Sunday, March 21, 2010

Good afternoon. You are being hosed

As if you needed further proof, the following is an example of how the United States government has inflated education costs to create generations of Debt Children.

Harvard graduate and current University of Buffalo professor Michael S. Rozeff cites that his yearly costs for Harvard in 1958 (room and board) were $2020/yr maximum. The median family income was at least $5100/year in 1958 and even higher for those families where the head of household worked full-time throughout the year. Yes, Debt Children - Harvard room and board for a full year was under 40% of the median family income per year.

Compare that with today, where Harvard room and board has breached the $50k/year level, and median income as of 2008 was about $61k. Harvard room and board for a full year is now about 82% of the median family income.

Further, in 1958 about 28% of married couple households had both husband and wife in the paid work force. Less people were working per household.

As of 2008, that figure is 61%. People are working more and getting less for it. And I haven't even figured in the comparative tax burdens for those two periods, which are higher now than they were then (Example: Federal tax burdens have more than doubled since 1965). Americans are being screwed over - plain and simple.

To save enough to pay for a decent part of that Harvard education today would take a long time - much longer than it would have in 1958. But the government offers the student loan quick fix coupled with higher ed propaganda to herd young Americans off to college where they will party for 4-6 years before spending the next 20-30 paying interest to the banks.

Who benefits from this? The Education Industrial Complex, Sallie Mae, the banks and the DC politicians who take credit for "educating" the nation's youth. They don't care how the problem was caused and they will only offer more of the same, despite the consequences.

What caused this problem? The flood of federal student loans has caused this problem. Other government policies that feed the education industry, based on the ridiculous belief that "more degrees = higher income for everyone" have also caused this problem. The Federal Reserve has caused this problem.

Those policies were short-sighted and have plunged post-1970s generations in a seemingly endless cycle of debt. Remember this when Congress talks about higher ed and "lowering costs" of education by increasing funding for student loans. Remember this whenever the Federal Reserve is mentioned. Remember this when you hear the name "Sallie Mae."

Other sources: Table F-7

Fellow law school grads will like this one ;) :



    Great breakdown. Look at this breakdown using increases in the U. of Michigan Law's tuition history vs. increases in U.S. median household income.

  2. If we give everyone an MBA, we will all be CEO of GE!
    Everyone will be partner at Cravath if we just open more law schools!


    Just make sure the student loans keep flowing. At this point, most grad school degrees are so diluted they aren't worth $50, much less 100k+ in nondischargable student loan debt.

    Aunt Sallie doesn't take blog posts and your philosophical insights - she wants cold hard cash.

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  4. Good stuff. Nando, that post on your blog was eye-opening. And it shows how ridiculous and short-sighted these Utopian "education for everybody" ideas are. It's no different from the "houses for everybody" idiocy that preceded the current crises, other than that the education version took longer to sh*t the bed.

    Expat summed it up well. How much could you sell a law degree for? A law license?

    And Aunt Sallie wants cash alright. She wants you to pay her principal and interest and then pay her again to bail her out when that P&I isn't enough to pay her servants and turn a profit.