Delta Cost Project

Delta Cost Project Logo
The Delta Cost Project should be on top of everyone’s list for information related to Higher Education economics.

On their site you’ll be able to:

  • Explore their database and create reports on higher education spending, performance, and more.
    Outstanding #HigherEd Trends & Data Updates
  • Find out how colleges in your state are spending money and performing.
  • Learn what research shows about higher education spending, tuition, subsidies, and outcomes.
  • Delve into hot topics that put rising tuition in perspective.
  • Explore data and create reports on higher education spending, performance, and more.

I find valuable their presenting the BIG PICTURE and an in-depth perspective of college funding, especially when faced with the quick, emotional blips heard in the media about rising tuition and university spending.

Here is an excellent example:

delta-cost-project

50 BILLION PROFIT Off Of Students

monopoly-manCollege Debt Crisis

“…the most profitable in the country”

I’ve written extensively about the high-cost of a 4-year college and whether high school educators are doing a DISservice to students in pushing them to a 4-year college– at any cost.

It’s NOT like it was in the old days when students could go to school and work a job to pay tuition. Tuition escalation is just too great to overcome. With the high rate of college graduate unemployment, and even higher UNDER-employment rates, an “educated” and rational person really has to wonder if the cost is worth the return and investigate other options.

Today’s USA Today article: Government projects to make $50B in student loan profit, highlights one of the problems as the United States government stands to PROFIT MORE than ExxonMobil, Apple, J.P. Morgan, or Fannie Mae.

According to the Congressional Budget Office’s latest projections, the federal government projects a record $50-billion profit on student loans this year. ExxonMobil made $44.9 billion in 2012, according to published reports, making it the most profitable company in the country. And if Congress doesn’t stop rates on some loans from doubling on July 1, that profit will rise more, up to an additional $21 billion, a recent report found. However, there are those who claim the projections don’t accurately reflect risk taken by the government and the profits are much smaller.

College Debt vs Student Loan Profits

IF a college-educated populace is a good thing for our society, nation, and humankind in general, why are the barriers so great?

The record-high profits on student loans come during a time of historically low interest rates on home mortgages and car loans. While a home buyer can get a 30-year mortgage at about 4.5% interest, the federal government is charging as much as 6.8% interest on unsubsidized student loans and is less than a month away from automatically doubling the interest rate on the loans headed to poor students unless Congress takes action.

“Because the government has almost ensured anyone who applies will get the loan they need, schools have been able to drive prices up with no concern as to where funding will come from,” Whaley said. “With prices skyrocketing, students are taking on way more debt than they can handle but have no other option to compete in the modern economy.”

Read the rest of the article here and please provide your views on college and how to battle rising costs in the comment section.

 

My other blog posts on College Debt.

 

student-loan-graphic-bigOn JULY 1st, 2013, the interest rate on new Federally subsidized Student Loans will DOUBLE  from 3.4% to 6.8%

The Federal Government currently makes 36 cents in PROFIT from every dollar they loan a student for education.

Bank On Student Loan Fairness Act

I’ve written extensively on the dangers and my concern for the over a  TRILLION dollars in College Loan Student Debt. (here, here,  here, and HERE)

The cost of higher education has grown far more rapidly than median family income, leaving students with little choice but to take out loans which, upon graduating into a labor market with limited job opportunities, they may not have the funds to repay.
Economic Policy Institute

Student Loan Debt by the Numbers

  • $1.1 TRILLION : Approximate amount of outstanding student loan debt—second only to mortgages in household debt.
  • 60% of the $1 Trillion is owed by Americans OVER the age of 30.
  • 37 Million people have outstanding student loans.
  • 1-in-5: U.S. households that have student loans.
  • $26,682: Average outstanding balance for a borrower with student debt.
  • 1-in-8: Share of borrowers with more than $50,000 in student debt.
  • 40 % : Share of American households headed by someone under 35 that have student loan debt.
  • 25 % : Share of borrowers under age 30 that spend more than 10 percent of their income on student
  • loan payments.
  • 30 % : Share of borrowers in repayment that are delinquent on a student loan.
  • 6.7 Million: Number of borrowers who are more than 90 days delinquent on a student loan.
  • 9.1% : The number of people who defaulted on their loans in 2012
  • 31 %: Percentage increase in the number of student loan borrowers between 2007 and 2012.
    Source: ConsumerFinance.gov

 Bank on Student Loan Fairness Act

In the video below, Sen. Elizabeth Warren (D-MA) introduces the Bank on Students Loan Fairness Act on the floor of the Senate. [Fact Sheet]
Excerpts-

“Some people say that we can’t afford to help our kids through school by keeping student loan interest rates low,” said Senator Warren. “But right now, as I speak, the federal government offers far lower interest rates on loans, every single day–they just don’t do it for everyone. Right now, a big bank can get a loan through the Federal Reserve discount window at a rate of about 0.75%. But this summer a student who is trying to get a loan to go to college will pay almost 7%. In other words, the federal government is going to charge students interest rates that are nine times higher than the rates for the biggest banks–the same banks that destroyed millions of jobs and nearly broke this economy. That isn’t right. And that is why I’m introducing legislation today to give students the same deal that we give to the big banks.”
“Big banks get a great deal when they borrow money from the Fed,” Senator Warren continued. “In effect, the American taxpayer is investing in those banks. We should make the same kind of investment in our young people who are trying to get an education. Lend them the money and make them to pay it back, but give our kids a break on the interest they pay. Let’s Bank on Students” Unlike the big banks, students don’t have armies of lobbyists and lawyers. They have only their voices. And they call on us to do what is right.”

 

0% Chance of Passing?

Megan McArdle (@asymmetricinfo), special correspondent for Newsweek, writes:

Of course, this isn’t really a serious proposal, in the sense that it has any chance of getting passed. Elizabeth Warren is a very smart woman who knows how the financial system works; she’s very well aware of why student loans are expensive relative to the Fed’s discount window. And I presume that she is aware that the CBO will score her bill as costing rather a lot of money.

But passing this bill probably isn’t the point. Rather, it’s a populist values statement: we like students, we don’t like banks. As such, it’s probably going to be quite effective. But only among people who don’t know much about the banking system.

And sadly, she’s probably right.

Students and education are always paraded around when it’s convenient, but while education and education funding is in trouble, banks are getting bailouts and bankers are raking in record salaries.

Already we have Student Loan Fairness Act (H.R. 1330) introduced on March 21, 2013.

The Student Loan Fairness Act would create a new “10-10” standard for student loan repayment, in which an individual would be required to make ten years of payments at 10% of their discretionary income, after which, their remaining student loan debt would be forgiven.

However, according to GovTrack.us it has a Prognosis of  “1% chance of getting past committee and 0% chance of being enacted.”

 

Is it Time to Re-Think College or Banks?

When 53% of graduates are UN-employed or UNDER-employed, and students continue to face an increasingly dim future, it’s time to re-think college. And many already are, as college enrollments fell this past fall.

As public anger over college costs continue, and legislators in some states get to work on their budgets, more colleges and universities are promising to freeze or cut tuition—in many cases, on the condition that they receive more taxpayer funding. Hechinger Report

The most pressing issue may be why college tuition is so high with increases nearly 500% in the past decade. But, one thing that can be done right now, and must be communicated prior to July, is to reduce the interest on student loans.

With federally subsidized, student loan interest rates scheduled to DOUBLE on July1st,  it’s time to get involved.
Spread the word. Contact your legislative representatives and let them know AFFORDABLE college is important to our country.

 

trillion-dollars-student-debt

12 Disturbing Facts about the over a TRILLION Dollars in Student Loan Debt. Is this the next financial crisis as tuition is up nearly 500% in the past decade?

Student Loan Debt by the Numbers

  • $1.1 TRILLION : Approximate amount of outstanding student loan debt—second only to mortgages in household debt.
  • 60% of the $1 Trillion is owed by Americans OVER the age of 30.
  • 37 Million people have outstanding student loans.
  • 1-in-5: U.S. households that have student loans.
  • $26,682: Average outstanding balance for a borrower with student debt.
  • 1-in-8: Share of borrowers with more than $50,000 in student debt.
  • 40 % : Share of American households headed by someone under 35 that have student loan debt.
  • 25 % : Share of borrowers under age 30 that spend more than 10 percent of their income on student loan payments.
  • 30 % : Share of borrowers in repayment that are delinquent on a student loan.
  • 6.7 Million: Number of borrowers who are more than 90 days delinquent on a student loan.
  • 9.1% : The number of people who defaulted on their loans in 2012
  • 31 %: Percentage increase in the number of student loan borrowers between 2007 and 2012.
    Source: ConsumerFinance.gov

 

Related Articles:

 

With over a TRILLION DOLLARS in college debt (see: New Debt Slaves) and a 498%  increase in tuition (since 1986), I was SHOCKED to see this story of Kenneth Wright from 2009. I wasn’t aware of this story when it first developed and was surprised to learn the Department of Education had its own SWAT team.

Page four of the Search Warrant  notes that authorities were looking for evidence related to Financial Aid Fraud, Conspiracy, Theft of Government Funds, False Statement to Government Agency, and Wire Fraud.

It’s important to note that NONE of these are violent crimes that requiring the breaking down of a door and a potentially lethal response.

U.S. Department of Education spokesman Justin Hamilton said the agents that served the search warrant were with the Office of the Inspector General (OIG), not the local Stockton, California S.W.A.T.

The initial report said the U.S. Department of Education “issued the search and called in the S.W.A.T for his wife’s defaulted student loans,” although that story has since been taken down and replaced with an updated version that did not contain the claim about the raid being connected to student loans. [source]

UPDATE: Interview with Wife

PJ Media’s Howard Nemerov asks:

  • Since Kenneth Wright wasn’t arrested, why the forced entry?
  • If this had to do with non-violent crimes like fraud or embezzlement, why not try a more humane first contact than door-breach and 15 armed personnel?
  • Since all the evidence is locked up because the case is ongoing, how do we know the feds are telling the truth?
  • How can the Department of Education issue warrants authorizing deadly force for non-violent crimes?
  • Doesn’t this sound like the Dupnik defense? (Keep changing the story and blame the victim by implying this is part of a larger investigation.)

ABC News10 caught-up with Michelle Wright and interviewed her (video).  She says she had not been contacted prior and “I’m 110 percent shocked that federal agents showed up at my house and in the way that they did.”

Increase in SWAT Raids Nationally

The Cato Institute published a report titled: Overkill: The Rise of Paramilitary Police Raids in America, along with a map of botched raids nationally. In their publication they report:

These increasingly frequent raids, 40,000 per year by one estimate, are needlessly subjecting nonviolent drug offenders, bystanders, and wrongly targeted civilians to the terror of having their homes invaded while they’re sleeping, usually by teams of heavily armed paramilitary units dressed not as police officers but as soldiers. These raids bring unnecessary violence and provocation to nonviolent drug offenders, many of whom were guilty of only misdemeanors. The raids terrorize innocents when police mistakenly target the wrong residence. And they have resulted in dozens of needless deaths and injuries, not only of drug offenders, but also of police officers, children, bystanders, and innocent suspects.

Let’s hope with the growing number of lawsuits and defaults on college loans, cooler heads prevail and the Department of Education can leave their guns at home so nobody gets hurt.

The Race to Zero Tuition In Higher Education has Begun By John Hamilton

If you need the degree your options are less but increasing all the time for a lower cost, but high quality education. Until recently there seemed to be a gentleman's agreement amongst the schools of not allowing a price war to break out for online …
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