Should I Finance College?

ASK BART: Should I Finance College?

Student Loans are America's Biggest Racket

- By The Notorious CFP®

Summary

No, you should not. Because it's a scam. And even stupid people are starting to figure out that (most) college is also very, very stupid.

The first hint is when they stopped using test scores for eligibility for being racist, when the tests were originally created to prevent racism. The second hint was everything else that has happened in the last 20 years in higher education.

When asked by clients and friends about how to finance a college degree, I express my conviction is that no one today should be attending a full four-year university unless pursuing a degree that benefits society, like STEM (Science, Technology, Engineering and Mathematics.) This is especially true if you are not receiving a full scholarship, and doubly-so if you are planning to finance it.

I do make slight exceptions for specialized fields like law and medicine, because our country is not getting any smarter nor healthier from here on out and we need someone to get ~~over~~paid for all that dysfunction. Same reason we need more dentists. It might as well be extracted from the stupid and distributed to smart people with degrees on the wall framed in mahogany (vs. the opposite direction like the government's wealth distribution strategy i.e. taxes...) Yeah, strap in, it's gonna be another one of those blog posts. I'm coming out swinging because the student debt bubble is the most immoral crime in America. Yet some people are still participating in this madness.

So my job is unfinished.

In addition, with law school to fix stupid and medical school to prescribe pills and treatment to fix stupid, as least...

Both primarily rely on graduate-level knowledge that can be entered into after traversing multiple paths that are both easier and cheaper than attending a four-year undergraduate college. (You probably know by now that most colleges no longer even require nor consider entrance tests like the GMAT or LSAT, because IQ is somehow deemed racist or unfair in some other absurd alternative reality.) Granted, there aren't six SEC home football games each fall at an exceptional school like Texas State Technical College ($10,738 average price, $6,800 average financial aid), but honestly for a University of Texas alum like myself that sounds like a blessing in disguise. Less games means less embarrassing losses means less drinking. Means less lawyers and doctors (in theory.)
There's too many lawyers anyways, and certainly too many law school (just ask any attorney.) The average salary for a lawyer today is about $100K depending on whom you ask, which broken down by hour for an 80-hour week is not great, and if you work for a company or in family law, you're likely to end up hating yourself in the end. So we need more coming out each year to reverse that trend.
Let's be honest, if you're reading this blog you're probably not smart enough for to be a doctor anyways. Or maybe you're too smart. Don't take my word for it, ask a doctor off-the-record yourself...

Those are not exactly ringing endorsements from some very smart people about a very fulfilling and lucrative profession.

So perhaps four years of "pre-med" undergrad education should be evaluated like an investment, in which - even with massively inflated grading standards, foreign TAs teaching every 100 students and dumbed down curriculum, a full 40% of college students never even graduate and less than half graduate on time (the average is six years). I recognize how important it is to tell friends and family that your child is at [whatever school you're willing to (over) pay full-price and feel lucky]. But in my estimation, it's not worth fleeting social validation and "the college experience" to destroy your child's financial life, I promise. Most parents would be far better off thinking rationally, sending them to a local community or junior college, live at home while they "find themselves" and then transfer into a state school for two years. For the vast majority of students, that's the best path. Remember, the people that have inflicted so much hard to this country over the past three years attended the most expensive colleges in the world, mostly Ivy League. And I would close shop before I'd hire any of them.

Another data point on the ROI on higher education is that I spoke with your deceased great-grandparents last night on the Ouija Board and they confirmed that borrowing large sums of money to go to college is absurd. At first they didn't even understand the question. They claim the only reason the cost of education has risen exponentially is because of a.) the government wants it that way and does not care about your personal consequences (unless you can find me someone in the dept of education who argues otherwise), and b.) people older than you borrowing money to go to college is how we got into this mess in the first place. So I don't know, maybe you should go in the opposite direction of the unwashed braindead masses, since - as I've proven personally and many times with data - doing the opposite of everyone else is statistically the #1 key to success in America today.

I know those are provocative, bold and controversial statements in a culture of large children who's primary impetus is to be able to do whatever they want when they want it, regardless of the impact on others, the country and those that come after them. I recognize that it's offensive to hear "no" these days, especially for those born after 1980. I'm old enough to remember when the universe told Earth "no" through the COVID virus. It was literally the first time most people had heard "no" in 40 years, and the primary reason so many people have lost their mind since then, they still haven't gotten over it. But facts don't care about our feelings. If you disagree, then let's meet up, compare the evidence of scam vs. no scam and I'll update this post and issue an apology to all the millionaire undergraduates in America today.

That might also be a great chance to compare pandemic shutdown vs. no shutdown, and how much we've both lost in our investment accounts this year, which is 100% the result of the government shutdown (forced shutdown = supply chain = stimulus = inflation = interest rates). I'm looking at my six-digit losses, what percentage of people I know who are happy about the path of the country (none), and who we've chosen as leaders since then. And we're probably only about halfway through the consequences, including the imminent layoffs.) So for me, it's going to be a tough sell on whether it was all worth it.

For anyone that disagrees but would rather not meet with me, I encourage them to survey their five closest friends that are college graduates without graduate degrees to inquire if - notwithstanding the benefits to getting that single first interview at a big company out of college (no one cares after that) and the opinions of some HR folks - whether their college major has positively impacted their wisdom and productivity today. And spitball any other paths in hindsight that might have led to their current job and life today easier or more affordably. I'd genuinely like to know.

Damn, it feels good to be an engineer (and a gangsta' ain't so bad, either.)

The Scam of the Century

So that's the short answer (... only in Bart World!)

The longer answer requires looking back a few years. The market drop of 2020 wasn't a true recession nor a correction in the literal nor figurative sense. It was primarily a health crisis that governments around the world introduced in their biolabs and then exacerbated into an economic crisis (for right or wrong.) By essentially turning the economy off for more than a year to attempt to control the outbreak of their virus (while still getting paid, of course) our leaders compounded their folly by generating both a labor (lockdowns) and a debt problem (money printing), a strategy successfully lifted straight out of the playbook of many past Presidential administrations, most notably President Obama's controlled transition of national mortgage debt into higher education in 2008...

You may have thought it was just a coincidence (if you thought about it at all) that American universities suddenly began facilitating truly obscene and immoral levels of debt at the exact same moment in history that mortgage lending was being greatly curtailed (see below) in the aftermath of the government-manufactured housing (financing) crisis of 2008-2010. Here's how it worked...

You've likely noticed in the past few months that the most expensive new SUVs in town are being driven by our poorest residents, and Porsches are now being driven by the least productive. It's not your imagination, the government loves when citizens finance depreciating liabilities.

What's so significant about this time period?

In 2008-09, the incoming Obama administration, along with his large majorities in both houses of Congress, were desperate for new debt-slaves to replace the former housing debt slaves that were now insolvent, renters and/or short-sellers. George Bush, the Iraq invasion and the almost cataclysmic collapse of the banking sector did him few favors and left national finances in a precarious state (to say the least). Without a doubt, the origins of the student loan epidemic predated the Great Financial Crisis and President Obama's first term by many years (once again, starting around the time a majority of Baby Boomer's were entering their fifties and their children were entering college at the turn of the century), but previously the generational graft was on a much smaller scale. If you feel that's a little charged, just ask any Boomer what they paid for college in the 60-70s and how much they financed.

Out of desperation (I hope), federal leadership realized the need to massively leverage the fractional reserve fiat currency machine to generate enormous sums of debt from:

Poor, generally younger, less sophisticated, uneducated and unqualified home- ~~owners~~ financers approved for comical levels of debt that they could not possibly pay back and assured that housing was a right (and not a privilege) as well as their ticket to financial success, equality and the American Dream to... wait for it...
Poor, generally younger, less sophisticated, uneducated and unqualified high-school students approved for comical levels of debt that they could not possibly pay back and assured that four years of college was a right (and not a privilege) as well as their ticket to financial success, equality and the American Dream. Neither was true then, nor is it true now. I know this because I have logic, reason and evidence to prove it (not that that matters anymore.) As I've argued many times, giving money to people who didn't earn it first is admittedly an intoxicating idea for both the slave and the lender- on par with MMT. Who doesn't want something for free? It provides something for nothing to the recipient and solidifies votes and a job for the provider. But do you recognize a pattern? And can you guess where the new loans came from?

That's right, Uncle Sugar. (If you said "thin air," then you were close!)

We now know who's already been selected to be left holding the bag, and will eventually bail out these "students" vis debt forgiveness from low income Americans to highly-educated middle class Americans. An absolute scandal in any reality but ours.

As before, it's you the tax payer that will "forgive" this debt. This kind of scheme crosses party lines and repeats throughout a generation of Presidents. But it's also safe to say that the Obama administration and his Democrat majorities in both houses of Congress and the Supreme Court provided one of the best opportunities to "fundamentally change" the United States (per his 2008 campaign promise) by capturing another sector of the economy as a reliable voting block- both students and professors. While the country can roughly (and perhaps crudely) be divided between those who preferred the America of the past (Reagan's "shining city upon a hill" and Trump's MAGA crowd) and those who wish to dismantle and remake it (President Obama's "Hope and Change" and Biden's "Build Back Better" supporters.) But one of the fatal flaws of President Obama's administration was that it never considered the possibility that they'd ever lose control of either of the three branches ever again, and would easily be able to write off student loan debt in successive administrations, once it reached unsustainable levels and was unable to be serviced by those who originally accepted it, own iPhones and NetFlix subscriptions and need "government help" to fix their problem. That government created. History suggests that may have been a major cause for concern that inspired the Clinton Foundation syndicate form fighting the results of the 2016 election so vigorously.

“Somehow, we have to figure out how to boost the price of gasoline to the levels in Europe [$9 - $10/gallon.]" - Steven Chu, President Obama energy secretary, September 2008

By funneling taxpayer money through young liberal arts student vassals for an average of six years (an age range that the Greatest Generation would have already secured a marriage, house, kids and a tour flying bombers overseas) and into a reliable voting base of professors and their administrative support in higher education, the executive and legislative are highly likely to eventually forgive all student debt for the same purpose: to allow the historic debt created during past administrations (with the help of the complicit GOP and both parties of Congress) that then flooded into the economy, to slowly drip back out and be destroyed through "debt forgiveness."

Sorry, TSTC students... you're gonna have to drive 90 minutes south to watch the University of Texas Longhorns lose to a school with 10% of their athletic budget, and funded by fees of Liberal Arts students. May I suggest the better funded, NIL semi-pro team 90 minutes east.