Living The Virtual American Dream

We might each have slightly different notions of what constitutes The American Dream. For most of us, I think it would include these eight building blocks:

1. Being born into a loving family with two married parents and some siblings

2. Living in the family’s owned home, preferably with a nice yard in a safe neighborhood

3. Getting good healthcare with an emphasis on prevention and early intervention

4. Getting a good education including a college degree and/or vocational training in an occupation that offers   good pay and growth opportunities

5. Enjoying a good career with fulfilling work that provides health insurance and a retirement plan

6. Finding the right person to love, marry, and have children with

7. Establishing a family and home in which the process will be repeated all over again

8. Being able to retire at a reasonable age and enjoying adult children, grandchildren, and many years of good health

In capitalist America, most of us have to work hard for The American Dream, earning one building block at a time. One of the lessons my parents taught me, and which I only learned with great difficulty, was that the best things in life are usually obtained through hard work and persistence, and if at first you don’t succeed, try, try again. I have come to believe that anybody who thinks that achieving The American Dream is easy, must be delusional, and probably won’t achieve it! But now, in the Cyberage, it has become increasingly difficult to discern reality from delusion. Many in our society have been opting for easy shortcuts to The American Dream. Entire industries have evolved that promise golden building blocks of the dream, but actually provide crumbling fool’s gold, heartache, and ruined credit to those whose wishful thinking turns into delusional thinking.

I’ll eventually address all of the delusional shortcuts to obtain the basic building blocks of The American Dream, but in this post I’d like to address two: (1) home ownership and (2) getting a quality college education.

Virtual Home Ownership

As a nation, we are still suffering the pain of high unemployment rates, defaulted mortgages, home foreclosures, bankruptcies, and financially struggling corporate and governmental entities, all brought on by a greedy and unregulated mortgage industry and delusional home buyers. For their conduct, shame on the congressman for all of the deregulation, the investment bankers who traded in credit default swaps, and the mortgage industry that sold subprime mortgages to people who couldn’t afford them. But, more interesting to me, are all of the approximately 8 million American families who wished so hard that they could afford $300,000 (+ or -) homes on their $30,000 (+ or -) salaries that they came to share the delusion that they could get their piece of The American Dream. All of their mortgage loans added up to about $2 trillion. Were they not aware of the adage, If it sounds too good to be true, it probably is? I imagine that most of the mass delusional thinking was fueled by wishful thinking, ignorance about the mortgage contracts they signed, and a sense of entitlement to living The American Dream, even if it was not earned through sufficient hard work and persistence.

Virtual Quality College Education

In the USA, the 2.6 million students attending for-profit colleges and universities now represent 10% of the total number of higher education students. I have reprinted my viewpoint on the subject of for-profit colleges and universities which you can read immediately below this post in “What’s Wrong with On-line Universities”.  Essentially, I consider the for-profits to be businesses whose primary mission is to make as much profit as possible; providing a good education for its customer-students is actually quite unimportant to them, contrary to their dishonest marketing claims.  All the for-profits actually sell is associates, bachelors, masters, and doctoral diplomas, but with very little actual educational growth, to customer-students who often do not have the talents, requisite scholastic skills, or work habits that are needed to actually earn legitimate degrees from traditional bricks-and-mortar universities.

The for-profit universities direct their marketing to the poor, to minorities, to the weakest students, and to prospective customer-students whose families have little or no experience with colleges and universities. They generally charge more than most not-for-profit public/state universities, but less than most not-for-profit private colleges and universities.  Most of their customer-students cannot afford the tuition, but these businesses have large staffs of salesmen (called “counselors”) who impress prospective customer-students with the availability of federal loans. Some even tell the prospective students that the lending agencies expect a high loan default rate, suggesting that they won’t even have to pay back the money they will borrow. And, failing to pay off loans is what many of them do- - big time!

As it turns out, most of the customer-students at for-profit universities never actually graduate, leaving them with debts, but no degrees. Of those who do graduate, they often have difficulty getting jobs in the fields for which they think they have prepared. The standards at these for-profits are so low that they accept students who often are unable to pass state licensing or certification exams, or to even qualify to take these exams. And, if the graduates can’t obtain the employment and salaries they expected, their inability to pay off their loans is exacerbated.

Now comes the news in USA Today (8/1/10) http://www.usatoday.com/news/opinion/editorials/2010-08-02-editorial02_ST_N.htm  that even though the for-profit universities account for just 10% of all college and university students in the USA, these students actually account for 44% of all student loan defaults. The U.S. Department of Education reported that 77% of the revenue at for-profit universities comes from federal grants and loans. Just the loans added up to $24 billion for the 2008-2009 academic year.  Apparently, one in five customer-students who borrow money to attend for-profit universities go into default within three years of leaving school, whether by drop-out or by graduation.

According to TIME (6/29/10) in an article by Elizabeth Dias entitled “For-Profit Colleges: Educators or Predators?”   www.time.com/time/business/article/0,8599,2000160,00.html  there could be $330 billion in student loan defaults in the coming decade. The article went on to note the similarities to the subprime mortgage collapse in the sense that the federal regulation has been very lax, that the borrowers have been targeted by aggressive predators, and that the customers often do not end up with the product (education, degree, and credentials) that they expected.

I would mention one other similarity between the subprime mortgage collapse and the for-profit university student loan default fiasco: both involve naive customers who were hoping to get their building block of The American Dream without the requisite hard work and persistence. After all, in the Cyberage, what kind of a person doesn’t consider the probability that if it sounds too good to be true, it probably is? It is in the nature of mass delusions that those who are deluded do not recognize the folly while everybody else sees it as plain as day.