The amount of student debt in the US is massive; over a trillion dollars currently.  Americans currently owe more in student loan debt than they do on credit cards.  The Stafford Loan, for instance, allows students to borrow up to $57,500 as an independent (with no parental support).  Students often compound commercial and federal loans into enormous sums of money – often under the assumption that they’ll be able to find work upon graduation.

Now before you suggest that’s the problem, look again.  The Labor Department for September of 2011 shows an unemployment rate of only 4.5% for those with a college degree.  So an inability to find jobs doesn’t seem to be the norm for graduates.

So we have people investing in their education, and rightly finding work after graduation.  Should be no problem, right?

No.  The problem is two-fold.  The average student debt for 2011 graduates is $22,900.  Since many graduates will have less or even no debt, the numbers among those who took loans is likely significantly higher.

The average salary of 2011 graduates entering the workforce is only $36,866.  Payscale.com provides a handy list of the average annual salary by degree.  It shows the salary for history, sociology, anthropology and others typically starting in the mid-30s and topping out ‘mid-career’ around $60,000.  Based on regional differences, in reality, you have students graduating who may have more debt that they can possibly make – even at Payscale’s “mid-career” salary level.

If we’re going to make changes to how that debt is repaid, we should also make changes to how it is accumulated.  The entire practice of student loans should be reformed in two significant ways.

Capping Student Loans

First, student loans should be subject to the same earnings litmus test that applies to other credit, but more strictly.

Credit cards, home loans, and other consumer debt limits are typically predicated on your ability to repay that debt.  Amex doesn’t hand out black cards to college kids with no income for good reason – they have little ability to repay.  Home loans, at least in theory if not in practice, require you to prove income before you can qualify for more home than you can afford.

Student loans have none of that. Student loans rarely take into account the potential future earnings of the student.  As mentioned, students frequently compound loans.  The problem is it becomes very easy to accumulate more debt than your future earnings will accommodate.

Student loans should be capped at no more than the average annual salary for a student with that degree.  If a student is likely to make no more than $32,000 with a degree in social work, they shouldn’t be allowed to accumulate loans of $57,500 or more.  By capping total student loans for that degree at $32,000 (combining both direct federal and commercial) and applying the administration’s 10% annual limit for repayment, most student loans should be paid off in significantly less than the twenty years proposed for forgiveness (low-interest rates being assumed).

It is inexcusable that students are allowed to graduate carrying debt nearly as high as, or higher than, their ‘mid-career’ earnings.

Restrictions on Student Loan Usage

Often students take out more loan than they need for tuition and books in order to cover living expenses and other incidentals.  Any credit expert will tell you that putting meals and perishables on a credit card is a terrible idea as the interest increases the cost of those items many times over by the time it is paid off.  Student loans have no such restrictions, and unless things have changed dramatically, there are no caveats against using loans this way.

Stafford Loans, as just one example, carry restrictions that the money is too be used for tuition, books, room, board, or “other education related expenses.”  So what qualifies, exactly?  It’s hard to say.  A search for “Stafford Loan Eligible Expenses” turns up absolutely nothing from the Department of Education on the subject, and the FAQs many schools host have that vague “other” language.  Apparently a used car is an education related expense, as are sneakers, iPods, or anything else.

Since the schools typically hand you a check or direct deposit the funds, there is really no telling what those expenses might be.

If we want to help students who are looking at debt based on future earnings, the least we should do is bring these restrictions in line with sound financial advice.  Allowing students to rack up debt on things Big Macs and tennis shoes is ridiculous.  The education system should limit the way these funds are expended so they cover actual school expenses.  The school should not be in the business of doling out excess funds to 18 year-olds for discretionary spending.

Just recalling my own college experience, I can tell you the day loan excess was disbursed was like a Roman orgy.  The only thing “school related” about the spending were the excuses for why you couldn’t make it to that 8 a.m. class the next morning.

By making these two simple changes, student loan debt might actually be used in accordance with the goal of getting an education.  It would, at the very least, ensure that degree in social work doesn’t come with a debt you’ll never be able to repay.

For those keeping score of wasteful, inefficient government ideas that refuse to die, back in April of 2009, Team Obama announced an $8 billion push for high speed rail.  I noted at the time the almost complete inability to go north by train.  I also noted the old adage that trains offer all the discomfort and cost of air travel, but in six times the time.

All of that still holds true.  The new plan still foresees a US population only concerned with lateral movement, and one that wants to pay top dollar for low value.

The one thing that changed is the price tag.  Now the government wants to spend $53 billion taxpayer dollars (a 6.5 fold increase in the cost) to subsidize a mode of travel that has never been profitable in the US.

That’s change we can believe in, and what counts as a commitment to responsible spending by the administration these days.

#5 Drew Carey – One of America’s jolly fat men, Drew Carey had a huge smash with The Drew Carey Show, but like most got his start doing stand up.  While he sold out to take Bob Barker’s place hosting The Price is Right, he’s still funny.  If you don’t believe me, visit Showtime on Demand and watch the episode of The Green Room with Carey.

#4 Adam Sandler – America’s favorite egg-shaped head also leans right.  Like many Republicans in Hollywood, he’s not overt about the lean, but he’s still funny (Little Nicki aside).

#3 Owen Wilson – Wilson, like our number two funny man Vince Vaughn, is unquestionably funny.  If you don’t buy that, rent Wedding Crashers or Zoolander again.  Wilson and Vaughn reportedly crashed a Texas Young Republicans event while in DC filming Wedding Crashers.

#2 Vince Vaughn – Arguably, Vaughn should be number one on this list.  Most people would probably put him there.  While I have been a big Vaughn fan since Swingers came out, if we’re talking political humor, I have to give the top spot to someone who covers it a lot.

#1 Doug Stanhope -  Stanhope probably isn’t everybody’s first choice, but he’s definitely mine.  This riff on the pledge of allegiance is a classic example.  As he says, good products sell themselves… So here’s my argument for Doug.

Honorable Mentions:

• Robert Downey Jr. has said his personal challenges forced a change of political views and he’s now a Republican.
• Bill Engvall, Jeff Foxworthy and Larry the Cable Guy – I’m not a fan of redneck humor, but they make a lot of people laugh.
• The Rock – Tooth Fairy was unintentionally one of the funniest movies ever. (It still counts)

I could go on… John Ratzenberger, Larry Miller, Penn & Teller etc.

Olbermann hasn’t been funny since he left Sports Center, so I’m guessing he didn’t take his writers with him.  For him to make ridiculous blanket assertions is really kind of weak, as this list demonstrates.

First, let me say that in the 10 years I have been in DC I have never seen a crowd like that trying to get access to their elected representatives. The lines to get into the House office buildings literally wrapped around the buildings like a nightclub rope line. Several of the buildings stopped letting people in, so people familiar with the HOB system were telling those turned away to go to another building, then enter the basement tunnel system to get to their representatives.

On some level it appalled me that the US Capitol was telling people they were not allowed to go inside and see their members, but the sheer volume made me understand it simply from a security perspective. I would say, however, that I did not get the sense from anyone that they would have turned violent. In fact, everyone I saw or talked to had a very sunny disposition. Given their agitation that was remarkable to me. There was no “mob rule” that escalated the anger at all.

I would not, however, say that there was no anger. There was, in fact, plenty. What really struck me about the anger, however, was its direction.

This was not a Republican crowd. This was an American crowd. The people I talked to were just as angry with the right as they were at the left. They were just as happy to disrupt the normal cycle of business in Congress for both sides. When men and women in well tailored suits walked past the crowd of people in jeans, dockers, polo shirts, and jackets, they were subject to mocking and derision without regard to what party they may belong to.

The suits, for their part, looked none to pleased. They were scowling at the crowds as they walked by, and seemed disdainful of the effort by the crowd to make their voice heard. That seemed true universally among what were clearly the DC class.

It became very clear to me that this crowd wasn’t anti-Democrat, anti-Obama, or in any way pro-Republican. It was simply anti-Washington. It was a crowd incensed at what it perceived to be the arrogance of DC. I heard time and again as people passed by, or chattered in line, the refrain that these were people happy to come remind Washington that the rest of the country is watching and demanding respect.

When I returned to my office, I saw a reference to Ramseh Ponnuru’s column in Time magazine titled “The Rebirth of the Republican Middle“. In it, Ponnuru argues that the results on Tuesday were less about party than they were about people clamoring for ideas and results. Deeds in VA clearly had no ideas. Corzine in NJ clearly had not delivered results. Hoffman in NY seemed ill-prepared for the local issues. Ponnuru argues that the lesson for Republicans is to run campaigns based on a message of specific achievable fixes for what ails us.

I assume that the upper case “R” in the title is due to a style requirement at Time magazine. I assume that because Ponnuru’s column specifically goes on to state the question of whether the GOP is too conservative or not conservative enough is really secondary. Ponnuru’s focus on ideas and solutions has no partisan stripe.

However, based on what I saw yesterday, I do believe that there is a republican wave in the sense that people feel government has gotten too big, and ignores them freely. Democrats didn’t get elected because people felt Washington was too small. They got elected because people felt that Washington, under the GOP, was unresponsive to “we the people”. The Democrats have proven that they’re no better. Now is the time for candidates to run on making government work, not simply adjusting its size.

I have read the excerpts of Latimer’s book and frankly don’t find all that much wrong with it. I’ll likely buy the book and consume it all simply because I liked the way the excerpts were written. His publisher is right. He has an engaging style. Was he in the room or across the street at the EEOB? Who cares. He was clearly closer to the President than 99.9% of Americans will ever get in their life, so let him have his say. We might find it interesting.

The treatment Latimer has received in the last 36 hours, however, has left me perplexed. It reminded me a lot of McClellan’s welcoming reception and that reminded me of something Peggy Noonan wrote.

William Safire, himself a memoirist of the Nixon years, said to me, a future memoirist of the Reagan years: “The one thing history needs more of is first-person testimony.” History needs data, detail, portraits, information; it needs eyewitness. “I was there, this is what I saw.” History will sift through, consider and try in its own way to produce something approximating truth.In that sense one should always say of memoirs of those who hold or have held power: More, please.

Noonan, and by extension Safire, were spot on. I think that every White House staffer should not be discouraged, but rather should be required to write a book, and tell the story of their time there. Our history demands that those making it (whether the President or his secretary) should provide us with as much detail as possible. When these books are written we should not denounce the writer, we should simply ask for the next installment from the guy who sat next to Latimer so we could see how he remembered the events.

One of the most interesting conversations I have ever had was with the woman who sat next to Monica Lewinsky in the White House. She once gave me her take on the woman behind the blue dress and it meant more to me than any ABC News special report.

Do I buy the caricature of Latimer as an opportunist trying to parlay his brush with fame into a financial windfall? Absolutely. Do I also believe that much of what he says is probably exactly as he remembers it? Absolutely.

That’s why we need more of these books, not less. We need to be able to compare notes and make our own determination about what happened, who these people were, where they made mistakes and where they proved they were only human.

Now, the latest to weigh in against Latimer in protecting the Bush years is James Carville.

This little dweeb needs to be glove slapped… People that have the honor of working in the White House ought not be going out and publishing this…

I couldn’t disagree with Carville more.

The people that need to be glove slapped are Carville and his ilk for attempting to silence future tomes. If Dana Perino, Tony Fratto, or Ed Gillespie recall events differently, let them write a book and give us their take. By the time all the ink dries, we might have a semi-complete picture of life inside the GWB administration.

• Skipper – 83% GOP
• Gilligan – 69% Dem
• Mary Ann – 61% GOP
• Ginger – 83% Dem
• Professor (the only “near tie”) – 47% Dem 41% Libertarian
• Mr. & Mrs. Howell – both at 72% GOP

The outcome made me wonder what the result would be if I looked at other classic TV series. As I discussed the idea with some friends, one that drew a lot of discussion was “Friends”. It seems there is a lot of disagreement about how Ross, Rachel, Chandler, Phoebe, Joey and Monica would cast their ballots.

Now here’s your chance to tell me what you think.

You’ll notice I added “Green” as an option for Phoebe as a number of people indicated their thought that she’d lean that way.

On Sunday I’ll be speaking on a panel about gaming and advocacy. The purpose of the panel is two-fold.

First, we are looking to teach gamers how to advocate for or against policy issues that impact them. It seems not a week goes by that I don’t see an article about some misguided state legislator who has determined that video games are the root of all evil. They typically then go on to craft legislation that seriously impedes the rights of gamers. We hope gamers will begin to take these issues seriously and organize to become a significant political force.

The second purpose for the panel is to talk a bit about how political groups and causes are using games to convey policy messages. Following the Obama team’s use of paid advertising in an online racing game, the use of such tactics is getting pretty advanced. I, for one, am looking forward to hearing from my fellow panelists as well as the audience on that topic.

If I pick up nuggets of wisdom from the panel, I’ll be sure to pass them along via my blog as well as my Twitter feed. Follow me @MichaelTurk (if you aren’t already.)

Finally, it looks like 11 of my 20 readers have voted in the “How Would Gilligan’s Island Vote?” poll. If you haven’t, I hope you’ll weigh in. I’ll be posting the reply’s over the weekend.

• The Professor – This would normally be an easy lift. He’d likely be the typical liberal academic. Definitely a Democrat.
• The Skipper – Former Navy man, the guy everyone looks to for tough leadership. He’s definitely a Republican.
• The Millionaire and Lovey – They’re unabashedly rich, and have no qualms about it. They’re Republican.
• Ginger – Like the prof, she’s the typical Hollywood starlet. She may not actually be liberal, but that’s the trendy thing, so she goes along. That’s a Democrat.
• Mary Ann – A girl from the heartland with mid-western values. She probably digs God, Guns, Country, and country music. She’s a Republican.
• Gilligan – He’s kind of clueless and rarely gets anything right. He’s a Democrat.

Like I said, that was easy enough. Until, that is, I started talking to my friend Paul about the list. He’s a liberal, so he views the world through a skewed perspective, but he had some interesting thoughts.

For instance, the Professor, he argues, is a dedicated academic, but also has a heavy lean toward technology. That may indicate he is more Libertarian. Ginger, he suggests, strikes him more as a Patricia Heaton type. He thinks she would actually lean GOP. What about Mary Ann? She may be a farm girl, but she also comes across as a bleeding heart. Could she be a closet lefty? Could “means well, but usually gets it wrong” be applied equally to paint Gilligan as a Republican? While we agree on the Howell’s, could they actually be limousine liberals?

So I decided to change the focus of this post. Rather than declaring how the Island would vote, I’m asking. I’d love to get your thoughts. I’ll tabulate it all and report back on the consensus (if there is one) view.

The RNC’s Health Care Bill of Rights for Seniors

Specifically distressing is the second point:

PROTECT MEDICARE AND NOT CUT IT IN THE NAME OF HEALTH CARE REFORM: President Obama and Congressional Democrats are promoting a government-run health care experiment that will cut over $500 billion from Medicare to be used to pay for their plan. Medicare should not be raided to pay for another entitlement.

Since when are we about “protecting” medicare? It’s a bloated program full of fraud and abuse. If we guarantee it won’t be “raided to pay for another entitlement”, we’re essentially demanding that government create two conflicting and somewhat duplicative health programs – both of which will likely be full of fraud and abuse.

To a cynic’s eye, this ‘proposal’ is the “let’s rile and confuse seniors so they’ll get even more flummoxed” plan. It’s disgusting to me that the party of small government is pushing a plan that would guarantee bureaucratic longevity simply to curry favor with seniors.

I’ve got a better idea for a plan. Why don’t we make the government fix Medicare and Medicaid – thus demonstrating they have a clue – before we let them create yet another program. If they can’t be fixed, then let’s figure out how to dismantle them.

There is plenty of evidence that Kessler’s whole premise is wrong. For instance, Google Voice runs on Blackberries on the AT&T network. Apple allows other VoIP applications like Skype to run on the iPhone. There are reports that Apple is developing a product that would compete with Google Voice.

Even if you discount all of that, however, Kessler’s column is full of inaccuracies, faulty assumptions and outright misconceptions of the state of competition in the telecommunications space. These errors fall into four main areas:

• Misunderstanding and misapplication of technology concepts
• Business competition on features versus price
• Network investment and sunk costs
• Cable deregulation

We’ll break these down one by one.

Technology
Kessler’s suggestion for reform of wireless telecommunications is simple – “any device should work on any network.”

While that truly does sound like technology nirvana, unless we agree to one universal standard for every technology, it’s not likely to happen. Why? It’s due to the very thing Kessler claims to want – competition. As Victor Godinez points out in the Dallas Morning News:

Kessler’s insistence that “any device should work on any network” suggests that he doesn’t understand even the basics of cellphone technologies. T-Mobile’s and AT&T’s GSM networks are simply incompatible with Verizon’s and Sprint’s CDMA systems, no matter how much Kessler might think they are. That’s why, even when you unlock an iPhone, you can’t make it run on Verizon’s network.

Kessler makes a similar error when he suggests that ‚”voice is data.” As The Social Telco blog points out:

While there’s a sense in which that’s true – all communication is ultimately ‘data’ – it’s only true in the technical sense if it’s carried that way. Which it isn’t, on today’s cellular networks and most public telephone networks.

Other than where voice over IP is used, voice is circuit-switched, which means it ties up an entire (virtual) circuit from end to end for the duration of a call, making it unavailable for other purposes. Data, on the other hand, is typically packet-switched, meaning that a data ‘connection’ in fact only uses up network bandwidth when packets are actually being sent back and forth, otherwise freeing up that bandwidth for the use of others. As such, voice networks and voice calls use network capacity in a very different way from data, with different equipment required and different economics associated with them.

Wireless networks today are moving toward a new standard called LTE which will do two things. First, it will make Kessler’s assertion that ‘voice is data’ more or less accurate as it does rely on IP for voice traffic. Second, it breaks down the barrier between CDMA and GSM networks. Verizon has suggested they’ll be using LTE by next year. These advances are being brought about by the very competition Kessler claims is thwarting them.

Kessler also suggests that connection speeds to our homes and phones should double every year, and suggests they have not. Here again, Kessler gets it wrong.

We explored exactly this topic on Cable’s blog after Robb Topolski made a similar assertion about broadband speeds and Moore’s Law. The fact is, since the inception of the 300 baud modem in 1978, broadband speed to the home has more than doubled every two years. We have not done a similar comparison for cellular technology since people have used wireless for data for a very short period of time.

Competing on Price or Features
While Kessler spends most of his space clamoring for competition in price, he ignores robust competition on features. It is a glaring omission given the economics of telecommunications.

Telecommunications is an expensive game. Cable companies have spent billions, as have the telephone companies, building out their networks. We have seen estimates that the per-home connection and acquisition cost for one FiOS customer is between $3,000 and $5,000. The same holds true for wireless when you factor in spectrum costs, towers, etc. It will take those companies a very long time to recuperate the sunk costs.

So, how do you compete to get that back if you focus only on competition on price? The answer is that you don’t. You compete on price, if at all, only to gain market share. Once you have a healthy share of the market, you stop competing on price and compete on features.

That competition on features is exactly what the iPhone represents. Ringtones, app stores, and other features are the core of competition when costs are roughly equivalent. Working in cable, we often hear arguments about price. They typically go like this:

Complaint: My cable (and/or broadband) bill is too high.

Reply: Well, then switch to Satelite/DSL

Customer: But they don’t offer (VOD, speed like cable, etc)

Reply: So what you’re really saying is you want all the features that cable offers, but you don’t want to pay for them?

In other words, the choice of which offering to choose comes down to features. There are, people will acknowledge, cheaper options. However, people don’t make decisions solely on price. They make them on perceived value and that includes features. I can get a phone that makes calls, and plays MP3s, and does other things, for less than I’d pay for an iPhone. But I want the perceived value of the iPhone. That’s the value of exclusivity. Do I have to use your network to get the phone I want, yes you do.

If you argue competition solely on price, though, Kessler suggests that AT&T Wireless margins are an ‘embarrassingly high’ 25%. Does that point to a flaw in my argument? Not really. As Hance Haney at Tech Liberation Front points out:

Before we get to that, Kessler complains that margins in AT&T’s cellphone unit are an ‘embarrassingly’ high 25%. He doesn’t point out that AT&T’s combined profit margin – taking into account all products and services – is only 9.66%.

AT&T is actually earning less now than it was legally entitled to earn when fully regulated – 9.66% versus 11.75%.

Haney also points out that those margins are required by government mandate, to subsidize landline service.

In a normal business, an unprofitable product or service would disappear. But telecom providers are still required by law to provide plain old telephone service to anyone who requests it. It’s called the ‘carrier of last resort’ obligation. Believe it or not, providers are still required to provide copper-based, circuit switched phone service in many places, even though they could cut costs by deploying fixed wireless and VoIP to deliver basic phone service.

This service obligation imposes a tax on those of us who have canceled our landline service in favor of our cellphones in the form of artificially high prices for wireless service.

Network Investment and Sunk Costs
Let us pretend for a moment that Kessler’s notions of reform made any kind of sense. He suggests the root evil lies in ‚’own[ing] a pipe between you and your customers,’ and thus we should take pipe ownership away. Except, those pipes are already built and paid for.

The mobile carriers already paid handsomely for the spectrum they use. If the government were to take ownership, then those companies would have to be compensated for the billions they spent. You may recall the ‘open access’ argument from a decade ago that proposed that it would be bad to let companies own their pipes because they could have exclusivity over the data that flows through them. Since the cable industry has invested more than $145 billion over the past 13 years, how should they be compensated? What of AT&T and Verizon’s investment in their networks because they want to compete with cable? Should that all be taken away with no compensation? And if it’s taken away, who can do a better job?

Companies are investing in networks to compete with each other. Is the competition and investment happening fast enough? Arguably not. But it is happening, and that competition is being spurred by exactly the concerns Kessler raises – demand for services, demand for speed, and demand for features.

Cable Deregulation
As we said, most of Kessler’s piece concerns itself with wireless. We have our issues with his facts and arguments there. However, given our employment with the cable industry, where we truly take umbrage at his comments is Kessler’s claim that one of the key elements of a new national data policy would be to “End municipal exclusivity deals for cable companies.”

Fortunately for Kessler, his work has already been done, since this was covered in the 1992 Communications Act. To quote from the section on “Franchising and Regulation”:

“a franchising authority may not grant an exclusive franchise and may not unreasonably refuse to grant an additional competitive franchise.”

Over the last few years, many states have taken that federal mandate a step further and passed laws that took franchise authority away from the cities and placed it at the state level. The FCC went a step further and made sweeping changes to section 621 of the Cable Act and granted a federal franchise authority to further streamline the process.

Conclusion
There’s plenty of irony in Kessler’s piece. He argues for competition, which already exists. He argues against exclusivity and pipe ownership and in favor of “new, feature-rich and productive applications.” But if you can’t own the pipe, who will pay for upgrades? If you can’t have an exclusive offering of a product or service, why invest the money to develop such offerings? How will we get the “faster and faster data connections” that Kessler wants? If you can take away the ownership of infrastructure that is already built, why should investors have any faith in supporting a business affected by such radically sweeping changes?

Focusing on a strong broadband infrastructure is a good thing. Focusing on a national data plan, especially as voice actually does become data, makes sense. However, Kessler’s arguments, based as they are on faulty technical, policy, and business assumptions simply don’t add up to much.