Profiting from Food Stamps, Student Loans, Unemployment: Wall Street, US Congress, Obama Cash-inSubmitted by kevink on Thu, 07/25/2013 - 22:18
I'm quickly becoming a big fan of BoilingFrogsPost. Hopefully others read it too.
“Despite being the richest country in the world, poverty remains an important social issue in the United States. All too often poverty in America is used as a political weapon by both political parties to galvanize their voting base. What is lost in the midst of such politicking is the crony connection of corporations that have positioned themselves to profit from poverty. The welfare programs we use to attempt to alleviate poverty actually play directly into the plans of companies that lobby on behalf of legislation lauded as anti-poverty programs. Rather than overcoming poverty, these programs line the pockets of their promoters. Such crony connections must end.” Government Accountability Institute
According to the US Census Bureau’s Median Value of Debt by Household (2011), the median household debt (both secured and unsecured) for 35-44 year olds was $108,000 (USD); for those 45-54, $86,500; and for 55-64 age group it was $70,000. The data in the Census Bureau report also shows that the less formally educated one is the less debt one has.
The median debt for someone with no high school diploma is $20,000 (with a high school diploma is $42,000), while the median debt for a holder of a graduate or professional degree is $130,705. So while America’s educational leaders say that a college degree will likely lead to increased income over the years, they don’t mention that secured and unsecured debt increases the “smarter” one becomes.
Debt for You, Profit for Them
Maybe Americans should dump the pursuit of a college degree particularly in the face of rising interest rates for federal student loans and increased tuition and ancillary fees at colleges and universities across the land. High interest rates (the cost of money) on student loans can also serve as a barrier to college entry. Perhaps the “hidden hand of the market” is sending a message of some sort, that the financially sound path is to get an education in the 21st Century trades that combine, say, computers and engines or computer systems and networks. Add a Cisco or Microsoft certification to the tradecraft and a job for life is possible. But buyer beware, earning an Associate’s Degree earns you a median debt of $63,000.
Moreover pushing the myth that a college education is a must-have in the USA tends to generate excellent profits for investors, and makes college/university presidents, administrators and senior faculty, quite comfortable. Take the case of Sallie Mae. According to the Huffington Post’s September 2013 report Sallie Mae Profit Boosts College Endowments and Pension Funds As Students Pay More, “University endowments and teachers’ pension funds are among big investors in Sallie Mae, the private lender that has been generating enormous profits thanks to soaring student debt and the climbing cost of education…previously unreported investments [obtained by Huffington Post] mean that education professionals are able to profit twice off the same student: first by hiking the cost of tuition, then through dividends and higher valuations on their holdings in Sallie Mae, the largest student lender and loan servicer in the country, which profits by charging relatively high interest rates on its loans and not refinancing high-rate loans after students graduate and get well-paying jobs. Sallie Mae is a former government-sponsored enterprise that was fully privatized in 2004 and now trades publicly as SLM Corp…
Sallie Mae reported $939 million in net income last year, the highest since 2006. The publicly-traded company, which enjoys a government guarantee on most of its $174 billion in assets, has been profitable in eight of the last 10 years, generating a cumulative $7.3 billion profit. Its shares have risen 54 percent over the past year, outpacing the 19 percent gain in the Standard & Poor’s 500 Index, America’s benchmark equity gauge…The endowments of Furman University, Harvard University, Mount Holyoke College, and University of Michigan all hold stakes in Sallie Mae through their investments in Highfields Capital Management, a hedge fund that manages more than $11 billion and is the second-biggest Sallie Mae shareholder… Pension funds for teachers and other school employees such as the New York State Teachers’ Retirement System, State Teachers Retirement Board of Ohio, Pennsylvania Public School Employees Retirement System, New Mexico Educational Retirement Board, Teacher Retirement System of Texas and California State Teachers Retirement System (CalSTRS) also own significant chunks of Sallie Mae, as does asset manager TIAA-CREF, which oversees retirement funds for teachers, among others… Federal records show the company spent more than $1.4 million lobbying members of Congress last quarter.”
Rockefeller, Obama Nest Eggs Turn Gold