Americans Waste Billions on College Education

As of this writing, student loan debt is rapidly closing in on a record $1.4 trillion.  But, more importantly, the average college graduate's debt has risen 350% in just the last 22 years while overall inflation has only risen 164% over the same period:

Yet, over the same period, real college graduate incomes have been relatively flat:

Combine this with the fact that, since 1993, the percentage of graduates with debt has risen from 45% to 70%. It doesn't take a math degree to figure out why 27.3% of student loans are in delinquency following the normal 6-month grace period after graduation.  The simple fact, is that high and rapidly-rising student debt, high delinquency rates, and flat wages, mean that our society isn't cranking out enough high-paying college-level jobs to support all that debt.  That fact couldn't be any clearer than shown on these two graphs from the Federal Reserve Bank of New York, as published by the Washington Post:

Essentially, 38% of college graduates are working below their achieved education levels.  And, only 27.3% of those with degrees are employed in jobs that match their original chosen fields.   Other studies confirm these results. For example, in 2014, Career Builder found that, for the class of 2014, 51% of graduates wound up working in jobs that required "no" degree.  Another study by the Center for College Affordability and Productivity found that 37% of college grads were working in jobs that only required a high school diploma.

With statistic like these, it's no wonder they can't repay their loans. A fact that hurts their credit ratings right out of the box.

So, the solution by Democrats such as Hillary Clinton, Bernie Sanders, and Barack Obama is to make college education debt free.  In other words, let the taxpayers pay the debt off.  But, that ignores the basic problem of graduating too many college students for the number of jobs available to them.  For that reason, we, as a country should be de-emphasizing the importance of a college degree.  Instead, the focus should shift to trade schools as the means to making a good salary.  In fact, all of these jobs pay more than what a median college job is paying:

1. Air traffic controller – Annual income: $108,000
2. Nuclear Operator – $75,600
3. Registered Nurse – $64,700
4. Construction Manager $95,956
5. Radiation Therapist $74,900
6. Storage and distribution manager – Annual income: $66,600
7. Transportation manager – Annual income: $77,762
8. Police and detectives supervisor – Annual income: $64,430
9. Non-retail sales manager – Annual income: $59,300
10. Forest fire fighting and prevention supervisor – Annual income: $58,920
11. Municipal fire fighting and prevention supervisor – Annual income: $58,902
12. Real estate broker – Annual income: $58,720
13. Elevator installers and repairer – Annual income: $65,893
14. Sales representative – Annual income: $62,000
15. Dental hygienist – Annual income: $66,221
16. Radiation therapist – Annual income: $72,491
17. Nuclear medicine technologist – Annual income: $71,212
18. Child support, missing persons and unemployment insurance fraud investigator – Annual income: $53,900
19. Criminal investigators and special agents – Annual income: $53,990

The simple fact is that our society is wrongly leading people to believe that any college degree will get you a good paying job.  When you have so few people working in the college major that they spent so much money to get, it is a complete financial waste, and the taxpayers should not be burdened with that waste.  As long as colleges and universities are able to turn students away because of the sheer volume of applicants, tuitions and student debt will rise unabated.  However, if we can get to a point where colleges can't fill the number of slots available, tuition rates won't increase nearly as quickly; or may even fall as they attempt to attract more students.  That's simple college level economics.


References:

Student Loan Debt Clock: http://www.finaid.org/loans/studentloandebtclock.phtml

Wall Street Journal: Head of the Class Chart: http://blogs.wsj.com/economics/2015/05/08/congratulations-class-of-2015-youre-the-most-indebted-ever-for-now/

Only 27 percent of college grads have a job related to their major: https://www.washingtonpost.com/news/wonk/wp/2013/05/20/only-27-percent-of-college-grads-have-a-job-related-to-their-major/

Annual Wage by Education Chart:  http://www.slate.com/blogs/moneybox/2014/09/08/college_graduate_vs_high_school_graduate_salaries.html

51 Percent of Employed 2014 College Grads Are in Jobs That Don’t Require a Degree, Finds CareerBuilder Survey: http://www.careerbuilder.com/share/aboutus/pressreleasesdetail.aspx?sd=10%2F9%2F2014&id=pr846&ed=10%2F9%2F2099

College graduates underutilized in current job market: http://www.schoolguides.com/College_News/college_graduates_underutilized_in_current_job_market_379061.html

Student Loan Delinquency: A Big Problem Getting Worse?: https://research.stlouisfed.org/publications/economic-synopses/2015/04/10/student-loan-delinquency-a-big-problem-getting-worse/

19 Good Jobs That Don’t Require a 4-Year College Degree: http://wealthpilgrim.com/19-great-jobs-without-a-college-degree-and-how-to-get-them-fast/

The Second Stimulus - Another Waste of Money

The facts about the first Obama Stimulus Package are in. In one report, it now appears that our Government spent close to 1/2 million dollars for each new job that was created (Click to See Full Story: Stimulus Math: $533,000 Per Job Saved or Created?). However, according to the President's group of Economic Advisers, the cost to create a single job was much, much lower at only $92,136. Of course, it took almost $150,000 in taxes being collected to spend that $92,136 in order to create a single job.

What's worse, each of these new jobs that were created were for time-limited projects and, therefore, can only be considered, at best, to be temporary work. Once the park is built, the job is over and the employee goes back on unemployment. Once the bridge is fixed, the same is true. Once the pothole is filled, that job, too, is over. And so on. Also, every one of these jobs, because of Federal work rules, is a union job.

The problem with all this is that the average worker in America is not a union worker and not a single non-union job was directly created by the Obama Stimulus Package. Union workers only represent about 8% of the overall workforce in this country. So, now, the Democrats, in order to help the non-union workers, have conjured up a better idea.

If there is going to be a second stimulus, the Democrats want to create a $2000 annual tax credit over the next two years for any employer that hires a new employee. This is just stupid. Employers are not going to spend $16,000 a year or more, plus the cost of benefits, to hire a brand new, but totally unneeded, employee because they will get a couple of thousand dollars back from the U.S. government by doing so. Apparently, the Democrats think they can create a new version of Cash for Clunkers; but, this time, for hiring people.

The simple fact is that, in business, employees are "overhead" and each unnecessary employee seriously impacts the bottom line of that business. No business is ever going to hire an employee if they don't need one. So, in essence, the only employers that will take advantage of this "tax rebate" are those employers who were going to hire an additional employee anyway.

The absurdity in this kind of tax rebate scheme is the assumption that the economy is simply driven by employers hiring employees. If ever there was putting the cart before the proverbial horse, this is it. Business activity drives hiring; not the other way around. So, the $2000 a year per person that the Democrats want to spend on hiring would be better targeted at stimulating business activity to create jobs. That's why tax credits to the consumer would be much more powerful than this planned boondoggle of a tax rebate. Once again, the debt will just pile up and, then --- months later -- we will find out that this plan, too, was another big waste of money. We should rename this Congress: "The Gang That Couldn't Shoot Straight!" They all appear to be as stupid as the characters in that dumb 1971 movie of the same name.

AIG Bonuses: Another Diversion

The $168 million of taxpayer money that is being used on bonuses for the AIG execs may be worth some outrage but, in contrast to all the other billions and trillions of possibly wasted taxpayer money, it is just a "gnat" in the grand scheme of things.

Right now, there is widespread outrage, from both the right and the left, over the AIG bonus thing. Where was that same outrage when billions of wasted dollars were uncovered in the first TARP bailout? Where was the outrage over nearly $10 Billion (not millions of dollars) that were being spent for pork projects in the recent $410 billion spending bill? And, why not the same outrage over Obama's $3.7 trillion dollar budget proposal or his $800 billion not-so -stimulus, Stimulus Program? Neither of which is hardly targeted to recover this economy!

With AIG, we are literally crying over a couple of grains of rice that have fallen off a wheelbarrow full of rice that is destined to be dumped over a cliff. We have completely lost our focus. For the Obama Administration, the AIG bonuses debacle is just what they wanted. It focuses America's anger on AIG and takes the heat off of them for all of their own wasteful spending. Believe me, this is a political diversion that is both intentional and welcomed.

This whole thing with the AIG bonuses reminds me of an "Everybody Loves Raymond" episode where Raymond's brother, Robert, has fallen on some hard times and is only eating bologna at every meal in order to get by. Raymond and his wife, Debra, decide to give him $1000 as a loan. However, because Robert doesn't want to be indebted, he refuses the money. Then, Ray and Debra, still feeling sorry for Robert, just decide to give him the "thousand", outright, as a gift. As the story proceeds, Robert decides to use the money for a vacation in Las Vegas instead of using that money to improve his lifestyle. As a result, Raymond and Debra get angry and want the "gift" back. However, Robert says "no" to returning the money and reminds them that it was given as a "gift" and not as a loan and without any strings attached. The story ends with Robert still going to Vegas but now, with Raymond as a travel partner. Sound familiar?

The problem with all these monies that are being spent by our Federal Government, specifically by Obama and by our Democratic Congress, is that we are sending money, out the door, with absolutely no strings attached and with little thought behind it. Therefore, you wind up with all the corporate Roberts of our world going to Las Vegas on the taxpayer's dime. Then, after the fact, we start asking for the money back or we start trying to attach the strings on how that money will be spent. This is just ridiculous and, surprisingly, it takes the plot of a decade-old situation comedy to remind us of that fact.

Right now, the Obama Administration is just starting to write the rules on how the stimulus program monies will be spent and we and the recipient states are just now starting to find out about rules. However, some of that stimulus money has actually gone out the door without those rules in place. There's an age-old adage that says "haste makes waste." Believe me, the AIG bonus waste will look like child's play as compared to all the other waste that we will ultimately see when the stimulus money has all been spent and after Obama's trillion dollar budget money goes flying out the door. Waste is just commonplace in Government programs. For many years, the Medicaid/Medicare program waste has been running at a rate of about 14% per year and no effective means of abating it have ever been instituted. What makes us think that the Stimulus Program or Obama's fat budget will be any different?

This article from the Washington Post "Anger Over Firm Depletes Obama's Political Capital" seems to say it all about the outrage. But, in addition, it seems to show that a lot of that anger may now be aimed at Obama and the Democrats.

Frustration, Anger, Threats, Childishness, Obtuseness, and No Change

The title of this blog entry says it all about the President's frustration and the way he's been acting over the last few days with regard to his not-hardly stimulus package. Yes, he and his party won. But, that's no reason to believe that he got an "e-ticket" to do anything he wants. We are still a republic. That means that those constituents who lost the last election still have some representation. It also means that we don't redo this whole country into another experiment in socialism.

Obama has enough votes in both Houses of Congress to get this package through without any Republican support. So, go ahead Democrats and do it on your own. But they won't. That's because "trouble" always "loves company." And, this bill is trouble. Even moderate Democrats are fighting it. Spending alone isn't going to get this country out of the ditch it's in.

It might help if Obama stopped all to the "scare tactics" and all the downer-talk that he has been using since he got in office. It might help if he would get off the everything-is-wrong-with-America campaign and start showing some leadership and become more positive about the direction of this country and what he thinks we should be doing. But scaring people into buying into his program is just the same-old Democratic tactic of the past. For example, just think back to how many election cycles the Democrats used the argument that the Republicans are going to kill Social Security in an effort to garner votes.

Don't forget this. You can spend a million dollars and buy acres of land in the Sahara desert. But, that's just throwing money away for the sake of spending it. Ten years from now, that desert land will have gained no value. It will have provided no jobs. Spending the same amount of money in Manhattan to rehab some buildings will put people to work. It will add value to the buildings and attract buyers. That will grow the economy. It isn't how much money is being spent that is so important. It's how its spent. This Obama-spending plan is like buying a lot if land in the desert at a time when the spending needs to be targeted.

Further, once the bridges are built or the school walls are painted, and the internet cables are laid, the stimulus is all over. While he claims these are shovel-ready projects, they do nothing for the majority of the jobs that are being lost in this economy; the retail and service industry jobs like those at Starbucks, Circuit City, etc. It will do nothing to stop the eviction of people from their homes because the bulk of those shovel-ready jobs aren't for the people who are now out of work or will lose their jobs in the future as the recession deepens.

In my opinion, this is just a massive social agenda being hoisted on this country under the mask of saving the economy. The people know it. That's why only 34 percent of Americans, in the most recent polls, approve of it. Democrats who are up for election next year are scared to death of it. And, Republicans have finally got their groove back in fighting it.