Archive for the ‘Student loans’ Category

Real World Graduation, Question 5

RealWorldGraduation_Question_5   <– PDF

A study by the U. S. Department of Education in 2006 [1] reported that college tuition, fees, and room and board are continuing to rise. The data in Figure 5-1 shows the costs of tuition, fees, books, and room and board for in-state students attending public four-year universities, living on-campus.  A separate study [2] concluded that a college graduate with a 4-year degree in 2005 will earn 63% more than a person with only a high school diploma (approximately $57,000 per year vs. $35,000 per year).  This means, on average, that a college graduate earns approximately 75% more over their working lifetimes ($2.1 M vs. $1.2 M) as compared to a person with only a high-school diploma.  Given the costs of a college education shown in Figure 5-1, and the earnings benefits of a college education, what is a good federal policy regarding college costs?

  1. a) The federal government should ensure all tuition, fees, and room-and-board is free.
  2. b) Congress should enact price controls on tuition, fees, and room and board to keep the annual rate of increase at or below the rate of inflation.
  3. c) Congress should pass a law requiring that tuition costs be frozen at the rates that prevailed during the freshman year.
  4. d) Attendance at college should be mandatory so that everyone’s income will rise.
  5. e) Some combination of a), b), and c) should be adopted to improve the current system.

School Year    Tuition & Fees ($)    % Increase in Tuition & Fees     Room & Board ($)     % Increase in Room & Board

1998-1999          3640                                –                                             4985                                           –

1999-2000          3768                            3.52                                          5144                                         3.19

2000-2001              3979                        5.60                                         5342                                         3.85

2001-2002              4273                         7.39                                         5675                                         6.23

2002-2003             4686                         9.67                                         5918                                         4.28

2003-2004             5363                        14.45                                        6316                                          6.73

2004-2005             5939                         10.74                                        6649                                         5.27

2005-2006             6399                           7.75                                        7025                                         5.65

Figure 5-1

(Answer on p. 2 of the PDF)

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Review of the 2016 Election, Part 5: The Future

PDF –>  ReviewOfThe2016ElectionPart5Future

The last topic to be considered is the future trend in our elections.  The next twenty years will determine which way America goes in the long run.

It seems to me that the activists favoring socialism will gain power in the long run, simply because their main selling point is that socialism can truly provide a better life for everyone.  Socialism has always looked good on paper, so long as the voting public is unable, or prevented from, observing the consequences of socialist policy.  It is easy to point to the immediate effect of a given policy; it is much harder to explain, or to understand, the second-order consequences.  For example, the “Great Society” programs of the 1960’s encouraged young women to start families without marriage: it looked great on paper, and some women were aided in the short run.  But it has led to a great undermining of the family in America, starting first with the poorest people in the inner cities, and now spreading to the suburbs.  The dismantling of the family unit has not returned any benefits.  Some will claim that the “Great Society” programs no longer exist.  It is true that they no longer exist as specific initiatives, but only because they are now fully ingrained and integrated into the functioning of the government.  They now have a life of their own, and can never be repealed, no matter how detrimental they are in the long run.

The fact that an open socialist like Bernie Sanders actually gained some traction is most alarming indeed.  He gained a great deal of support mostly among young people, with his promise of free college tuition and health care for all.  The rallying point was the notion of free tuition, no student loan debt, and a free and fair society for all.  Senator Sanders received about 11.9 million votes in the course of the Democratic Party nominating process.  Of the 11.9 million Sanders voters, about 10% of them have enough common sense to realize that tuition cannot really be free: their cherished liberal professors will still demand a paycheck; the lab equipment isn’t free; the heating and electricity isn’t free; the dorm maintenance isn’t free; everything involved in running an institution has to be paid for somehow.  It is these 1.2 million or so who understand enough basic economics to know that the government will have to pay those costs.

Of those 1.2 million, maybe 10% of them know enough about government financing to understand that governments do not really have anything except what they can extract from the taxpayers.  Those 120,000 realize that taxes on some other set of taxpayers have to be raised so they can get the free tuition.

Of the 120,000, maybe 10% of them understand that there will be considerable resistance to an increase in taxation, especially if those paying the taxes do not have college-age children, or whose children choose not to attend college.  Shall they get a rebate?  Shall those future young people not attending get a cash grant to start their own business, or to spend as they choose?  Anything else would be unfair, would it not?  This last 12,000 also knows that any such provisions in the tax code will come too late for them: they will be out of college, working, and paying taxes to send other people’s kids to college.

Senator Sanders was selling the same old “free lunch” theory that socialism is built upon, conveniently forgetting that government policies can turn the rich into the poor only once.  After that everyone is poor.  In order to manage what is left, and to ensure that everyone gets their “fair share”, it will then become necessary for the government to regulate everything, and the government gains absolute power.  Which explains why no socialist country has any free citizens except for the ruling class, and the U. S., if it fails to understand the history of socialism, will fall victim to its false theories like every other nation that has tried it.  Unfortunately, this is the thing that Sanders’ voters either cannot understand or choose to ignore:  if the government gives with one hand, it takes more with the other.

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Can You Afford That Student Loan?

CanYouAffordThatStudentLoan   <–  Free book in PDF format

Dear Readers:

I have written a new book called “Can You Afford That Student Loan?”  My reason for writing it is that it seems there are a lot of young people who do not understand the overall economic implications of taking on student loan debt.  I have read many cases recently where students find themselves overwhelmed by the payments on their student loans after graduation.  The idea behind this book is to show the aspiring student how to evaluate the economic benefit of taking out a student loan to obtain an education.

This book contains more than just a calculator — it shows, using a nomograph system, the entire relationship between interest rates, repayment term, monthly repayment, income potential from selected professions, and income requirements to avoid cash flow problems after graduation.  With the simple system outlined here, the aspiring student can get the “big picture” of return on investment in an education.

The book is free, and you may download it and distribute it as you see fit.  If you have any questions or comments, please contact me at


Ed Duvall

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