Category archives: Uncategorized

Tack on Another $70,000 in Expenses for the College Years — Give or Take

by Chris Gacek

May 22, 2012

Nancy Anderson, a certified financial planner with Financial Finesse, is a Forbes contributor who is interested in the college debt crisis. In a Forbes piece from March, Ms. Anderson references an article from Business Insider which argues that the college sticker estimate $60,000 per year for top-tier private colleges/universities appreciably underestimates true costs. They estimate that extras could total $70,000 over four years depending on the students circumstances.

Some of this total appears to be for expenditures one might have even if one were not at college. However, it is clear that costs can mount up from unexpected directions. One I found interesting was $2,000 per year for fraternity/sorority dues. The list definitely has some extras, but the point is legit.

Anderson writes that todays students face a lifetime of tougher economic times mostly related to the disappearance of pensions and inevitable Social Security reductions.

It is also becoming clear that the drag from college loan debt and underwater mortgages will be considerable for many years. All sorts of purchases will be crowded out: automobiles, furniture, travel, etc.

The New York Times Makes a Splash on College Loan Debt

by Chris Gacek

May 15, 2012

Andrew Martin and Andrew Lehren have written a major story on college loan debt for the New York Times (5/12/2012). As the authors note: …. growing student hangs over the economy like a dark cloud for a generation of college graduates and indebted dropouts. One interesting aspect of the article is its discussion of the less than honest campaigns that non-profit colleges use to entice students to attend them. Another devastating insight: Many students and parents dont have a firm understanding of the cost of attending college, or the amount of debt they will incur. And most colleges arent much help. Oh, and one mother who co-signed loans for her daughter is taking out life insurance on her child. Thats when you know its getting serious.

Martin has a follow-up article that is first-rate. In it he speaks with E. Gordon Gee, president of Ohio State, who says that public colleges and universities need to devise a new business model to pay for the costs of education, beyond sticking students with higher tuition and greater debt” (in quotes - NYT summary of Gee’s thinking).


More from Glenn Reynolds on the Higher Education Bubble

by Chris Gacek

May 11, 2012

This past weekend Professor Glenn Reynolds, University of Tennessee Law School, published another newspaper article on the college debt bubble. Reynolds is one of the best writers on the college debt bubble as he calls it. He believes that the market for exorbitantly priced higher education is getting soft as market forces and public awareness take hold.

He also takes note of 21st Century alternatives to the old brick and mortar education model. He mentions a number of high-tech ventures that are taking off: Harvard/MIT edX, Minerva University, Stanford professor/Google bigwig Sebastian Thruns Udacity.

New thinking abounds: Glenn references Andrew Coulson (Cato Institute) who proposes that it is becoming more practical for students to educate themselves via online methods. See George Leefs brief discussion of Coulsons idea here.


May 10, 1940: Churchill becomes Warlord

by Robert Morrison

May 10, 2012

No American had a voice in the decisions made in London this day in 1940. It was an entirely British matter. But President Roosevelt had said this generation of Americans has a rendezvous with destiny. For millions of us, our destiny would be entwined with the decisions made across an ocean on May 10, 1940.

My own parents would likely never have met had the U.S. not been drawn into World War II. Thats true for tens of millions of us. And drawing America into that war was the Number One objective of the man who became Prime Minister this day in 1940. No one ever studied the whims of his mistress more carefully than I studied Franklin Roosevelt, Churchill would say. Thats an odd way of putting it for this man who was famously faithful to his beloved and brilliant wife, Clementine. She was taller than he was, too. Thats usually a sign of a secure ego.

Carlo DEstes book, Warlord, is a biography of Winston Churchill at war. He was at war, too, it seems from the day he graduated from Sandhurst, Englands military academy. He saw action on the Afghan frontier with the British army in India. He fought in the last great cavalry charge at Omdurman in the Sudan. Then, he was fighting against militant Muslims. He killed many of them. And some of them tried to kill him. Nothing is as exhilarating as to be shot at without result, he said of his experience there. Young Winston was just a lowly lieutenant in Lord Kitcheners army fighting the Dervishes. Those fanatical warriors followed a Muslim holy man they called the Mahdithe Expected One. When the Mahdi died and Lord Kitchener allowed his grave to be desecrated, young Winston protested loudly. He was courageous, not only against Britains enemies, but courageous on the home front, as well. When he was captured during the Boer War in South Africa in 1899, everyone on both sides testified to his fearlessness. Churchill as POW could not be restrained, however. He hated being confined in any way. DEste relates the controversy over Churchills escape from the Boers. Did he abandon his fellow POWs? Or did he jump at the chance to escape while they held back? Its not entirely clear.

What is clear is that he took advantage of a trip to the latrine to squeeze his then-slender frame through a hole in the wall. As they would say of him, Winston stepped out of the loo and into history.

And what a step! Once, at a large London dinner party, he annoyed his bosss daughter by dominating table conversation. Violet Bonham Carters father was Prime Minister H.H. Asquith at the time. Mr. Churchill, dont you know we are supposed to be humble? Winston wasnt having any of that. I know we are all worms, he said (he knew his Psalms), but I do believe I am a glowworm.

Glow he did. Several years ago, I told the interns at Family Research Council that Winston Churchills life may have been the best documented human life ever lived. Trip Dyer, one of the brightest our Witherspoon Fellows, challenged me.

Trip said he thought the current Prince Williams life may be more documented. I took his point. We do live in a Twitter Age.

And one thing you learn from DEstes Warlord book is that Churchill did not mind being contradicted. But youd better be able to maintain your point with facts and arguments. I still maintain that Churchills life is the best documented human life ever lived because we know so much of what Churchill thought about everything because he wrote everything down. Its hard to imagine that he had any thought that he did not write. And thats not the case with Prince William.

My own wife is taller than I am. (That, I promise, is the end of Churchill comparisons.) She could not believe I needed yet another Churchill book. After dropping me off at the Naval Academy recently, she called me on her cell phone. A police officer at Annapolis City Dock had stopped her. You know that thumping sound I told you about, she said. The policeman showed me that your Warlord book was rattling around on the roof of our SUV. Everything youve ever heard about the absent-minded history prof is true, Im sorry to say.

But I have not forgotten this: President Obama tossed the bust of Winston Churchill out of the White House into the snow. He spurns the advice and counsel of the great British war leader. Too bad.

Theres a lot to learn from Churchill. A key lesson has to do with Jerusalem. Mr. Obamas cringing spokespeople cannot decide whether Jerusalem is the capital of Israel or not. They have no trouble telling you that Berlin is the capital of Germany. But somehow, the Obama administration is confused about Israels capital city. Churchill had the answer to that one, too: Let the Jews have Jerusalem. It is they who made it famous.

A Better Estimate of the Unemployment Rate — 11%

by Chris Gacek

May 7, 2012

Last Friday the Labor Department released economic figures that were very disappointing. A couple of months ago the U.S. economy appeared to have had some positive momentum. Any such momentum is now gone. Here is the Investors Business Dailys assessment of some of the data:

Last month, 342,000 people disappeared from the labor force. Had that not happened, the unemployment rate would have been 8.3%, not 8.1%.

Worse, the labor force participation rate has been on a downward slide throughout Obama’s presidency, as millions of workers have given up their fruitless job searches (see chart). That also masks the size of the unemployment problem.

Had the participation rate stayed where it was in June 2009 the month the recession officially ended the unemployment rate would be more like 11% today.

And when you add in all those who can’t get full-time work because of the lousy job market, the jobless rate reaches Depression-era levels of 14.5% unchanged, by the way, from the month before.

Imagine what it must be like in Spain where the unemployment rate is 24%. Spain gives our socialists something to shoot for.

College Debt and Senior Citizens

by Chris Gacek

April 3, 2012

Ylan Q. Mui, a financial journalist for the Washington Times, has written a fine article on college debt that brings surprising information to the debate. It turns out that some senior citizens have not escaped the burdens of this type of debt:

New research from the Federal Reserve Bank of New York shows that Americans 60 and older still owe about $36 billion in student loans, providing a rare window into the dynamics of student debt. More than 10 percent of those loans are delinquent. As a result, consumer advocates say, it is not uncommon for Social Security checks to be garnished or for debt collectors to harass borrowers in their 80s over student loans that are decades old.

Some of the elderly incurred loan themselves when they returned to school for a career change or more training. Others were hurt after they co-signed college loans for family members, and the family member was unable to make the loan payments. (In one case described on a CNBC documentary, the child-student died in an auto accident and the co-signing parents had to assume responsibility for massive loans. This leads to two conclusions: 1) do not co-sign loans for family members; and, 2) if you do, take out life and disability policies to cover contingencies.)

College Debt and the Housing Market

by Chris Gacek

April 2, 2012

The Washington Times contained an insightful editorial today arguing that the fundamentals of the housing market are bleak despite a more favorable report issue last week by the federal sponsored housing agency, Freddie Mac. Of significant interest to us is the papers linkage of college debt to long-term trouble for housing:

There is another, deeper problem with the housing market: ballooning student debt. Young people are graduating from college (or not - graduation rates for four-year colleges are shockingly low) with non-dischargeable debt that is the size of a mortgage. The grand total of student loan debt has reached about $1 trillion. It is pretty hard for young families to buy a house while loaded down with such massive obligation, even if they are lucky enough to be gainfully employed. Locking out the buyers at the entry level of the market makes recovery of the entire housing market that much harder.

The less obvious point here is that anyone who depends economically on the housing industry for wages or business profits should favor aggressive higher education reform that reduces tuition costs and debt levels.



The First RU-486 Abortion Death in Australia

by Chris Gacek

March 22, 2012

Sad news has arrived from Australia of the first woman to die there after using the mifepristone-misoprostol abortion regimen. According to a March 19, 2012 news report the patient died of sepsis associated with group A streptococcus. The woman, a patient of Marie Stopes, died in 2010. It is amazing that it took at least a year-and-a-quarter for the Australian public to learn of the death and then to have virtually no information provided by their version of the FDA or other authorities about the facts of the case. Sepsis has been linked to a number of the RU-486 deaths in the United States.