Interview: “I Can’t Afford My Private Student Loans”

My interview with Natalia Antonova

Also, see yesterday's post on how modern "education" has deceived some people.

Three Blocks To Housing Demand From Generation Y

Quick Summary:
Echo Boomers will eventually want housing. Three current major obstacles: student loans, low marriage rate (unsettled), and costly energy.

The housing market wants to know when Echo Boomers will begin demanding housing. While the attitudes toward home-ownership are negative among the Millennial generation for now, will this trend continue in the long run?

No.

The Millennial generation will demand housing like former generations, though it will take some time before this demand occurs. Several reasons exist for this delay:

1. Generation Y possess high student debt, unlike former American generations. Millennial customers reported student loans and auto loans (much less credit card debt, however), which will take sometime to pay. As these balances begin to decline, Echo Boomers will gain the confidence to begin thinking about buying a home.
2. Many Echo Boomers will marry, even though the current marriage rate for Generation Y is low. As more Echo Boomers marry, they will seek houses for family formation. Like former generations, they may seek housing in areas with excellent schools for their children (recall that Generation Y sees parenthood as a major priority).
3. Costly energy has drained many American's wallets - especially with transportation. As new technology is developed to create efficient energy consumption (see real wealth), Echo Boomers will be more likely to take financial risks and buy a home. When people feel like they're becoming poorer, they tend to hold on to their money tighter (basic psychology). With gas prices rising, many Americans may be reluctant to put money down a home.

Depending on the time frame of these three factors, Echo Boomers - like many Americans - will buy homes. But these trends may take up to a decade or longer to correct, which means the housing market shouldn't expect a recovery.

Are Attitudes Toward Higher Education Changing?

Among Echo Boomers, the attitude has shifted more in Millennial males than females.

Of the Echo Boomers I've discussed finances, over half of them have taken at least one college class or plan to attend college at least for a semester (the majority of these Echo Boomers being females). A few of them failed to continue their education or begin it, while most of them continued it or started it. Still what I find on a daily basis is that Echo Boomers value higher education.

One way the education bubble might pop is when people's views on higher education change. If people perceive that $60,000 is a good deal for a four year degree, then they will borrow money to pay for it or work multiple jobs to cover the costs. Young people aside, parents may be willing to save money to cover their kids tuition without considering that tuition may be overpriced.

Echo Boomers are now amassing the college debt, and only ad hoc analysis will show us what the result of that debt was. Will these Echo Boomers spend decades paying back student loans instead of creating jobs and demand in other parts of the economy? Will high levels of debt affect the social environment and delay maturity? Will Echo Boomers eventually tire from massive loan balances and refuse to pay back their debt? All of these questions, while valid, won't be known.

We will, however, note changing views on education in the coming two decades. As we witness the result of this "educational experiment" on Echo Boomers, the next few generations (like Generation Z) will use Echo Boomers and their stories as motivation to either attend or avoid school, much in the same way that Echo Boomers used their parents stories on the validity of education to put massive amounts of money toward higher education.

I should note here that when we report data for educated people and claim that they perform better than the "uneducated," we are relying on past data. Philosophy arguments aside, using past data and trying to make future predictions - while popular - can misinform. We cannot know for certain if education will pay as big of dividends for this generation as it has for former generations. I would assume that, in general, the educated will do better than the uneducated, but of course, I could also argue that the self-disciplined will do better than the lazy. Education, unfortunately, doesn't mean that a person will do automatically better, and Echo Boomers, who have focus and a work ethic, whether they attend school or not, will perform better than other Echo Boomers, lacking those characteristics.

Millennial Life Goals

A study highlights an observation that Echo Boomers may not be as concerned about the environment as previously thought:

Millennials and GenX’ers rated being very well off financially, being a leader in the community, living close to parents and relatives, and having administrative responsibility for the work of others as more important than Boomers did at the same age. They rated developing a meaningful philosophy of life, finding purpose and meaning, keeping up to date with political affairs, and becoming involved in programs to clean up the environment as less important.

Regarding the notion of Generation Y and the green movement, I noted that:

Trend counterpoints:

1. In the past, Echo Boomers have consumed expensive clothing apparel, expensive technology, and other items exceeding the basic expenditures required to live. Much of that consumption was under parental financial support, but as Echo Boomers provide for themselves, they'll find that luxury items - especially housing - aren't easy to afford.

2. From past trends listed above, there's little - if any - reason to think that Echo Boomers don't have luxury tastes. Affordability is what's in question.

3. Provided that green housing and apartments are cheaper, Echo Boomers will choose the green path. This is due to the fact that housing is listed by many Echo Boomers, who I speak with, to be their most expensive monthly bill.

The green movement that we see, if popular among the young, reflects the notion that what's green may actually be cheaper (especially, regarding housing and transportation).

Added: While those may be life goals, Millennial financial goals speak volumes about them:

1. Save money 16.9% of the votes (90% of Echo Boomers have fewer than $2000).
2. Pay off debt 14.4% of the votes.
3. Buy a home 13.4% of the votes (12% of Echo Boomers are homeowners).
4. Go to college or continue education 12.9% of the votes (Echo Boomers may still see value in higher education) despite the growing education bubble.
5. Be financially stable 10.9% of the votes.

Interview: Hemant Mehta of Friendly Atheist

The responses to the interview questions may not represent the views of The Echo Boom Bomb's author. These interviews are provided to inform readers of information from experts and provide these experts with a medium where they can answer questions without any content changes. You can also read other interviews at this link.

As I wrote in the earlier post - Generation Y To Church "Bye" - the Millennial generation holds more secular views than its parents. While this may challenge modern churches, this trend has helped the rise of atheism in the United States.

Hemant Mehta, who writes Friendly Atheist, responded to my questions regarding atheism and a few other important topics. Outside of blogging, some more information on him:

Hemant Mehta wrote the book, I Sold My Soul On eBay, which captures how an atheist sees faith (he made $504 from his auction and donated it to the Secular Student Alliance). He works as a mathematics teacher and speaks throughout the country on the topic of atheism, as well as his experience from selling his soul on eBay. His blog, Friendly Atheist, features his voice as well as a list of contributors that address the topic of atheism, religion and politics.

1. I noticed that you teach mathematics. The lack of math skills in our country is beyond disturbing. What can we do to correct this problem?

It starts by getting people who are intelligent, dedicated, and strong speakers in the classroom. We need people who are genuinely excited by math to teach it. Unfortunately, a lot of smart people get lured away from K-12 education because there's more money elsewhere or they don't believe it's arespectable profession. We also need to find better ways to communicate our teaching methods with other teachers and get the students to understand the relevance of what we teach.

2. The Millennial generation is more secular and open to atheism than any former American generation. In your interactions with Millennials and other Americans, what trends have you observed about atheism among these groups?

Young people grow up nowadays surrounded by people from different faith backgrounds (including those without faith). It's very hard to stay inside your own bubble. Kids know that atheists aren't evil, that Muslims aren't terrorists, that gay people deserve equal rights, that women deserve the same opportunities as men; basically, they grow up realizing that their pastors are feeding them lies. They are less drawn to the church than ever before. They may not always leave the faith, but they're growing increasingly disillusioned by church leaders. That's good for all of us.

3. What common misconceptions about atheists exist and how do you address those misconceptions?

That we're evil and immoral. I think the amount of charity done by atheist groups nationwide is growing at a staggering pace and it will continue to do so - and that's a great counterweight to the "evil" claim. I'm working with organizations like Foundation Beyond Belief which were created solely to address the fact that atheists want to give to secular charities but don't always have good ways to do it. Even college groups are donating blood or raising money for good causes.

4. What are the largest challenges for atheism in the United States?

We have to show people that we're kind, decent people, contrary to what they've grown up believing from their pastors or parents. It's a tough obstacle to overcome but you can see the younger generation growing more accepting of us, so the trend is in the right direction, even if there are blips along the way.

5. Since you sold your soul on eBay for $504, how has life been?

It's been great :). I donated the money to Secular Student Alliance and I started friendlyatheist.com. I began teaching high school math since the book came out and I am able to talk about atheism in my private life while (hopefully) helping kids learn the value of math in my public life.

Housing Will Continue To Slow

Quick Summary:
Political and economic leaders expect Generation Y to be the next housing consumers. Echo Boomers have different attitudes toward home-ownership. Echo Boomers face financial obstacles in buying a home (such as increasing oil prices).

The housing market will continue to slow thanks to the primary demand for housing in the future coming from Echo Boomers. A recent article highlights that Baby Boomers seek nursing homes, not McMansions with the young generation expected to be the main driver of housing in the future:

"It's a difficult time for housing," said former Mayor Henry Cisneros, a member of the Housing Commission and former secretary of Housing and Urban Development.

While these leaders review changes for the housing industry (such as the mortgage tax deducation), some things they should keep in mind with Echo Boomers:

1. Millennial attitudes toward home-ownership differ from other American generations

The lack of assets isn’t the only encumbrance to housing: Echo Boomers value education, people and leisure more than other American generations.

2. Like in the recession of 2009, high gas prices could start more problems for housing, especially among Echo Boomers:

When people plan to buy a home, many look at their current and future expenses. If a major expense, such as gasoline , is rising, they may delay any big purchase – such as a down payment on a home.

These outside factors will directly affect the housing market, meaning that any change inside of housing will have less impact than major increases in the price of oil or the attitudes against home-ownership.

High School Dropouts

No High School Necessary: The Stage For the Education Bubble Continues To Grow

Quick Summary:
The education bubble will pop when many people realize school is unnecessary for success. A high school drop out, who mines, makes $200,000 a year.

One argument I make about the education bubble is that as young people learn that college is unnecessary, they will eventually abandon schools, which will cause educational institutions to lose a huge customer base. Of course, currently schools promote the lie that you can succeed better by going to college than by not going to college. However, stories like this continue to offer refutations:

One of the fastest-growing costs in the global mining industry are workers like James Dinnison: the 25-year-old high-school dropout from Western Australia makes $200,000 a year running drills in underground mines to extract gold and other minerals.

The heavily tattooed Mr. Dinnison, who started in the mines seven years ago earning $100,000, owns a sky-blue 2009 Chevy Ute, which cost $55,000 before a $16,000 engine enhancement, and a $44,000 custom motorcycle. The price tag on his chihuahua, Dexter, which yaps at his feet: $1,200.

Read that carefully - high school dropout. Americans tend to view high school dropouts as the type of people who you find homeless later in their life. Ironically, this "drop out" makes more more money than 80+% of Americans (for humor, compare his salary to what lawyers make. Keep in mind, that law school tends to cost six figures!). While this story may seem unusual, many skills offer a high pay scale for their occupation. For instance, one customer I spoke with at Wells Fargo performed underwater welding (a very dangerous skill) while making several hundred dollars an hour (note that $100 an hour equates to $200,000 a year with a 40 hour work week).

Other skill sets that are valued are things like equipment operators in oil fields. I spoke with a professor at DeVry, who mentioned that Midland Texas is currently seeking these positions. The problem? They struggle finding qualified people because too many young people think that employers require "going to school" (note to young readers - first, find out if employers need someone who has a degree before spending money on school). Unfortunately, due to unemployment rising, we've continued to tell people to "go back to school," when the reality is that we need many positions that don't require a college degree (and some of them are starting to pay more and more).

Are Media Finally Seeing the Next Major Recession?

Quick Summary:
CNBC recognizes the dilemma with Generation Y and the housing recovery. With student loan balances, higher gas prices, and consumer spending limited, a housing recovery is far off and another recession is right around the corner.

CNBC - a major financial media outlet - published an article which recognizes the potential problem with real estate and Echo Boomers (I've discussed Millennial attitudes toward the housing market, but also financially-limiting factors, such as high gas prices and the education bubble also create encumbrances). The article mentions a red flag report:

The Bipartisan Policy Center's report states that young adults are struggling with higher levels of credit card and student loan debt than their elders—some of which could take decades to pay off.

The last statement, "decades to pay off" spells disaster for the economy. While the education industry may be enjoying its decade, the enjoyment is coming with a high cost to Echo Boomers, which will stall their consumption in other economic areas.

On top of the education bubble, gas prices are also hurting Echo Boomers. This tightening effect will cripple any future plans for many Echo Boomers to become home-owners (if that is their goal), among other economic changes, possibly setting the stage for a major recession. Unfortunately, since little has been accomplished since the last recession, the education bubble popping alongside the next recession could make the last recession seem like nothing. In other words, a great depression may be around the corner. Which media outlet will be ahead on this one?

"Give Us Facebook Or We'll Take A Lower Paying Job!"

Quick Summary:
Some Echo Boomers would take a lower paying job, provided they could surf Facebook at work. What you think you can control and change will often change, and possibly control, you.

For the humorous article of the week - and no, I'm not kidding - some Echo Boomers would take a lower paying job if it meant that they could access Facebook at work:

According to Cisco’s second annual Connected World Technology Report, which surveyed 1,400 college students age 18 to 23, and 1,400 young professionals under 30, across 14 countries, the ability to use social media, mobile devices, and the Internet more freely in the workplace can influence job choice, sometimes even more than salary.

In fact, 40 percent of college students and 45 percent of young professionals said they would accept lower-paying jobs in exchange for those freedoms. You read that right.

Wow. In other words, some Echo Boomers do not see the value in work - doing something that fulfills you. And, like some of our current political leaders, some Echo Boomers don't respect their time or money (while money is not everything, it represents value and when people disrespect that value things like a growing national debt and throwing money at various "important" programs occur).

In other words, companies like Microsoft, Cisco or Apple could toy with cutting their Millennial employees' salary while giving them Facebook freedom, and about half of the their Millennial workforce would remain.

As an interesting side note, I could not tell if the author of the article was kidding or not in some places. For instance:

Remember, as kids they earned trophy after trophy for just for participating [author's note: wouldn't this line of thinking lead to a generation that will think that just "showing up" to work is the same as working?]. So it’s no surprise to learn that they are hungry for positive feedback.

But like anything else in their lives, if it isn’t posted on their wall, it’s almost like it didn’t happen at all [author's note: wow.]. In other words, accolades that can be viewed by their colleagues will pack twice the punch [author's note: somewhere in the world, Mei Yaochen is rolling over in his grave]. Facebook makes it painless to commend and reward your employees publicly [authors note: definition of a win-win for employers - pay your employees less and give them cheap Facebook compliments!].

Don't give the Echo Boomers a raise - post a "good job" on their Facebook Wall, and they'll be happy for a day (or week, or month, or year). Technically, Echo Boomers enjoy self-esteem boosts, and for some, a self-esteem boost may be a post on their Facebook Wall (though the definition of a self esteem boost may something entirely different - like receiving a raise).

As a final note (regarding human behavior), I'm reminded of some advice I received from a business owner in Dallas, who I met at the gym a few months ago (he told me of a story about his son wanting a dog to "be the master"): what you perceive that you can control and change will often change (and maybe control) you. While that may not be a bad thing (in some cases, we want to change), you should avoid engaging in self-delusion and ask yourself, "Do I want to be changed by this?" If the answer is no, avoid it (and vice versa).

Generation Y Loves Technology

Quick Summary:
Echo Boomers represent or over represent their demographic in technology. Technology offers emotional investments for businesses to use.

Of various internet consumers, note the significance of Generation Y on the internet:

23 per cent of the consumers watching online video 27 per cent of users of social networking/blog site 33 per cent of tablets owners 39 per cent of smartphone users

If we consider that Echo Boomers make up about 25% of the U.S. population, those numbers reflect how important technology is to Echo Boomers. Among Millennial consumers, businesses should cultivate a online presence, especially by using tools like social media and mobile and tablet apps.

In the business model of the future, I note regarding technology that it is wise to ensure that users invest emotional energy in your product:

Zuckerberg, whether he knows it or not, has created a new business rule that few businesses recognize. This business rule is simple: make consumers invest their time in your product. Most consumers won't leave Facebook and join other social networks simply because it took a massive amount of time to add friends, adjust their features, build personal albums, et cetera. In other words, there's a major emotional cost to leaving Facebook. Trust me, the more people invest emotional energy into Facebook, the less likely they are to leave (and, ironically, the more likely they are to continue investing emotional energy into Facebook).

Since Echo Boomers are over represented consumers of electronic media, convincing them to invest their energy in your product (or products) will yield the most results. Keep in mind, some companies also use social media to ascertain risk, whether that's for offering insurance quotes or hiring people.

In a nutshell, technology will play the largest business factor when dealing with Generation Y.

Interview: Matt Kramer On Predatory Leadership

The responses to the interview questions may not represent the views of The Echo Boom Bomb's author. These interviews are provided to inform readers of information from experts and provide these experts with a medium where they can answer questions without any content changes. You can also read other interviews at this link.

A brief biography about Matt Kramer:

Matt Kramer is parent-child mediation, mediator, photographer, entertainment entrepreneur, talent consultant and coordinator. He's based in Dallas and Austin Texas, doing business throughout Central and North Texas, and outside the area. He's also studying predatory leadership and how it affects our society. You can get more information about him on his website, mattkramer.com.

1. What is predatory leadership?

Predatory Leadership is the display, by one's actions, policies or agendas, of their mental, emotional and subconscious investment into attaining their goals, openly or covertly, by any means, with complete disregard or concern for the consequences of their efforts upon others.

2. How has predatory leadership affected the business and political worlds?

Predatory leadership is evident throughout almost all aspects of society. In the domestic arena, the behavior is identified in verbal and physical abuse in families. In regional municipalities it shows up in government corruption as in the City of Bell, a small town east of Los Angeles in which the city manager was paying himself over $800,000 a year and helping his cronies milk the local economy with comparably illegitimate salaries at the expense of the inhabitants of the city (Gottlieb & Knoll, 2011). It shows up in a corporate culture that replicates the evils associated with destructive forms of competition focused on increasing shareholder profits while ignoring pollution controls, quality control, employee safety, etc. It showed up in Bernie Madoff. One example is the corporate - political scandals in which city officials take or demand bribes, currying favors for vendors and suppliers whose products are not in the best interests of their constituents. It shows up in religious organizations protecting pedophiles at the expense of their victims. It showed up in Radio-Te´le´vision Libre des Mille Collines (RTLM) when its disc jockeys spent months exploiting racial prejudice and exhorting its listeners to prepare to reclaim their country via the extermination of their Tutsi neighbors (Li, 2004). It shows up when any dictator censors free press, imposes martial law and assassinates his opponents in order to maintain illegitimate control of the nation. Predatory leadership wreaks havoc upon humanity in myriad ways too numerous to include in this document. The proliferation of the psychological culture of predatory leadership is thousands of years old. The impact and consequences of this syndrome shows up throughout all levels of culture in ways that are invisible as well as visible. Conventional wisdom says that man is violent by nature, that war is inevitable. That a few bad apples make the organization look worse than it is. But maybe that's just a symptom of the pervasive nature of the predatory leader. There are pockets of humanity, small communities where leaders are not corrupt. There are idealists working hard to change systems that perpetuate destructive, harmful practices at all levels of government and throughout society. Countering their passionate efforts are powerful forces employing maximum effort to sustain the status quo in spite of the harm suffered by many people in the process.

3. What are the solutions to predatory leadership?

While I do not have all the answers, I believe the initial stage of any solution begins with verifiable information. Most people do not recognize the early warning signs of socipathic behavior. Our awareness of the nature of this pathology is akin to the status of medicine in the 16th century – physicians then did not know about bacteria and viruses; most of their theories about illness were wrong. Due to their ignorance, they didn't know they were spreading diseases among their patients. Teach everyone, especially children, to recognize the early symptoms of narcissism and sociopathy at a young age; they will have the opportunity to make better choices in whom they choose to follow, promote, elect or marry.

A second stage would be to develop opportunities for people to gather and brainstorm more solutions. By educating and involving the general population in generating solutions, ideas will surface that are workable within the resources of those involved.

4. Suppose someone tells you: "People who succeed in business/politics are in leadership positions because they worked harder than everyone else, not because they are sociopaths." How would you address this assertion?

Certainly there are successful business people and politicians who earned their success legitimately. While it may be difficult for the uninformed to identify "healthy" from "toxic" personalities, one concern is that in order to succeed, some of them had to replicate sociopathic behavior (the ends justify the means) in order to gain their success. For example, a top executive at Nestle's may have empathy and be concerned about the way Nestle's marketing techniques raise mortality rates for third world infants but in order to hold on to his position, he withholds his point of view and goes along with the company's policies (Breastfeeding.com, 2012).

5. Last question, and this one is quite the challenge. I would argue that some people in our world like to be prey; meaning they would like a predator for a leader. While normal individuals, like you and I, find this appalling, after working in social psychology, I studied people who desired to be abused (as disturbing as this phenomena is). How do we address people who want to be abused?

There are a number of reasons this may happen, and you are more correct than you may realize. On the domestic level, some who have low self esteem deny themselves the opportunity for healthy relationships; subconsciously they will "punish" themselves by getting into abusive relationships. On the larger social level, some people do gravitate to leaders they feel will carry out policies and agendas they themselves do not want to handle. Another reason is that those leaders provide a parental role – the followers want to believe their leaders know more than they do. The "toxic" follower will believe the lies of a toxic leader who promises lies they want to hear (like blaming a minority for their problems or pushing a false short term solution for a difficult problem), rather than accept a truth (such as a long term solution) they don't want to hear from someone else. (Lipman-Blumen, 2006). Hopefully those who are educated to this phenomenon will not fall prey to it.

Matt's Sources:

1. Breastfeeding.com (2012). The Nestle Boycott. Retrieved from: http://www.breastfeeding.com/advocacy/advocacy_boycott.html
2. Gottlieb, J. & Knoll, C. (2011). Robert Rizzo, aide accused of conspiracy in Bell corruption scandal. Retrieved from: http://articles.latimes.com/2011/mar/31/local/la-me-0331-bell-indictment-20110331
3. Li, D. (2004) Journal of Genocide Research (2004), 6(1), March, 9–27 Carfax Publishing Blumen-Lipman, J. (2006). The Allure of Toxic Leaders: Why We Follow Destructive Bosses and Corrupt Politicians – and How We can Survive Them. New York, NY: Oxford University Press