A bigger problem..

| Wednesday, August 11, 2010
Occasionally, I'll write a post that I truly wished everyone would read. This is one of those posts for me. But first, let me clarify that this is by no mean a generic advice to you my friend. All I’m doing here is jotting down my point of views. I am and will always be encouraging you or anyone for that matter to continue enriching themselves with knowledge as much as possible; be it through school/system education or self education. Now, I am not old enough to say “back in my day” but I do remember having my head in books for countless hours during my secondary (high) school and college years. At the same time, I have to admit that I was really blessed for I did not have to work or get a student loan to pay for my education.

Yes, this post is about student loans. A big problem in the financial industry that the big wicks are trying so very hard to hide. Thus, when I stumbled upon a little factoid today, I couldn't’t believe it! By factoid I refer to our current educational system, which I believe is the root cause of this financial mess we have entered in the name of student loan. See graph below:
The above graph from frontline suggests that the for-profit colleges cost three times more than the public and non-profit colleges. Yes, we all know that it is a no brainier for any for-profit company to be non profitable! duh!! So, I am not going to take my fury on these legit for-profit colleges. But, the system which allows it to happen. Student lives and taxpayer/investor cash are all at stake. What was once a cost-benefit decision is now a foregone conclusion: You must get a college degree. Like all bubbles, the college bubble has been pumped to excess by societal and market failures. Among these: the societal failure that for many, a public high school education is often inadequate or irrelevant; and market failures created by distortions in what passes for the market place for a college education - e.g., tax-payer funding that encourage unbridled growth in supply and unchecked appetite for it. (And in an environment where super-loose monetary policy already encourages mallinvestments in education, fiscal distortions are the last thing you need.) But how many of us are actually aware of this? Is it time to be paying close attention to our failing system?

Although the for profit colleges enroll only ten percent of all post-secondary students, for-profit schools receive almost a quarter of federal financial aid! yes! FEDERAL FINANCIAL AID!! Go figure! And, FYI - the the Department of Education figures for 2009 show that 44 percent of the students who defaulted within three years of graduation were from for-profit schools, leading to serious questions about one of the key pillars of the for-profit degree college movement: that their degrees help students boost their earning power. Isn't it time we expose this failing industry, and why it may be the biggest scam foisted upon Americans since the ARM swindles that have practically crippled our economy...permanently.

On the contrary, I do agree that there are some benifts in a for-profit college; read the previous post. But at the same time, as much as I believe that a college education is a good investment, it is not priceless! So go get your college education but be bright while choosing it; here are some alternatives to think about: work while you attend school to help pay expenses; go to a junior college for the first two years; go to a public university instead of a high-cost private institution; seek out an employer than offers tuition assistance and last but not the least save money in advance to pay for college.


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