As IF Times

link YouTube – Kelli Space Interview Part 1 – Peter Schiff Radio 11/30/10.

Not really necessary to listen to the entire interview.  The salient point is made from the first few minutes of the conversation.

In another area of human activity rumored to be risky, namely buying stocks or mutual funds, the buyer is practically smothered with disclaimers about the risk of making such an investment.  The boilerplate lines are:

1. Investments may be risky and loss of some or all of invested capital may result

2. Past results are not an indicator of future performance.

Similar to all pharmaceuticals we take these days, the lawyers have draped themselves all over stock investments to warn people away.  Nevertheless, somehow people still take drugs and buy stocks.  Maybe it’s time the lawyers jumped onto the College education bandwagon. 

While I can’t comment on the experiences provided by a  4 year program in sociology, we can probably say that spending close to $200,000 to attain a non professional undergraduate degree without some avenue to employment should not have happened without a prospectus.  No doubt this poor gal is just one of tens of thousands of wide eyed students going to college each year in the hopes of bettering themselves for a competitive job market.  If the parents are able to write the cheque, bully for them.  In the case of this gal, like many other students who are forced to borrow money for the experience, there should be a disclaimer in bold letters at the outset of the school career which states:

“Warning.  In no possible way can the cost of this degree be paid off in your lifetime, we strongly suggest taking courses in waiting tables and selling time shares.  Your degree may have no practical use to society”

Under the noble  idea that no one should be denied the right to higher education because of financial disadvantage, governments have implicitly guaranteed all student loans via their funding arm Sallie Mae.  Similar to the home mortgage fiasco, if lenders are not at risk since the government provides a backstop, why not lend the money to anyone who asked?  Moving up the food chain, if students were willing to pay the tuition, why wouldn’t colleges just ratchet up their fees?  Which brings us to where we are today wherein some private colleges charge 25, 35, or even 55 thousand dollars a year for undergraduate programmes. 

To be sure, colleges can charge what they want, but the original goal of allowing financially disadvantaged students to attend school has achieved, shockingly, the exact opposite effect.  Indirectly, the government is supporting the high cost bases demanded by all colleges.  University educators no longer have to publish or perish, they can make a pretty good wage just teaching.  In this way, the public supports the private school system.  Now, even pedestrian college degrees will cost at least $100,000 even at some state colleges. 

If families cannot afford to underwrite this amount, the aspiring student, like the gal in the interview, takes on a crushing debt load to obtain a degree with little or no guarantee of employment.  Even if a liberal arts student were able to find a job with their degree, the burden of paying off such a crushing debt will guarantee them a miserable life.  It’s only a matter of time before colleges have to issue a prospectus upon taking in students.  Otherwise, students would be better off paying lawyers to sue for misrepresentation.

Update: Aug 18, 2011 http://management.fortune.cnn.com/2011/08/18/have-b-schools-become-debtors-prisons/

link BC Law student asks for money back – BostonHerald.com.

You knew this was going to happen.  In April of this year, an AsIF article forecast just such an event. http://asiftimes.com/2010/04/12/refund-on-kids/  Given the protracted decline in economic activity, many college grads encounter a pretty tough job market upon graduation.  This guy at least is putting his almost completed law training to good use. What if this is the thin edge of an enormous wedge?  If colleges are charging upwards of $25,000 to $40,000 per year for tuition to receive a ‘valuable’ education, you can bet people will be annoyed when the degree counts for little in the real world. 

As for why college tuitions cost that much is another topic, but let’s just say that guarantees of student loans by the quasi government funding agency known as Sallie Mae enabled many kids to receive loans for school.  The unintended consequence of this was that schools, knowing full well that tuitions were government guaranteed, simply raised their tuition levels.  In no small way, this contributed to college costs of over $100,000 for a simple 4 year degree in some obtuse diploma program.  People shouldn’t be shocked that a degree in art history or African studies really doesn’t sell well in the real world’s job market.  Well it looks like collectively, these unemployed college grads will be participating soon in that most American of economic activity…the class action lawsuit.