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The Coming Bear Market: Part II How to Prepare
Issue #492, October 16, 2017

Some Observations on Cemeteries
Issue #Interim Bulletin #491A, October 12, 2017

The Coming Bear Market: Part I: The Myth of Buy and Hold Forever
Issue #491, October 09, 2017

The Market makes New Highs
Issue #490, October 02, 2017

The Importance of a New High
Issue #489, September 25, 2017

A Little Insurance: Wealth, War and Wisdom
Issue #488, September 18, 2017

Some Observations
Issue #487, September 11, 2017

How to be Successful in Your Career
Issue #486A, September 07, 2017

How NOT to Buy a Home
Issue #486, September 04, 2017

This Week in the Market
Issue #485, August 28, 2017

Is the “Trump Bump” Running Out of Gas?
Issue #484, August 21, 2017

Gold is on the Move
Issue #483, August 14, 2017

The Importance of Estimation
Issue #482, August 07, 2017

Buying Art and Collecting: Part II of II
Issue #481, July 31, 2017

Buying Art and Collecting in General, Part I of II
Issue #480, July 24, 2017

Physicians need to be More Forceful: Follow-up
Issue #479, July 17, 2017

Physicians need to be More Forceful
Issue #478, July 10, 2017

Your First “Real” Investment
Issue #477, July 03, 2017

Leasing a Watch: Don’t
Issue #476, June 26, 2017

The Importance of Your Children having a Job
Issue #475, June 16, 2017

The Problem with Medical Student Debt is—the Med Schools
Issue #474, June 12, 2017

Critters and Varmints in your Home and Yard
Issue #473A, June 07, 2017

Leveraged ETFs
Issue #472, May 29, 2017

Leasing a Vehicle: Don’t!
Issue #471, May 22, 2017

Issue #470, May 15, 2017

More on Buying Jewelry
Issue #469, May 08, 2017

Buying Jewelry: Gold, Diamonds and Pearls
Issue #468, April 30, 2017

Thomas Sowell: Part III of III
Issue #467, April 24, 2017

Thomas Sowell: Pat II of III
Issue #466, April 17, 2017

Live Close to Where You Work
Issue #465, April 10, 2017

Medtronic in Hospital Management
Issue #Interim Bulletin #464A, April 07, 2017

Thomas Sowell: Part I of II
Issue #464, April 03, 2017

A Political Contribution a an Investment: Part II of II
Issue #463, March 27, 2017

A Political Contribution as an Investment: Part I of II
Issue #462, March 20, 2017

Buffett Selling Vacation Home
Issue #461, March 13, 2017

Advanced Placement (AP) ourses
Issue #460, March 06, 2017

The Importance of a Credit History
Issue #459A, March 02, 2017

A Credit Card Scam
Issue #459, February 27, 2017

The Electronic Health Reord
Issue #458, February 20, 2017

Issue #457, February 13, 2017

Platinum and Palladium
Issue #456, February 06, 2017

Economic Outlook for 2017: Part II of II
Issue #455A, February 02, 2017

Economic Outlook for 2017: Part I of II
Issue #455, January 30, 2017

A Story From Vegas
Issue #454A, January 25, 2017

Land Donation Deals and the IRS
Issue #454, January 23, 2017

The Theory of Gambler’s Ruin
Issue #453, January 16, 2017

Student Loans: But Wait, There’s More!
Issue #452, January 13, 2017

A Second Home
Issue #Interim Bulletin #451A, January 04, 2017

The Consumer Confidence Index
Issue #451, January 02, 2017

Social Security
Issue #450, December 26, 2016

My Outlook for 2017: Part II of II
Issue #449, December 19, 2016

My Outlook for 2017: The Market
Issue #448, December 12, 2016

Medicine in 20 Years
Issue #447, December 05, 2016

Higher Interest Rates
Issue #446, November 28, 2016

Trump and the Markets: The Bad and Ugly
Issue #445A, November 23, 2016

Trump and the Markets: The Good
Issue #445, November 21, 2016

Negative Trends: The Suits aren’t Makin’ Steel
Issue #444, November 16, 2016

The New DOJ Fiduciary Rule
Issue #443, November 07, 2016

Barron’s Conference, Part IV of IV
Issue #442, October 31, 2016

Barron’s Conference, Part III of IV
Issue #Interim Bulletin #441A, October 26, 2016

Barron’s Conference, Part II of IV
Issue #441, October 24, 2016

Barron’s Conference, Part I of IV
Issue #440, October 20, 2016

This Newsletter
Issue #439A, October 12, 2016

Memoirs of US Grant: Vol II
Issue #439, October 10, 2016

More Points on Collecting, Investing and the Economy
Issue #Interim Bulletin #438A, October 05, 2016

Personal Memoirs of US Grant
Issue #438, October 03, 2016

Ideas for a High School Part-Time Job
Issue #Interim Bulletin #437A, September 29, 2016

Collecting, Investing, and the Economy
Issue #437, September 26, 2016

Free College
Issue #436A, September 22, 2016

A Military Commitment to Pay for Med School
Issue #436, September 19, 2016

When a CD isn’t a CD
Issue #435, September 12, 2016

I Made a Mistake
Issue #Interim Bulletin #434A, September 07, 2016

What is Your Spare Time Worth?
Issue #434, September 05, 2016

Credit Cards and Bonus/Loyalty Points
Issue #433, August 29, 2016

The Write-off of Student Loans
Issue #Interim Bulletin #432A, August 25, 2016

412 Retirement Plans
Issue #432, August 22, 2016

Join the Club
Issue #Interim Bulletin #431A, August 18, 2016

The Case for Precious Metals and Hard Assets
Issue #431, August 15, 2016

When the US went off the Silver Standard
Issue #430, August 08, 2016

Why NOT to Open a Restaurant
Issue #429, August 01, 2016

Some Tips on Life Insurance
Issue #428, July 25, 2016

More Observations on Negative Interest Rates
Issue #427, July 18, 2016

Issue #426, July 11, 2016

Is a PhD Worth It? Part II of II
Issue #425, July 04, 2016

Is a PhD Worth It? Part I of II
Issue #424, June 27, 2016

Avoid Part-time real Estate Agents
Issue #423, June 20, 2016

Issue #422, June 13, 2016

The Problem with Auction Reserves
Issue #421, June 06, 2016

Make Full Use of Your Capital Investments
Issue #420, May 30, 2016

The Fed’s Announcement
Issue #419, May 23, 2016

Quit While You’re Ahead: A True Story
Issue #418, May 16, 2016

The Precious Metals
Issue #417, May 09, 2016

Negative Secular Trends: Part Ii of II
Issue #416, May 02, 2016

Negative Secular Trends: Part I of II
Issue #415, April 25, 2016

Not Winning is not the same as not Losing
Issue #414, April 19, 2016

Behavioral Economics: Part II: Weaknesses
Issue #413, April 11, 2016

Behavioral Economics: Part I: Valid Points
Issue #412, April 04, 2016

The Most Important Books I’ve Read
Issue #411, March 28, 2016

Secret to Success: Take Risks and do Things Differently
Issue #410, March 21, 2016

The Over-Priced Food Presentation Hustle
Issue #409, March 14, 2016


By Robert M. Doroghazi, M.D., F.A.C.C.

The Write-off of Student Loans

Issue #Interim Bulletin #432A, August 25, 2016

    This is a summary of “Writing Off Student Loans is Only a Matter of Time” by Daniel Pianko in the Wall Street Journal on August 16.
    Student debt now equals nearly one-quarter of federal borrowing. Only 37% of borrowers are actually paying down their loans. In April the WSJ reported that 43% of the approx. 22M with federal student loans weren’t making payments and 1 in 6, or 3.6M, were in default on $56B of debt. 
    In 2010, the Obama administration dispensed with the private intermediates that had administered federal loans since the 60s and replaced it with Direct Lending, administered by the Dept. of Education. At the same time Pres. Obama backed Income Driven Repayment and loan forgiveness. Students struggling financially can defer payments, causing the balance owed by more than 20M borrowers to grow. From 2004 to 2014, the average balance on a student loan increased from $15K to $24K.
    Starting in 2017, students can take advantage of the Public Service Loan Forgiveness Program, allowing borrowers to work for non-profits or government agencies to have their loans forgiven over 10 years. Virtually every teacher, firefighter, social worker, police officer, doctor or nurse could have their loans forgiven. Considering that the student loan portfolio is now $1.3T and growing at approx. $100B per year, the eventual cost to the Treasury could be hundreds of billions of dollars.
    Pianko feels options to avoid this massive write-off include using the same standards required of banks to determine non-performing loans, and pricing loans differently based on the success of students.
    RMD comment:
    1) Student loans have become an entitlement. As such, they are politicized. Any politician that caters to the 22M people with student loan debt can rack up a lot of votes (I believe this was a significant part of Bernie Sander’s appeal to the 20-30 year olds). A politician who wants to enforce collection has about as much chance to win as one who wants to reform Social Security. In Bismarck’s Germany, anyone receiving a government dole couldn’t vote. I am not recommending that, but I hope you see the logic.
    The socialist goal is to make people dependent on the government for the basics of life: food, medical care, housing, retirement and education. With Food Stamps, Medicaid and Medicare, Fannie Mae, Social Security and student loan forgiveness, we are there.
    2) The government = you and me, are going to eat as much as $500B of losses.
    3) There is an important moral lesson here. The government is teaching a whole generation that you don’t have to pay your debts. Since the beginning of my financial writing I have noted there are few better investments than the early repayment of debt. If you have student debt, you were lent the money in good faith and have an obligation to repay. HOWEVER, considering how I believe this will shake out, I recommend that you not make any early repayment of your student loans. 
    2) The only real solution is for government to get out of the student loan business.  Unfortunately, it won’t happen.       
    A reminder:
Never buy anything at a charitable auction!
    I’ll explain in Sunday’s regular newsletter.
    Steve Wynn just opened a $4B casino in Macau. Should you invest?
    1) Steve Wynn opened the Golden Nugget in Atlantic City in the 70s. Cousin Tony took a client. When he went to the bathroom, the lines were 6-7 deep. He thought “this place is really popular”, bought some stock, and made nice money.
    RMD comment: How could it be any better: you get an investment idea going to the bathroom? This is one of Peter Lynch’s main points: keep your eyes open: you can find investment ideas in everyday life. Lynch’s wife brings home panty hose: he buys Hanes.
    2) Invest in A) people, like Warren Buffett, Bill Gates, Steve Wynn and Steve Jobs. Hitch your wagon to a star, and hang on for the ride. B) A system, as outlined in our Constitution. Rome dominated the Western World for 500 years because of the system created by Augustus (Octavian) Caesar. If I were a Professor at a Business School, I would teach a course on the administrative genius of people like Augustus, Moses, and Menes/Narmer, the first pharaoh. 
    Sunday’s newsletter will be “The Loyalty Points, Frequent Flier’s Miles Hustle”.
    It looks like the correction in the precious metals has begun. I’ll discuss that also.       

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