On inheritance, college tuition and college loans
My parents died as paupers, so there wasn’t anything for me and my four siblings to “inherit” upon their deaths. No matter. I figure I got my inheritance on the front end, because my folks paid for my college education: tuition, room and board. Even correcting for inflation, tuition* at the University of Tennessee was cheap: ca. $160/quarter for a full load. I was fortunate that my parents had the money; even though I also carried a work-study job through most of that time, it wouldn’t have paid the whole cost. And I was fortunate that the state of Tennessee heavily subsidized higher education. Both community college and four-year college tuitions have increased far faster than inflation since then.
In addition to the expense of college attendance, there’s an opportunity cost. You could be spending those 4+ years working and earning an income. The business model is that a college degree can position the graduate for a higher lifetime income than a worker without the degree. The data support that, on average.
That said, far too many people are getting loans to pay tuition at community colleges and four-year colleges and universities that they struggle to pay off but cannot discharge through bankruptcy. This isn’t happening in most industrialized nations on the planet. What do they know that we don’t?
Back in the day, Milton Friedman, that paragon of free market economics, proposed allowing investors to pay university tuition in exchange for a percentage of the student’s future earnings. And he got what he wished for. How’s that working out in the free market utopia?
What is to be done?** Well, I guess we could blame the victims. You should have weighed the risk that you might not finish that degree, or that you might not find a job that allows you to pay off the principal as well as the interest. Is debt slavery good for the country? Forgiving those loans could actually boost the economy by increasing the velocity of money. Maybe as a society, we could come to see investing in our human capital as a means of keeping the nation competitive.
*technically, there was no tuition. These were “fees.”
**to quote Lenin
The Shrinking Future of Colleges, Especially the Small Ones, Angry Bear, angry bear blog
Friedman was an idiot (excuse my bluntness). His views that monetary policy could be used to control the economy are completely wrong. I would suggest reading the work of Marriner Eccles. He was a wealthy Republican businessman that FDR appointed to Federal Reserve Chairman. Seems like an odd combination for a Social Democrat to choose, but Eccles’ views on fiscal policy much aligned with FDR. I would highly suggest reading Eccles testimony to a congressional committee on the depression https://fraser.stlouisfed.org/files/docs/meltzer/ecctes33.pdf
What he has to say on pages 730-731 will amaze you.
Mark:
I am guessing you are referring to this portion of the testimony.
It is a sound and excellent read. But, what about the wheal and the arable land? I am not making fun of you. It was worth the additional few sentences.
@Mark, In case it escaped your attention, I didn’t quote Friedman approvingly.
I don’t know that he was an idiot, but from my longtime observations as a geneticist, in humans the traits of high intelligence and good judgement are unlinked. Henry Kissinger and Jean Kirkpatrick are among the many exhibits supporting this hypothesis.
Friedman used his genius for foolish ends, and his prophecies have amply discredited him. In this particular instance, I cited him because the educational loan market of today (a) followed his ideas and (b) has amply demonstrated their sterility.
Joel:
After working the scaffolds in Chicago with my dad in 67 and the draft still being there, I enlisted at 19 in 1968. We were a family of 6. Not a family of means. I left and never lived in my families’ rental homes again.
Getting out in one piece with some level of sanity was a big deal. The hard Corps press was on . . . and I had a different vision of being an engineer. My wife and I settled in near my parents. Worked and went to school again. VA paid me monthly while in school, Illinois had a state grant for vets. I worked maintenance, and my wife was a company trained patent and trademark paralegal.
So yes Joel, I understand the trail of getting somewhere in life.
The student loans are predatory to which there still is no escape from them. To which the rich can avoid and those aspiring to a different life may be forced to use. The politicians are people of words and little action even after being questioned openly in public.
As a democrat who has donated to fund raising for politicians of choice. Invited to a garden party for Stabenow, she picked the silver haired guy who had raised his hand. Mistake . . . I help student loan justice org. and Alan Collinge from time to time. So, I asked my question and she started off with her answer. When she was off path in it, I brought her back to it with a “polite” interruption. Her last words in answer were; “we are not the majority in power.”
But they have been and she was in opposition to doing anything. Meanwhile a U of M person scurried his butt over to me to tell me how they had developed a new graduated payment system. I was not interested. Anything shy of forgiveness which is available to businesses and citizens alike and not students is a travesty.
I caught up with Durbin at “Showdown in Chicago” while on the verge of catching pneumonia. Same question and similar answers. Both are impervious to reality. Pneumonia put me in bed for a week. I had no health insurance then.
The funny part about the student loan activity and which I have pointed out at AB is Biden has been against student loan relief or forgiveness since ~1990. He has been one of the prime instigators of the issue. An old man trying to reconcile with what he has done in the past, gain political ground, and be remembered in a different light.
Forty-four million people holding a total of ~$1.6 trillion of debt. The average loan of which is 30 to 40+ thousand dollars dependent upon age group. People at 60+ years old will most likely never pay them off even with a 2-3% interest rate and a payment of ~$250/month.
“Forty-four million people holding a total of ~$1.6 trillion of debt. The average loan of which is 30 to 40+ thousand dollars dependent upon age group.”
This is perhaps too big a problem for the guv’mint to deal with, alas.
That’s what they seem to think anyway.
Especially to the extent that it’s private debt, if you are suggesting that the guv’mint should reimburse the debt holders.
I have seen a figure of $4 trillion, which would make the problem far worse.
It is estimated that less the 2% of the student population is holding private loans. In which case they would not be impacted by this relief. The key here is to provide the ability to declare bankruptcy for which there are many valid reasons for a person to do so. And to which many people are doing today having far less reasons to declare such in commercial loans.
The defense budget is $900 billion. We can afford such. The trump tax break resulted in a $2.1 trillion deficit due to a tax break passed under Reconciliation which disappears in 2025. We can afford that. The productivity gain from removing such debt would surpass the amount forgiven. And the nation can not afford debt relief which is simplely an accounting function?
I have been writing on student loans for well over a decade in support of Student Loan Justice Org and in general for relief. I have cornered a couple of senators in public on this topic and written the letters. I have multiple several posts on the topic at AB. You toss out comments on the topic which are BS and have been taken as such when made in public. There is no reason not to scrap these loans out.
PS: Biden is the chief instigator in the past blocking such relief since 1990 which I also wrote about at AB.
Joel, I didn’t think you were approving of Friedman. Here is another excerpt from his testimony on page 714. If there is one thing I would like people to understand about our monetary system; it is the point he is making here:
Mr. ECCLES. Well, there is this difference. A State, of course, is in the same financial category as corporations and individuals in that they do not have the power of issuing money or credit. The Federal Government is entirely in a different category because it controls the money system.
Mark:
Excellent point and one I took for granted.
@Mark,
Yes. The USG is different from you and me. That’s why all the analogies between household budgets and the federal budget are false.
Markg
maybe not entirely. i get the point about the money supply, but i don’t see its relevance to student loan debt. there is no need to print money to correct that mistake and open invitation to predatory loans.
i have no objection to printing money per se…We do it all the time…but I am not convinced it would work as THE policy for all seasons and for all reasons.
Markg
Friedman was an idiot, but
Friedman Lives!
He is still cited for the reason that Social Security is a bad thing for the Economy.
It reduces savings. You see how litle savings were available to support investments in
the great potential for economic growth afforded by derivatives and such before the market fell due to insufficient savings.
this may seem like a pointless comment, but in view of recent “misunderstandings” i feel a need to say i agree with what is said here entirely.
well, maybe not anymore, but at thr time it was written…intended to ease some of the what to me was inexplicable animosity.
speaking of which, calling a commenter “speaking BS” strikes me as a little more ad hominem (new daze definition) that what i was accused of doing.
but also…not being well informed, i have asked those well informed who is going to lose money if the debts are forgiven. i hear today “accounting function,” and also the mmt version of print the money. i have no objection to either of those ideas..i just wish i knew the “legal” facts. and, oh, yes, to the extent the loans are “private” i wonder to what extent were they “predatory” or outright fraud? this, and the protections of bankruptcy, seem to me to be the important issues here.
How Big Is the Legacy Boost at Elite Colleges?
NY Times – July 27
In the same week as a civil rights inquiry into Harvard, new data shows legacies are slightly more qualified yet are four times as likely to get into top schools.
… New data shows that at elite private colleges, the children of alumni, known as legacies, are in fact slightly more qualified than typical applicants, as judged by admissions offices. Even if their legacy status weren’t considered, they would still be about 33 percent more likely to be admitted than applicants with the same test scores, based on all their other qualifications, demographic characteristics and parents’ income and education, according to an analysis conducted by Opportunity Insights, a research group at Harvard.
Researchers said that was unsurprising, given that these students grow up in more educated families. Their parents may be more able to invest in their educations, pay for things like private schools or exclusive sports, and offer insight into what the college is looking for.
Yet the admissions advantage they get at many elite colleges for being children of alumni is far greater than that. They were nearly four times as likely to be admitted as applicants with the same test scores, according to the data, released Monday. And legacy students from the richest 1 percent of families were five times as likely to be admitted. …
The new study was based in part on internal admissions data from several of a group of 12 elite colleges: the Ivy League as well as Duke, M.I.T., the University of Chicago and Stanford. Because the researchers promised anonymity to the colleges that shared it, they would not say whether Harvard was one of them, but they said that admissions practices were generally consistent across other colleges in the group, except for M.I.T.
They also compared legacies’ chance of admission at the colleges their parents attended versus similarly elite schools. They found that they were slightly more likely to get in to the other colleges than applicants with the same test scores. But that was dwarfed by the advantage they got at the school their parents attended. …
getting a whif of envy here. i have suggested elsewhere that admission to an elite college is not…or should not be…a life changing event. i do not think the government has any business telling a private school who it can admit. if that sounds racist, it is not. the racism exists at the point were people are hired for hgh income jobs or jobs with a line to political power. to the extent that college admission affects that, there are better ways to assure “equal opportunity” than fighting over ‘oo gets into ‘arvard.
The fact is of course that there’s no room in the relatively small set of ‘elite’ colleges & universities to enroll ‘everybody’. The issue has to be that they (say they) try to admit more disadvantaged students (like Clarence Thomas!) and what does this get them?
They appear to hypocrites & then everyone picks on them, for still favoring children of alumni. Go figure!
Perhaps this means the guv’mint has no business telling anyone who they should serve, or admit, or accommodate, hmmm?
not quite. i would agree that private schools and wedding cake bakers should be left alone to decide who they want to serve.
but there need to be good public schools, and “public accommodations: that are not disadvantaging people according to their race. i don’t think it’s a hard line to draw, but the bad guys will always try turn the good into bad, and the bad into law.
“Public accommodations” as in ‘public housing’ maybe?
Mrs Fred and I, though we had public educations through high school, both graduated from RPI, an eminently private Institution. (We were institutionalized, I have told friends.) And our kids went to private colleges. I would tend to agree that such places have every right to make whatever rules they choose, and even allow parents to bribe acceptances for their kids if they so choose. But that’s as far as I’ll go on denying services to others.
The problem with “private” schools teaching and admitting whoever they want is that they rely heavily on public money. That’s why they are subject to regulation that even the right wing Supreme Court will enforce when it comes to “racial preferences” or “biases” like affirmative action, for example.
RPI always seemed to be heavily dependent on ‘private’ industry.
Mega-corps. A major memory was a big helicopter landing on the lawn near the freshman dorms bearing the CEO of United Aircraft
arriving for a visit/meeting. Also IBM, GE, Boeing, Texas Instruments to name a few. The co-founder of Digital Equipment Corp Harlan Anderson (an RPI trustee but not a grad, was pushed out by MIT grad Ken Olsen.) Such corps were major employers of RPI grads, eventually including me & Mrs Fred.
Think RPI would be willing to forgo federal funds? If so, they could probably do whatever they want.
Dobbs said
“I would tend to agree that such places have every right to make whatever rules they choose, and even allow parents to bribe acceptances for their kids if they so choose. But that’s as far as I’ll go on denying services to others.”
do you see the contradiction in this? At what point does not admitting someone to your limited capacity private school become “denying services to others?” I cannot even imagine that the poor white kid who scored 399th on the admissions test has a right to cry “racism” because the college admitted the kid who scored 400th on the test but came from a population whose “point of view” the college felt would improve the educational experience of the other 398.
of course not, you were thinking of the ten million black kids whose lives were destroyed by not being admitted to Harvard..denied services as it were.
And of course the Country could stop subsidizing Harvard et al if we thought the country was injured by such denial.
not especially. “public housing” means “projects” whivh are usually dsigned without regard for predictable human behavior. but i do think the government would be helping “the general welfare” (that is, all of us) if it built (caused to be built) very low cost houses that people suffering from economic straits could rent or buy [no money down, no foreclosure] until their situation improves. With any luck this could turn into a reserve stock of emergency housing during national disasters like floods and hurricanes.
I can’t see why those would be segregated, but it could turn out that living next door to “the other” is not as likely to improve race relations as working side by side.
incidentally, i don’t get too excited over private schools or even public ones teaching nonsense. if people want their kids to grow up stupid, that should be their business. if that is a danger to the country, then it becomes the government’s business to provide opportunities for kids to learn the truth for themselves. i do have some objection..call me a racist, call me a homophobe [i’m not, but i do get tired of trying to convince people] …to burdening grade school kids with grownup hangups about race and sexuality. let them be kids and try to teach them kindness and maybe something better to think about. the Left calls the Right out of its caves by overreaching to teach kids their own political religion..
i went to schools that taught the standard American exceptionalism propaganda, but everyone I knew had figured out it wasn’t the whole truth by the time they were in high school.
The rationale for public schools has usually been that if we’re going to be some sort of democracy it’s important for people to be educated in realities. The failure of the system to accomplish that is quite visible in MAGA states and regions. Lots of people figure out reality on their own without decent teaching, it’s true but lots of others don’t and that causes lots of trouble. Have you heard about how slaves benefitted from their status?
The rationale was always (IMO) that education was something that everyone needed as children, and it just made sense for guv’mint to provide it. But it was always local guv’mint that was most closely involved.
Things eventually got more than a little weird when home-schooling became popular. Local schools became very distrustful of that (I was a school board member at the time), perhaps for good reason.
Well, fund it more than provide it. It was meant to be locally controlled. Eventually, as guv’mints do, substantial bureaucratic operations were installed to oversee education, both at state & national levels.
But the local control didn’t extend to religious instruction, for example. I think it was to determine categories of subjects, like shop, or art. Most states require civics courses and/or American history.
As you know, American guv’mint has no say in religious matters, except for those sitting on the Supreme Court, when religion has much say in civil matters in America.
Jackd
yes I have. I also know that the kids are not fooled, unless they learned it at home.
even there, all the grownups are doing is teaching their kids that the grownups are stupid.
I read an essay this morning in a liberal newsletter that “slavery was practiced all over the world” was not true and a stupid answer in defense of slavery.” i could not respond to them, because like most ‘newsshources’ they don’t want to hear what their readers have to say. but i would have told them that “slavery was practiced all over the world” is true enough, and it is not a defense of racism…it is an answer to the people who claim “America was founded in racism and is racist through and through and all you white folks should give us money.”
I agree that a nation needs to try to see that it’s people have a good reason to try to teach the truth, but there are better ways to go about that than trying to sound as dumb as the racists, or force feeding kids our political neuroses. let them be kids for awhile.
back when separate but equal was the law…it was not a bad law for the times, but no one even tried to make “equal” mean anything. so Brown v Board became necessary as well as the Civil Rights act until we (liberals) overreached.
i could go on, but it is futile. people have the need to make enemies. more fun than fixing things.
Yes, progressives don’t like to talk about that or about the Black people in Africa who captured and sold other Black people to the slavers. That’s a far cry, however, to the claims of slaves benefitting from their slavery.
yes. of course. i do not think the new daze republicans are honest or sane.
incidentally, do you think my generation learned “civil rights” and “anti war” in school?
but i have heard lately that we are stealing out grandchildren’s future. they are taught this in college by men who are knowlegeable about these things because they made a lot of money.
Well, I’m probably older than you and we learned about civil rights but anti-war? Not so much.
The kids in school during the Vietnam War may have learned anti-war
Damned auto-correct! Anti=war.
Jack:
What is the problem? It looked ok to me.
Jack
I agree with you: damned auto-correct!
but my own personal auto-correct has developed a mind of its own lately too.
I kind of liked ate-war.
For some reason on my computer screen, after posting, it showed: “ate- war”.
Yea, I know those fingers and screens can be tricky. I fixed it.