2018/07/13

We Hate Our Kids

Average Student Loans Per Consumer

Last night I happened to tune into financial guru Dave Ramsey's show just as Dave was launching into a rant on the looming student loan crisis. He posts clips from his radio show on YouTube, and I managed to find a clip that contains part of his longer polemic.

From the transcript:

…[W]e've got a 1.4 trillion dollar now student loan crisis…See it's scary to me how the paradox is...that we're fools about education. We're idiots when it comes to education...what it amounts to...is that so many people have been completely overwhelmed with their student loan debt that now there's this whole movement out there that says...college is ridiculous. You shouldn't go to college. And that's an overreaction. That's just as dumb as "Go anywhere you want because it's all gonna work out okay." Both of those are dumb.

Here's the whole clip.


I agree with Dave in general, although his conclusion should come with a couple of major caveats.
  1. Only go to college if you know exactly what you want to do for a living, you need a degree to get the job, and you know a position will be available when you graduate.
  2. Find a school that hasn't been SJW converged--no mean feat.
He's right on the money about the cataclysmic damage wreaked on younger generations by the mostly Boomer college cargo cult. In the live show, he spared a few choice words for the "It doesn't matter what you major in," canard. He rightly pointed out that such lies have destroyed countless young lives and rhetorically asked, if we know the banks are only loaning future underwater basket weavers fifty grand because Congress guarantees the loans, why don't we end federal student loan programs?

Dave advocates applying common sense to financial problems. If known effects of federally guaranteed student loans include inflating tuition costs out of all proportion to any kind of consumer price index and turning young people into lifelong debt slaves, common sense dictates that the reason those in charge do nothing to solve the problem is because they hate their own children.

Financial advisers like Dave Ramsey are primarily concerned with individual outcomes. An even more disturbing picture emerges when we examine the effects of the student loan crisis at the macro level.
That last article in The Hill also warns that the coming collapse of the student loan bubble could rival the economic meltdown we were warned of during the 2008 mortgage crisis. Luckily, or so the conventional wisdom holds, the government stepped in and bailed out the banks. Armageddon averted.

To recap: 

Too many bad mortgages threaten confidence in the credit market=government swiftly mobilizes to shield bankers and themselves from the consequences of their poor decisions.

Three generations of Americans are gaslighted into incurring unserviceable debt=crickets.

Or worse. All too often you'll run into a Tough but Fair™ free marketeer whose insistence that "those entitled Millennials learn that actions have consequences" betrays a thinly veiled contempt for the young and the poor.

Often overlooked are the millions of student loan debtors enrolled in income-based repayment programs. A major selling point of these plans is that they claim to offer debt forgiveness. Make regular payments without missing a month for 20-25 years, the IBR brochures say, and the balance of your loan will be forgiven.

The devil's in the details. Read the fine print, and you'll find that the "forgiven" amount is taxed as income by the IRS. Remember that 40% of student debt slaves don't expect they'll be able to pay off their loans. Let's say a student debtor who can only afford the monthly minimum makes regular payments like clockwork for twenty years. During that time, he covers the interest, but that's about it, leaving him with a $100,000 balance. The $100k is "forgiven" and is reported to the IRS as income for that year. Our ex-debt slave is hit with a $30,000 tax bill. There is no way he can pay it. The IRS throws him in jail for non-payment of income taxes, and he goes from debt slave to debtor's prison.

You'd think that explaining the real consequences of the student debt crisis would make the Boomer capitalists rethink their "spare the rod, spoil the child" take. You'd be wrong. I've had a free market worshiper tell me, straight-faced, that he'd rather see the IRS imprison student debtors and put them to useful work compensating the taxpayers than support student debt relief. Interesting how fast support for the free market turns into support for government-run labor camps.

A couple of details that escape debt gulag supporters: a) How exactly is the government supposed to find work lucrative enough to pay inmates' debts when the prisoners couldn't find such jobs in the free market? b) The taxpayers will be hosed even if nothing is done because the expected $560 billion in defaulted loans is federally guaranteed.

Yet by some twisted logic, these champions of capitalism would rather bail out lenders (again) and sentence debtors to federal work camps than simply bail out the debtors. Because prison builds character. Or something.

Or could it be that BoomerCons are so narcissistically youth-obsessed that they'll jump at the chance to lock up anyone who reminds them of how old they are?

There's only one internally consistent solution. We bailed out the banks. Now we must bail out the baristas.



Nethereal - Brian Niemeier

27 comments:

  1. 1. Most people shouldn't go to college. Either they aren't smart enough, or the job waiting for them pays a paltry 10.50/hr. It takes 4+ years to produce a new X. It takes 6 months for GenX/GenY/older Milles to learn those skills. So in 4+ years the job market is saturated.*

    or

    2. There are no jobs for Americans (especially white male Americans) because the boomers in charge would rather hire Indians for 3.50/hr.

    * The exception to this are places that ONLY hire recent college grads at the expense of those with experience. So everyone ends up screwed.

    As much as I'd hate to bail out student loan debt, I agree with you: we bailed out loser banks, why not the college kids. The dollar will collapse before we're done paying everyone off.

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    1. Don't get me wrong. I don't relish the thought of another government bailout, either. But it's either that or blood in the streets.

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    2. Blood in the streets is most likely coming, but this is NOT the hill to die on.

      Trump bought us a few more years to avoid it. Hoping and praying there is no blood in the streets.

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    3. I hate the idea of a bailout too, but I'd rather demand a pound of flesh out of the banks than individual people who have been horribly misinformed. My wife and I have $400 in student debt, and that is all we are going to have, but it was close. My first term in college was at a very expensive, very liberal Lasallian school in California. If I had stayed, I would have had a couple of hundred thousand in debt, and I never could have afforded to start a family.

      I say revoke the federal guarantee, the anti-bankruptcy protections, and just let the banks profiting off of an evil, usurious practice to go into bankruptcy themselves. Refuse to enforce usurious contracts, as Zippy Catholic puts it.

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  2. College is like Pinocchio's Pleasure Island, only with a ruinously expensive entrance fee.

    TBQH the way the economy seems to be set to go, VoTECH seems better equipped to produce workers ready to MAGA than grad school. I don't share this guy's faith in the system either.

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  3. “It doesn’t matter what you major in, it just matters that you graduate. Everything will fall into place from there.” - Worst freakin advice - and only advice - I received from the Boomers, especially my parents, teachers and guidance councilors. What were my choices based on my academics, skills, and test scores? Military/FedGov offered to pay my way through grad school in either nuclear science or robotics/computer science; academic full rides for math, physics, or premed; and full scholarship for music.

    Take a I guess as to what degree I was pushed towards? Also guess how I feel about such an awful mistake? Granted, full ride softened the blow, but for an 18 year old with his head up his arse, letting me make the choice was mean and yet said meanness came out of supposed compassion by my Boomer “mentors”.

    Now I’m back in school almost 20 years later studying for a degree that pays well and can finance the debt (there are zero scholarships and grants for those who already have a bachelors), and has enough demand that there will be a job for me when I graduate. But what has been lost in opportunity, money, time, experience, status, and growth in that 20 year time span? But hey, it will all work out in the end, right? Right?! And Boomers wonder why some of us say the world will be better off once every last one of them is dead.

    I watched the short clip and Dave seems be under the impression that what he learned in college could not have been learned elsewhere. Western education is nothing more than reading a textbook or four and regurgitating the information back. Real learning almost always occurs during apprenticeships/clinicals/internships/mentorships or on the job training. School just gives you the language and a few basics so you aren’t completely lost on day one.

    Dave could have learned his accounting knowledge from a mentor, an apprenticeship/internship and independent study. We give educators too much credit because we have been trained to give them respect, not because they’ve actually earned it. Good students are almost always good students in any setting. Teachers rarely make a difference beyond making the class more of a chore or less of a chore; enjoyable or miserable; easy or difficult in testing.

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    1. "Worst freakin advice - and only advice - I received from the Boomers, especially my parents, teachers and guidance councilors."

      This is why the "Let the deadbeats learn the hard way what defaulting does to your credit score" contingent don't have a leg to stand on. The technical term for being misinformed by absolutely every authority who should have taught you better is _invincible ignorance_. One who is invincibly ignorant of the facts pertaining to a particular act bears no culpability for his actions.

      "I watched the short clip and Dave seems be under the impression that what he learned in college could not have been learned elsewhere."

      I like Dave, despite his own Boomerisms. As if you can't learn to read a spreadsheet online for free.

      Still, the part they didn't post on YouTube, where he lays into parents, educators, and elected officials who led kids into a fool's paradise, was pretty based.

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  4. As to the free market libertardians, this mistake was created and fascilitated by the government, so the government should incur a financial penalty for the mistake and forgive or cover the debt and change the policies currently making this mess.

    It’s been disappointing to me how no leaders have pointed out how the rapid rise in education and housing, coupled with wage stagnation and dollar depreciation is massively contributing to the decline in family formation and birth rates. The Right wants to blame it all on the sexual revolution, but much of this has been from a screwed up education system, a government that favors the banksters and corps over the people, immigration, feminism, and free trade.

    The silence from the right and the left shows that both parties in the USA are liberals, because they’ll never speak against their pet policies.

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  5. Anyone find it ironic that supposed free market libertarians wanna lock people up in debt prison work camps or is it just me?

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    1. As a former libertarian, no, I don't. Many see it as the student's responsibility to understand the contract they were getting into. The contract must be honored, and it is on the student to get themselves out of the mess they put themselves in.

      That was one of my big issues with the Libertarians. They have blinders on when it comes to abstract concepts of economics and finance and human interaction. They have a bad habit of ignoring sin and assume most engage in good faith rather than the complete opposite.

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    2. For my money, the most retarded argument I heard was: "If these slackers can't find jobs at a high enough wage to pay back their debts, let the Feds find them work in prison."

      Once again proving that Libertarians and Commies are two sides of the same debased coin.

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    3. Or, proof that most people who claim to be Libertarians are actually not even close, rather, they are mildly sociopathic lefties.

      Let's recap the Libertarian schools of thought where work-camps don't violate base principles:
      Oh, there aren't any. It violates self-ownership, it violates the NAP, it violates proportionality (financial crimes only having financial punishments) and it completely ignores that fact that these are kids who have been repeatedly told that they must get a degree or they won't get a job.... in short, they are victims of fraud.

      As is anyone who believes those people when they call themselves Libertarians.

      Libertarianism, properly thought out, has major issues, but the fact that so many adherents can't even grasp the basic and laudible aspects and fall into gross moral error before they even get to the really tricky problems is a disgrace.

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    4. "...in short, they are victims of fraud."

      A much more succinct and accessible way of explaining "invincible ignorance". Thanks.

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  6. Banksters and Globalists Politicians built a rigged system and suckered in a large percentage of Gen Y in the US.

    May the God Emperor free them to vote their conscience and take up their rightful place in society.

    Crimson Tidal Wave!

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    1. Some serious commenters on the Right are predicting that the GE will make a student debt jubilee a plank of his 2020 reelection platform.

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    2. Brian
      A jubilee excellent policy In fact I was going to advocate that we reinstate the old testament jubilee where every 50 years debts are erased.

      xavier

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    3. From your mouth to God's ears, Mr Niemeier. This debt slavery has to end.

      The God-Emperor protects.

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    4. A jubilee suits me just fine. Much better that the banks eat the losses than another bailout involving giving tons of money to banks that hate us.

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    5. That would be great. As it stands, the banks will suffer zero repercussions either way since the loans are federally guaranteed. How about Congress passes a law reneging on those guarantees when Trump declares his jubilee? The banks should have some skin in the game.

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  7. Brian,

    It took me 11 years to pay mine off (I lived in Canada)and delayed my settling down by 10 years. The problem is had was the boomerror panicked during the 91 Gulf War and stopped hiring. So I stupidly went back to school instead of teaching ESL abroad.

    What bugs me the most is the total abdication of companies to provide apprentice/mentorship to kids. They foist their trying on the public schools. Some of them do a great job but it's not enough. And d9n'the get me started on professional licences to jobs.

    xavier

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    1. The future of education will be the return of the apprenticeship program - or something like it - in many fields coupled with an update of the older education format of the triv-quadrivium

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