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Eduction; Mathematically Incorrect;

By       Message Mike Folkerth     Permalink
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Good Morning Middle America, your King of Simple News is on the air.

 

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EDUCTION costs are making the news. More correctly, getting the money to pay for higher education is making news as the availability of capital for student loans seems to be drying up. Investors seem to have lost their interest in buying the student loan backed paper.

 

You see, the federal government doesn’t have any actual money to make student loans, so federal guaranteed lenders such as student loan giant “Sallie Mae” passel up a bunch of loans and put the paper up for auction. To have an auction, three people need to show up, the seller and at least two buyers. Of late, sellers are plentiful and buyers are as scarce as new Starbucks stores.

 

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I’m thinking that the investors have two concerns. One, they know that to get paid back, the student will need not only to get a job, but a better than average job, and two, if the student defaults, the government will have to pay the money back. Either way, Las Vegas seems a better risk.

 

With education costs literally skyrocketing, while at the same time even white collar jobs are leaving the U.S. in record numbers, what will the younger generation do with their expensive learning’s?

 

While this article is aimed at higher education, it should not be overlooked that K through 12 costs are accelerating at the same pace. Well beyond that of inflation and income increases. Property taxes are increasing in nearly every state in an effort to support an educational system that has, if nothing else, proven that money spent has little to do with outcome.

 

Education is a protected subject that is about as touchy to approach as a pet porcupine. That being said, let’s get a couple of things out of the way before we start. Contrary to popular belief, public schools, grants, scholarships, student loans, government paid programs, parent paid programs, deferments, forgiveness programs, and state and federal subsidized institutions of higher learning, all cost real money. In the instance of many students; someone else’s money.

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From a pure mathematical standpoint (a subject apparently not offered in college) and considering the current job market and the worsening economic situation, many college educations make no financial sense. Having someone else pay for another’s college education in order to make the education viable from a return on investment standpoint, does not justifiably dismiss the flawed economics.

 

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Mike Folkerth is the author of "The Biggest Lie Ever Believed" and is not your run-of-the-mill author of finance and economics. The former real estate broker, developer, private real estate fund manager, auctioneer, Alaskan bush pilot, (more...)
 

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