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Tuesday, April 25, 2017

The Constant Expanding Student Debt Bubble

Today we felt like taking a few moments to focus on student loan debt, a topic we've written about many times before in the past because it just amazes us how many people willingly pour good money down that empty hole called obtaining a degree..

Currently student loan debt is at $1.433 Trillion dollars of which at least 33% will be defaulted on at some point within 5 years of graduating and needing to pay it back

In fact, roughly 8 million Americans owing $137 billion are at least 360 days delinquent on federal student loans, nearly the number of homeowners who lost their homes because of the 2008 housing crisis.
Part of the problem of course is University tuition is simply too expense and more than ever, a student is not getting much educational 'bang' for their buck

Let's take the University of Pennsylvania as an example though really all educational institutions are overpriced

Back in 1960, undergrad tuition for one year was $1,250 which when adjusted for inflation means $10,260 in 2017 money
But if you were to attend Penn now, a year of tuition comes to a whopping $51,400!

And we're not counting books, board or activity fees

So basically when taking into account the adjusted value of money from 1960 to the present, it costs 5x more to attend Penn than it did for those back then

And is the education any better?

Not really...
Remember these are undergrad courses like Algebra, Geography and Spanish 101 students are forced to take..  Courses like that do not get major overhauls because things like 2x + 3y = 4z and the names of the oceans do not change over 57 years

Everything today is far too computer dependent which is of course one way schools justify their rising tuition..

Another rationale is that lovely landscapes and winning football & basketball teams do not come cheap..
If we lived in what I like to term a 'Good Will Hunting' society, based on the Matt Damon film meaning where just being naturally intelligent,self-educated and self-motivated was enough to be desired by employers, most people really would not even need to bother seeking a degree

Just go to the library, immerse yourself in books in a marketable field that you were interested in, and then blow away your job interviewer with how much brilliance you possess then get a good job..

That is how it should be for most professions
Instead, people are forced to attend 4 years universities and colleges where many major in drinking and drugging with a minor in sexual experimentation while the parents rack up the debts

Afterwards, they get bitter while working at Subway with a degree in Engineering or Art Appreciation and wonder why life is not fair

So how to fix the problem..  How to make tuition come down and make a college degree actually worth the time it takes to obtain one

There's no easy solution but here are some ideas (we admit there's a snowball's chance in hell of anything ever being implemented but you never know.. One day..)
1)  Colleges must base enrollment on only one factor..  grades..

Extracurricular activities mean nothing.  What is your GPA?  Does it meet minimum requirement or not..  If not..  Sorry..

That also means by extension no more Affirmative Action!!
If a black is not genuinely intelligent enough to get into college, he/she does not get to go..  Period!

Social-environmental factors?  Nope.  No excuses..

And that ignorant black who thinks he/she will be attending a quality university through scholarship because of basketball skills?  Nope..

Good grades? You're in..  Bad grades?  Good luck
2)  No longer is 120 credits necessary to graduate

Most undergraduate degrees can easily be achieved in 60 credits (2 calendar years) if not for all the mandatory fluff electives forced upon students..

Want to go to school for 7 years and enrich your mind (or escape reality)?  Fine..  But for serious students, its two years and done..
3)  No student under 21 can get a student loan for more than $5,000 per calendar year without a parent co-signing who is legally on the hook to repay

Its absolutely amazing that an 18 year old with no credit history, job, savings or collateral would be denied an auto loan or mortgage yet could get a student loan in a finger snap!

The harder it is for students to get loans, the smaller the pool of students who attend which means though basic laws of supply and demand, the more schools would be forced to lower tuition to attract students to want to apply
4) No student who is politically liberal is allowed to attend college

Ok.. Ok.. That's just a wish   ~laughs

So much money wasted on college..  Would be better spent sending the young adult to vocational school or teach them how to start up their own business and be entrepreneurial

At least those career paths can't be outsourced
The number #1 reason why most degrees are completely worthless is there are too many people With degree and too many with Access to obtaining them

Nothing special about having a BA or BS

In 1960, only 10% had an undergrad degree..  Today it is 35%

We wonder how much student loan can-kicking people will be allowed to get away or more importantly how much longer the government and financial institutions will purposely look the other way
Eventually that bubble like all others will go 'pop'

Just wonder if Trump will be strong enough to allow it or will he buckle under the political and social pressure..

Time will tell..