Ironically, something that weirdly specific might actually not be a bad choice... as long as no one else is doing it. Corner the market on Tibetan basket imports.

A lot of the rich people I know got rich by focusing on one very specific thing.

Unfortunately, the mere fact that some college offers a major in it, is affirmation that the saturation point for marketability has already been exceeded.

They don’t fund departments for one offs. Those skills only develop in a free market non academic setting.

Twitter Factoid.

Finding a niche market and getting an effective monopoly on it is great in business. But that almost never involves having a degree on that niche. If you've got the knowledge and can demonstrate it then having credentials doesn't mean much.

Also, good point Crid.

"we've arrived where we are because the government is cooking the books. Student loans now constitute one third of the federal balance sheet."

To be fair those are only 1/3 because the government is cooking other books. There are a lot of other liabilities that aren't officially on the federal books as well. If they weren't the government they would be looking at jail time for the way they do accounting.

Although DeVos did not say so explicitly, she basically acknowledged that we've arrived where we are because the government is cooking the books. Student loans now constitute one third of the federal balance sheet. "Only through government accounting is this student loan portfolio counted as anything but an asset embedded with significant risk" DeVos said. "In the commercial world, no bank regulator would allow this portfolio to be valued at full, face value."

It might be helpful to understand how we got here.

In 1990, under GHW Bush, the law required the government to budget for student loan defaults. The government was not directly lending then, only guaranteeing private loans, so budgeting for defaults was a huge hit to the budget.

Student loan defaults were a little different back then. Most of the defaults were from poorer students who had attended propriety trade schools set up to rake in the lightly-regulated "free money" from student loans.

Direct lending would mean that each loan due would be an asset on the books - unlike the default escrow which was counted as a liability. The interest subsidies, which were counted as expenses, would also be eliminated.

A direct lending program was phased in under Clinton in 1993, alongside the guaranteed program. College financial aid offices liked the direct lending program. It cut out the middleman (banks, state agencies, etc.) and the eliminated the complicated guarantee process. For the next decade, schools switched back and forth between preferring the direct loan program and the guaranteed loan program, depending upon which offered better incentives.

In 2008, the financial crisis caused many schools to abandon private lenders in the guaranteed program as those lenders reduced their lending due to "credit market turmoil."

In 2010, the government eliminated the guaranteed loan program and switched to direct lending, citing cost savings from eliminating the interest subsidies involved.

And here we are, with the government sitting on a portfolio of risky and outright bad loans that it refuses to discount. The government uses interest-only repayment programs to ease the burden and keep the loans "solvent," but those just end up delaying the inevitable.

We now have senior citizens who are still in student loan debt and will not be able to repay the entire loan before they die. According to the Wall Street Journal, "One generation of Americans owed $86 billion in student loan debt at last count. Its members are all 60 years old or more." (2-Feb 2019)

"the top 25% of American households by income hold nearly half of all student debt—and the bottom 25% holds just a tenth of it. Canceling all student loans would deliver $5 to rich Americans for every $1 given to poorer families." ~ from a link by Crid at May 13, 2019 4:40 AM

Somewhere along the line, middle-class and upper middle-class parents figured out they could send Junior to Harvard or Stanford, or even Berkeley or Chapel Hill, on someone else's dime. Many of them took out parent loans to help their kids with college.

Urban legends of people getting away with defaulting on their student loans with no consequences convinced them that they and Junior would not be hopelessly mired in debt after graduation.

We now have senior citizens who are still in student loan debt and will not be able to repay the entire loan before they die. According to the Wall Street Journal, "One generation of Americans owed $86 billion in student loan debt at last count. Its members are all 60 years old or more." (2-Feb 2019)

Guess we will just have to pull it out of their social security. Win, win.

Guess we will just have to pull it out of their social security. Win, win. ~ Isab at May 13, 2019 6:40 AM

So, rob one bankrupt program to pay another bankrupt program?

Guess we will just have to pull it out of their social security. Win, win. ~ Isab at May 13, 2019 6:40 AM
So, rob one bankrupt program to pay another bankrupt program?

Conan the Grammarian at May 13, 2019 6:57 AM

Nope. Make people pay their debts up to the limit of their social security contributions. Just like the IRS

There is something uniquely unjust by making government benefits untouchable against debts incurred by the same damn person.

Let's be brutally honest about why degrees like the one Amy mentioned exist:

1. They are political indoctrination programs. Their purpose is to crank out acolytes. Actually learning anything is beside the point.

2. They allow people who are bad/lazy students to get a degree without being academically challenged.

I've never seen a breakdown of student loans in default by degree pursued, but I'm betting that these account for a substantial percentage.

Also, I wonder about those seniors who still haven't paid off their student loans. Wouldn't most of those people have graduated prior to 1980?

Also, I wonder about those seniors who still haven't paid off their student loans. Wouldn't most of those people have graduated prior to 1980? ~ Cousin Dave at May 13, 2019 7:26 AM

Some of those loans were parent loans for undergraduate students (PLUS).

"Many of these seniors took out loans to help pay for their children’s college tuition and are still paying them off. Others took out student loans for themselves in the wake of the last recession, as they went back to school to boost their own employment prospects."

High time to make to force government at levels are held to the same accounting practices demanded of publicly traded companies.

I have a number of technical degrees. I'm currently paying for a degree in something that interests me because I'm able to make the payments. I went to the schools that offered scholarships, so I've never borrowed.

Student Loan Forgiveness is cancer. The universities are bloodsuckers. The proliferation of administrative positions has been possible because the taxpayer has been put on the hook.

The end of the Student Loan debt privilege is something we can all get behind. In God's infinite wisdom, He gave Ancient Israel the Sabbath and Jubilee years; we need something like that. The closet we have is bankruptcy, that sticks with you for only 7 years. America's daughters (and, we're reminded, they're the borrowers 2-1 over America's sons) should be indentured chattel for only 7 years rather than life-long slaves to the student loan system.

You should repay what you borrow - but that's a normative, "ought" statement. Sometimes, it just can't be done. As Dr. Laura used to say - somethings just can't be fixed. Let them declare bankruptcy if they cannot pay, and let the bankruptcy courts terminate the student loan contracts. No debt should be unbankruptable.

People who are selling an investment are required to make a disclosure of risks. Read the K-1 for any public company or the S-1 for any IPO and there will be pages & pages devoted to things-that-can-go wrong.

A college education is for many people the one of the most expensive investments they will ever make, yet there is rarely any serious attempt at risk-disclosure on the part of the sellers of those investments.

The mansions of college presidents, the high salaries of the expanding armies of administrators, the grandiose physical plant: these things are purchased at the cost of great human suffering on the part of the suckers.

That would at least provide clarity IRA. The US federal government doesn't follow GAAP or any other generally accepted accounting practice.

"We must admit that the federal student-loan program is totally out of control and allow its victims to discharge their loans in bankruptcy."

This isn't a solution to the problem. It is great for those who owe money. But it doesn't solve the problem with taking out loans that cannot be repaid. The real solution is to end the federal government making loans for education.

@Conan: Excellent summary of how we got into this mess. But, you overlooked the various student loan forgiveness programs. https://www.forgetstudentloandebt.com/student-loan-relief-programs/federal-student-loan-relief/federal-forgiveness-programs/

These have certain common features - go to work for a federal or state agency, or a politically favored non-profit, and have your loan forgiven over time. These positions tend to be low paying ones. You still only are likely to be able to afford to eat ramen and cheap veggies and meat, and may still be living with your parents, but, at least your parents won’t have to file bankruptcy because they co-signed on loans which you defaulted on. It also ensures a continuing underclass from which the political elites can expect to receive votes.

Economically, it’s a sort of slow motion bankruptcy of debts owed the US. If any private lender did this, the loan officers involved would likely face criminal charges. The advantage of being the sovereign government is that you can write the laws any way you wish.

Excellent summary of how we got into this mess. But, you overlooked the various student loan forgiveness programs. ~ Wfjag at May 13, 2019 9:02 AM

Thank you. And, you're right, I did.

To be honest with you, my experience in student loans is on the repayment processing side when it was a guaranteed program. There were not a lot of forgiveness programs when I worked in student loans, so that aspect of it kinda slipped my mind.

But that kind of program means the government is not getting any sort of repayment and is forgiving the loan. As a result, the taxpayer eats the loss and the deficit continues to explode.

Economically, it’s a sort of slow motion bankruptcy of debts owed the US. If any private lender did this, the loan officers involved would likely face criminal charges. The advantage of being the sovereign government is that you can write the laws any way you wish. ~ Wfjag at May 13, 2019 9:02 AM

It's even worse than that.

Unlike the mortgage crisis, in which the government forced lenders to make risky mortgage loans, the risky student loans are not collateralized in any way. As such, the loss from student loan default is total and unrecoverable.

And, thanks to direct lending, the burden of that default is not spread around among various lenders, but rests entirely on the government's books.

"We must admit that the federal student-loan program is totally out of control and allow its victims to discharge their loans in bankruptcy."

I think this would result in mass economic chaos, as nearly everyone who had a loan outstanding would seek to get out of it through bankruptcy. Unless you have significant assets that would be lost through bankruptcy, it's a no-lose proposition -- the loan isn't collateralized in any way; the government hasn't got any method of repossessing your degree. So the only people who would not go the bankruptcy route will be people who have good income and and probably on-time on their loans. Even at that, some of those people may seek to conceal assets and then sneak through bankruptcy if they get the impression that everyone else is getting a free ride.

And Conan, thanks for the explanation -- that makes a lot more sense.

We must admit that the federal student-loan program is totally out of control and allow its victims to discharge their loans in bankruptcy."

Couple of issues here. Bankruptcy is a state by state process government by state laws. Student loans have been federalized. With some exceptions, a state bankruptcy court does not have the right to relieve you of a federal debt. In short, The state can’t stiff the feds for you.
In some states you have to be darn near below the poverty line to declare bankruptcy. Others are more lenient. I think your best hope is negotiating a settlement or a restructuring of the debt. Kind of like dealing with the IRS.

I just realized that I didn't finish my last post... Instead of some type of loan forgiveness, a less drastic first step might be to freeze the accrual of interest on loans that have been outstanding for more than a certain number of years. A big part of the problem is that about 25% of the borrowers are on programs that make interest-only payments; the principal is never reduced. It is turning them into academic sharecroppers. Freeze their interest, and then they can use those payments to start paying down the principal. This way, the taxpayer only gets a haircut instead of a purse-snatching, and a fairly large fraction of the not-in-good-standing loans eventually get paid off.

"Also, I wonder about those seniors who still haven't paid off their student loans. Wouldn't most of those people have graduated prior to 1980?" ~ Cousin Dave

Their bachelors degree, yes, but not advanced degrees.
People starting later, taking longer to finish, and higher degrees. According to nsf.gov https://wayback.archive-it.org/5902/20160210153659/http://www.nsf.gov/statistics/infbrief/nsf06312/

If turning a senior now you were probably born in 1954.
in 1989 the average age of a humanities PHD graduate is 35.8 (aka born in 1954) with it having taken 12.6 years to complete your degree.
Compared to Physical sciences taking 7.5 yrs finishing when 30 yrs old.
Education is even worse, but they are in a category all to themselves.
So factor in 12 more years of interest on loans and some additional loans. And only 30 years to pay it back before you hit 65.

There's a benefit to allowing bankruptcy that hasn't been stated: doing so would immediately trash that LIE that a debt represents an asset.
So you ration the bankruptcies. Have a lottery or something, but counting debt as an asset is crazy.

...but counting debt as an asset is crazy. ~ Radwaste at May 14, 2019 6:07 PM

I'm gonna disagree with you, Rad. A debt owed to you is an asset. A debt owed by you is a liability.

You earn interest on a debt owed to you. It's a working financial instrument and is accounted as such. For some businesses, loaning money is their raison d'être. Accounting practices have evolved to account for the risks of lending money.

If the debt is bad or risky, you discount its value. That's why ratings agencies and credit scores exist, to allow the lender to analyze risk; and help investors and regulators understand the risk underlying a portfolio of outstanding loans.

What's going on here is not beyond the scope of GAAP accounting practices (Generally-Accepted Accounting Principles); however, the federal government does not use GAAP in its accounting.

Conan, I would agree except for one thing: those debts are simply never going to be paid. Period.

Please explain how a guaranteed loss is an asset.

Under GAAP those debts would have a value of $0, Rad. They would be counted as a loss. In general a debt is an asset. It is just that these specific assets have no value. The government refuses to use standard accounting practices because they don't want to admit they have no value. Among other accounting fictions as well.

The more classic example of false accounting by the federal government is social security. While excess tax revenue is used to purchase debt (i.e. loaned out) which would normally be counted as an asset the debt purchased was T-bills. I.e. the government loaned the money to itself and is paying itself interest. It shouldn't take much intelligence to realize if you loan yourself $100 you have created both an asset and a liability of $100, which cancel. You can't pay yourself money and call it income. If a private group did this it would be called fraud and the government would prosecute them over it. But hey, they are the government, so it all ok. Or something.

"But that kind of program means the government is not getting any sort of repayment and is forgiving the loan. As a result, the taxpayer eats the loss and the deficit continues to explode."

Well, not entirely. If those people didn't work in those undesirable jobs to get their loans forgiven, people would need to be recruited to fill them at higher pay covered by federal pork barrel money, so there's potentially some taxpayer savings to be found.

"I'm gonna disagree with you, Rad. A debt owed to you is an asset. A debt owed by you is a liability."

Especially since courts have ruled that your savings account is technically an zero-collateral loan to the bank.