Take two examples….

Dr. Ringo and John Beatle are a dual income family well on their way to securing the American dream… Ringo graduated in 2008 and John graduated in 2009.  They were married in 2011 and currently share a modest apartment.  Ringo earns $79,000 as an new doctor in the Christina Health Center, and John went in to partner with an older doctor up near Naamans Road in Brandywine Hundred.  He lists his income bertween 80 and 100 thousand, and we’ll average it out as $90,000 per year… Together their gross income this past year lines up at  $169,000.  Their net, after taxes averages  $109,000 per year or $9,000 per month…   not a shabby income. 

But they pay loans. 

John’s educational loan payment is $1340 per month, and  Ringo’s is $960 each of the 12 months… Together they each write out checks $2300 per month… Their leftover income  lies around $6400 per month….  Two cars take out $1,000, their city view apartment takes $1300. their utilities $500.  Insurance $300,   What’s left?  $3,300 per month… That alone equals a family income close to $40,000 per year…  still not shabby.. so what’s the point?

 

Now take Mick and Keith Stone, a married couple from moneyed families.  They went though college and law school on parent’s money.  No bills… Mick or Mickie as she is commonly called, works at Morris and James up on the 16th floor of the WSFS building in international investment law.  She makes between $80 and $100 K per year. and so we will round that to $90,000… Her husband Keith, is an district attorney in Wilmington.  He makes $79,000 per year. Together their income is  $169, 000 and after tax their net is $109,000…. They have almost the same mandatory expenses as the Beatle family and after similar expenses, they have $5,600 per month… 

The barristers Stones put $2,300 down each month into savings to buy a new house….  Over two years, they already have $55,200 saved up, and next year they seriously plan to house shop with a down payment of $82,800…  So what’s the point?

This battle of elites illustrates one thing; how our economy is not living to its full potential due to massive amounts of college loan debt.  These examples too rich for your blood?  Then drop the incomes down to the levels of the average professional; cut each person by $40,000 or $3333 per months… The first couple is flat broke.  The second couple still has $2200 left over to live on per month, but not enough to put into savings.  Their checking account rises and falls with spontaneous purchases. 

Here is the real problem:  Track it over the 30 years length of the loans…. The Beatles have after 30 years, nothing.  The Stones after 30 years, have extra wealth strictly left over from salary, of $828,000 assuming they put it in a mattress. More likely it has grown by 7% per year… or $2.7 million…

College loans aggravate the inequality gap.  the only way to get rich in America is to come from rich parents… With everything exactly the same except for the payment of college loans, one couple has $2.7 million after 30 years… The other still living month to month… if one starts his professional career at age 25… one’s loan at 30 years termed, end when he is 55… Too late to start saving for retirement… 

The fix…. 

 

Here are the ways to close the inequality gap.

  • Forgive the loans
  • Forgive the interest
  • Tax the wealth

Options one and two are out.  Remember that most pension plans (some are still left) insurance funds, and stock options are in the entities holding these loans.   

Option 3, .. if that money was taxed on the last couple (The Stones)) but not on the first (The Beatles)  then, over a period of time, there would be equality when the loan payments finally ended…  One would not have an unfair advantage over the other.

Multiply this across the entire spectrum of students holding $1`trillion dollar in debt… a debt now too big to fail, and you get the picture of how our economy was mortgaged out to big banks long before young people could even afford traditional  mortgages…

If we simply taxed the second couple an additional $2300 sort of as an equivalent of the loan payment they currently didn’t have to make, then playing field would even out.  Only then, could the hope and promise of America then return. . 

(Keep in mind these examples were from America’s best occupations.  College loans currently keep large numbers of working Americans still below poverty levels..)

 

 

 

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