Friday, December 21, 2007
Now the Drum Major Institute has named Opportunity Maine, conceived by a team of student and citizen activists including the League of Young Voters and former USM president Andrew Bossie, one of the ten best progressive policies of 2007.
" Talk about killing two birds with one stone: with an innovative new program called Opportunity Maine, the Pine Tree State is simultaneously addressing the mounting burden of student loan debt and the economic development challenge of retaining an educated workforce."
Wednesday, December 19, 2007
While overall the ratings were quite positive (3 1/2 out of 5),
Negative reactions were interestingly split between those who thought the advice was too basic, those who complain you don't need credit cards at all, ("Why MUST we use debt ever? ") and those who call me a man. (my favorite: "Man-ya").
For those who think the advice is too basic: When the average household credit card debt goes below $8000, this advice can be retired.
For those who think that you don't need credit cards at all: You're right. Unfortunately, my editor asked me to soften my recommendation that you don't carry debt and pay off the balance every month.
For those who think I am a man: You're right. I am the first transsexual personal finance web celebrity. You heard it here first.
Sunday, December 16, 2007
I OWE, I OWE
The article in Fast Company on Mint, a Web site that focuses on young adults who need help in managing their money, is worth reading for quotations like this from the 26-year-old founder, Aaron Patzer: “Your parents say ‘balance your checkbook,’ but you don’t have to anymore,” thanks to all the online tools available.
But what is more compelling are the statistics that the author, Anya Kamenetz, has included in the article. Consider these:
¶The median household income for people under 34 in 2005 was $48,405. From 2000 to 2005, that figure fell nearly 6 percent, according to the Census Bureau.
“This demographic, in sum, is sorely in need of an easy-to-use solution to their ample money woes,” Ms. Kamenetz writes. That explains why a number of money-management Web sites — Geezeo, Spendview and Wesabe among them — have started recently.
Friday, December 14, 2007
Viacom, a Fortune 500 media company, had $11.5 billion in revenue last year. It includes the hip, youth-oriented cable networks MTV, VH1, Comedy Central and Nickelodeon. But the cachet of these names on a young college graduate's résumé is not matched by the way the company treats its workers.
Like scores of companies in the media industry and elsewhere, Viacom has increasingly shifted to workers who are not regular, salaried employees--both true freelancers and "permalancers." The term refers to those who may work full-time for several years--with duties, hours, and responsibilities very similar to regular employees--yet who are classified as temporary employees or independent contractors and do not receive the same recognition as regular employees.
Thursday, December 13, 2007
*Income inequality among households, both before and after Federal taxes, grew more quickly over the last two years of the series, 2003-05, than over any other two-year period on record, back to 1979.
*If we break households in groups of 20% each by income, well over half of household income (55%) was held by the richest fifth in 2005, the highest such share on record.
Tuesday, December 11, 2007
writers, Broadway stagehands, and now MTV "permalancers."
The walkout highlighted the concerns of a category of workers who are sometimes called permalancers: permanent freelancers who work like full-time employees but do not receive the same benefits.
Waving signs that read “Shame on Viacom,” the workers, most of them in their 20s, demanded that MTV Networks reverse a plan to reduce health and dental benefits for freelancers beginning Jan. 1...
But some of the protesters asserted that corporations were competing to see which could provide the most mediocre health care coverage. Matthew Yonda, who works at Nickelodeon, held a sign that labeled the network “Sick-elodeon.”
“I’ve worked here every day for three years — I’m not a freelancer,” Mr. Yonda said. “They just call us freelancers in order to bar us from getting the same benefits as employees.”
Gawker has prime coverage. Yes, that Gawker.
Monday, December 10, 2007
"There are, in fact, three distinct concerns associated with the rising tide of foreclosures in America.
One is financial stability: as banks and other institutions take huge losses on their mortgage-related investments, the financial system as a whole is getting wobbly.
Another is human suffering: hundreds of thousands, and probably millions, of American families will lose their homes.
Finally, there’s injustice: the subprime boom involved predatory lending — high-interest loans foisted on borrowers who qualified for lower rates — on an epic scale. The Wall Street Journal found that more than 55 percent of subprime loans made at the height of the housing bubble “went to people with credit scores high enough to often qualify for conventional loans with far better terms.”"
Paul Krugman says the administration's subprime mortgage plan will help investors some, homeowners a little, and predatory lending victims specifically not at all.
Friday, December 07, 2007
" I am a bit tired of hearing about the pangs of these so-called 'new Millennials' and their hesitancy to join the working class. I am especially irritated by authors/journalists (Dr. Twenge comes to mind), who have created this buzz in the corporate world intimating we have to learn how to deal with and accommodate them in the workplace! There is no difference in what they are feeling now than what my grandfather and his father felt back then."
Many others chime in with varying degrees of derision for those so young and foolish as to wish for/ dream of / expect a happy time working at a fulfilling job.
Yes, attitudes have changed among young people. But the workplace has changed too. I wonder how those who bash the Millennials reconcile that image of them as privileged and coddled, with the fact that, every time they walk into a McDonald's, a Starbucks, a Target, a Circle K, a Best Buy, a Blockbuster, a Whole Foods, a Barnes&Noble, a restaurant, a bar, 90% of the workers who greet them are under 30. Half of all minimum wage workers are under 25.
These workers may not be white. They may be immigrants. But they represent this generation too, and they are getting "real work experience" in spades. A plurality are college students or even college graduates.
The difference between these service jobs and the factory jobs our grandparents found is that the salaries are much lower and you can't raise a family on them. So they can't be long term commitments.
Millenials are far from "hesitant to join the working class." They ARE the working class.
Other types of consumer debt, which have nothing to do with housing and nothing to do with subprime, are going bad, too.
Even as the economy continues to expand, more and more borrowers are having difficulty remaining current on their debt. Which isn't surprising, given that median household income hasn't budged since 1999 (see Figure 1 on Page 4 of this Census report). What's more, in a natural reaction to reckless lending, mortgage companies and banks are now in money-hoarding mode and thus unable or unwilling to help Americans refinance existing debt.
Thursday, December 06, 2007
We're all connected. Everyone is going to suffer when the hangover from excess credit finally comes due. The subprime mortgage lending compromise announced today isn't going to do enough to keep people in their homes, which means it isn't going to save the portfolios of Goldman Sachs et al. Same is true, eventually, in the credit arena.
The brilliant Elizabeth Warren on Marketplace last month: What about the economy in all of this? We're often told that consumers are responsible for about two-thirds of Gross Domestic Product. Now if they start pulling back, what can we expect?
Warren: This is one of the scariest parts for me. The typical family is carrying now about two months' worth of income in credit card debt. So what's going to happen long-term? Do we have a period where all these families that are carrying all this debt simply cut back on their consumption so that they can pay off the outstanding debt loads? Is that gonna be a long, slow decline, or is it going to be a one-time smack? Either way, the consequences for the economy cannot be good.
Wednesday, December 05, 2007
Here's my favorite Yahoo comment. Should provide a good incentive to flee the country:
Jus more multicultrial (sic) liberal rambling. Way to go naming a few places where Islamo terrorist are just waiting to kidnap an American or blow up a night club! Here is a better idea for the liberal types, how about spending your money in the US and visiting the many fine Cities, National Parks, and other destinations in the US first. A national outlook is more important than a Global outlook for young people. Seems the liberals are the first ones to run overseas and throw thier money away but the first ones to complain about the national enonomy and limited job opportunity. Seeing what the US has to offer might open your eyes as the why everyone else in the world wants to live here and why so many illegals are breaking into the country everyday.
Thursday, November 29, 2007
"he is like so many of his millennial generation — new workers wavering on the threshold of real life, determined to get it right, they say, and fearful that they might get it wrong."
Or as Penelope Trunk puts it, while Gen Y talks of seeking passion and embracing what is new, that is just brave cover for a less comfortable truth. “The reality is they might prefer one job that would last forever and end with retirement, but that kind of job doesn’t exist anymore,” Ms. Trunk says. “The alternative, the instability, terrifies them. Sean Aiken is an example of how uncertainty and constant change can be O.K..”
Yes and no. It reminds me of an interview I was reading last week with a spiritual teacher named Adyashanti. He talked about how the constant spiritual search can become a substitute for actually arriving--staying with a practice day after day, experiencing a quiet peace without the fireworks of enlightenment. In the same way, the search for "passion" substitutes for what you can actually learn about yourself by sticking with a job for awhile and overcoming difficulties.
But what do I know. I'm just a freelancer.
Wednesday, November 28, 2007
Nearly 3.5 million students enrolled in online classes during the fall of 2006-07, according to the 2007 Sloan Survey of Online Learning, which surveyed more than 2,500 schools and released results last month. Over the past five years, the survey found, online enrollments have grown by an annual average of 21.5%.
This is the way things need to go for better value and more innovation in higher education.
So we need more research on human-computer interaction: What kind of teaching works best online? What doesn't work or can't be taught online? How do you keep students motivated and respond to their questions? How can we combine screentime with experiential learning for the best designed courses of study, most efficiently and at the best price?
Monday, November 26, 2007
New York Magazine, 10/28/2007:
The U.S. economy, for all its worldly sophistication, is driven by mall shoppers and late-night Amazon addicts—70 percent of the gross domestic product is accounted for by consumer spending, which is buttressed by debt. According to the Federal Reserve, total U.S. household debt was, as of August, $2.5 trillion—a 24 percent increase in the past five years. Total credit-card debt, including gas cards and the like, was $915 billion.
The willingness of consumers to keep spending and piling on debt in the midst of a slowing real-estate market is hailed on Wall Street as an act of patriotism, which Schiff considers perverse. Imagine, he suggests, that you ran into a good friend and asked him how he was doing. His reply: "I took out a third mortgage, maxed out my credit cards, and emptied out my kids' college savings account so I could buy a bigger TV and a new car, and we're going to Greece on vacation over the holidays. Things are great!" Schiff lets the idea sink in and then finishes the thought: "And we're celebrating the fact that we're doing this as a nation?"
In a recent interview, John Santer, a district director of NeighborWorks America, a community-based nonprofit, pointed out that 43 percent of American households spend more than they earn each year, and fewer than six in ten have enough savings to last them three months if they were suddenly out of a job. So where's the money coming from? From 1991 to 2005, Americans borrowed $530 billion against the value of their homes each year.
James Glassman, a senior economist at JPMorgan Chase, told a Tulsa, Oklahoma, luncheon crowd in early October that before 1985, consumer spending grew in line with income, but since that time, it's grown half a percent faster on an annual basis. As a result, household savings, which once reached 10 percent of income, is now literally negative. "My guess is that in five years we'll look back and realize … that the consumer we knew for twenty years is coming to an end," he said.
Roger Ehrenberg, an ex–Wall Streeter and author of the financial blog Information Arbitrage, forecasts extreme financial pain. "You've got a weaker dollar, declining economic fundamentals, and a debt-strapped consumer—I'd call that a bad fact set," he says. "Lay on top of that the mortgage problem and declining home values, and you can paint a pretty ugly picture."
New York Times, 11/25/2007:
How bad could things get? Pretty bad, say many economists. Not so bad that your grandfather’s prescriptions for enduring the Great Depression need dusting off, but nasty enough to force many Americans to get reacquainted with living within their means. That could make life uncomfortable. It may also be an unavoidable step toward purging the United States and the global economy of a major source of instability — an unhealthy dependence on the willingness of American consumers to keep buying even as debt mounts. Concerns that Americans must eventually grow thrifty, leaving factories from Guangzhou to Guatemala City scrambling for buyers, now sows unease around the world.
As home values rose much the way dot-com stocks had a decade earlier, banks offered loans and no-fuss refinancing that allowed homeowners to turn increased value into money. From 2004 to 2006, Americans took more than $800 billion a year out of their homes, according to most estimates. With prices now plummeting and banks savaged by mortgage losses, this artery of credit is drying up. The American consumer, a crucial engine of growth for the global economy, may finally be tapped out.
Reality Sandwich, 11/23/2007:
In some ways, the US has reverse-engineered itself into a Third World country, with its nomadic elite no longer tied to nationalist obligations - the financial meltdown should make this clear. Today, our primary export to China is soy beans, a raw material, while we receive electronic devices and finished goods from them.
During this process, the US rulers were confronted with the difficult question of what to do with the huge pool of nonspecialist surplus labor no longer required for the functioning of the system. One solution was to warehouse them in prisons (the US is 5% of the world population with 25% of the world’s prison population), another was to put them in the military (but popular resistance to the draft has made this difficult); another option was to create new bureaucracies and expand unnecessary aspects of the service sector. Another idea – a short-term solution but one that created the temporary illusion of abundance – was to encourage the amassing of personal debt, and then to turn that debt into a financial product, through securities, and sell those bundled debts up the financial pyramid.
Friday, November 16, 2007
Thursday, November 15, 2007
I'm not sure that another list, another regulation, is the best way to hold down tuition increases. I think we need to change formulas of federal aid. But it is an incentive in the right direction. And I find some of the reactions to be patently absurd.
Richard Doherty, of this association of private colleges, said,
“The notion that there are efficiencies that colleges are not trying to pursue currently is just a fallacy."
Oh really? Where is the private college in Massachusetts that offers full courses of study online? That offers well-planned three-year bachelor's programs and focuses on graduating students efficiently? That has eliminated all sports to focus on academics? That reviews the performance of all departments each year and cuts those that are underperforming? That has moved to an Oxford all-tutor/independent study model, with faculty offices and dorms, but no classes? That actively rents out its physical plant to the community to make sure that buildings are being used around the clock?
Yes, for-profit schools do some of these things, but the savings go into their pockets. Only when independent and public colleges make some radical changes to focus on efficiency are we going to get somewhere.
Friday, November 09, 2007
Veterans today have only the Montgomery G.I. Bill, which requires a service member to pay $100 a month for the first year of his or her enlistment in order to receive a flat payment for college that averages $800 a month. This was a reasonable enlistment incentive for peacetime service, but it is an insufficient reward for wartime service today. It is hardly enough to allow a veteran to attend many community colleges.
It would cover only about 13 percent of the cost of attending Columbia, 42 percent at the University of Hawaii, 14 percent at Washington and Lee, 26 percent at U.C.L.A. and 11 percent at Harvard Law School.
College costs have skyrocketed, and a full G.I. Bill for those who have served in Iraq and Afghanistan would be expensive. But Congress has recently appropriated $19 billion next year for federal education grants purely on the basis of financial need. A G.I. Bill for those who have given so much to our country, often including repeated combat tours, should be viewed as an obligation.
Thursday, November 08, 2007
"A hand specialist informed me today that if I don't have surgery within a week, I will lose complete use of my finger. This means I cannot play guitar. I have surgery scheduled for Monday, November 13, but unfortunately I don't have health insurance. In total, it's going to cost me at least $7000. Because of this circumstance, the next two shows - November 19 & November 20- will be benefits for surgical costs. Any donations will be greatly appreciated."
Wednesday, November 07, 2007
Tuesday, November 06, 2007
Friday, November 02, 2007
Also this summer Linda C. Babcock, an economics professor at Carnegie Mellon University, looked at gender and salary in a novel way. She recruited volunteers to play Boggle and told them beforehand that they would receive $2 to $10 for their time. When it came time for payment, each participant was given $3 and asked if that was enough.
Men asked for more money at eight times the rate of women. In a second round of testing, where participants were told directly that the sum was negotiable, 50 percent of women asked for more money, but that still did not compare with 83 percent of men. It would follow, Professor Babcock concluded, that women are equally poor at negotiating their salaries and raises.
Wednesday, October 31, 2007
... the surge is mostly among community colleges, professional programs like business and education, specialized online schools like the University of Phoenix, and public universities like Penn State and Illinois that feel obligated to accommodate far-flung residents.
Bafflingly, this article doesn't mention cost as a factor, although cost is certainly the concern that unites the institutions listed above.
Tuesday, October 30, 2007
is about student loan reform and what comes next:
...no serious remedy is on offer for the elephant in the room: tuition increases themselves.
Even if reformers succeed in eliminating FFELP--cutting the lenders altogether out of federal student loans, as all the major Democratic presidential candidates have advocated--the college cost problem will not be solved. We'll lose less of the federal higher ed budget to corporate subsidies, but colleges will continue to raise tuitions faster than inflation and more and more private loans will keep filling in the gap at higher cost to students.
We can try to control tuition directly, by rewarding colleges that keep costs down and punishing those that don't. We can promote competition on cost: spotlight the best community colleges, distance learning programs, etc. Even form better ways to rate these types of programs to raise their profile a little. And we can try to limit the loans available to students. That's what restoring bankruptcy protection for private loans will ultimately do.
Just as the growth of "creative" mortgages fueled the runup in house prices, the growing availability of student loans doubtless had some influence on the rise in tuition.
Monday, October 29, 2007
"The young workers are attracted to Trader Joe’s for its groovy, noncorporate aura and also because it, unlike most of the sorts of jobs arty kids do while waiting for their big break, offers health insurance...I am assigned to a warm, mid-twenties clerk who is also directing a Restoration comedy, dramaturging a friend’s show, and performing in a comedy troupe. But she has a lot of student-loan debt, so in addition to Trader Joe’s, she’s a waitress."
That's all well and good, but if people so appealing can't find real jobs paying more than $11.25 an hour, it doesn't bode so well for the economy as a whole.
Friday, October 26, 2007
By 2010, another 17.3 million young Americans will come of age, swelling the already sizable ranks of voting-age "Millennials" – those teens and twenty-somethings coming to age in the early years of the 21st century. At 80 million strong, the Millennial generation outnumbers even the Baby Boomers by 3 million and represents the single-largest demographic age group in electoral politics, according to a recent Mother Jones article ("The 50-Year Strategy", in the Nov/Dec 2007 issue).
Polling data, recent voter turnout, and the swelling ranks and increasing coordination of the youth climate movement all demonstrate that this young generation is remarkably engaged, overwhelmingly progressive and pro-environment, and has largely rejected the "government-is-the-problem" conservative mentality that still dominates the general population .
I've been doing a lot of events this fall talking about student debt & related issues. I have three more events coming up next weekend (I'm especially excited about attending and covering the Power Shift conference in DC, the largest-ever student conference against climate change) .
In my presentation I always try to strike a balance between "service" messages about personal finance and "action" messages about changing the policy equation vis-a-vis higher education and the workforce.
For some reason, the land of Michael Moore has been a popular spot; I've now spoken on campuses in Ann Arbor, Kalamazoo, Ypsilanti, Marquette, and Mount Pleasant, where we snapped the above picture at a Bennigan's with Dr. Hope May and some of her students in the Center for Professional and Personal Ethics, who were all charming and motivated as hell.
You can read the students' take on the event here.
I was at the podium answering the last question about what it was like to be a freelancer when my phone started vibrating. It was a call from an editor at 8:30 at night.
Wednesday, October 24, 2007
Monday, October 22, 2007
*Total federal grant funding to undergraduates was still lower in 2006-07 than it was three years earlier, after adjusting for inflation.
*Public university tuition is up 6.6% to $6,185; total costs up 5.9% to $13,589.
*Tuition at private colleges hit $23,712, an increase of 6.3 percent.
*"even the net price, after taking into account grants and other forms of aid, is rising more quickly than prices of other goods and than family incomes."
*Private loans made up 24 percent of total education loans in 2006-07, up from 6 percent a decade ago.
*Private loans, those not guaranteed by the federal government, continued to be the fastest growing form of borrowing, totaling more than $17 billion in the 2006-07 academic year. In the same period, students and their families borrowed $59.6 billion in federally guaranteed loans.
Retired New Jersey school teacher Kathleen Casey-Kirschling, born at midnight on Jan. 1, 1946, applied for her government pension this week to much fanfare. Kathleen's simple act signals the start of a surge never before seen by the Social Security Administration.
"The baby boomers, there are 80 million of them and the first one has already filed for retirement benefits," said Social Security Administrator Norm Franker. "And she filed online, and we've built a new online system to help with the tsunami."
The Onion comments:
"Wait a second. Not only do I have to pay to keep them safe from terrorists, I have to pay so they can retire, too?
Thursday, October 18, 2007
At heart, "Generation Lost," as I call them, is stuck in an extended adolescence, refusing to come to grips with reality. This "Generation Blank," as I also call them, refuses to support itself because all its members are selfish praise-junkies who don't know the meaning of hard work and self-sacrifice.
Or hell maybe they're all still leaning on their folks because the boomer middle-class dream was revealed as a vicious scam and the social safety net was spent and legislated away by our parents once they got theirs? Who knows!
In the end, though, you don't really need to worry about any of this if you don't feel like it.
So will Gen Y be able to deal with the realities of kids-and-a-mortgage adulthood? The answer is that they probably won't do any better--or worse--than their parents did.Ha ha ha sure, we'll do just fine with our student loans and shitty credit and subprime mortgages and service industry jobs.
I had a great time visiting Northern Michigan University in Marquette last night. The weather was perfect, my hotel had a view of Lake Superior, and the students were really nice. In my presentation I mentioned some free websites that are easy to use to manage and track your spending. These are Wesabe, Mint, and Geezeo. There are a bunch more popping up out there on the web as well. I recently signed up for Mint myself.
Tuesday, October 16, 2007
Sunday, October 14, 2007
Thursday, October 11, 2007
She, too, has now come out in favor of abolishing FFEL loans (all of those made by banks, rather than Direct Loans). Other great notes:
*Radically simplify the aid-application process.
*Interesting: require a four-year tuition guarantee for state universities, so if you enter in 2008, your bill won't be 50% higher by the time you're a senior.
*$500 million for community colleges.
*$250 million for apprenticeship/ job training programs.
"Elite Financial Group, a lender in San Diego, has solicited business with letters from its “Federal Loan Division” on stationery with an eagle logo that looks very much like something the federal government might use. The letters warn that “failure to respond could result in higher interest rates and increased payments.”"
And Sallie Mae filed a New York Freedom of Information Law request (really!) to get SUNY to turn over the names, ages, graduating classes, majors, telephone numbers, home mailing and e-mail addresses of "all admitted and enrolled students for academic year 2007-2008."
The request came from the company's "Direct Marketing Division," suggesting they were planning to use the personal info to push private loans to students. (Thanks to New America Foundation for the scoop)
Why should private student loans be allowed to be marketed directly to students in the first place? Barnard's experiment proved that college financial aid officers can dramatically reduce the use of these loans with just a single conversation.
Wednesday, October 10, 2007
1 star out of 5
This article is quite inaccurate. Women make more than men. If you compare apples to apples, .ie men and women in the same field, same experience, and same education, women make more. Articles like this are ridiculously misleading. The presentation of facts needs to be more organized and better explained. Poorly written ... Anya is hot though.
A lot of people seem to have trouble accepting the fact that men still earn more than women on average. I don't know what to tell you folks except look at the numbers. Here's more about the wage gap.
If you want more info on the column,
Go to On My Own Two Feet.
Thomas Friedman's take on the college generation in today's NYT is pretty accurate, actually. Accurate on the circumstances, not on our response. (Note seasonal Jack O' Lantern at left).
"But Generation Q may be too quiet, too online, for its own good, and for the country’s own good. When I think of the huge budget deficit, Social Security deficit and ecological deficit that our generation is leaving this generation, if they are not spitting mad, well, then they’re just not paying attention. And we’ll just keep piling it on them.
There is a good chance that members of Generation Q will spend their entire adult lives digging out from the deficits that we — the “Greediest Generation,” epitomized by George W. Bush — are leaving them. "
Tuesday, October 09, 2007
Two private equity firms, J. C. Flowers & Company and Friedman Fleischer & Lowe, and two banks, JPMorgan Chase and Bank of America, were fixing to take Sallie Mae private for $60 a share. The largest holder of federal student loans would've gone from being a government-sponsored entity to a privately held company in the space of just four years.
Then Bush signed the College Cost Reduction Act , with about $20 billion in subsidy cuts to Sallie Mae and other federal student loan providers. JC Flowers saw this as enough of a "material adverse effect" to Sallie Mae's business to walk away from the deal
(also spurred by upheaval in the credit markets that are making all of these types of deals look shakier). They made a counteroffer--$50 a share with "warrants" worth $4 to $5 more if Sallie Mae's business improves. Now Sallie Mae is suing to force them to hold to the original deal.
Will they succeed? Probably not.
Why should we care? I don't think it's good for a company that depends entirely on government subsidies to be privately held. I also don't think student loans should be a corporate cash cow.
On student loans:
Too many borrowers around the country are overly burdened or treated unfairly as they repay their student loans. ...More than ever, students are financing their college costs by borrowing as the cost of college is rising and grants are becoming less readily available. The burden of student loan debt alone can put people in economic handcuffs and force them out of important, but low-paying professions, such as social workers, teachers and police officers.
On lifelong learning:More than 50 percent of students are now going to college later in life, working full or part time while they attend, or raising children, and this is particularly true among minority populations. I also hear from people all along the campaign trail who want to upgrade their skills midway through their careers so they can change jobs and grow professionally. I believe we have to create a robust system of lifelong learning to help prepare every American to compete in the global economy...I also want to find ways to support colleges that are designing night courses and other flexible scheduling, like compressed courses, and providing child care, in order to make it possible for all students even those with significant family responsibilities to complete their degrees.
This is all right on, although she doesn't come out for the eradication of FFELP loans as Edwards and Obama have. And when she talks about college costs, she only talks about increasing federal aid. I'm increasingly convinced that that's just not gonna do it: there needs to be some cooperation between states, universities, and the federal government to hold down tuition increases.
Thursday, October 04, 2007
Guess the town from each quote!
1) "At a taqueria, you can get a gut-busting meal for under $5; the weather's not extreme, and I just sold my car because I'm trying to be more green."
2) "I have my own little one bedroom apartment [$850 a month], and I love it...All my friends in other cities have roommates."
3) "It's not overwhelming and I like that."
4) "I didn't move here to become a blogger, but I moved here and became a blogger."
5) "I would rather experience a ton and not save any money for a few years than be bored in another city."
Wednesday, September 26, 2007
I didn't even get into the green angle, which is another excellent reason to not spend more than you need.
Monday, September 24, 2007
William Bowen, the former president of Princeton, and his associates discovered, in a rigorous study of 19 selective colleges, that applicants from disadvantaged backgrounds, whether defined by family income or parental education, “get essentially no break in the admissions process.” The paucity of students from poor and working-class backgrounds at the nation’s selective colleges should be a national scandal.
Chronicle of Higher Ed:
a Sallie Mae spokeswoman, Martha Holler, suggested a willingness to consider Mr. Durbin's plan.
"We agree that it may be appropriate to revisit how to handle private student loans in bankruptcy," Ms. Holler said in a statement, "and we would be happy to participate in finding a solution that provides relief to borrowers who act in good faith but still find themselves in difficult financial situations."Time Magazine:
Conwey Casillas, Sallie Mae's director of public affairs, acknowledges that the previous bankruptcy law, which allowed students to discharge their loans after seven years of active re-payment, might be more appropriate, adding that the company would support revisiting bankruptcy laws for students who act in good faith but still struggle to pay off their debt.
Friday, September 21, 2007
I appreciate his efforts to innovate and work outside the system. If I didn't have health insurance I might think about it. It would be especially great to be able to see a doctor right away.
Thursday, September 20, 2007
The adverse consequence arising from the current situation is that simply by virtue of being enrolled in an institution of higher education, including cosmetology school, people are able to borrow $50, $100, or $200,000 in unsecured loans, completely without regard to their ability to repay. If their income after leaving their programs falls short of the amount required to repay the loans, they then have absolutely no recourse.
These people are just like people who have taken out subprime mortgages, except the bank can't take the house back. There is no house.
Student Loan Justice has many tales of people who have committed suicide or fled the country after reaching this dead end. Or they may just abandon their aspirations, and/or live in poverty.
The adverse consequence, some argue, in making private student loans dischargeable in bankruptcy is that banks would become more cautious about their risk. The loans would become more expensive, and banks may try to determine if someone will be able to pay back the loan, based on their course of study or other factors.
Should lenders in general become more cautious about the risk of loans? YES.
Should they try to determine if the loans they make will be affordable to borrowers? YES.
This is what correction in the credit market looks like. Turning off the faucet of easy credit
may be painful but is necessary for mortgage lenders, credit card marketers, and all other types of debt.
If this necessary correction results in adverse social consequences, rather than continue the ability of banks to make money risk-free off the backs of students, maybe we need to think about shrinking the role of the private sector in higher education finance, and strengthening the commitment of state and federal governments to ensure higher education access. This means increasing financial aid, providing low-cost loans at the government's rate of capital, protecting borrowers, and controlling tuition increases. Unaffordable private debt does not equal higher education aid.
Proposed legislation in Congress would allow borrowers to discharge their private student loans -- but not federally guaranteed loans -- after five years of repayment.
The bill, S 1561, was introduced in June by Sen. Richard J. Durbin, Democrat of Illinois, and is now pending before the Judiciary Committee. While the measure's future is uncertain, it may be attached to other legislation moving through Congress this year.
Supporters say the bill would provide much-needed relief to borrowers who find themselves in severe financial distress, while discouraging banks from making loans to students who are likely to default. They argue that it is unfair for the government to treat student loans more harshly than other forms of unsecured debt.
"We are more forgiving of the middle-aged guy who buys a Corvette and stops making payments than we are of the 22-year-old who goes to college and drops out," says Luke Swarthout, a higher-education advocate with the U.S. Public Interest Research Group. "If our laws are a reflection of our values, is that our value system?"
"Mr. Murray said he had been thinking about these issues for a book he is working on about higher education, titled “Simple Truths.” He has four of them: Ability varies; half of all children are below average; too many people go to college; and the future depends on how the gifted are educated. At the moment, he said, “our college system is broke.”"
Ability varies; True. So do requirements for different jobs and for human happiness. Human intelligence and skills are multifaceted. Mr. Murray, for example, evidently lacks empathy and social intelligence.
Half of all children are below average; Seems true, but not on every dimension. Everyone has a variety of strengths and weaknesses, which change over time. The rigidity and negativity of the "below average" label is contrary to the principle of educating people to live up to the best of their own individual abilities.
Too many people go to college; Especially if you mean a four-year BA program, far too many people enroll without the ability and support they need to succeed. But the percentage of population with BAs almost perfectly matches the percentage of jobs requiring them, suggesting there's no surplus of graduates.
The future depends on how the gifted are educated: I think the future of a democratic society depends on how well we prepare everyone to succeed to the best of their abilities. The funny thing about gifted people is they tend to find their way toward appropriate sources of information and mentors on their own.
At the moment, he said, “our college system is broke.”Yeah, I got to agree with that one.
Tuesday, September 18, 2007
"the MBA is more popular than ever, with twice as many of the degrees earned in 2005 than in 1991...The growing demand for MBA graduates combined with plentiful career opportunities have created an environment in which "students can afford to turn down even six-figure offers from investment banks.""
Monday, September 17, 2007
Here's my favorite bit:
The student loan "industry," as it is comically referred to in the newspapers, is an interesting case study in politics and business. To start, it is hardly an industry. There are no factories. The only things it "makes" are loans. Furthermore, it exists only because of a government program.
Yet in the four decades since the federal government started it, the student loan business has evolved into a pretty good imitation of an industry, with trade associations, lobbyists, and support from politicians, mostly Republican. This "industry" is so dependent on the good will of politicians, in fact, that the reform bill alone may be enough to queer the deal in which its biggest player, Sallie Mae, is supposed to be bought by a private-equity firm for $25 billion...
There is very little about the student loan program that has anything to do with free-market capitalism. Yet whenever the student loan system comes under criticism, lobbyists, "industry" leaders, and supportive politicians haul out the same old clichés as if they were defending Adam Smith's famous pin factory itself.
Debt is the new four-letter word. As the credit-fueled housing bubble comes ever closer to bursting, Democrats in Congress and on the stump are denouncing predatory lenders and their "Wild West" ways. The potential industry blowback extends far beyond NINJA (no income, no job, no assets) mortgages and "liar loans." A whole new debt-industrial complex -- high-interest payday loans, deceptive credit card practices, creditor-friendly bankruptcy laws, and an oversubsidized student loan business -- is undermining Americans' economic security.
Friday, September 14, 2007
"The idea is for any young person in America who graduates from high school, qualifies to go to college, and commits to work while they're there, a minimum of 10 hours a week, we pay for their tuition and books. So the notion is knock down the barriers, don't give it away, make sure that young people who want to go to college and are committed to go to college are willing to work for it."
College for Everyone-John Edwards Site
Wednesday, September 12, 2007
Is Grad School Worth The Cost?
It depends where you go, and how much you pay for it.
Update: the New York Times says enrollment in masters' degree programs has been growing twice as fast as other programs. And they are a great source of revenue--especially for the college. The Times doesn't evaluate the claim of good value, merely saying "many students believe that these multiple degrees are highly valuable in today’s competitive job market."
Tuesday, September 11, 2007
Monday, September 10, 2007
Well, in the short term, subprime borrowers of all kinds (that is, people with poor credit) are apparently being targeted with more credit card solicitations than ever. "Direct-mail solicitations to subprime borrowers were 41 percent higher in the first six months of 2007 than they were in the first half of 2006. At the same time, solicitations to the most credit-worthy consumers fell by 13 percent. And the numbers are even starker when you look at June of 2005. "
As well, credit card delinquencies are up because people are finding it harder to use their home equity to pay off debt.
Like mortgages, lots of credit card debt, car loans and student loans are also packaged into asset-backed securities that are sold to investors, which does raise the specter that as the secondary market dries up, this kind of debt will be harder to get (or just more expensive.) The SF Chronicle says:
"I'm clearly hearing that bankers are being cautious, taking a second look, making sure they understand the risk they're taking," says James Chessen, chief economist with the American Bankers Association. For the riskiest customers, "it's naturally going to cost the borrower more," he says. But by and large, "for consumers with good credit, there has been no spillover effect" from the mortgage crisis, says Greg McBride, a senior analyst with Bankrate.com.So: if you have bad credit, you will have the opportunity to get more credit , and more expensive credit. If you have good credit, you will have fewer opportunities to get credit that costs essentially the same as before. I think I know which side of the line I want to be on.
The Chronicle article also uncritically repeats threats from student lenders that with the $21 billion subsidy cut, they will just be forced to cut all discounts from loans. Because god forbid they should have to compete, actually compete, on price.
As the economy skids, pundits scoff at the excesses of Americans who take out huge mortgages for five-bedroom McMansions, finance their Lexuses with adjustable-rate home equity loans and charge flat screens on their credit cards... It's not hard to see where Americans got the idea that a normal-size home and regular clothes will never be enough. Twenty or 30 years ago, after all, TV characters had cheap clothes and tacky furniture and bad hair, and they were happy to be getting by. Shows like "Roseanne" and "Laverne & Shirley," and more recently, "Seinfeld" and "Everybody Loves Raymond," brought us regular families with regular jobs and regular problems. [Um, no. Seinfeld had none of the above, although his one bedroom NYC apartment was quite believably scruffy--remember how it was cluttered with that bike which he never, ever rode?]
Easy fix: Just don't watch TV. Or watch Lost, The Wire, and 24, shows where survival is paramount.
Friday, September 07, 2007
Today the U.S. Senate and House of Representatives passed the College Cost Reduction and Access Act by votes of 79 to 12 and 292 to 97 respectively. The bill now goes to the President who has said he will sign the legislation into law.
Statement by U.S. PIRG Higher Education Advocate Luke Swarthout:
“The College Cost Reduction and Access Act is the most meaningful higher education reform in more than 15 years. The legislation addresses the dual financial challenges of access and affordability that face American college students. The legislation provides billions of dollars a year in additional grant aid to low-income students through the Pell Grant program. It will also help students address the burden of rising student debt through lower interest rates and a new repayment system.
This legislation is an example of Congress getting policy making right. The bill trims excessive subsidies that benefit a handful of banks and directs them to millions of students and families who are working to pay for college. The bipartisan votes for this legislation, and the President’s pledge to sign it into law, are testament to the broad support for helping students and families pay for college.”
Thursday, September 06, 2007
At a press conference with students on Capitol Hill today, Rep. George Miller (D-CA), the chairman of the House Education and Labor Committee, announced that the Bush administration plans to sign the College Cost Reduction and Access Act into law if the Congress approves it as anticipated.
Today’s news is proof that elections can make a difference. Last November, Democrats promised to make college more affordable for every qualified student, and with this bill we are making good on that promise. This is not only an exciting day for students and families, but also for the direction of our country.
New York Times.
The College Cost Reduction and Access Act will help address the dual financial challenges of access and affordability facing students. The legislation will:
- Increase the maximum Pell Grant award by $490 in each of the next two school years, by $690 in the following two school years and by $1,090 in each additional year. The Pell Grant is the nation’s premier college access program, providing grants to 5 million low-income students each year. The maximum Pell Grant is currently $4,310. (This would make it $6,670 by 2010 by my count).
- Create an Income Based Repayment program that allows borrowers to repay their loans as percentage of their income. Borrowers would be expected to pay 15% of any income above 150% of the poverty line (about $15,000 for a single individual). This new program will protect borrowers with low salaries from making unmanageable payments.
- Reduce interest rates on student loans for more than 5 million low and middle-income student borrowers receiving subsidized Stafford loans. To see who would benefit from these interest rate reductions read U.S. PIRG’s report.
- Finance increased education spending by reducing subsidies to student lenders. Lenders will receive a reduced rate of return for offering federal student loans and a slightly reduced reinsurance rate from the federal government. As a result, the increased grant aid and loan benefits will have no additional cost to taxpayers.
Wednesday, September 05, 2007
From George Miller's office:
Last night the House and Senate began the process of negotiating final legislation on H.R. 2669.
House and Senate negotiators met this morning and are expected to negotiate and approve a final bill (a conference report), later this afternoon. Details of this final legislation will be released as soon as possible (I expect around 3:30 or later).
Both the House and the Senate are expected to take final votes on the legislation by the end of this week. If approved, the bill would then go to the President for his signature.
"For the purposes of this column, however, I'll put aside the important intangible benefits such as widening cultural horizons and developing critical thinking, civic participation, healthier living, and stronger relationships. In strict dollar terms, is that degree going to be worth the parchment it's printed on for Generation ?"
Also, I was on KCRW's (Los Angeles) "To The Point" show yesterday. It's a pretty interesting half hour of talk about the mortgage meltdown. Particularly the woman from the National Consumer Law Center.
Tuesday, August 28, 2007
"Congress now votes on the levels of subsidy that are given to lenders participating in the federally guaranteed student-loan program. Advocates of an auction argue that it would use market mechanisms, rather than estimates by Congress, to set profit margins in the student-loan industry. Critics, including most lenders, argue that an auction would limit student choice to the lenders that emerged victorious in the government-run auction process."
Maybe student loan companies should worry about something else: both Edwards and Obama have come out in favor of eliminating their role in the federal student loan program.
Monday, August 27, 2007
" The $20,000 bonus can be enticing, especially to those who lack a steady job, languish in debt or are worried about their future."
Don't know who that could describe...
Monday, August 20, 2007
*The difference between what Americans consume and what we produce (in income) each year is nearly equal to the entire annual output of Brazil.
*We've been this in the red before, but to build infrastructure and capacity, which we're manifestly not doing now. "The United States, for example, was “the world’s biggest debtor for a hundred years,” [Harvard economist Jeffrey] Frieden notes, “but the money was used to build the railroads and the canals and the factories and to improve the ports and to build our cities. It was used productively, and it worked. The question to ask now is not, ‘Is the country living beyond its means?’ The question is, ‘Is the money going to increase the productive capacity of the economy?’ Because if it just goes to getting everybody another iPod,” he warns, “then unless iPods make people more productive, there is going to be trouble down the road when the debt has to be serviced.”"
*Are we headed the way of Argentina? It looks more likely now than just a couple of weeks ago.
*“Part of the reason people are spending beyond their means,” says Rawi Abdelal, an associate professor of business administration at HBS, “is because they are—in a way—witnessing the end of the American dream.” Between 2000 and 2005, even as the U.S. economy grew 14 percent in real terms, and worker productivity increased a remarkable 16.6 percent, workers’ average hourly wages were stagnant. The median family income fell 2.9 percent.
... internships are largely for rich kids--and therein lies another problem. The menial summer job gave many kids their first paycheck and the feeling of independence that came with it. It was also inherently democratic. For eight hours a day, at any rate, working-class and middle-class kids were in the same boat. They all had to learn that life wasn't always entertaining. They had to wait tables for people who could be less than polite--people who sometimes reminded them of themselves. With many of them in four-year colleges (where close to 75% of their classmates come from homes at the top quarter of the income scale), without a draft and now without menial jobs, privileged kids almost never meet up with their less well-off peers.
Maybe, she suggests, your kids should be learning Spanish, not on a volunteer trip to Mexico, but by working alongside immigrants at Taco Bell. Of course she won't make her own daughter do that because she might not get into Harvard!
Thursday, August 16, 2007
Q: I’m a young adult (22) who just graduated from college. What advice do you have for young adults like me who appreciate the importance of investing young and want to learn to invest responsibly, but have little money to invest?
A: I started out myself by scraping together what little extra money I could find at the end of the week. But as my nephew, Cliff Mason, said in a controversial set of articles in TheStreet.com, many youngsters fresh out of school must first gauge whether those few extra hard-earned dollars will make you happier in the near term, [be it from] buying that new Xbox game or spending a night out on the town. If you feel you’ve made peace with that aspect of twenty-something life, I believe that young people should start putting away as much as they can afford, either in index funds or an employer-sponsored retirement plan. Until you get up to $5,000 or $10,000 in a non-retirement account, I believe that folks of any age are generally better off staying away from investing in individual stocks.
Q: I’m still in my twenties, but cognizant enough to know that Social Security is a waste of my time and money. What do you believe are the most effective ways that a twenty-something can ensure that retirement funds will be available when we enter our sixties, while we wait for the failure of the Social Security tax?
A: Start putting away as much disposable income as you can afford to, and maintain a diversified investment portfolio. Also, I believe that young folks should not be afraid to take more risks. If they pay off, you could be set for some time. And even if they fizzle out, if you’re willing to learn from your mistakes, you still have a few decades before retirement to make up for the losses.