The Flinchum File

Thoughtful Economic Analysis and Existential Opinions
Subscribe to the Flinchum File
View Archives

Soaking Human Stumps ?

08/25/2022

I have a young cousin who is dumb as a stump . . . maybe dumber?  Fortunately, he lives six hours away, and I have rarely seen him over the years.  Unfortunately, his downward slide began when he was expelled from school about fifteen years ago for smoking pot and started hanging out with a bunch of losers.

Shortly afterwards, there was a large family reunion in his part of the state.  Unfortunately, I had just purchased a new car, and he watched as we drove up.  He started asking me questions about the car.  Finally realizing I’m a money-guy, not a car guy, he asked about the purchase price.  When I told him the price, he assumed I was rich and wanted to know how I could afford it.  Hoping to end the conversation there, I told him I could afford it . . . because I went to college.

A year or so later, I got a postcard (who sends postcards anyway?), saying he was working on his GED — pretty good for a Stump, I thought.  A few months later, I got another postcard that he had been approached by ____X______ College in North Carolina, which I had never heard of.  Researching it, I discovered it was one of those “Failure Factories” – expensive private, for-profit colleges that require little more than an admission application and a loan application to attend.   I called his mother to say this was a mistake, and she agreed but had already begged him to forget college.

Of course, he flunked out during the first semester but only after he had already borrowed $5,800.  Having only a minimum wage job and a spotty work history since then, I doubt he owes much less on his government education loans today.  He was probably glad to hear President Biden has announced his plans to cancel certain education loans.

Republicans are not opposed to all “handout” programs, but they are strongly opposed to programs what can possibly be “gamed,” whereby some undeserving person might conceivably benefit, and I understand that.  Democrats accuse them of opposing any help for anybody as long as any solitary undeserving person can benefit, but it is unrealistic is expect zero gamers.

Republicans also argue that Biden’s program will be inflationary, and that’s probably true, but without further analysis, I doubt it will be significant – nothing compared to the Fed’s delay in raising interest rates and to over-funding the American Rescue Plan last year.

Who’s fault is this anyway?  Was it The Stump’s fault?  Was it my fault for encouraging his education years ago?  Was it the college’s fault?  Was it the fault of vast college loan industry?  Was it the fault of the Student Loan Marketing Association (Sallie Mae), which buys student loans and syndicates them to investors, thereby removing almost all risk from the colleges, like the mortgage crisis in 2008/9?  Was it the fault of the Great American Dream – get an education and a good job, even for Human Stumps?

But who pays the financial cost?  Should we rely on The Stump to ever repay that debt?  Should we punish Sallie Mae’s investors?  Should we sanction the colleges that benefit, primarily private colleges?  Or, should we dump it on the taxpayers?  Do we really have a choice?

We are a fee-only advisor providing best interest fiduciary services to clients
in Chesapeake, Newport News, Norfolk, Suffolk, Virginia Beach, Williamsburg, and the surrounding areas of Hampton Roads.

CONTACT BAY CAPITAL ADVISORSWe Will Respond Promptly

Contact Us Bottom