About 40 million people owe over one trillion dollars in student loans. Bill Gross, the most successful bond manager ever, and the founder of PIMCO (the largest bond management company in the world), gave this explanation:
“…Universities are run for the benefit of the adult establishment, both politically and financially, not students. To radically change the system and to question the sanctity of a college education would be to jeopardize trillions of misdirected investment dollars and financial obligations…” (Quoted with permission from http://www.pimco.com/EN/Insights/Pages/School-Daze-School-Daze-Good-Old-Golden-Rule-Days.aspx)
Every student and parent should be aware of this. Unfortunately, they are up against professionals, each of which is likely to have an interest of their own – bankers, investors, universities, administrators, advisors (both financial and academic), etc…In most cases, it is the student and his/her family that is the least prepared for the hard decisions required; where to go to school, how much to borrow, what is the return on the investment part of my education, what am I paying for the rest of what I’m getting, and, last but not least, what kind of education am I really getting.
What should be done? Again, listen to David Riesman
““…Since students are so often misled in their choices, I have long encouraged federal as well as regional and state efforts to protect their rights…Our task…is to strike a balance between the need for consumer protection where students are defrauded and the need to limit student power so as to minimize the impact of Gresham’s law on higher education as a whole…” [Gresham’s Law states, in its simplist form, that “Bad money drives out good money.”]
Note: Riesman wrote this in 1980 before the impact of Gresham’s Law had been fully felt, as it is in too many places today.
Very Important Note: What I am most worried about is that students (and/or their parents) pay for an education yet get only a degree. That is the fraud. They are led to believe they are getting an education. See my next post “How to Make Calc. Student Believe They Know Calculus When They Don’t” to see how this works.
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