Latest / Financial Survival Network / Why Go To College? Eddie Yoon #5907

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Why Go To College? Eddie Yoon #5907 · Financial Survival Network

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  There's a bunch of things going on as you talk about whistling past the graveyard.
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  Is a student loan payment hiatus. You know we had paused and people
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  said you don't have to pay during COVID. That's resuming, right. Why
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  should anybody have to pay their student loans when they can't even get a job
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  as a janitor. You're listening to carry Lets's Financial Survival Network, where you
• 0:22
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  times. You need the Financial Survival Network now more than ever. Go to
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  Financial Survival Network dot com and get your free newsletter and gift. Financial Survival
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  Network now more than ever. Welcome. You aren't listening to watching the Financial
• 0:48
  Survival Network, I'm your host Carry Loves Well. As the consumer finally run
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  out of red ink, or is there always another jolt just off on the
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  horizon. So far the death of the consumer, or certainly his or her
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  or your consumer spending has been greatly exaggerated, as a wise writer once said,
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  But are we finally at that moment, the Minsky moment where the can
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  can't be kicked down the road any further? Eddie Unit is with us.
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  Now, Hey, you've got a question for Eddie or myself kl at Kerry
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  Lutz dot com is the email address, Eddie. Great to have you back
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  on. So death of the consumer greatly exaggerated as usual. Yeah, I
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  think that's right. Where we're not quite there yet doesn't mean that there isn't
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  a near death experience on the horizon, but you know, so far,
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  they're trucking along. So the latest data from the government says that in July
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  that consumers aren't continuing to spend, but perhaps a bit unwisely like you and
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  I might not advise you know, friends or children to spend this way,
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  but there they go. So personal consumption expenditures is up point eight two percent
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  in July, which is the highest it's been in twenty three. However,
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  disposable personal income is only up point one five percent in July, which is
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  the lowest it's been in twenty three. So they're spending more, but they
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  have less discretionary to spend. And you know, you can kind of see
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  this happening. There's a bunch of things going on as you talk about whistling
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  past the graveyard. Is the student loan payment hiatus, you know, we
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  had paused and people said, you don't have to pay during COVID, that's
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  resuming, right, Why should anybody have to pay their student loans when they
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  can't even get a job as a janitor? Well, you know all these
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  depends of thousands, right, It's interesting. I think that all of my
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  solution to this is that, you know, you got to hold everybody accountable,
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  certainly you know, the consumer, but also the university. Like I
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  think that any debts or bankruptcies or loan forgiveness should be tied back to the
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  university that granted the degree. In the flair, it's a thought because they're
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  the beneficiary. Really, the student got nothing out of this, right,
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  the all of the whole kind of you know, pal loans and you know,
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  the all the loan availability. It really bypassed the consumer and went straight
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  to the university because they were able to raise prices without any regard to outcomes.
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  And so you know, basically the consumer, anyone with a loan on
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  average, is going to have five hundred and three dollars per month less to
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  spend going forward. So and then you know, you got loan delinguencies carried
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  approach on Q two of twenty twenty rates per the Saint Louis FED And this
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  is my favorite stat is you know, the number of twenty five to thirty
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  four year old adults that are living with their parents is four times higher than
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  it was back in the sixties. Bite your tongue, man, Well,
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  thank goodness, that's not something I've had to deal with there, But for
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  the grace of God. Go on. Hey, you know one thing,
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  when you're going back to the student loans, not only is it in the
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  interest have the college has benefited from this, but they benefit more from their
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  students failure than their success. The more courses you have to take over,
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  the longer it takes you to get that degree. Used to be when I
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  went to school four years you got your degree. And now we got these
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  perennial students and they're just cash registers to the colleges. And then eventually the
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  student is the bag holder. They get left holding the bag here right totally?
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  I mean, I think to your point, until the student gets the
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  job. I mean, number one, you sure your tuition should be capped
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  at the average salary your graduate gets immediately after your graduate. You know that's
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  kind of one. Two is like if you. You know, if you
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  can't pay back your loan, then that should come back in the form of
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  taxation, because all these schools are tax exempt, right, and so you
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  know, basically like you you have, I mean, and it's a bit
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  of a have and have nots. Like my understanding is that Princeton, as
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  an example, makes enough money off of its endowment, so they're great money
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  managers, right, so to the point where they could charge nothing for tuition
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  and the endowment would still grow. They could. Yeah, all of these
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  schools second five billion last I heard in the Harvard Endowment or maybe that was
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  Yale. It doesn't matter. You could just substitute a name, right,
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  you know. And these non profit to you know, these non so called
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  nonprofit to institutions seem to be doing just fine in a nonprofit environment. You
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  know. Well, these are all hedge funds disguised as universities. I mean,
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  that's really what it is. And if you had a hedge fund with
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  that my amount of assets under management, like would you not tax some?
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  Of course you attack them. And so yeah, all of this stuff is
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  like you know it And not only do I think it should be university specific,
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  I think it should be major specific you know, like if some I
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  mean, surprise, surprise, I'm guessing there's a flat fewer STEM graduates that
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  are having trouble finding jobs and paying off their loans then you know, English
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  degrees or whatever else might be. Like you know, so like I think
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  accountability needs to happen. Unfortunately, the consumer you know, always buy or
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  be aware, so they're going to pay the price. But a lot of
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  these universities, it's not like the professors are making more. It's that they
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  have bloated middle management and they've hired administrators and people who have nothing to do
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  with the actual teaching of the students. And that's the problems. How about
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  if we incentivize the professors, like you know, they need. They keep
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  a rolling average of what their students pass or fail rate is and when they
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  graduate, and if they part of a team and they managed to get these
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  things, get them to perform better, they get a bonus. And if
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  they perform worse, hey get rid of them or at least pay them less.
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  Right now, absolutely, I mean, you know, to your point
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  about a bonus, not only professors, but the college presidents and every middle
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  manager out there. It should be paid. You should get a bonus that
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  is a percentage of the average income that your students generate post college, right,
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  I mean that that would be there's a thought there, very logical way
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  of doing it. Hand. We'd have a lot of broke college professors work
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  who worked for crummy or lower tier schools. But let's do it for law
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  schools too. I don't know if you caught that James Grisham book about for
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  profit law schools, but it is the biggest scam and the planet. You
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  know, it was a funny book that they did, but yeah, it's
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  it's it's uh, it is absolutely there's a glut at the education that some
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  professional institutions, like as you said, if you're not at a top whatever
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  law school and that you can lend the corporate job, like you should not
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  be out there like you're you should not be charging what the big law firms
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  are law schools charged at least like the idea that you know. I mean,
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  this is like if this were regulated as a business, it'd be price
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  collusion. Right. How is it possible that tuition is virtually the same everywhere
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  you go and yet the outcomes are radically different. Yeah, and it's funny
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  the way it works, and yet nobody seems to want to do anything.
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  Do you think they got a big lobbying outfit to all of these colleges because
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  really, the student loan debt bubble, the only beneficiary of it has been
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  the colleges because look, let's face it, they didn't increase the number of
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  students as the loan balances, as the loan thresholds went up. All they
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  did was charge more money and hire more administrators. And there's no meaningful measure
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  of the professor or a staff productivity at all. You know, maybe internally
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  they have something, but it's a good question. I don't know what the
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  I don't know what the lobbying dynamic is with higher ad in Washington, but
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  you're right that there's a reluctance to change things, and you know, it
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  is one of those things. I mean, part of it is what I
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  feel bad about, is it is a bit of the big lie that has
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  been sold to the population that you know, education is a silver bullet,
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  like it is if you come from a family of never gone to college and
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  you're the first generation to go to college, and it is if you study
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  the right thing, that's much more of a pre professional degree versus whatever.
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  But you know at absent that it's really become a sol status club at the
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  very high end education schools because you know, you're you know, the admissions
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  rate for a legacy student is so much higher than it is for a regular
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  student. It's just another way of perpetuating aristocracy. But like, yeah,
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  it's it's it's a trillion dollars of debt plus that's misallocated capital that could have
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  been much better used to buy a franchise or start a business of some sort.
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  And then because like if it's actually higher education, maybe the undoing of
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  America as a as an economic power, because that debt that hangs over you
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  is going to prevent you from buying a house, which is going to prevent
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  you from having kids, which is going to prevent you from having getting married.
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  And then you know, population implosion, and we look like Japan and
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  Western Europe which is already starting to go that route, and so the downstream
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  effects were just starting to see, all right, well, you know it's
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  a it's a bad situation. They're not doing anything to make it better.
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  And we've got the three legs of the stool, actually four legs of the
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  stool consumer credit, debt, credit cards, student loans and auto loans and
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  home loans right, and it seems to me the legs of that stool are
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  rott into the core well. And it's interesting in that there's certainly rot in
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  each of them. I think student loans has the most amount of rot,
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  for sure, just because the you know, the the roi has always been
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  dubious from an educational standpoint, at least with the car loan in theory,
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  the car gets you to and from work so you can be productive and earned
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  money. The home loan in theory the value your homes post to go up.
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  Now, there's all a full bunch of changes that are going on in
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  the housing market that may make things challenging for some time. But now you
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  know, of all the different types of credit that's out there, I mean,
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  the credit card one is absolutely you know, I think the consumer is
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  getting savvier, but and the percentage of people who revolve are that's still going
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  to be a problem. But you know, frankly, the consumer, as
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  you said, is doing no different than the government is doing, which is
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  that's tomorrow from you know, tomorrow to pay for today, and at some
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  point you do have to pay the piper. I'm not sure when that's going
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  to be, and I'm not sure if it'll be paid equally. I do
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  think that it'll be very localized and very specific to categories and geographies. And
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  I totally agree with you. Yeah, well, you know who's going to
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  pay it. The taxpayer is going to pay it right some way or another.
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  These losses are always they always wind up being socialized, whereas the profits
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  from all these programs which are a total mess, are privatized. Right.
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  Isn't that the way it works? Yeah, yeah, no, it's it's
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  absolutely the case. And you know, the smart consumers, I mean,
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  it's your Your point is well taken about college in general. College enrollment is
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  down actually from its peaked in twenty ten eleven, and it's down a million
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  students. And so not only is the bubble is bursting, like there is
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  meaningfully less enrollment, prices will come down and that you know, call it
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  a third to half of the universities are going to go out of business,
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  and so the market will reconcile. It's just taking too long to do so.
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  And in part, as you said, some of the core assumptions and
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  the inaction and or lobbying is preventing it from happening in a way that the
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  market should normally make things happen, and you're seeing this in other legs.
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  To carry is that you know, in general, my view is that categories
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  that focused on experience in transformation, meaning you know, like international travel is
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  at a forty six year old high two percent of you just considering to travel
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  abroad for the conference board. And then a category that I know well that
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  I'm operating a business in Jeneo and glow to facial medical aesthetics that's to grow
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  ten percent a year to forty billion dollars and twenty seven according to BCG SO.
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  Categories that deliver the goods like you get a great experience, or you
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  actually become better or different, or a transformation in some way, shape or
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  form that's going up. Whereas stuff that's just kind of physical goods like I
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  bought it last yesterday and last week, therefore I buy it again, Like
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  that's going to be super problematic. Target revenue down five percent in July,
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  Home depot revenue down two percent in July. And you'll like this one,
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  Kerry, is that you know, physical goods, the pricing has come down,
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  So you know you're going to see deflation there because there's just not too
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  much stuff and too little people want it. But to the point, theft
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  at retail is going to be a massive even one two worse one two punch.
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  It was estimated to be one hundred billion dollars and twenty two and Targets
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  said that merchandise theft will rob shareholders of a half billion dollars in earnings this
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  year. And so, well, you know, shoplifting has been normalized,
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  so why should we worry about it? Right? Wow, we're gonna worry
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  because I mean, we'll see how long the pain kicks in. But some
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  parts of the country will just not have retail available to them. Why would
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  they Why would a retailer operate a business there put their people at risk and
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  their merchandise at risk. And I think it was Chicago. It's got the
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  Kachamimi idea because of all the shoplifting, the theft, and the danger to
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  everybody there. Uh, they're going to open up their own supermarkets to make
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  up for the food desert. Now, didn't I didn't see that one definition
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  of complete and total utter insanity. Where am I crazy? Well, you
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  know, it's it would I haven't allowed it, but if they were smart,
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  they would do it in the new economy, not the old economy.
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  Right, So delivery would work make a lot of sense, right because like
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  the three the four horsemen of the apocalypse that's going to hit retail. Physical
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  goods are One, we've hit peak physical goods. People don't want that stuff
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  anymore. They want experiences in transformation. Look at China, Look at China,
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  China absolutely. Two is that you have the theft shoplifting thing, which
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  is like it's just going to make it less pleasant the shop at these places,
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  people won't go there. Three, you have e commerce that's continuing the
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  truck along like Amazon is going to continue to do its thing. And in
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  the four you're going to have delivery services continue to rise. And that all
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  of these things make it so that you don't need the retail experience to be
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  a great one. They should become distribution warehouses where people can just get stuff
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  shipped to them and showroom looks exactly that you go look at you know,
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  you go look in the big box store or whatever the retail store for the
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  product you actually want, and then you go order it online. Right,
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  I like it. Hey, I do it all the time myself. You
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  know. Yeah, time is precious. Why would you you know, so
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  they might as well accept their new newly found role and capitalize on it.
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  Maybe they'll charge you to walk in the store now you know, well you
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  know, I mean there are retailers in Japan that do that. And guess
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  what, when you charge people for the experience, the experience gets better.
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  You know, That's how club stores work, right you. The reason why
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  the Costco hot dog is a buck fifty is you pack the pay to enter
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  the store. So you know, like you maybe think of that, like
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  maybe I will go to Costco and get a hot dog for lunch today.
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  You just made me hungry. But even if they said, look it's ten
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  bucks to come in, but you'll get a credit on your first sale,
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  right, oh yeah, it wouldest that be a better thing for them.
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  Absolutely, I mean it. I mean the best thing that retailers could do
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  would be to follow costical model. And he said, you know, charge
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  them up front so that you know that it's not going to be you know,
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  a shoplifter or whatever, someone who actually wants to be there, and
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  as you said, give them a Scooby snack, whether it's you know,
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  a block fifty hot dog five dollars or two's ritchickin or whatever, or a
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  discount on future purchases, Like everybody wins in that scenario. So yeah,
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  I think it. I think it could work. I think it could work.
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  I mean there'd be outrage at first. There always is outrage. You
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  remember when they started charging for credit cards what's upon a time and there was
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  complete and utter outrage. And now what do you think, like now everybody
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  just accepts it, right, Well, I think the consumer will avenge figure
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  out and I think it's probably figure it out sooner rather than later. That
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  there is no free lunch. That when you pay for something you're going to
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  get better experience, treatment, service, or whatever else. It is.
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  So as you said, credit cards went this way, your retail is going
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  to go this way, and look at social media is going to go this
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  way too. You know, when you get charged to be part of the
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  platform, then at least you know you aren't the product that's being monetized and
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  sold, which is like what Facebook is. So and you know the other
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  thing is that when you get something for free, it has no value to
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  you, whereas when you have to actually pay for things. You know that
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  it's a different things, different thing altogether. Yea, all right, hopefully
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  we can free up money from paying for things like colleges and unnecessary education.
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  That free up more money to pay for things that people actually want will actually
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  help them out. So yeah, well that's the other thing. Like you
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  and I, you know, can talk about this. We already went to
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  college, we already had our day. College was a lot more affordable and
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  cheaper. Now that it's unaffordable, the person is saying, like, og,
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  you know you're you already got the benefit. Now you're screwing us out
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  of it effectively. Yes, you know, there's something to be said for
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  that, you know, I mean, I understand where they're coming from.
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  But things are definitely different now, aren't they. Oh I, it's it's
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  incredible, just just the sheer mercenary nature of higher education. Like you know
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  it. These these educational institutions started out with the missionary purpose and now they're
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  not. They're all here to suck as much money out of people as possible
• 20:49
  without delivering any outcomes. And it should be criminal to do. But it
• 20:53
  should be criminal, like basic some schools and some majors should have the same
• 20:57
  warning labels as cigarettes. You could lose all your money with this, right,
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  I mean those trading options, those stock market it's like you might lose
• 21:06
  all your money and get nothing out of this. Hey, it's it's they
• 21:11
  become basically parasitic entity. Seventh they yes, all right, any organization that
• 21:18
  loses its missionary purpose said perfectly becomes a parasite. It's rentier. They're rentier
• 21:23
  seeking enterprises that that couldn't care less about who's paying for it. Right,
• 21:33
  Yeah, so all right, well, Eddie, tell us again where we
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  find you at these days. Yeah, you can find me on Twitter at
• 21:41
  eddiewood Grow, as well as my substack category pirates dot com. Uh,
• 21:48
  if you're a carry a Lens listener, then please send me a note.
• 21:51
  I am glad I give you a complimentary subscription to it, all right,
• 21:53
  Eddie wood Grow dot com. If I remember the and there it is on
• 21:59
  my web site. Hey, if you got a question for Eddie or myself,
• 22:03
  shoot me an email, k l at carry Lutz dot com, Twitter
• 22:07
  feeds at carry Lutz and while you're at the site, you'll find a direct
• 22:12
  link to Eddie's site on Financial Survival Network dot com. Just click it take
• 22:18
  you right there, and while you're on the site, sign up for your
• 22:22
  free newsletter Eddie. Always a pleasure. Thanks so much for stopping by,
• 22:26
  same here, Kerry, Thanks man, thanks for listening to carry Lutz's Financial
• 22:30
  Survival Network, your solution to today's trying times. For the latest, go
• 22:34
  to Financial Survival Network dot com. Financial Survival Network now more than ever,