In this column, Malcolm Berko talks about health and college costs.
BY MALCOLM BERKO
RELEASE: WEDNESDAY, DECEMBER 27, 2017
Health and College Costs
Dear Mr. Berko:
I pay over $33,000 a year for health insurance for me, my wife and my four children. That’s more than we’ve spent on doctor bills and medicine in the past 10 years for our whole family, including our 9-year-old black Lab. My insurance agent and I are good friends, so I’m reluctant to question his recommendations. So I was hoping that with your contacts, you’d be able to advise me on a lower-cost policy. Our son will be attending college next September, and I need to reduce our expenditures. His four-year college costs will be unbelievable. I can understand why medical insurance costs have risen so much, but why have college costs risen as much as medical insurance costs? — GK, Joliet, Ill.
There’s only one reason your health insurance costs are so high. It’s an eight-letter word, and that word is Congress. But I place all the blame on you and millions of other voters who are too lazy to take the time to understand how our crooked Congress snubs citizens. Most Americans don’t realize the visceral contempt that members of Congress have for voters. Several congressmen I’ve known for years privately look down on common folks like us, calling us the “great unwashed.” And unfortunately, their Washington staffers often share that view.
I don’t know enough about health insurance to offer knowledgeable advice; however, I do think that $33,000 is a lot of premium to part with each year. My suggestion is to find another insurance agent, and be mindful that financial dealings with friends usually have bad outcomes. You and your family are victims of an ugly political game masterfully played by your representative and senators and their 532 comrades. These members of Congress have government-paid health plans so posh and cushy that Bill Gates, Warren Buffett and even the Rockefeller family are green with envy. With Congress, health care is a game of money that converts to power — who pays, how much is paid and who receives it. Get used to those huge costs; unless you are willing to significantly lower your benefits, I doubt your rates will ever decline. So suck it up!
The most egregious reason for high college costs is probably the fact that there are unlimited student loans for an unlimited number of students. Today a non-English-speaking 87-year-old great-grandmother who harbors Islamic terrorists would qualify. Government attempts to make college degrees more accessible have also made them more expensive. As more money chases the same object, the cost of the object rises to meet the money available. It’s simple economics. Students owe $1.4 trillion, and I suspect that most of those loans will be forgiven by Congress. So those greedy colleges took all that dough to become bigger, not better. Note that since 1986, college costs have increased nearly seven-fold.
Another reason that college costs are a tragedy is that there are swarms of poorly educated teens with no work skills. They’ve nothing to do but matriculate. Enrolling students who are not up to par forces colleges to spend more time educating them — an average of nearly three semesters per student — because the kids need remedial courses in math, English and basic sciences. Those semesters cost approximately $36,000 in extra student loans. Then those students are given pity diplomas.
Another reason college costs are a tragedy is administration bloat. In the past 15 years, total university costs have risen by 37 percent, with enrollment up by 15 percent and spending on administration up by 66 percent. The nature of all bureaucracies is to expand. And most college administrators know bupkis about business and budgets. The University of Florida has 58,000 students and 31,000 employees. That translates to nearly two students per employee. What an impressive ratio. Remember the old axiom that work increases to match the number of people available — and the opposite is also valid.
Will the day ever come when along with glorifying our college sports standouts, we equally glorify our colleges’ educational standouts? Sadly, the public doesn’t care enough. Just look at what we elect to Congress.
Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775, or email him at [email protected] To find out more about Malcolm Berko and read features by other Creators Synldicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.
COPYRIGHT 2017 CREATORS.COM
Warren Buffett Dumps All Airline Stocks, Berkshire Takes $50M Loss
At Berkshire Hathaway’s annual meeting, held virtually for the first time ever due to the coronavirus pandemic, Warren Buffett announced that the company had sold all of its investments in the airline industry.
Previously, Berkshire Hathaway held 70 million shares of Delta, 54 million shares of Southwest Airlines, 22 million of United Airlines and 42.5 million shares of American Airlines. Each investment represented a roughly 10% ownership stake in each company. Also, the four airlines combined account for roughly 80% of the total passenger miles flown in the US.
Buffett said simply, “I was wrong about that business.”
“When we bought (the airlines), we were getting an attractive amount for our money when investing across the airlines,” he said. “It turned out I was wrong about that business because of something that was not in any way the fault of four excellent CEOs. Believe me. No joy of being a CEO of an airline.”
“I don’t know that three, four years from now people will fly as many passenger miles as they did last year,” he added.
Global Pandemic’s Impact on the Airline Industry
Passenger volume went down by 90% compared to a year ago. It’s impossible to tell when travellers will feel comfortable flying again, particularly if the pandemic lingers into the fall or winter months.
Shares of United Airlines are down 70% so far this year, American Airlines shares have fallen 63%, Delta has lost 59% of its value so far this year, and Southwest has fallen 46% this year.
During Berkshire’s meeting, Buffett added, “The world has changed for the airlines. And I don’t know how it’s changed and I hope it corrects itself in a reasonably prompt way. I don’t know if Americans have now changed their habits or will change their habits because of the extended period… I think there are certain industries, and unfortunately, I think that the airline industry, among others, that are really hurt by a forced shutdown by events that are far beyond our control.”
Interestingly, until 2016 Buffett made it clear that airlines weren’t an investment he was interested in. In a 2007 note to Berkshire shareholders, he said “if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down.”
The other major news coming out of the meeting was Berkshire Hathaway reporting a $49.7 billion loss. This came during the first quarter as the coronavirus pandemic caused the markets to plunge in late March. That’s a loss of $30,653 per Class A share in the first quarter, down from a profit of $21.66 billion, or $13,209 per Class A share a year ago.
The company also continues to grow its cash balance. They spent only $1.8 billion on stock purchases and $1.7 billion on buying back Berkshire stock last quarter. The cash balance increased from $127 billion in Q4 2019 to $137 billion in Q1 2020.
Many investors expected Buffett to put that cash to use during the selloff in March that drove markets down 30%. But it appears that Buffett didn’t see any attractive value plays and decided not to make any additional investments.
Senator Rand Paul: Pay Off Your Student Loans With Your 401k
Senator Rand Paul says you should pay for your student loans with your 401k. Paul’s new legislative proposal, the HELPER Act (Higher Education Loan Payment and Enhanced Retirement), would allow benefits like tax-free money for college, tax-free employer-sponsored plans, no cap on student loan interest deduction, and many others. Essentially, it would allow students and parents to withdraw retirement funds to settle expenses for college.
The act “would allow Americans to take out up to $5,250 from a 401(k) or IRA tax- and penalty-free each year to pay for college or make monthly student loan payments,” explained CNBC.
According to Forbes, “Paul seeks to reshape the way people save and pay for higher education, driven through tax and savings incentives.” He notes that “the current student loan interest rates can be as high as 7% for graduate students and parent borrowers.” Student loan refinancing rates, on the other hand, have dropped to below 2%.
Paul’s critics will likely note objections such as removing money from a retirement account for any purpose that is not related to retirement may not be a wise financial move; many students cannot both save for retirement and pay off student loans; and the annual amount may not be enough to help borrowers make a meaningful impact.
8 Tips on Going to College with No Debt
It’s not uncommon to hear news stories anymore about the millennial generation going thousands upon thousands of dollars into debt to receive a college education. This is a conundrum because most jobs that offer good pay require a college degree, but this also requires students to go into debt for a large portion of their lives in order to eventually make a profit from their education. However, this doesn’t have to be the case. There are ways of going to college without going into debt at all!
Is College for You?
Firstly, you need to determine if you need to go to college. There are individuals who are more skilled working with their hands, to which a vocational school would be a better (and much cheaper) option. There is a gap of laborer jobs because of the large emphasis put on people to go to college after high school. If you do not fit into this category and feel called to go to college to achieve your dreams and livelihood, then please read the tips below to help you go to college without a large debt to pay off afterward.
1. Scholarships and grants
This should be the first step to pursue after you receive your college admission letter. Complete the FAFSA, a form that will allow you to determine how much the government can help you, and you could also receive some money from the government for free if your family fits into a certain socioeconomic category.
However, if you complete the FAFSA and find that there isn’t much help the government can offer, look at the college’s financial aid. The scholarship and grants options are listed the university’s website and can help you determine which scholarship options would be best for you to apply. AS a general rule, always apply for scholarships even if you think you aren’t the perfect fit. It’s surprising how many people don’t apply for scholarships for this reason alone!
2. Negotiate with the financial aid office
This is not a common way to obtain some funds for college, but it can be done if handled tactfully and if the university policy allows it. This could be as simple as finding out how much you would spend each semester, proving that you are just shy of being able to pay it, and talking to a financial aid officer about your situation. You will need to go through a rigorous process of proving your income and expenses, but this may be an option worth considering if you need a little extra help.
3. Work study
This is an option typically offered through the university for students that are within a certain income bracket. The university will offer on-campus jobs that are an excellent choice for those wanting to focus on their schooling, but need some financial help as well. This does count as job experience, and most work studies are flexible with your school schedule and understand that your grades come first. Work studies may pay a portion of your tuition in exchange for some part-time work on campus.
4. Employer reimbursement
If you already have a job, look into whether or not they will pay for your college tuition. Some employers take a strong stance on bettering their employees, and if you are fortunate enough to work at one of these companies, they will offer to pay your tuition so long as you continue to work at that company for a specified period of time and can maintain a good grade point average. This also counts for military veterans: the military will pay for schooling after your time in the armed forces.
5. Choose an affordable college
As much as private universities tout their reputation, immaculate campuses, and benefits of attending their school, it is usually rarely a good idea to go into a large amount of debt to go to the top college of your choice. Public universities have their benefits as well, one of them including minimal to no debt upon graduation! Public colleges tend to have a wider range of degree options to choose from, have a wider range of classes that are offered, and can have just as accomplished faculty as those in private schools. Before going into debt for your dream college, really think about if it’s worth it to you to spend almost triple what it would cost to go to a public university.
6. Transfer credits
If you have (or had) the opportunity to take college-level courses in high school, then you are already off to a good start! These high school credits will usually transfer into college coursework and can save you money paying for more classes, meaning you may be able to graduate sooner. This also means that you get to focus on more major-related classes instead of having to take required courses in your first semester or two.
Coursework can also transfer from other universities. Going to community college for a year or two can save you a lot of money and once you find a college that will accept the credits you had already taken at the community college, you can move ahead in your degree program as if you were at that university the entire time. However, be aware that you may need to retake some courses if you feel that a course at the community college did not teach as much as you would need to successfully take higher-level courses.
7. Commute to college
If you live with parents or a roommate off campus, you will already be saving yourself a lot of money in the long run. You will still be able to have the college experience even if you don’t live on campus and you will be able to save a lot from not paying for meal passes and dorm room costs. Though you may need to cough up the cash for a parking permit and spend money on gas, it will pale in comparison to how much on-campus housing costs. That, and you will hopefully be able to have a much quieter living space.
8. Learn to budget
This is a skill that a lot of college students learn too late. They will spend money without thinking about the consequences of every purchase and then will need to take out loans. Budgeting gives you a birds-eye view of your finances and how you are spending your money. It can be uncomfortable to see how much you may find yourself spending on eating out or shopping, but learning your spending habits can drastically reduce how much money you will spend while you are in college and for the rest of your life.
Start Your College Journey
With these tools, you should be more equipped to tackle college and all the financial burdens that come with it. It will be a hassle to go to various people and research various things in order to make sure you go to college debt-free, but all that hard work will pay off in the end when you can enter the workforce and not have to spend years and years paying off your college debt.
Investing1 year ago
How To Invest In Drones
News6 years ago
How to Invest in Graphene
News6 years ago
The Federal Reserve Is A Ticking Time Bomb
Business1 year ago
Why is Small Business in America Dying?
News6 years ago
How To Invest Money in Oil and Gas Today
Dividend Stocks1 year ago
Mcdonalds the Worst Slump in a Decade
News6 years ago
3 Reasons to Invest in the Russian Stock Market Right Now
Commodities1 year ago
Latest Update On Oil – Expected to Settle Between $45 and…