Student Loans

Senator Mark WArner has just sent out a message about student debt, noting that 44 million Americans have student loan debt of $1.4 trillion. This may be the elephant in the room with respect to higher education, making it inaccessible to the majority of Americans. Senator Warner (and others) proposes relief at the Federal level to reduce the burden of this debt on individuals. Today, many students graduate with a large debt from their education, but are unable to find a job to pay it back. There are many negative factors about these loans, and Republicans in Congress are working to make the situation worse.

The proper approach, however, is to look also at the root cause of this problem. A University education has become increasingly expensive. Costs have risen much faster than inflation for many years. One of the root causes is that there are no constraints on costs. The student loan system allows colleges to raise costs above what normal people can afford by invoking loans to pay the difference. This is wrong. Part of the bame goes to universities that provide increasingly luxurious accommodations and surroundings for students. One reason for these seductive surroundings is a competition for students. Colleges must fll their freshman classes. We might also look at productivity of professors. What about the administration? Do we really need a Dean for Left Handed Students?

Perhaps Congress should provide some financial relief for the burden of student debt. Ultimately, however, the cost of higher education must be reasonable. There are, today, colleges that provide excellent education at an affordable price. Go there. Pick a school that doesn’t have a football team or doesn’t charge admission to games. Let admission counselors know that cost is important to you and that a student loan is not an acceptable option.

When I graduated, the president of our univesity told the graduating class that half the cost of our education came from tuition. The balance came from alumni gifts. There were no loans. Ahhh, the good ol’ days.

Medical Tourism

Here’s another approach to reducing healthcare costs: Medical Tourism. Have your big operation done overseas. Costs are much lower, enabling you to bring your spouse along for a little vacation while you are recovering from surgery. The surgeons have frequently been trained in the US and are certified by US specialty boards. Some of the hospitals are managed by US companies.

This option appeals most to those without any insurance, because it’s usually the cheapest way to have surgery. If you do have insurance, check to be sure they will pay the bill. Many will, because the costs are lower than any US hospital.

But be careful. This is one of those situations where it goes well when it goes well. Hospitals overseas generally don’t have the same quality control procedures in place. Medical staff are not organized as they are in the US, so if you have a complaint, there may be no one to talk to. In the US, a nurse has a masters degree in nursing. In many countries, a nurse has only a high school diploma.

Still, it’s a viable option if price is important to you. Check out the Medical Tourism web site or show up at their convention in Los Angeles in October.

The CDC has a page about medical tourism, which lists other things to think about and links to other resources. The main reasons for US patients going overseas are cosmetic surgery, dentistry, and heart surgery.

Affirmative Action

Rod Newhouse writes in today’s Washington Post about his educatinal experience at MIT. He was first in his class in high school in Flint, MI, so he should have done well. The problem was, he was black and poor, so his high school was also black and poor. His SAT scores were poor, and he got into MIT only because he was black. His peers at MIT had already had 1 to 2 years of college-level calculus. He had none. Some would argue that affirmative action puts students into situations where they are likely to fail, that admission should be based on merit alone. Rod’s basic problem was that he was born in the wrong ZIP code. Even today, students in Rod’s old neighborhood start from a greatly disadvantaged position. Their schools are poor, and there is nothing in their environment to make up for that disadvantage. Pre-school can do that. Starting the learning process at age 3 or 4 can level the playing field by providing resources to children they would not otherwise see. It levels the playing field, so that all children have the same skills when they enter a k-12 school. Of course, the remaining problem is to ensure that all k-12 schools in the system provide the same education to their students. Why should one high school in a city be substantially better than another? If Rod’s fresman classmates had calculus in high school, why didh’t he? He was certainly capable of learning calculus and did gratuate from MIT, but with great effort. Not every student would succeed in that situation. Look at what we are missing as a country! Students fail to earn admission to a university because they were trapped in a poor school. We all lose, but this can be fixed. The “fix” of course, is political. Our elected officials are responsible for the quality of our schools–ALL of our schools. Money is part of the problem, but it’s possible to have excellent schools without spending large sums. Voters must demand that candidates attach sufficient importance to excellence in schools.

Whither the Economy?

So, the economy is doing well, right? Unemployment is low, and the market is up. All good, right? Well, maybe. First, the unemployment figures hide those who are under-employed or working only part time. One good number to look at is wages. Stagnant. Those at the top are doing better than ever, but the rest of us are plodding along. If you look at the stock market, prices are up, but it’s mostly fluff. Companies show a profit, but it’s from cost cutting, not from selling stuff. Real people don’t have money to buy stuff. It’s not the minimum wage folks. It’s the next level up. Real people don’t have much disposable income after food and rent, so they don’t go shopping. Housing starts are down this month, so no one will be buying stoves and refrigerators. One metric I like is the Walmart parking lot. The situation is, of course, more complex than that, but the principle applies–people are not spending money.

What to do? The hope for tax reform was a key factor in driving the market higher after the election. Is this real? Many expected that corporate taxes would go lower and companies would then repatriate cash reserves to the US, generating tax revenue. But that wouldn’t help the Walmart shopper. Most large companies are already sitting on large cash reserves without any reasonable place to invest it. No company will build a new factory without a market for the goods they would produce. If customers don’t have money, no one will buy.

There was a book a few years ago about retirement planning that said the 401k concept was a cruel hoax for most workers. The average worker didn’t have anyting left after food and rent to contribute to retirement. One cause, of coure, is the multi-million dollar CEO sallaries. Those at the top are doing better than ever, while salaries for the average worker have remained flat. Changing that will be difficult.

Another solution is a givernment stimulus–a large input of money into the economy in the form of salaries for workers. Public works projects come to mind–roads and bridges. One risk in this approach is inflation. Blindly injecting money into the economy would risk inflation. One solution would be to take equivalent money out at the top in the form of taxes on the wealthy. This sort of stimulus would only be necessary for a brief time, but it has to be done on a large scale. (See previous post, “old movie.”)

Many expect a market “correction” soon of around 10%. As soon as those buying stocks realize there is nothing behind the price–no sales, no revenue, prices will fall maybe 20 or 30%. Remember, you heard it here first.

Eye on the Prize

For many years, the two great problems in American healthcare have been ACCESS and COST. Both of these are amenable to broad political solutions, but neither has been solved. The ACA went a long way toward improving access. In this country, access to healthcare requires health insurance. Hospitals and many providers will not accept patients who do not have insurance. Universal expansion of the MEDICAID option would essentially solve this problem, but Republicans are opposed to this. No alternative has been offered, so, in states such as Virginia, millions of citizens go without healthcare. This issue has reached a point where 60% of Americans favor a single payer, government sponsored health insurance system. Healthcare has become a right. There are many drawbacks to government provided healthcare, but no other solution has been offered to provide health insurance to all citizens. MEDICARE for all may be the only alternative.

The high COST of care has not really been addressed. We pay our providers (doctors and hosptials) more than any other country for the same services. In her book, “An American Sickness,” Elisabeth Rosenthal details various scams that providers and manufacturers use to suck money out of the healthcare system. Not all of these schemes are illegal. Just sleazy. And they do make healthcare more expensive.

Atul Gawande has also written about healthcare costs in the New Yorker magazine. In June 2009, he wrote about McAllen, TX, where Medicare spent $15,000 per resident in a town where the average income was was $12,000. This was essentially an abuse of the fee-for-service payment system. Providers found excuses to provide excessive healthcare to patients, which their insurance paid for.

As patients, we are powerless. A National system of healthcare might fix this, but the healthcare-industrial lobby is a powerful foe.

One of the problems that has evolved recently is the evolution of healhcare providers into a series of monopolies. In a lot of communities in the US, the largest employer is the hospital. If an insurance company wants to sell health insurance, it has to bargain with that single provider over prices. A common scenario is for a distant university to buy out a community hospital. Instantly, care becomes more expensive and more plentiful. The hospital expands in size. More tests and procedures are provided to the same population at greater cost.

Smoke and Mirrors

So, the economy is doing well, right? Unemployment is low, and the market is up. All good, right? Well, maybe. First, the unemployment figures hide those who are under-employed or working only part time. Another number to look at is wages. Stagnant. Those at the top are doing better than ever, but the rest of us are plodding along. If you look at the market, prices are up, but it’s mostly fluff. Companies show a profit, but it’s from cost cutting, not from selling stuff. Real people don’t have money to buy stuff. It’s not the minimum wage folks. It’s the next level up. Real people don’t have much disposable income after food and rent. Housing starts are down this month, so no one will be buying stoves and refrigerators. One metric I like is the Walmart parking lot. The situation is, of course, more complex that that, but the principle applies–people are not spending money.

What to do? The hope for tax reform was a key factor in driving the market higher after the election. Is this real? Many expected that corporate taxes would go lower and companies would then repatriate cash reserves to the US, generating tax revenue. But that wouldn’t help the Walmart shopper. Most large companies are already sitting on large cash reserves without any reasonable place to invest it. No company will build a new factory without a market for the goods they would produce. If customers don’t have money, no one will buy.

There was a book a few years ago about retirement planning that said the 401k concept was a cruel hoax for most workers. The average worker didn’t have anything left after food and rent to contribute to retirement. One cause, of coure, is the multi-million dollar CEO sallaries. Those at the top are doing better than ever, while salaries for the average worker have remained flat. Changing that will be difficult.

Another solution is a government stimulus–a large input of money into the economy in the form of salaries for workers. Public works projects come to mind–roads and bridges. One risk in this approach is inflation. Blindly injecting money into the economy would risk inflation. One solution would be to also take equivalent money out at the top in the form of taxes on the wealthy. This sort of stimulus would only be necessary for a brief time, but it has to be done on a large scale. (See previous post, “old movie.”)

Many expect a market “correction” soon of about 10%. As soon as those buying stocks realize there is nothing behind the price–no sales, no revenue, prices will fall maybe 20 or 30%. You heard it here first.

When does Learning Begin?

When does learning begin? When should school begin? There is good evidence that learning begins before birth. Infants learn to recognize their mother’s voice in utero, particularly vowel sounds. After birth, the child learns from his environment. It then becomes the responsibility of adults to prepare that environment so that there are things to learn. The child’s brain is like a sponge, with enormous capacity for learning. Readiness is an issue. A child cannot write until he has motor skills to hold a pencil. Very young children can learn to express thoughts, like “I’m hungry,” with hand gestures before they can form words. The brain is working.
But when should we begin a formalized approach to learning? Six months may be a bit extreme, but age 3 is a reasonable objective. The remaining question is how to pay for it. We’re talking about school, not day care. That means a safe environment designed for children, teachers with college degrees and training in early childhood education, and certification of the education program. It’s not cheap, but Washington, DC, provides mandatory pre-school, so any community should be able to do this, given the political will. To achieve the full advantage of such a program, the K-12 system must be coordinated with it. No sense teaching reading to first graders who already know how to read. Move on. There is so much more to learn.
Some object to starting school at an early age on grounds that children need time to play. My experience suggests, however, that children look forward to coming to school and truly enjoy the experience. It’s not uncommon to hear dad exclaim, “Hey. Don’t I get a hug?” as his kid dashes off to class.
There is also a question of parental time. For many, the alternative is day care, so the question is moot. Parents report that there is ample quality time available evenings and week ends for interactions with children. Furthermore, nothing can compete with the stimuating classroom environment provided at a well run school.
Kids are certainly capable of learning more at an earlier age. Starting two or three years earlier would provide a richer edcuational experience and help compensate for any economic or social disadvantage.