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Secretary of Education Babbles Financial Nonsense and Can't Explain Simple Cash Flow!

Lots of Money for Student Loans--But at What Cost?

Secretary of Education Arne Duncan was all smiles in November as he addressed a group of students at T.C. Williams High School in Alexandria, Va.

"Please apply for our financial aid. We want to give you money. There's lots of money out there for you," Duncan said.

The event was the kick-off of a joint push for financial literacy by the U.S. Department of Education, the Federal Deposit Insurance Corporation and the National Credit Union Administration. But implicit in Duncan's remarks was the fact that nowadays, with costs rising at least twice as fast as overall inflation, saving for college is not enough.

Duncan noted that millions of students do not take full advantage of federal student aid. But the vast majority of that aid consists of loans, and the nation's student loan debt--and student loan defaults--are going rapidly.

Still, Duncan rejects the notion that the administration is pushing student borrowing in a way that previous administrations pushed home ownership--with disastrous results.

"We have to educate our way to a better economy," Duncan told CNBC in an interview. "The only way we'll get to there from here is through many more students not just graduating high school but going to college."

Duncan is concerned, however, about the rapid rise of college tuition, and hinted the administration is preparing to shame some schools into keeping costs down.

Is it me, or is it ironic to have the Secretary of Education promoting to the young to seek financial aid, which consists mostly of student loans and thereby taking on more debt in the middle of a student debt bubble, all during an event centered around financial literacy? Complete arrogance!

He's totally wrong if he can't see the correlations between a government stimulated real estate/debt bubble and a federally stimulated student debt bubble. It's ignorant and moronic.

Where Duncan totally fails in his address to the young is his concern over rapidly rising tuition costs. He fails because he doesn't explain to the young it's due to the rapidly rising payroll and benefit packages at the college level. As the government has flooded the nation with student debt, that money increased demand and chased it's way into the college system allowing colleges to consistently raise pay and benefits to unsustainable levels, which is forcing tuition higher, while no one is teaching young people that all of this student debt might get them very little in relationship to the debt which is mostly benefiting college level pay and benefits and that's why savings for college is not enough. Duncan fails to present the cycle of cash flow and why the system is failing students.

Dear Duncan: Let's stop calling debt/loans financial aid. How about teaching high school students how long it's going to take to repay that debt? How about teaching the cycle of cash flow of student tuition, federal aid and college level pay and benefits? How's that for financial literacy?

Hope all is well.


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