The US Recovery

[JAD_333]

There seems to be a lot of confusion about student loans here as to what is subsidized, insured and so on. The federal government makes direct loans under various programs. The amount a student can borrow is generally fixed and often not enough to cover tuition and living expenses at many schools. Parental help, scholarships, income from part-time jobs, grants, state aid and grants make up the difference, or the student may go to a private lender to borrow the difference.

https://studentaid.ed.gov/types/loans#borrowing-limit

Schools and DOE discourage borrowing from private lenders.

Columbia College Chicago : Private Educational Loan Funding Sources

This is interesting as well: http://trends.collegeboard.org/sites...ull-report.pdf

TYPES OF STUDENT AID
In 2012-13, 49% of all student aid was in the
form of grants — the highest percentage over
the past decade. In 2008-09, 44% of student aid
was grant aid.
–
In 2012-13, 43% of all student aid was in the form of federal
loans — the lowest percentage over the past decade. In
2008-09, federal loans constituted 49% of student aid.
–
The federal government funded 71% of all student aid and 41%
of all grant aid to postsecondary students in 2012-13.
–
In 2012-13, $238.5 billion in financial aid was distributed to
undergraduate and graduate students in the form of grants
from all sources, Federal Work-Study, federal loans, and federal
tax credits and deductions. In addition, students borrowed
about $8.8 billion from private, state, and institutional sources.
–
In 2012-13 undergraduate students received an average of
$13,730 per full-time equivalent (FTE) student in financial aid,
including $7,190 in grants from all sources and $4,900
in federal loans.
–
Graduate students received an average of $25,730 per FTE
student in financial aid, including $7,800 in grants and $16,240
in federal loans.
–
The American Opportunity Tax Credit increased the tax savings
for college students and their parents from education credits
and tuition deductions from $7.1 billion (in 2012 dollars) in 2008
to $15.6 billion in 2009 and to $20.3 billion in 2011.

[JAD_333]

Why Student Debt Won't Cause the Economy to Collapse

Student Loan Debt Is Bad, but There's No Bubble to Burst - US News

[zraver]

Why Student Debt Won't Cause the Economy to Collapse

Hard to sustain growth with a hundred billion a year anchor.... $400 a month per graduate sucked out of the economy is brutal and is a lot og goods and services not purchased by them. Reforming the student aid interest scheme could put $50 billion a year back into local circulation.

[Monash]

I was told the same thing: Go to college, it's the only way to make a living unless you want to destroy your body in the building trades.

Myself, I never went to college. I started working part time at age 15 (the earliest allowable, legally) and then full time at age 18 (ditto).
I still have zero college and yet I make quite good money in logistics. I got where I am today by years of building experience upon experience.

Trades are still a good way to go so long as you have an aptitude for the one you have chosen. In fact these days I would encourage any kid with the right aptitude to choose a trade he or she enjoyed e.g. electrical/mechanical/building etc over a mediocre degree. On the assumption they want to work for themselves at some point in time I would also suggest a good small business management course (say 6-12 months) so they are aware of all the traps and pitfalls etc when starting up or running a business but apart from that stick to what they know and like. With lawyers and accountants becoming dime a dozen a good tradesman can still make a decent if not spectacular living and be his own boss if he chooses which is nothing to sneeze at.

For example the teenage daughter of a friend of mine joined the navy and got her marine diesel certificate. Before she was even finished her training recruiters were contacting her and saying - do your 6 years then get out and we will set you up with a 6 figure salary in Singapore to work on call for big shipping outfits who would then fly her out to wherever they had a problem that needed inspection/fixing.

For that matter I've always admired Germany's approach to trade and technical education which sets kids in early high school onto academic (University) or trade/technical education streams. Their education system is a large part of that countries global success.

[DOR]

Monash,

Well said.

A close friend of mine had serious reading problems throughout his 12-year education. They graduated him from High School without recognizing that it would take him an hour or more to read and understand a simple newspaper article. Very, very bright guy but not a good reader.

So, he joined the army, learned about very large power generators, and once he got out, found a very lucrative career running power generators at rock concerts, country fairs and the like.

[GVChamp]

Actually most of the student loans are financed by the private sector. About half of them are not insured by the federal government.

Really? Hmmmm....thanks for correcting me. I'll probably have to go visit some CBO report or something and see what's going on. My impression was 90% of the funds were directly issued through FAFSA or insured.

Just jumping some more on the college discussion in general. Where I grew up, over 95% of the high school students attended and graduated from a 4-year institution. It's a social rite of passage that can't be skipped. Anyone who doesn't go, and doesn't go in the socially acceptable dorming for 2 years followed by apartment living for 2 years, is considered a socially retarded dullard who obviously doesn't have anything to contribute.

It's a community class-conscious enough to make the British blush. If you don't have the necessary credentials, they'll fight you every step of the way on the corporate ladder/business ladder/whatever. They won't be friends with you, they sure won't recommend you for anything, and they definitely won't marry you (or allow their kids to marry your kids).

[Officer of Engineers]

Just jumping some more on the college discussion in general. Where I grew up, over 95% of the high school students attended and graduated from a 4-year institution. It's a social rite of passage that can't be skipped. Anyone who doesn't go, and doesn't go in the socially acceptable dorming for 2 years followed by apartment living for 2 years, is considered a socially retarded dullard who obviously doesn't have anything to contribute.

It's a community class-conscious enough to make the British blush. If you don't have the necessary credentials, they'll fight you every step of the way on the corporate ladder/business ladder/whatever. They won't be friends with you, they sure won't recommend you for anything, and they definitely won't marry you (or allow their kids to marry your kids).

Really? I know a lot of military, especially my generation, who did not go post-secondary, and some made extremely good officers as high as Major.

[GVChamp]

Really? I know a lot of military, especially my generation, who did not go post-secondary, and some made extremely good officers as high as Major.

The kids weren't really exposed to any examples like that. Everyone we knew went to college. Anyone who didn't go to college pretty much WAS a loser, because they were so rare. Everyone in our town who didn't go to college worked in fast food...at least our age...

Just a huge bubble.

Our town produced some quite hard-working and problem-solving kids, but they also come off entitled, condescending, and IMO quite uneducated. In particular, their Social Studies knowledge is astoundingly weak (which probably factors into their poor social attitudes).

They are just responding to incentives, though. There's absolutely no personal consequence to not knowing who Martin Luther is.

[Officer of Engineers]

You from Chicago? That is kind of strange since that was a factory town.

[GVChamp]

You from Chicago? That is kind of strange since that was a factory town.

I'm not from the city, I'm from the Near North Suburbs. Think Ferris Bueller's Day Off, then add in Cell Phones.

Oh hell, if you're going to age it 20 years, just think American Pie and Mean Girls. Or think Girls from HBO. The blue-collar class does not factor in at all.

[DOR]

DATE:_ _ February 5, 2015
TO:_ _ _ _ Janet Yellen, Chair, Federal Reserve Board
FROM:_ _ DOR, concerned economist
RE:_ _ _ _ When to raise interest rates

Real Fed Funds rates have been negative for more than five years, and as unemployment has remained below 6% for four months in a row there is rising pressure to start raising interest rates. This memo argues in favor of staying the course for at least six months, if not another year.

1. Consumer inflation has averaged 1.7% over the past three years, 1.2% over the past six months and the trend is down. This suggests inflation is not a concern at the moment. While the Fed must always be forward-looking, there is ample time to react if -- and when -- inflation tops 2% for more than a month or two at a time (the last time that happened was in early 2012). Oil prices averaged $95 over the past three years, $85 over the past six months and the trend is down. This suggests there is little risk of energy-driven inflation. Since Congress won't provide any fiscal stimulus, lower fuel prices act as a modest tax cut and provide much of the same outcome.

2. The unemployment rate has averaged 7.2% over the past three years, 5.7% over the past six months and the trend is down. This suggests unemployment, while still uncomfortably high, is moving in the right direction. The total number of jobs in the country has been growing, year-on-year, for more than 4 years, and full-time work has grown many times faster than part-time employment (+1.64% p.a. over the past five years for full-time, vs. +0.02% for part-time). But, many people have been discouraged from working and we need to continue generating jobs until a tight labor market begins to drive up wages, and attract more people back into employment.

3. The economy grew 2.3% p.a. over the past three years and 2.6% in the past six months. There is little indication that the economy is over-heating. The last thing we want to do now is to pull the plug too early, as happened in 1937 when a still-weak recovery was throttled by overly quick fiscal and monetary tightening.

[JAD_333]

DOR:

...especially the part about keeping rates as is longer...great for stock market.

[gunnut]

I was told the same thing: Go to college, it's the only way to make a living unless you want to destroy your body in the building trades.

Well, I hate to brag (yeah right) however...

Myself, I never went to college. I started working part time at age 15 (the earliest allowable, legally) and then full time at age 18 (ditto).
I still have zero college and yet I make quite good money in logistics. I got where I am today by years of building experience upon experience.

I'm a homeowner, my car is paid for and my financial obligations are easily met. I suppose never having been married and never having had children has helped a great deal as well.

And not so much as penny of student loan debt.

I've always enjoyed doing things my way and charting my own course.

There is absolutely nothing wrong with not having a college education.

College education is just one mean of getting one's foot in the door. And much like everything else in life, when there's a surplus of something, the price goes down. College degree is worth less if everyone has one.

Of course I'm not saying those few who don't have a degree automatically get more money. Far from it.

However, those who don't have a degree could make a lot of money by doing things those with a degree thumb their nose at. Mechanic, machinist, plumber, construction, electrician,....the list is endless. If there is a will, there is a way.

College is not for everyone. Some people don't want to sit in the office all day. Some people are much better working with their hands and tools. Why shove everyone into colleges?

Instead of saying "college for everyone," we should say "college is only one way to make a great living."

I have a college degree. My job has nothing to do with my degree. I could have done my job without ever having to go to college. Everything I needed to do my job, I learned on the job or on my own.

The biggest lesson I learned from college is that college is not that important.

[DOR]

Producers vs. Consumers

US trade data came out today, showing the usual deficit.
Here's an interesting take on the numbers.
DOR

[JAD_333]

DOR:

Last 2-3 years, things seem to have leveled off.