New Foreclosure Fraud Scam

Foreclosure Fraud Scam PSA


Don't fall prey to scam artists to promise to "save" your home from foreclosure. The answer they promise will be worse than the disease. If you are having a problem, call your lender or talk to a bankruptcy attorney.

Hat tip: Tanta at Calculated Risk

I'm Not A Central Banker, But I Can Play One In This Game

Monetary Policy Simulation Game

Hat Tip: Sudden Debt

Take the Scam Quiz

McAfee SiteAdvisor Phishing Quiz

Can you spot the scam?

Are College Tuition Costs That Bad?

Teen Accused of Robbing Bank for Tuition
From Associated Press
July 20, 2007 1:47 PM EDT

CINCINNATI - A college student accused of robbing a bank had been worried for months about his mounting tuition bills, his mother said.

"He just really was struggling, working two jobs here, you know, temp jobs, two jobs and trying to get the money," said Franki Butler, whose son Andrew was charged this week with robbery. Andrew Butler, 19, and another man were arrested Tuesday after a Valley Central Savings Bank in suburban Reading was robbed, police said. Police recovered an undisclosed amount of cash.

A judge set bond Wednesday at $50,000 for Andrew Butler and Christopher Avery, 21, also of Cincinnati. Both are charged with aggravated robbery.

Avery, a student at the University of Cincinnati, posted bond and was released. Butler, a University of Toledo student, remained in custody Friday at the Hamilton County jail.

The sad part about this is that the college student will probably get a minimum sentence of 25 years if convicted. The real travesty of this is that -- while this is an aberration, if true -- no one should have to imagine such a choice in an attempt to get an education.

Intergenerational Poverty

The Organization for Economic Cooperation and Development recently conducted a study on the causes of intergenerational poverty. The study found that socioeconomic mobility (i.e. the ability to move up from the lower classes to the middle or even upper classes) is lower in the United States than many other Western Democratic countries including Denmark, Austria, Norway, Finland, Canada, Sweden, Germany, Spain and France.

I mentioned a similar report in a blog entry about this before.

Here are a couple of the conclusions from the report:

The level of wealth and education of parents are two crucial determinants of children’s future life-chances. For example, the evidence suggests that parental characteristics are reflected in educational outcomes, and that greater public intervention in the accumulation of human capital might reduce intergenerational transmission of advantage and disadvantage. Moreover, parents who are capital constrained – facing tighter liquidity constrains – cannot invest as much as rich parents in education although these constraints seem less important than other family background characteristics. The effects of such liquidity constraints are also likely to vary considerably accordingly to the ability of the child: they are likely to be tighter for low-income parents of high-ability children.

Growing up in low-income households seems to affect heavily children's future life-chances. In fact, parental poverty is related to lower levels of good health, nutrition and housing, all of which affect child development and future incomes. Furthermore, the home and social environment is where beliefs, attitudes and values are shaped (for example welfare dependency of parents is correlated with future
welfare receipt of children, even after adjusting for income, in part reflecting the role-model that parents provide). High parental income is correlated with a better quality of education because good schools are generally in good neighbourhoods, where in addition, networks useful in later life may be more present, and crime is less prevalent. It is further correlated with transmission of verbal ability, and non-cognitive skills, including self-discipline, which improve life chances (Heckman and Carneiro, 2003). Reducing poverty, and especially childhood poverty, might therefore contribute to reduce intergenerational inequality.

The language is highly technical; but basically it is saying that where a child starts out in life based on his parent's income and educational status has a great correlation to where they will end up. If governments would tax the wealthy more, it would go a long way to alleviating the problem of poor parents who don't have the spending power to get their children the best possible education.

The second paragraph says that children who live in better, lower-crime neighborhoods not only benefit from a better quality education, but also benefit from the social and business contacts who will be able to give them better job and entrepreneurial opportunities. Furthermore, going to those better schools improves language skills, interpersonal relationship skills (among them dispute resolution skills) and the principles of delayed gratification and other self-control skills that will help them avoid trouble. Therefore reducing poverty can lead to greater opportunities because it would alleviate the problems associated with stress brought on by fear of crime, which impedes learning.

There. Clear as mud?

I remember many years ago attending a short seminar put on by a local non-profit group that rated a child's chances of success based on some 30+ factors called "assets." The more assets a child had, the greater their chance of success in life. I can't remember if poverty was one of the factors. However, this study indicates that until we alleviate the problems associated with inequality in society, it needs to be a factor in evaluating a child's opportunity.

How To Spot A Scam, Part 3

Educating yourself against Investment Scams

A group by the name Invest Ed™ has started a web site dedicated to teaching potential investors how to avoid investment fraud here in Oklahoma. The group is supported and made possible by the Oklahoma Securities Commission and produced by the University of Oklahoma Outreach, College of Continuing Education.

You can find the only tutorial at www.InvestEdOK.org.

The Purpose of Education

Check out today's great post entitled Educated Eichmanns at Audience of 1.

China vs. India: Can America Compete?

Nicholas Kristof of the New York Times has a video report on his theory of who will be the world leader economically in 2100. In it, he details how people in rural India are lagging behind: no electricity, schoolteachers who leave their students uneducated and sex slavery that does not seem to be abating for poor and unfortunate girls. Kristof says that China suffers the same problems in rural areas, but that the Chinese educate all their children in math and science very well. Therefore, Kristof says, he is betting on China to be the world leader in 2100.

Kristof says that he is teaching his children Chinese because of his theory.

A lot of writers have theorized that the United States will not be a world power 100 years from now. I have my doubts about that theory. We are an educated country, and the democratization of information through this medium called the internet is also to our advantage. Almost all of the world's patents are created here in the U.S. We still have a good education system and we have a political system that allows us to adapt to a changing social, economic and political landscape. Don't write the U.S. off just yet.

I have said for many years that it is important that every American child learn English and a second language fluently. English is our national language by custom and tradition. But in a world made smaller by instant communication ("flattened" as Thomas Friedman has argued), I think it is important that every American child learn how to communicate with others around the world.

There are multiple reasons for this:

1) Think how much better we could fight terrorism around the world if we had enough Americans who could speak directly to people (and translate for intelligence services) in those languages where terrorists come from (at this time in history that would mainly be Arabic). It wouldn't solve all of the problems, to be sure, because some of the problems are based on religious and cultural differences as well. But being able to speak the language would help break down some of the barriers that we currently have.

2) Learning a language helps break down misunderstandings created by mistakes in translation. There are subtleties in languages that cannot be explained by simple transliterations of words or phrases. Language differences are a natural barrier to trust, friendship and commerce.

3) Speaking a second language would expand our marketability and market share around the world -- increasing our political and economic power. Speaking to someone in their own native language lessens tensions that can be created by being an outsider.

Right now the U.S. does not have the ability to teach every child a second language fluently. But, if we were to set our minds to it and put our money where our minds should be, we could bring people here from all over the world to teach us their language. Doing so would help us fight terrorism, improve international relations and increase our marketability around the world.

I have to admit that I don't speak a second language fluently, but I wish I did. Nicholas Kristof is doing the right thing teaching his children a second language. Now we need to implement that same idea for every American child so that they will be able to compete in the new markets of the future.

A New Deal For Generation Y

In an article at the American Prospect Online, Offering the Young a New Deal, writer Paul Starr proposes that we create a New Deal for America's Young to provide education funding, health care benefits and job training. From his article:

Many of the forces affecting the economy today come to bear hardest on young people starting out in life: the soaring cost of a college education; the difficulty in finding jobs that provide a middle-class income; lack of health insurance coverage; the long escalation in housing prices; and the conflicts between the demands of work and family life.

We need a New Deal for the young -- a Young America program -- that can help young people cope with those challenges. At least part of that program ought to draw on the lesson of the GI Bill. Americans will be ready to be more generous to the young if the beneficiaries have demonstrated responsibility and contributed something through their own efforts. The United States no longer needs to draft or recruit most of its youth into military service. But we could make national service, whether civilian or military, a routine experience, for some in their late teens and for others after college. And, in return, we could help them to deal with the responsibilities of paying for their education, first homes, health coverage, and the rising costs of raising children.

A Young America program would not provide something for nothing. Like the GI Bill and Social Security, its benefits would be earned. And because of its focus on youth, it would be a way of helping Americans, individually and collectively, become more productive as well as more secure.

The premise of a Young America program would be the inclusive conception of freedom and power that are at the core of modern liberalism. An increasingly unequal America that exposes so many of its young to poverty and insecurity cannot be the strong and prosperous nation all Americans want it to be. Government can be the means for expanding the horizon of freedom, creating opportunity, and making a society both more powerful and more just. The world used to think of America as a country where the young had possibilities unmatched anywhere else. The United States could be that country again.

This is just the kind of thinking that we need. We need to expand opportunities, not restrict them.

How Sallie Mae Profits From Defaulted Student Loans

From Consumer Law Updates:

Some of the news articles have touched on how parts of the student loan industry work. According to CNN’s story Bonfire of the Universities 85% of Sallie Mae’s portfolio is Federally insured. That means that 15% is not. Something that I found very intersting is that in the event of default on a federally insured loan, the Government pays the lender between 96 and 98% of the total principal and interest owed.

So, why the emphasis on interest in that last sentence?

I am starting to see student loans that have been in default for a long time, because since 1997 virtually all student loans have been non-dischargeable; and since 2005 that is expanded to include completely private student loans — i.e., that other 15% of Sallie Mae’s portfolio. One thing that I am noticing on these loans is a ballooning of the account balance that just doesn’t seem right for loans at 8 or 9% interest. Then, I learned about interest capitalization.

I didn’t know until recently that in the event of default or at the conclusion of an approved forbearance period, a student loan lender may capitalize the accrued interest. That means add that interest into the principal balance so that interest accrues from that point forward on a much larger principal balance. This effectively makes a simple interest note a partially compound interest note — all of which is effectively non-dischargeable.

No sweat, thought right? After all, deferments followed by default should be pretty early in the note history, the two tend to go together so there is only one incident of capitalization; it shouldn’t make that much difference right?

Tell that to the client of mine who is now being told she owes $22,000 on a note that was written for less than $7,000. Oh, and even though she never made a payment after the deferment period (not uncommon, by the way); she has two capitalization events on her loan history — several years apart. Can anybody explain that to me?

So, why are we, the taxpayers, guaranteeing a return on investment and insuring investment losses for a corporation worth $25 Billion, that is paying out hundreds of millions in executive compensation and charging and capitalizing interest at 9%?

Good question, Elaine.

Happy Eostre

Most likely the celebration of Easter started out as a spring festival of Eostre, the Anglo-Saxon goddess of spring.

I was under the impression that Easter came from Ishtar, because of the other associations with Easter of Easter eggs and bunny rabbits (both fertility symbols), but the information at Answers.com call that into question.

The name Eostre also bears some resemblance to the name Ishtar, a Babylonian goddess. Other variants on Ishtar include Astarte and Ashtoreth. This resemblance has resulted in some Neopagans and Christians opposed to Easter believing that Easter is Ishtar's festival. (Fakelore is often constructed to support such speculative continuities.) There is, however, no evidence that Ishtar was ever worshipped in Europe, nor any strong evidence that the myths of the two goddesses were related.

Whatever the origin of Easter, Christians should celebrate the Resurrection. Celebrating it on a day that started as a pagan holiday does not negate its importance or value.

Debt and Taxes

Something that has not been discussed much is how official debt obligations pushed onto the middle class -- such as student loans -- are a form of taxation. It used to be the case that scholarships and grants were used to help a student pay for a college education. Neither scholarships nor grants are used much anymore. Grants were provided through taxation and scholarships were provided by wealthy benefactors who bestowed endowments to colleges and universities so that non-wealthy students could attain a college degree.

There used to be a value system among wealthy individuals called noblesse oblige. Sadly, it does not appear that the current generation of wealthy have been taught this value system.

What few people know is that until the changes in the bankruptcy law in 2005, income tax obligations were dischargeable under certain conditions while student loan debt was not except under exceptional circumstances. In other words, it was easier for a high-earning wealthy person who didn't pay tax obligations to get rid of their tax debt than it was for a poor college graduate to discharge student loan debt. Income tax obligations were routinely wiped out in bankruptcy automatically whereas a disabled person who owed student loans would have to (and still has to) file a lawsuit against the government (known in bankruptcy court as an "adversary proceeding") in order to have a chance at getting the unsecured student loan debt discharged.

By the way, what did these non-tax-paying people do instead of paying their taxes? They lived it up: big houses, fancy cars and vacations. They often were held up as shining examples of success in their churches and communities. If their friends only knew what I knew.

As accountants and lawyers say: "All great wealth starts with a crime."

Obligations to pay for health care and pensions are still dischargeable in chapter 11 bankruptcy proceedings. Chapter 11 is a reorganization bankruptcy mainly used by corporations, but also used by wealthy (or at least seemingly wealthy) but largely-indebted individuals. That is why I have suggested that we create a national health care system and expand Social Security into a national pension system. Large corporations will deliberately underfund pension obligations because they will be able to overpay executives and pay "retention bonuses" to executives before filing for bankruptcy.

By way of analogy, if a consumer debtor did what corporations are allowed to do in chapter 11 proceedings, the bankruptcy trustee would invalidate the consumer debtor's transfer of their property and the court would probably dismiss their bankruptcy without a discharge.

We need to change health care and pension obligations to a kind of "priority debt."

For those of you unfamiliar with bankruptcy law, let me explain what I mean. There are basically three levels of debt in bankruptcy: secured, priority and unsecured non-priority.

A secured debt is one that is tied to a piece of property (such as your home mortgage and car payment). Priority debts are unsecured debts that are non-dischargeable for public policy reasons. Examples include most taxes and child support obligations. Unsecured non-priority debts are all other debt obligations such as medical bills, credit cards, payday loans and signature loans. Student loan debts are unsecured non-priority debts that are non-dischargeable except for "undue hardship."

When the Bankruptcy Abuse Reform Fiasco ("BARF"), aka BAPCPA, was passed and signed into law in 2005, it made debt obligations that middle-class taxpayers would incur harder to discharge. The court fees were increased almost 50% (from $209 to $299 for chapter 7 and from $179 to $274 for chapter 13). Attorney fees also increased by about the same percentage. I used to be able to have someone come into my office, go over their financial information, analyze it and determine if bankruptcy was a proper remedy in about an hour. Then I could prepare the paperwork in about another hour. Now things are completely different. I have to have three different meetings with the potential client: one free consultation on the ramifications of bankruptcy, wherein I have to give them disclosure forms mandated by the new law, inform them of the cost, tell them about the credit counseling requirement, etc; then I have to have a separate meeting wherein I collect their 6 months of pay stubs for the Means Test calculations (which itself takes a couple of hours); then the rest of the paperwork takes another hour or two to prepare. Then I have to re-review everything before filing as the new law creates a new liability on me personally to verify that everything they told me is true.

I've gotten a little off-topic here. But the point is that more debt obligations that used to be borne by the wealthy are being foisted onto the middle and lower classes and the only safety net -- bankruptcy -- is being restricted and made more expensive to those who have the least ability to pay. Debt obligations (student loans, medical bills and loss of pensions) are becoming a hidden tax that only middle and lower class workers pay.

The question is: how long will working class Americans be willing to accept subsidizing the lifestyles of the rich and famous by taking on their debt obligations?

Bob Herbert: College Costs Making US Less Competitive

From his editorial in the New York Times:

Young men and women are leaving college with debt loads that would break the back of a mule. Families in many cases are taking out second mortgages, loading up credit cards and raiding 401(k)s to supplement the students’ first wave of debt, the ubiquitous college loan.

At the same time, many thousands of well-qualified young men and women are being shut out of college, denied the benefits and satisfactions of higher education, because they can’t meet the ever-escalating costs.

You want a recipe for making the U.S. less competitive over the next few decades? This is it.

Tamara Draut, in her book, “Strapped: Why America’s 20- and 30-Somethings Can’t Get Ahead,” tells us:

“Back in the 1970s, before college became essential to securing a middle-class lifestyle, our government did a great job of helping students pay for school. Students from modest economic backgrounds received almost free tuition through Pell grants, and middle-class households could still afford to pay for their kids’ college.”

Since then, tuition at public and private universities has soared while government support for higher education, other than student loan programs, has diminished.

This is a wonderful example of extreme stupidity. America will pony up a trillion or two for a president who goes to war on a whim, but can’t find the money to adequately educate its young. History has shown that these kinds of destructive trade-offs are early clues to a society in decline.

I just read the book Strapped that Bob Herbert referred to in his column. I recommend it.

The kids who graduate with enormous debt burdens — $40,000, $80,000, $100,000 or more — face a range of uncomfortable and even debilitating consequences, the first of which is the persistent anxiety over how their loans are to be repaid.

My student loan debt from law school was $100,000. And it is not dischargeable in bankruptcy. That is part of the reason why I care so much about debt issues.

Bob Herbert goes on to say:

I’ve spoken recently with a number of law students who have already decided to go into corporate practice because their first choice — public interest law — would not pay enough to cover their loans. Many students have turned their backs on teaching for the same reason.

Back when I first started practicing law, Legal Aid was down to paying $6.00 per hour for a full-time attorney position. I interviewed for a position with Legal Aid. They ended up hiring an attorney with 10 years of experience in Family Law, the area they were looking for. Now, admittedly, some of that was due to the oversupply of attorneys in the market. Things are not so bad now as the starting salary for an attorney working at Legal Aid is $30,000 per year, and that is comparable to what you would make in private practice or working for the state.

Another thing to keep in mind is that it is not so easy to get a corporate job. Many corporations only seek job applicants that graduated in the top 25% (or higher) of their law school class, so the competition is fierce.

Bob Herbert goes on to write:

At that stage of life, you shouldn’t have to choose between a job you would love and one that you would take simply because it would pay the bills. Talk about stepping on a dream.

There are also plenty of cases of students who have postponed marriage or buying a home or having children because of their college loan obligations.

And then there are those who never see a graduation day. There’s no way of telling what talents have been squandered, or what great benefits to society have been lost, because bright students who were unable to afford the costs have been forced to leave college, or never went to college at all.

In a nation as rich as ours, it should be easy to pay for college. For some reason, we find it easier to pay for wars.

One of the old rules of success we were taught growing up is that you should obey the law, get an education, work hard and you will become successful. What we are now finding out is that because of the debt load that is being foisted on up-and-coming talented young people, they are having to give up opportunities. They are being bankrupted. What is worse, the very debt that is bankrupting them is not dischargeable in bankruptcy proceedings. We are now finding out that you can apply all of those old rules, but it is not a guarantee of success anymore.

Mr. Herbert is completely right; but the situation is even more dire than what he paints in his column. Our current policies -- and it is not just a few of them -- are destroying the very opportunities that America is supposed to stand for. Social mobility has historically been one of the hallmarks of American civilization. Recent studies, however, have shown that the U.S. and Britain have the lowest social mobility in the industrialized West.

Even Warren Buffett is sounding the alarms:

The unease at the way the system benefits the well-off is captured by the decision of 120 billionaires, including Warren Buffet, America's [now second] richest man, to found a pressure group to oppose the elimination of taxes on capital gains and inherited wealth. Buffet's argument is that the US is developing an aristocracy of the wealthy. Just as it would be absurd to select the US Olympics team for 2020 from the children of the winners of the Olympics in 2000, he says, so it is wrong to construct a society whose likely leaders tomorrow - given the advantages that wealth confers - will be the children of today's wealthy. This offends not merely the values of democracy and equality of opportunity on which the US is constructed, but will be economically disastrous.

Social mobility is central to our values as Americans. It is important that we reverse course and restore access to education and job training so that we can go back to being the country we were meant to be.

Don't Confuse Savings With Wealth

From The Mess That Greenspan Made Blog:

Everyone just stop it! If, in some twisted sort of way, redefining "wealth" or "net worth" as "savings" makes you feel better about the world and your own lot in life, then go ahead and do it - just do it in private.

Whatever gets you through the day.

But, please, stop sharing your rationalizations with the rest of us who prefer to continue believing that "savings" (as either a verb or a noun) is not something that can come and go as quickly as a subprime lender.

Call it old fashioned if you want, but, just leave the word "savings" alone. Please.

Since the personal saving rate turned negative in 2005 and then plunged even further into the red last year, there has been a steady stream of commentary and research papers intent on blurring the lines between "wealth", "net worth", and "saving(s)" - sort of like a bad doctor anxious to ease the immediate discomfort of an ailment with one pill or another while the underlying illness remains untreated.

Wealth is the value of your assets.

Net worth is assets minus liabilities.

Saving is income less expenditures or money put aside.

Stop confusing them.

Mr. Iacono may be willing to give them the benefit of the doubt, but I am not convinced that those who post "confused" information are doing it unknowingly. I have a suspicion that said "confusion" is actually disinformation.

I fear that the comment by "Python" may be the correct one. Python said:

Apollo, I see it as: "sacrifice the sheep to hasten the inevitable." The PTB are straight out of "1984". Their newspeak is designed to confuse and to ensure conformity. God help anyone who is not exercising critical thinking skills in every aspect of their life. The sheeple are about to get slaughtered.

(I think "PTB" stands for Powers That Be.)

Read the rest of the linked article and educate yourself so you can be wary of financial traps.

Dave Ramsey: Total Money Makeover (Revised)

I have just started reading the Revised and Updated version of Dave Ramsey's Total Money Makeover. I don't agree with everything he says (probably 80%), but I am certain I will not be as harsh as I was with Donald Trump and Robert Kiyosaki's book earlier here and here.

I have criticized Dave Ramsey before. But I admit that the concept "neither a borrower nor lender be" has been around for quite a while. My main complaint is that it is just as important to speak out on behalf of the working class who are not able to pay those debts and save for retirement due to unfair practices by their employers. When a corporate employer pays the executives so highly and tells their employees to buy the company stock while they themselves are dumping it, it's not right to blame the victim. It's kind of hard to save if someone is effectively stealing from you.

Anyway, over the next few weeks I will be doing some book reviews / critiques of Dave Ramsey's book. Overall, let me just say that his advise is good 80% of the time. It is important to live frugally and save; but it is just as important to do Social Justice and utilize government and the courts to protect those who have less bargaining power and have fewer "life assets" (less intelligence, education, access to information, income and the like). Just because a person is gullible and can be taken advantage of doesn't mean that we should let the con artist get away with it. The intent to commit a fraud and carrying out the fraud on a gullible person is still wrong. I know it is not unusual in these types of situations to "blame the victim." But they are still victims, nonetheless.

I guess the point I am trying to make is: educate the working class as to the dangers of debt vs. the principle of delayed gratification; but at the same time, work to pass laws to prevent intelligent, educated people who understand how excessive usury and fees work from taking advantage of those uneducated consumers. Make noblesse oblige more or less a legal obligation. If they do take advantage of consumers, allow the courts to correct the problem by making their torts or crimes unprofitable.

College Graduates are Struggling with Debt

From the USA Today article:

Nearly half of twentysomethings have stopped paying a debt, forcing lenders to "charge off" the debt and sell it to a collection agency, or had cars repossessed or sought bankruptcy protection.

High debt loads are causing anxiety, too. A poll of twentysomethings by USA TODAY and the National Endowment for Financial Education (NEFE) found 60% feel they're facing tougher financial pressures than young people did in previous generations. And 30% say they worry frequently about their debt.

"I have nightmares," says Heather Schopp, 29, of Long Beach, Calif., who accrued $165,000 in student-loan debt to become a chiropractor. "I dream I'm on a hot-air balloon, hanging on for dear life."

Among all twentysomethings, the fastest-growing group owes $20,000 or more in student-loan debt. Though it's a small group, its proportion has doubled in the past five years to 3%.

"This debt-for-diploma system is strangling our young people right when they're starting out in life," says Tamara Draut, author of Strapped: Why America's 20- and 30- Somethings Can't Get Ahead. "It's creating a sense of futility that no matter what they do, they're not going to be able to get ahead. It's a sense of hopelessness."

A change of plans

Debt has forced some young people to change their career plans. Of those surveyed, 22% say they've taken a job they otherwise wouldn't have because they needed more money to pay off student-loan debt. Twenty-nine percent say they've put off or chosen not to pursue more education because they have so much debt already. And 26% have put off buying a home for the same reason.

A smaller percentage say they've put off marrying (11%) or having children (14%).

The Boomerang Generation — young adults who return to live with their parents — is real, too. In the poll, of 910 twentysomethings, 19% said they've moved back with parents to cut costs. The 2000 Census found that more than 25% of 18 to 34-year-olds had moved back in with family at the time the Census was taken.

Yep, this is what you call the "ownership society." American college graduates are owned by their education debt.

What are the reasons for this problem? Again, from the article:

What exactly is tougher about the financial challenges facing today's young adults? Shireman of the Project on Student Debt points to:

•Skyrocketing tuition. The average price of college has grown much faster than the rate of inflation. Average annual tuition at public four-year colleges and universities is $5,836 in 2006-07, up 268% from 1976-77, according to the U.S. Education Department and the National Center for Education Statistics. Private college tuition is up 248% to $22,218 a year.

•Declining student grants. Though total federal student aid has grown sharply, so has the proportion of people in college. In 2004, 67% of high school graduates enrolled in college; in 1972, only 49% did. As a result, student grants cover only 39% of the costs of a four-year college today, compared with nearly 80% in the mid-1970s, the College Board says.

•Soaring student-loan debt. Students have generally made up the gap between what colleges charge and what they can afford by borrowing. The percentage of students who borrowed for college jumped to 65% in 2000-01 from 34% in 1977, the National Center for Education Statistics says.

And they use credit cards to help pay for books and other items. Half of all graduates in 2004 used credit cards for school expenses, the American Council on Education found.

•Flat wages. Once students graduate, jobs don't pay what they used to.

Thirty years ago, a male college graduate could make the equivalent of $51,223 a year in 2004 inflation-adjusted dollars. In 2004, he earned less: $50,700, according to the NCES. Wages for women, though, have risen.

•Rising home prices. It takes a greater portion of the average income to buy a median-price home today. In 1970, it was 17%; in 2005, 22.4%. The median price of a home was $23,000 in 1970. Adjusted for inflation, that's $115,770 — barely more than half the median price of $219,000 in 2005.

"Twentysomethings now are crunched in ways older people were not," says Cathy Stocker, co-author of The Quarterlifer's Companion, a book for twentysomethings. "The cost of education has far outpaced income, and housing costs have skyrocketed. They're crunched from all directions."

For more information on how this all fits into the Big Picture, see my previous posts here and the Warren Reports generally. Just click on the Warren Reports tab for more articles.

Too Many Voices

This is a follow-up to my post two days ago reviewing the Blue Man Group concert in Oklahoma City where I mentioned the information overload alluded to in the concert. I was thinking of how much time I spend every day reviewing all the different blogs and news sites for information and how there is more information than I have time to digest, it seems. Sometimes it seems that there are just too many voices.

Of course, I just had to add to the chatter of too many armchair pundits adding their two cents worth on the issues of the day. So I have a lot of room to talk, don't I?

Of course, the founding fathers of the United States always intended for there to be a clash of the cacophony of ideas among the participants in the political process. At the same time, the virtual smorgasbord of sources of information is almost too much to handle.

Although I suppose its better than the alternative. I would rather have access to all the information out there that allows me to make an intelligent decisions about politics, investments or any other interest I have. So maybe there aren't too many voices after all.

The Virtues of Education

The Internet Monk, Michael Spencer, writes a great article about the value of a liberal education. I wish more Christians thought like this.

A Rise in Student Loan Defaults

A new post over at Talking Points Memo site in the Warren Reports section entitled Canary in a Coal Mine? discusses the rise in student loan defaults from 4.6% to 5.1% in the last year. As the post notes, 5.1% is historically low. However, the report also notes that it is expected that 12% of the loans made this year will eventually default.

One of the main arguments for requiring students to borrow money is that it should be seen as an investment. Of course, we have heard the same argument for housing, too -- and look where the housing market is headed now with overleveraged investors in a excessively crowded market.

One of the problems is that many students are not able to graduate from college and find a job that, given a complete financial cost-benefit analysis of their earning potential, would justify "investing" in college by borrowing money. Section 523(a)(8) of the bankruptcy code virtually makes student loans non-dischargeable in bankruptcy. Therefore, such an investment carries with it a tremendous risk. More risk than, say, starting a new business.

We used to value a college education so much that we provided grants to qualified students so that their schooling was paid for. Because of our public policy, grants and scholarships are rarely granted anymore. In fact, colleges and universities are even getting "incentives" (read: kickbacks) to push students to borrow money from private lenders rather than the cheaper government-subsidized loans.

What makes this worse is that students from lower-income groups, who have a hard enough time moving up the economic ladder, become saddled with debt that may compound their difficulty with upward mobility. Somehow, the American people need to come to the realization that we all have a stake in educational opportunities. The world is changing. We cannot sit on our laurels. People in China and India want our jobs. We will have to work harder and continually learn new things if we expect to keep our place of preeminence in the world. Now is not the time to saddle people with debt that creates another barrier to entry to success.