It's The University Business Model Stupid, Not Interest Rates

It’s The University Business Model Stupid, Not Interest Rates

            The New York Times feature story on student loans (A Generation Hobblied by the Soaring Cost of College) was sheer idiocy – focusing on the capillaries (student loan interest rates) not the heart of higher education costs (personal financial ebola) that indentures students and or canabalizes or defers the work free retirement of their co signing or borrowing parents: the damn incompetent featherbedding arrogant inefficient effete normative pompous recklessness of the university business model based to tenure and collegiality rather than the  cost benefit ratio to the student and the learning delivered.

            And the Times and its douche bag writers (sorry Vince this was a political agenda in search of a story) accomplices to a political agenda as they know better. And yes, I’m maligning their motivation – which journalists practice daily – but are thin skinned when it is their ass.

            My assertion is illustrated by the numbers below:

Higher Education Personal Financial Ebola

            The example below assumes:

• Private school 4 years – room board tuition books starting at $40,000 a year
• Higher ed inflation of 9% versus the overall inflation of 3% (300%+ has been the higher education inflation cost historically)
• Graduation in 4 years (when less than 25% overall graduate in 4 years)
• Reinvestment rate in a 401K of differential @8% which is conservative given PERA uses 8.5% and Calpers 7.75%.
• Without reinvestment the differential in higher education costs in $482,000 and with the difference reinvested $546,000 ($818,000-$272,000) is the cost per child that otherwise could go to the parents’ retirement for example

160,000@9%	new value	160000@3%	new value	inflation diff	'infl diff invest 8%
14400	174400	4800	164800	9600	35520
15696	190096	4944	169744	10752	36835
17109	207205	5092	174836	12016	38116
18648	225853	5245	180081	13403	39367
20327	246180	5402	185484	14924	40587
22156	268336	5565	191048	16592	41781
24150	292486	5731	196780	18419	42946
26324	318810	5903	202683	20420	44085
28693	347503	6080	208764	22612	45201
31275	378778	6263	215027	25012	46295
34090	412868	6451	221477	27639	47368
37158	450026	6644	228122	30514	48421
40502	490529	6844	234965	33659	49456
44148	534676	7049	242014	37099	50472
48121	582797	7260	249275	40860	51471
52452	635249	7478	256753	44974	52457
57172	692421	7703	264456	49470	53427
62318	754739	7934	272389	54384	54384
inf diff + reinvest					$818,189.00
infl diff	$482,349.98

            So while politicians are fiddling with student loan interest rates, unaccountable effectively un-terminable tenured holier than thou professors and their administrative enablers like former University of Colorado President and now Ohio State President Gordon Gee Whiz (On Your Wallets) making serfs out of indentured students and or delay or waylay parents work free retirements.

            It was Gordon Gee Whiz On Your Wallets, making reportedly high six figures (1) who said in the May 12, 2012 New York Times article A Generation Hobbled by the Soaring Cost of College “I readily admit it. I didn’t think a lot about costs. I do not think we have given significant thought to the impact of college costs on families.”

            Duh

           

(1)   In addition, Ohio State has spent at least $844,000 on the school president's travel since 2007, including more than $550,000 in the past two years that included two trips to China plus two other international trips to Iceland, Turkey, France and the United Kingdom, according to a report by the Dayton Daily News. And according to Wikipedia “Gee's base salary is $802,125, with a total compensation package of $1.6 million, making him the highest paid public university president in the United States”