Saturday, August 24, 2013

Want to graduate with a 4.0?

Now is a good time to go back to college - you can get a 4.0.  Why?  because Obama's new plan to help colleges (who don't actually need any help)  is to tie federal aid to performance - what's the measure of performance - number of graduates, how do you graduate more students, grade inflation.  C is the new F.   A is the new C.

How cool and ultimately useful that will be.   The department of labor says, only about 20% of jobs need a college degree, yet were pumping out about 30%.  Why?   well it's good for the colleges, it's great for the teachers.   Is it good for the students?  with an average debt of $26K and lots of debt in excess of $100K  and almost no empolyment opportunity for recent grads- yeah great idea.  Do you really want to start your job as a janitor with $30,000 of debt, when you could spend half that, see the world and then end up in the same place with half the debt?

But he has a fix for that too.   He wants to cap the payment to 10% of your disposable income, and if you don't get it paid off in 20 years we'll just let it go.  So you can rack up a dept of 50K, have a disposable annual income of $1000 and pay be only $100 a year.  So let's see if we assume a 0 interest load, you'll pay back $2000 of the $50,000  - Don't you wish they'd do that with your car?  Or you house?  Wondering who's going to eat the difference?   

If you get a federal job you can stop paying after 10 years. Obviously working for the government is good and working for industry is bad. The obvious message is - BIG GOVERNMENT.    

The flaw they never talk about is what happens when the costs of federal employees exceeds the income tax of the non-government employees -  Government employees pay income tax too you say?  OK so we discount the budget line item for salaries by 17%  Think that'll solve the problem?    You do?  did you forget all the other stuff the government spends money on that isn't salary? Where did that money come from?

Compiled from: WSJABC, NYT, and a few others.
I'd start with the WSJ, more facts less fluff.

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