College Degree for Children Born in 2013 Could Cost $140,000

From Macleans:

The cost of a four-year university degree for a child born in 2013 could rise to more than $140,000 due to tuition inflation, a new study says.

But three-quarters of parents with children under 18 haven’t made a detailed estimate of the total cost of post-secondary education, said BMO’s Wealth Institute in a report released on Wednesday.

Tuition and other costs for a four-year university degree now can cost more than $60,000, the report said.

“I think that for most people if you tell them that tuition has increased two or three times the rate of inflation they will be surprised at that,” said BMO’s Caroline Dabu.

This can leave parents unprepared for the costs and students with hefty loans to pay back when they graduate, Dabu said from Toronto.

Over the last five years, the average annual inflation rate has been 1.6 per cent while tuition inflation was 3.9 per cent, the bank said.

Why Subways Are Important

Krugman:

Here’s an interesting new working paper: Subways, Strikes, and Slowdowns. Unfortunately, there doesn’t seem to be an ungated version. But here’s the summary: the author argues that mass transit has a significant impact in reducing traffic congestion, even when it carries only a small fraction of commuters. Why? Because commuters who take mass transit are, very disproportionately, people who would otherwise be driving on the most congested routes. So even the small number of people taken off the roads has a surprisingly large effect in reducing travel delays.

(via Poor Mojo)

The Poorest Americans Donate 3.2% of Their Income to Charity. The Richest Donate 1.3%

From The Atlantic:

One of the most surprising, and perhaps confounding, facts of charity in America is that the people who can least afford to give are the ones who donate the greatest percentage of their income. In 2011, the wealthiest Americans—those with earnings in the top 20 percent—contributed on average 1.3 percent of their income to charity. By comparison, Americans at the base of the income pyramid—those in the bottom 20 percent—donated 3.2 percent of their income. The relative generosity of lower-income Americans is accentuated by the fact that, unlike middle-class and wealthy donors, most of them cannot take advantage of the charitable tax deduction, because they do not itemize deductions on their income-tax returns.

But why? Lower-income Americans are presumably no more intrinsically generous (or “prosocial,” as the sociologists say) than anyone else. However, some experts have speculated that the wealthy may be less generous—that the personal drive to accumulate wealth may be inconsistent with the idea of communal support. Last year, Paul Piff, a psychologist at UC Berkeley, published research that correlated wealth with an increase in unethical behavior: “While having money doesn’t necessarily make anybody anything,” Piff later told New York magazine, “the rich are way more likely to prioritize their own self-interests above the interests of other people.” They are, he continued, “more likely to exhibit characteristics that we would stereotypically associate with, say, assholes.”

(via TYWKIWDBI)

The Lost Decade for the Economy

From The Washington Post:

The U.S. economy has expanded at a healthy clip for most of the last 70 years, but by a wide range of measures, it stagnated in the first decade of the new millennium. Job growth was essentially zero, as modest job creation from 2003 to 2007 wasn’t enough to make up for two recessions in the decade. Rises in the nation’s economic output, as measured by gross domestic product, was weak. And household net worth, when adjusted for inflation, fell as stock prices stagnated, home prices declined in the second half of the decade and consumer debt skyrocketed.

Another Hurdle for the Jobless: Credit Inquiries

From The NY Times:

Once reserved for government jobs or payroll positions that could involve significant sums of money, credit checks are now fast, cheap and used for all manner of work. Employers, often winnowing a big pool of job applicants in days of nearly 10 percent unemployment, view the credit check as a valuable tool for assessing someone’s judgment.

But job counselors worry that the practice of shunning those with poor credit may be unfair and trap the unemployed — who may be battling foreclosure, living off credit cards and confronting personal bankruptcy — in a financial death spiral: the worse their debts, the harder it is to get a job to pay them off.

“How do you get out from under it?” asked Matthew W. Finkin, a law professor at the University of Illinois, who fears that the unemployed and debt-ridden could form a luckless class. “You can’t re-establish your credit if you can’t get a job, and you can’t get a job if you’ve got bad credit.”

(via Shakesville)

Maricopa, AZ

From The Wall Street Journal:

Builders rushed into this one-time agricultural crossroads during the housing boom. They put up beige stucco houses on winding streets, with names like Heavenly Place and Good Vibrations Lane. They lured young people who couldn’t afford homes in nearby Phoenix or its costly suburbs. The population soared to 37,000 last year from 1,400 a decade ago, making Maricopa one of the nation’s fastest-growing towns.

Now, it’s become a dead end for some of those people.

“We’re trapped,” says Tracy Campbell, as she watches her 2-year-old daughter romp on a playground.

In 2005, her husband, Zachary Campbell, accepted a transfer from San Diego to Phoenix to manage a recreational-vehicle store. For the first time, the Campbells figured, they could afford their own home, though that meant moving to Maricopa, about 20 miles from Mr. Campbell’s store. They scraped together a $50,000 down payment to buy a new four-bedroom home in Maricopa, for $250,000. It came with black granite countertops, cherry kitchen cabinets and a pool in back.

Today, Ms. Campbell figures, the home is worth perhaps half what they paid in 2005.

Even that might be optimistic. Along a nearby highway, young men hired by a local real estate brokerage wave red signs touting “Homes From $69.9 K.”

The Campbells planned to sell their house for a profit after a few years and move back to San Diego before their daughter starts kindergarten. Today, they couldn’t hope to sell the house for enough to pay off the mortgage. They fear the down payment they made on the house is money they won’t see again.

Some people in the neighborhood are simply walking away from their houses, leaving them for the lenders to foreclose. “We’re surrounded by empty houses on three sides,” Ms. Campbell says. But she and her husband have kept up on their payments, and want to keep their credit record clean.