<p>"As steadily as ivy creeps up the walls of its well-groomed campuses, the education industrial complex has cultivated the image of college as a sure-fire path to a life of social and economic privilege.</p>
<p>"Joel Kellum says he's living proof that the claim is a lie. A 40-year-old Los Angeles resident, Kellum did everything he was supposed to do to get ahead in life. He worked hard as a high schooler, got into the University of Virginia and graduated with a bachelor's degree in history.</p>
<p>"Accepted into the California Western School of Law, a private San Diego institution, Kellum couldn't swing the $36,000 in annual tuition with financial aid and part-time work. So he did what friends and professors said was the smart move and took out $60,000 in student loans."</p>
<p>
[quote]
The two disillusioned attorneys were victims...
[/quote]
No, they weren't 'victims'. They might not like the deal they made in retrospect but they're not victims. If they each have such a poor opinion on their own decision making capabilities I sure wouldn't want either of them as my lawyer.</p>
<p>Besides, since they're earning in excess of $200K per year it shouldn't take them that long to pay down the loan as long as they had their priorities straight and didn't rush out to buy a big expensive house and expensive cars. They should be able to pay at least $60-75K per year on the loans.</p>
<p>The 12% rate is way high but they might have been able to refinance it at a lower rate once they were both gainfully employed with high incomes and they could pay the principal down rather than making the minimum payment weighted towards the interest.</p>
<p>Agree with UC dad. Should have been able to make far bigger payments on 200K+ salary. If you're not living a 200K livestyle. IN 1990, H had about 60K debt with double digit interest rates, and we made the payments with less than a third of the income they had. With two kids, too. Certainly it was not something to divorce over, not unless we had expectations of a certain lifestyle we felt we were guaranteed--which we didn't.</p>
<p>
[quote]
They eventually married and each landed a six-figure job. Yet even with Kellum moonlighting, they had to scrounge to come up with $145,000 in loan payments.
[/quote]
Please... There are people who have enough money to pay their bills, and there are people who don't. And it often does not matter how much money they actually have.</p>
<p>No doubt, money pressures are profound in the early years of a marriage. In our case all the debt was mine and in the early years 75% of the income was my spouses. His profound generosity came through, and we committed to a lifestyle well below our income, but well within our budget. Some of my loans were well over 12%..</p>
<p>I think the issue of 'buying into the hoax' is that, unfortunately, there absolutely has to be a delay in gratification in these situations and quite honestly, some people are simply unwilling to do this. They feel 'entitled' once the money starts to roll in and forget that they have a long life ahead. The interest rate is not the issue, the attitude is.</p>
<p>I guess I highlighted the wrong part of the article. :)</p>
<p>I think the most important part was the following. I guess others see this differently.</p>
<p>"College graduates will earn $1 million more than those with only a high school diploma, brags Mercy College radio ads running in the New York area. The $1 million shibboleth is a favorite of college barkers.</p>
<p>. . . . </p>
<p>"But anybody who has gotten a passing grade in statistics knows what's wrong with this line of argument. A correlation between B.A.s and incomes is not proof of cause and effect. It may reflect nothing more than the fact that the economy rewards smart people and smart people are likely to go to college. To cite the extreme and obvious example: Bill Gates is rich because he knows how to run a business, not because he matriculated at Harvard. Finishing his degree wouldn't have increased his income."</p>
<p>Not that different from telling the prospective buyers of a new home that it will go up $100,000 in a year and that they can refi and pull it out to buy new cars.</p>
<p>There are many (many) things that people thought were a good investment that didn't turn out that way. Start with a home and end with Bernie Madoff. In between you have investments in FNMA, Bear Sterns, Lehman, Citi.. BofA.. Wachovia, Ford, GM...</p>
<p>
[quote]
The two disillusioned attorneys were victims of an unfolding education hoax on the middle class that's just as insidious, and nearly as sweeping, as the housing debacle.
[/quote]
In their case, I fail to see the hoax... They were earning >200,000 entirely as a result of the degrees they got for their money. And they could not pay a $142,000 loan? Seems like a lack of basic money managing to me. Most families live on $60K or less. So they should have been able to pay all their debt off in a year (or two years at most).</p>
<p>Figure $40K in Federal Income Taxes, $13,000 in Social Security and Medicaid taxes and $18,000 for California income taxes. So there's $71K off the top. That still leaves them with $129,000 per year. That's plenty of money to deal with their loans if they lived frugally. It could take a few years but it is certainly doable.</p>
<p>I wonder how much they both borrowed to do the divorce.</p>
<p>I disagree with the premise of this thread. A college degree is a necessary, although not sufficient, condition for financial success for most of us in our society. Within our extraordinary higher education system, a worthy public college or university, or a private college or university with generous need-based financial aid, is available to each of our highly-achieving fellow young citizens. At the graduate school level, the decision-making becomes more sublime. As a lawyer, I often advise college students that alternative career plans are preferable to choosing to become a lawyer when entry to the profession requires entry to a law school with which employers are not familiar. (I note the couple landed a [single?] six-figure job.) I have no issue with California Western but, outside of southern California, many are, I'm sure, unaware of its merits.</p>
<p>Agree with nngmm--where's the hoax? Now if this couple had taken on $150K of debt and couldn't find legal jobs with their Cal Western degree--that would be a hoax. But this couple had 6 figure jobs...</p>
<p>I wouldn't borrow $36K a year to go to Cal Western. </p>
<p>Sounds like he brought $60K debt to the marriage and his wife brought $130K. We had a thread about marrying someone with a lot of school debt...</p>
<p>By the way, I've been involved in the hiring of lawyers since 1982, and I know nothing about California Western. Again, at the graduate school level, don't buy a product if you don't know its utility. At the college level, enjoy the generous philosophy and policy-matrix underlying our system. Unlike sub-prime mortgages, you don't have to repay the educational discount you receive in the public system, and you don't have to repay the financial aid or merit grants you receive in the private system.</p>
<p>Unneccesary debt, that was our family's bottom line. "Dream" school may have been a top 20 univ or LAC. But he researched merit aid options and was offered major discounts to several highly respectec colleges including Case, RPI and our excellent state flagship.</p>
<p>He is now graduated with zero debt and a great job, far above entry level grade and salary. Yep, he was what many would consider demeaningly as a white collar tech track. But he loves his job and his carefree lifestyle. And the choices he can make in the near term, because of his debt free post grad situation, are greatly enhanced.</p>
<p>The two lawyers were just an example. The hoax is this....</p>
<p>"Misguided easy-money policies that are encouraging the masses to go into debt; a self-serving establishment trading in half-truths that exaggerate the value of its product; plus a Wall Street money machine dabbling in outright fraud as it foists unaffordable debt on the most vulnerable marks."</p>
<p>originaloog, my point exactly. Our educational system in this country, though obviously flawed, is very impressive. And where would he have ended up without going to college? Probably not the same place.</p>
<p>dstark, I truly do not believe that the "value" of the undergraduate education "product" in our society is "exaggerated." Again, check out your excellent undergraduate public institutions (which, even without financial aid, do not materially exceed the cost of solo living in many parts of this great country). Or the amazing loan-free aid available from many private (and public!) institutions in our society. I am not alluding to loans, but rather financial or merit aid, without any obligation to repay.</p>
<p>For me the issue is 'Value." I think the practical consideration is where do we send our students to college. I think way too often, parents pay large tuition bills, without value over the lower cost public schools. I could argue that HYPS and some others are worth the price, but is Trinity in San Antonio ( a very good school) a better value at almost $20,000 per semester v. UTexas Austin at $4400 (I am from Texas, and these are tuition only)... food for thought</p>
<p>We had a lot of discussions on this last summer and fall.</p>
<p>A country losing its manufacturing base needed something to continue the appearance of prosperity and blowing bubbles was that approach. It generated huge fees on the loans and profits from interest payments. We've done stock, housing, stock and edudebt. As Japan has shown there aren't a lot of options for asset bubbles. Perhaps we should try decorative garden plants - I heard that worked out several hundred years ago.</p>
<p>I read Maudlin's piece yesterday and he talked about real unemployment numbers and they're pretty scary. I also listened to about two hours of Pupluva and one of his guests was talking about a situation of anarchy in the US in 2009 as people lose jobs and have nowhere to go. I work in tech and the layoffs and spending and budget cuts are feeding on each other.</p>
<p>We have some massive stimulus on the way but the comments on Pupluva is that central bankers and politicians always throw gasoline on a fire to try to put it out. We really need a huge bubble in something to stop the deflation and that's going to be very, very hard.</p>
<p>Those with huge loans in a deflationary income environment don't do too well.</p>