Photo Credit: Salary.com
Reader M.H. graduated college with a liberal arts degree (he wanted to do something in film and video) and he emailed me about the bad choice he made in going to college. He has not found work in months of looking. Sadly, he received the following Internet email too late, after he already borrowed money he won't be able to repay to get a degree that is basically worthless.
[*** Start of Email ***:]
Little Timmy walks into a bank and asks for a loan to go to college, goes to college 4 years (every year taking out a loan to pay tuition), gets out and pays back his loans to the bank. That's how it works end of story right? Wrong, big time.
After Timmy walks out of the bank with his loan, the bank packages his debt with a whole bunch of other student loans into what are known as student loan asset backed securities (SLABS). SLABS are then sold to investors on Wall Street who make money off of principal payments and payments on interest. SLABS are also guaranteed by the government, so even if tons of students go into default, these investment instruments will still pay out courtesy of Uncle Sam. The capital that is created after the lending banks package and sell SLABS then allows them to go out and issue more loans and repeat the whole process over again. The never ending flow of credit and loans then allows colleges to raise their tuition almost every single year at hyper-inflationary rates.
The only ones screwed in the whole process are students. They are the ones loaded up with all the debt so that everyone else can make a HUGE profit off them. No wonder the banking industry spent large sums of money to lobby politicians to make student debt impossible to get rid of -- by not allowing students to get rid of debt, it cuts down on the risk of SLABS and guarantees that investors get paid. Open your eyes, you are just a pawn to the system built to make the rich more wealthy while they offer you the American "dream", which in reality, is nothing more than a nightmare. A big portion of people that invest in SLABS aren't even American, they're European. In other words, people who are far, far away, that don't even care about our country or our youth, have vested interest in trying to drive up tuition costs as much as possible here and want to see our kids loaded up with as much non-dischargeable student loan debt as possible! Outrageous. Infuriating. True. Just like the article below says, I guess this wouldn't be America though if you couldn't monetize and gamble on your children's debt and futures on Wall Street.
Read about the whole scam right here in this excellent article, you really should since you, the taxpayer, are on the hook once this giant bubble explodes.
[*** End of Email ***]
Of course, there are degrees that one could call a good investment; however most students pick majors that are simply worthless for careers and will leave them in debt for the rest of their lives, especially if they were poor to begin with. This coming Thursday I will post the 13 Worst College Majors.
For the majority of our population, College is a Scam. However learning a trade or getting an education, as long as it doesn't require hocking your lungs, is not a scam. I bet 90% of students would have been better off learning a trade that people really need. The world certainly can live without another philosophy major.
I should mention that I discouraged both of my sons from going to college. Twenty years later, they would both agree they made the right decision. Neither owes anyone a penny and both acquired an on-the-job education one cannot get even if purchased for a million dollars. If either chooses to go to college, they certainly would know now what they want to learn and they could pay for it in cash.