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Profiting from Student Debt

Excerpts from Confessions of an Old Man

Confessions of an Old Man“Washington borrows at 2 percent and charges students 7 percent in interest”

February 22, 2020 – The federal government has been profiting from student debt earning $66 billion on loans originated from 2007 to 2012, according to Senator Elizabeth Warren. The profits could be as high as $185 billion on new student loans made over the next ten years. According to the US Department of Education, the federal government charged interest rates from 4.45 to 7 percent on student loans in fiscal year 2017–18. At the same time, SoFi, a private company, offers student loans as low as 3.25 percent. The federal government uses a ten-year bond issued by the US Treasury as a benchmark for its cost, which was about 2.4 percent in 2017. It appears that Uncle Sam is even worse than the Wall Street banks when it comes to making profits from student loans.

To help students attend college, Congress passed the Higher Education Act of 1965. It guaranteed student loans against defaults, promised certain interest rates to the banks, and paid fees to banks for the administration and collection of student loans. Later on, the federal government decided to provide student loans directly instead of going through financial institutions. The Direct Loan (DL) Program began its operation in the academic year 1994–95. Under this program, the federal government provides the capital and loan servicing, and the loans are originated by colleges and universities. By July 2010, the program accounted for 100 percent of new student loans—a government-controlled student loan program. One of the shortcomings of student loans through the federal government is having virtually no option to refinance the high interest rates. This option has been commonly available for other types of loans in the private sector but not for student loans from the government. Lowering student loan rates to match the cost to the federal government could put its profits into students’ pockets and help grow the economy. (more…)

Make a Change

Excerpts from Confessions of an Old Man

Confessions of an Old Man“Take a look at yourself, and then make a change.” Late Michael Jackson

Michael Jackson’s song, “Man in the Mirror” can be taken as a challenge by members of the MI generation to take a look at themselves, take charge of their destiny, and make a change. And they have the power and tools in their hands to do so. They can also make their parents and grandparents help them accomplish that goal. For the first time in American history, millennials will represent the largest segment of eligible voters: 32 percent in 2018 and 34 percent in 2020. Democrats and Republicans, both parties being gravitated toward extreme positions, offer a great opportunity to make a change starting in 2018 and beyond. One can see the frustration of many Americans with the daily grind of working hard and getting nowhere, going through security checks at every high-rise building and airport, waiting in lines at every government office, and forever being on hold when calling a government agency or credit card company. The choice is to make a change or have the federal government take more control over our life.

 

The United States has fought communism and socialism since World War II to promote democracy, freedom, and human rights. However, it now finds itself working toward a socialist order and building a wall. It has a centralized health-care system controlled by the health insurance industry and the government (Medicare and Medicaid). The government decides how Americans behave financially by printing money and dictates how we spend money through the tax code. It is monitoring our emails, phone calls, and physical activities by placing video cameras at virtually every street crossing and in every building. Furthermore, American politicians pick their voters through the gerrymandering process instead of voters getting to pick their leaders.

 

The major impediment to a change and improving the future for the MI generation and the middle class are the two major political parties: Democrats and Republicans. Both parties believe they are the best for the country and that the country will not function without them. There is no room for a third mainstream political party or independent leader in their eyes. Both parties have done and will continue to do everything possible to keep third-party or independent candidates from even running for election. They have total control over who gets nominated for any public office at the state and federal levels.

 

A majority of Americans consider themselves as independent. However, they have no voice in the governing of the country. The bottom line is that both parties are the same when it comes to governing and living off the backs of the MI generation. Both parties’ leaders behave like children and blame one another and everyone but themselves for their failures to govern. Their only interest seems to be getting reelected, instead of serving the people.

 

“So the trillion-dollar question is how do you go about making a change, and what is the road map toward accomplishing that?” ….More

 

The Middle Class Comeback

The middle class is getting crushed. But there is hope. The most common argument about the middle class destruction is the declining or stagnant income, which is true. However, the main culprits are the costs of healthcare, education, and housing that have increased at a much higher rate, making it impossible for an average American family to attain a middle-class lifestyle (see chart below). Furthermore, the tax policies have exacerbated the problem by creating after-tax income and wealth inequality, favoring the non-working income taxed at a lower rate than the working income. Despite the doom and gloom about the middle class making headlines, there are three major forces working together—women, millennials, and technology, which provide hope for the future.

Change in Income vs Cost of Healthcare, Housing and College 1986 -2013 (more…)

70 Congresspersons who are 70 years old in 2019

District Name Party Year Assumed Office Born Age Years in Congress % Win Votes in 2018 Total Votes casted for the district Winner’s share of Votes Major Challenger’s Share of Votes Win Margin Against Major Opponent
1 Alaska at-large Don Young Republican 1973 1933 85 46 53.3% 280,978 149,779 131,217 7%
2 Texas 30 Eddie Bernice Johnson Democrats 1993 1935 83 26 91.1%    183,174      166,784            16,302 82%
3 California 32 Grace Napolitano Democrats 1999 1936 82 20 68.8%    177,031      121,759            55,234 38%
4 Florida 20 Alcee Hastings Democrats 1993 1936 82 26 Unopposed    202,824      202,659                  – 100%
5 New Jersey 9 Bill Pascrell Democrats 1997 1937 82 22 70.3%    200,416      140,832            57,920 41%
6 Kentucky 5 Hal Rogers Republican 1981 1937 81 38 78.9%    218,017      172,093            46,002 58%
7 New York 17 Nita Lowey Democrats 1989 1937 81 30 88.0%    193,318      170,168            23,198 76%
8 California 43 Maxine Waters Democrats 1991 1938 80 28 77.7%    196,052      152,272            43,720 55%
9 Georgia 5 John Lewis Democrats 1987 1940 79 32 Unopposed              –                –                  – 100%
10 Maryland 5 Steny Hoyer Democrats 1981 1939 79 38 70.3%    304,209      213,796            82,441 41%
11 California 12 Nancy Pelosi Democrats 1987 1940 78 32 86.8%    317,072      275,292            41,854 74%
12 Florida 27 Donna Shalala Democrats 2019 1941 78 0 51.8%    252,586      130,743          115,684 4%
13 North Carolina 4 David Price Democrats 1997 1940 78 22 72.3%    334,495      242,002            80,279 45%
14 South Carolina 6 Jim Clyburn Democrats 1993 1940 78 26 70.1%    206,433      144,765            58,421 40%
15 California 40 Lucille Roybal-Allard Democrats 1993 1941 77 26 77.3%    121,449        93,938            27,569 55%
16 California 47 Alan Lowenthal Democrats 2013 1941 77 6 64.9%    221,036      143,354            77,584 30%
17 Illinois 7 Danny Davis Democrats 1997 1941 77 22 87.6%    246,243      215,746            30,534 75%
18 Texas 31 John Carter Republican 2003 1941 77 16 50.6%    286,007      144,680          136,425 1%
19 California 18 Anna Eshoo Democrats 1993 1942 76 26 74.5%    302,238      225,142            77,071 49%
20 Florida 24 Frederica Wilson Democrats 2011 1942 76 8 Unopposed              –                –                  – 100%
21 North Carolina 3 Walter Jones Republican 1995 1943 76 24 Unopposed              –                –                  – 100%
22 Texas 12 Kay Granger Republican 1997 1943 76 22 64.3%    268,491      172,557            91,018 29%
23 California 8 Paul Cook Republican 2013 1943 75 6 60.0%    170,785      102,415            68,314 20%
24 Connecticut 3 Rosa DeLauro Democrats 1991 1943 75 28 93.6%    154,277      144,452              9,874 87%
25 New York 15 José Serrano Democrats 1991 1943 75 28 96.0%    129,674      124,469              5,187 92%
26 North Carolina 5 Virginia Foxx Republican 2005 1943 75 14 57.2%    277,002      158,444          119,111 14%
27 Wisconsin 5 Jim Sensenbrenner Republican 1979 1943 75 40 62.0%    364,005      225,619          138,322 24%
28 California 3 John Garamendi Democrats 2009 1945 74 10 58.1%    232,251      134,875            97,313 16%
29 California 53 Susan Davis Democrats 2001 1944 74 18 69.1%    268,794      185,667            83,057 38%
30 California 6 Doris Matsui Democrats 2005 1944 74 14 80.4%    201,939      162,411            39,580 61%
31 Illinois 9 Jan Schakowsky Democrats 1999 1944 74 20 73.5%    290,351      213,368            76,943 47%
32 Minnesota 7 Collin Peterson Democrats 1991 1944 74 28 52.1%    281,509      146,672          134,843 4%
33 Missouri 5 Emanuel Cleaver Democrats 2005 1944 74 14 61.7%    283,785      175,019          100,744 23%
34 New Jersey 12 Bonnie Watson Coleman Democrats 2015 1945 74 4 68.7%    252,375      173,334            78,993 37%
35 New York 2 Peter King Republican 1993 1944 74 26 53.1%    241,152      128,078          112,377 6%
36 Arizona 1 Tom O’Halleran Democrats 2017 1946 73 2 53.8%    266,089      143,240          122,933 8%
37 Georgia 13 David Scott Democrats 2003 1945 73 16 76.2%    293,010      223,157            69,736 52%
38 Indiana 4 James Baird Republican 2019 1945 73 0 64.1%    244,363      156,539            87,726 28%
39 New York 12 Carolyn Maloney Democrats 1993 1946 73 26 86.4%    251,604      217,430            30,444 73%
40 Tennessee 1 Phil Roe Republican 2009 1945 73 10 77.1%    224,282      172,835            47,099 54%
41 California 13 Barbara Lee Democrats 1999 1946 72 20 88.4%    294,837      260,580            34,201 77%
42 Georgia 2 Sanford Bishop Democrats 1993 1947 72 26 59.6%    229,171      136,699            92,585 19%
43 Illinois 1 Bobby Rush Democrats 1993 1946 72 26 73.5%    257,885      189,560            51,061 47%
44 Maryland 2 Dutch Ruppersberger Democrats 2003 1946 72 16 66.0%    253,302      167,201            77,764 32%
45 Michigan 1 Jack Bergman Republican 2017 1947 72 2 56.3%    332,497      187,251          145,301 13%
46 New York 16 Eliot Engel Democrats 1989 1947 72 30 Unopposed              –                –                  – 100%
47 North Carolina 12 Alma Adams Democrats 2015 1946 72 4 73.0%    276,867      202,228            74,477 46%
48 Ohio 9 Marcy Kaptur Democrats 1983 1946 72 36 67.8%    231,937      157,219            74,684 36%
49 Texas 35 Lloyd Doggett Democrats 1995 1946 72 24 71.3%    194,067      138,278            50,457 43%
50 Arizona 3 Raúl Grijalva Democrats 2003 1948 71 16 63.9%    179,518      114,650            64,806 28%
51 California 19 Zoe Lofgren Democrats 1995 1947 71 24 73.8%    220,319      162,496            57,724 48%
52 Florida 8 Bill Posey Republican 2009 1947 71 10 60.5%    360,527      218,112          142,408 21%
53 Kentucky 3 John Yarmuth Democrats 2007 1947 71 12 62.1%    278,720      173,002          102,012 24%
54 Mississippi 2 Bennie Thompson Democrats 1993 1948 71 26 71.8%    221,379      158,921            48,039 44%
55 New York 10 Jerry Nadler Democrats 1993 1947 71 26 82.1%    210,714      173,095            37,718 64%
56 North Carolina 1 G. K. Butterfield Democrats 2004 1947 71 15 69.8%    269,534      188,060            81,399 40%
57 Oregon 4 Peter DeFazio Democrats 1987 1947 71 32 56.0%    372,893      208,710          152,513 12%
58 South Carolina 2 Joe Wilson Republican 2002 1947 71 17 56.3%    257,139      144,642          109,284 13%
59 Texas 9 Al Green Democrats 2005 1947 71 14 89.1%    153,001      136,256              5,967 78%
60 Vermont at-large Peter Welch Democrats 2007 1947 71 12 69.2%    272,451      188,547            70,837 38%
61 Virginia 3 Bobby Scott Democrats 1993 1947 71 26 91.2%    217,722      198,615            19,107 82%
62 West Virginia 1 David McKinley Republican 2011 1947 71 8 64.6%    198,214      127,997            70,168 29%
63 Connecticut 1 John Larson Democrats 1999 1948 70 20 63.6%    272,020      173,133            95,207 27%
64 Florida 21 Lois Frankel Democrats 2013 1948 70 6 Unopposed              –                –                  – 100%
65 Florida 5 Al Lawson Democrats 2017 1948 70 2 66.8%    270,326      180,527            89,748 34%
66 Massachusetts 1 Richard Neal Democrats 1989 1949 70 30 Unopposed              –                –                  – 100%
67 Oregon 3 Earl Blumenauer Democrats 1997 1948 70 22 72.6%    384,326      279,019            76,481 45%
68 Pennsylvania 16 Mike Kelly Republican 2011 1948 70 8 51.6%    262,396      135,348          124,113 3%
69 Texas 11 Mike Conaway Republican 2005 1948 70 14 80.1%    220,377      176,603            40,549 60%
70 Texas 36 Brian Babin Republican 2015 1948 70 4 72.6%    221,956      161,048            60,816 45%

Sources: Ballotpedia, Washington Post, Votesmart.org

Debt Denial: Stealing from Our Kids

Our handling of the national debt is like a grand, inter-generational Ponzi scheme that’s destined to drown our children and grandchildren in red ink. Our leaders like to call their strategy borrowing, but it is really tantamount to stealing — from our children, worse yet. Why? Because we have no plans to pay the debt. None. We continue to borrow just to make interest payments that are estimated to be $5 trillion over the next decade while doing nothing to pay down a staggering debt of $17 trillion.

Equally alarming, perhaps even surreal, is that party leaders who can hardly agree on the color of the White House can be found nodding their approval at the fiscal fiction “that deficits don’t matter,” as then-Vice President Dick Cheney told a disbelieving Paul O’Neill, the treasury secretary at the time.

Fast forward a decade to President Obama, the anti-Cheney, who was telling George Stephanopoulos on ABC that “we don’t have an immediate crisis in terms of debt. In fact, for the next 10 years, it’s gonna be in a sustainable place.” House Speaker John Boehner, considering the President’s comments in a separate ABC interview, concurred that the crisis is not immediate. This pervasive Washington attitude is reflected in Office of Management and Budget’s 2014 projections that show the national debt haplessly climbing skyward through 2020 with no sign of coming down.
(more…)

Flip Side of the Minimum-Wage Debate

2014-09-03-FlipSideofMinimumWageBattle.jpg

September 8, 2014 – Something that Washington does not want you to know about and hopes that nobody else will discuss during the minimum-wage debate is take-home pay after taxes for low-wage earners. Washington claims that Americans should be paid living wages so that they can live a decent life. However, it is not willing to give up its share of the booty that it would collect from the same low-wage earners it claims to help.

For example, the federal government will collect at least 15 percent of the increased income from those low-wage earners through payroll tax. In other words, if the minimum wage goes up by a dollar, the federal government will take away, directly or indirectly, at least 15 cents of that additional dollar from the working poor.

Asking large corporations, which are in business to make money, to pay additional wages is like asking them to be saints. Government mandates do not have a major impact on large corporations, since they will figure out a way around them. After all, they can rent lawmakers; one former senator famously declared, “My vote can’t be bought, but it can be rented.” On the other hand, politicians do not pay anything from their pockets either. They will just give the money to one group and take it from another, but not from the special-interest groups that finance their campaigns. (more…)