Student loan crisis

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CNBC has a show in the early January of this year which is about the student loan programs in America and how this sector may burst next to the housing bubble. The name of the program is “Price of Admission: America’s College Debt Crisis“. I was lucky to have my family support throughout college, but still graduated with $120,000 in student loan. My job has a good pay, so I will be able to pay my bills. Not any job can guarantee that prospect. My pharmacy school’s tuition now is 43,000 a year!!! I don’t think it is worth it. With the slow economy right now, the school should not increase the tuition with the rate of 6% per year. The students should sign a petition to the board of trustee or directors or the president, but nobody has thought to do it.

One of my co-workers is taking classes of University of Phoenix, a for-profit private school, for major in software engineering. He said he has financial aids but I am afraid he will be hooked to private loans sooner or later. Data has shown that most of the students of that school will not be able to pay back loans. I can’t persuade him to take classes at community college. He has children and he works full time to support his family, so online program is convenient for him. The thing is with the slow economy, he may not find a job but the interest still builds up. There is no bankruptcy for student loans. Once you are hooked, you are stuck forever. Even if you are dead, your co-signer will have to continue to pay for it.

Higher education is a really good idea, but you have to consider the cost as well. Sometimes it is not worth it. Sometimes, it takes longer but affordable. The cost of education and for-profit schools should be regulated. Students, be aware!!!!

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Black Swan – Randomness

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In Black Swan by Nassim Nicholas Taleb, the author argues that many unpredictable events happen due to randomness and cannot be explained. Analysts try to explain why the stock market tumbles but only after the facts. Is it really due to this news or that news? I don’t think so. The Dow lost almost 500 points on Thursday 8/4 (4.8%). Instead of asking why, we just need to accept the fact. It is not too bad as Black Monday (1987) but enough to scare a chicken like me. The stock market is too difficult to predict. Mr. Taleb and Mr. Soros have many viewpoints in commons but these are the two that I can remember:

1. Be ready to lose money before making money

2. Advocate Open Society concept from Karl Popper

If it is a true Open Society, the Debt Deal has been done differently. The Debt Deal is not really a deal. I feel Obama is too weak in this case. Raising tax to the upper class is much better than to cut spending on student loans and Medicare/ Social Services. The money you give to the elderly will remain in the States because they spend money in the malls, at dr. office, the hospital, in the caregiving services and therefore stimulating the economy and raise the employment rate. If the corporation keeps the money, it goes to bonus for the Executives, to Swiss Bank, to around the world to avoid tax. I do not really understand why the politicians are too ignorant. There is a rule, 80/20. 80% of assets in a country is held by 20% of population. Sometimes, it can be 99/1. It is an asymetrical distribution, and it always is.