Kool-Aid and Baloney Sandwiches: The Days of Cheap Road Trips Are Over

In Coat of Many Colors, Dolly Parton sang that you are only poor if you choose to be. That was my parents' philosophy when I was a kid. We ain't poor; we're middle class.

Perhaps to prove that we were climbing upward on America's economic ladder, my parents took us kids to Disney Land in 1958. My dad bought a Chevy station wagon without air conditioning, and we were on our way. 

We headed west on Highway 66--America's Mother Road. We stopped for lunch at rest stops along the way, where my mom would slap a slice of baloney between two pieces of Wonder Bread. That was lunch--along with Koolaid, which Mom mixed herself.

In those days, people couldn't book hotel rooms online like we can today. On the road west, my dad would drive the family from one motel to another every evening until we found one with the right price.  I imagine that was a little stressful for my parents.

As I said, our Chevy wasn't air-conditioned, but my dad borrowed a tube-shaped air conditioner that fitted on a passenger window.  Didn't work too well.  

Dad also borrowed a canvas waterbag that pictured a Native American in a war bonnet. He hung the bag on the car's front grille. Dad would turn the hose on the waterbag every time we stopped for gas. 

Of course, the water on the waterbag evaporated quickly under the hot Southwestern sun. Theoretically, this evaporation cooled the water inside the waterbag. Theoretically.

On the way home, our car broke down in Santa Rosa, New Mexico, and we had to spend a night there. The repair cost for fixing the transmission was astronomical--one hundred bucks!

Looking back, I now realize that it wasn't easy for my family to drive to California in 1958. Still, we saw everything a middle-class American family would want to see: the Grand Canyon, the Petrified Forest, Disney Land, Sea World, Knott's Berry Farm, and the friggin' Pacific Ocean.

Oh, those were the Good Old Days! 

Today most families would head for Disney World in Florida--not Disney Land in California. A middle-class family would drive to the resort by car and stay in a respectable chain hotel.  The family would likely eat their meals in restaurants rather than make their own sandwiches at roadside parks. 

But maybe not. Inflation has gone up so fast and so high that many people who consider themselves middle-class may be priced out of a trip to Disney World.

First, the cost of four-day theme-park tickets for a family of four is about two grand.  Five nights in one of Disney's moderate-priced hotels will cost $1600 for a standard room with two queen-size beds. Meals for six days will cost a family of four about $1600 (according to Urban Tastebuds).

So, we're talking five grand plus the cost of driving to the world's grandest theme park.  Gas is projected to hit $6.00 a gallon by summer's end.

And souvenirs--don't forget the cost of souvenirs. Mickey and Minnie don't come cheap.

Altogether, a one-week vacation to Disney World will cost a family of four about $6,000. 

You can't handle that? Don't worry. As Dolly Parton reminded us, we're only poor if we choose to be.  

So if you can't afford a summer vacation for your family this year, just tell yourself you're still in the middle class. And keep telling yourself that until you believe it. 

Who needs bottled water?

Walking on the Sunny Side of the Street: 53 percent of the nation's infants receive federal food aid

 Is everybody having fun? According to the feds, the economy is booming: millions of new jobs and rising wages.  The defense industry and its stockholders are getting rich from the Ukraine War, and college students are likely to get all their student-loan debt forgiven. Ain't that great!

In Baton Rouge, where I live, thousands of people got Payroll Protection money. Many of these folks are remodeling their houses or shopping for vacation homes. The restaurants are full of people eating fried oysters and sipping tropical drinks. The roads are full of luxury cars. There's never been a better time to be alive!

But maybe not. A lot of Americans are hurting; we just don't see them. The U.S. Department of Agriculture is feeding millions of low-income families. USDA's own website says it provides supplemental nutrition to 53 percent of all the nation's infants. 

In Houston, where housing prices are going through the roof, and people are waiting in line to buy Audis, the Houston Foodbank is feeding 800,000 people a year. That's a lot of people who need supplemental food in an economy of rising wages and a robust job market. 

And how about the millions of retired people who live on fixed incomes? Television ads show senior Americans gamboling on tropical beaches with their grandkids, playing golf with their buddies, or traveling to beautiful and exotic places,

But that is not a reality for most retired Americans who see their savings depleted. The average Social Security check is $1500 a month, but lean ground meat is pushing six bucks a pound. And by the end of the year, we all know, hamburger meat will cost even more. 

In other words, the inflation we are experiencing is not fuckin' transitory.

We now live in two Americas. Some Americans have a secure seat on the gravy train, and all of our congressional and corporate leaders are rich.

But the un-rich are worried about the future. We know that inflation is not under control, and we know it will worsen. More than half of American families don't even have $1,000 set aside for emergencies.

In my view, Americans will continue to believe that the economy is fine for another year or so. The government continues to print billions of dollars of new money every month, and no one worries about the $30 trillion national debt.

But we are all living on the brink of a financial collapse, and most of us know it--at least on a subconscious level.

And when food becomes scarce and increasingly expensive, we will have to face reality and change our ways.

People will have to stop paying dog walkers and walk their own dogs. Maybe pop will cancel his lawn service and start mowing the grass again. Many of us will stop going out to dinner and start looking for Spam recipes.

And God forbid, some of us will have to wean ourselves off craft beer and go back to drinking cheaper brews.  When I buy my first case of Old Milwaukee,  I will know the end is near.

Will Americans Starve This Year? Probably Not, But Lets Plant Gardens Anyway

 A few days ago, Chris Martenson posted a blog essay titled "Will You Starve to Death This Year?" Martenson pointed out that escalating prices for natural gas have led to a global rise in fertilizer costs.  The price of diesel, which runs the world's farm tractors, has also shot upward dramatically, contributing to a sharp increase in food prices. A ten percent decline in global food production, Martenson argued, would be catastrophic.

Other people are beginning to worry about food. On television, I'm now beginning to see ads from emergency-food-supply companies--the outfits that sell food packets that can be safely stored for up to 25 years.  Is it time to stock up on canned goods?

I don't think Americans are in danger of starving to death--in the short term, at least. We live in a great country blessed with fertile soil, a temperate climate, and the advanced technology we need to feed a nation of 330 million people. 

In addition, the U.S. has a pretty good safety net to make sure people don't go hungry. The federal government's SNAP program (food coupons) is readily available to low-income families. Thousands of churches and nonprofit agencies deliver food to people who need it--including elderly shut-ins.

The American consumer is paying more for food, and we can't always get the food we prefer due to kinks in the supply chain. But nobody will die of hunger in the U.S., at least not in the near-term future.

Nevertheless, Americans should not take our food for granted. I've been reading about famines, and history tells us that people can starve to death even in countries that export food.

Several million people starved to death during Ireland's Potato Famine of 1845-1849, even though the British government exported food out of Ireland. Almost four million Ukrainians died of hunger in 1932-1933 due to Stalin's order to seize food stocks from peasant farmers, even while the Soviets were exporting food to Europe.

Anne Applebaum, who wrote a masterful history of the Ukrainian famine, described how people react when they don't get enough to eat. First, hungry people respond with anger and violence--especially if they have access to firearms. Eventually, however, starving people fall into lethargic apathy and quietly die.

In The Great Hunger, the best treatment of the Irish potato famine, Cecil Woodham-Smith explained how mass starvation always leads to epidemics. Disease invariably follows when the living become too weak to bury the dead.

I am also convinced from my reading that mass starvation inevitably leads to cannabilism, even in advanced societies. The starving people of Leningrad began eating the dead during the Nazi's 900-day siege of the city, as did the Ukrainians during the Holodomor. During World War II, German prisoners of war descended into cannibalism when the Russians penned them up and allowed them to starve to death. 

Americans have been blessed by abundant food for so long that we've forgotten its importance. We can eat whatever we want--from Russian caviar to Chicken McNuggets, and the grocery stores are always open.

Nevertheless, I think it is time for us to think about food.  We still have plenty to eat, but the grocery-store shelves no longer have everything we desire. And food prices have gone up alarmingly over the last few months.

Martenson concluded his sobering essay by urging his readers to plant gardens. I agree. I have been gardening for about ten years, and I now grow both a spring and a fall garden.

My little vegetable garden can't sustain my family for any length of time, but I am learning how to tend my crops, how to spot and treat diseases, and when to fertilize and harvest. 

Just as importantly, raising my own food is fulfilling on a spiritual level.  Planting a seed and seeing it grow into a bean plant that twines around a trellis and produces something I can eat is a miracle. And nothing tastes better than a home-grown tomato picked from my own garden. 

As Guy Clark observed in a famous song, "What would life be without homegrown tomatoes?"  Indeed it would not be nearly so sweet.

Why Does the Federal Government Subsidize Foreign Medical Schools?

 As Reported by Steve Rhode in Get Out of Debt Guy, the Federal Trade Commission recently filed an action against St. James School of Medicine, located in the Caribbean. According to the FTC, St. James "deceptively marketed the school's medical license exam test pass rate and residency matches to lure prospective students."

The FTC seeks a $1.2 million judgment against St. James. This judgment, the FTC asserts, will go toward student refunds and cancellation of student debt for aspiring doctors who attended St. James over the past five years.

You may wonder why the FTC asserts jurisdiction over a medical school operating outside the United States. As it turns out, this Caribbean medical school receives federal student-loan money. St. James is hardly in a position to argue that its recruiting activities are none of the FTC's business.

St. James is just one of more than twenty foreign medical schools that receive federal student-loan money. Five of these schools are in the Caribbean, but medical schools in Australia, Canada, Ireland, Israel, and Poland also receive revenue from federal student loans.

Going to a foreign medical school is expensive. According to a U.S. government website, the median cost of completing a medical degree at  St. George University's medical school in Grenada is $385,000.

So why not get your medical degree from Ross University in Barbados? The median cost is only $348,000--a bargain!

Why is our federal government subsidizing foreign medical schools? Are there not enough American medical schools to meet the nation's health needs?

If not, why don't we build more medical schools in our own country instead of subsiding medical training in the Caribbean?

Moreover, it can be dangerous for an American to get a foreign medical degree. Why? Because there are more M.D. graduates in the United States than residency programs to train them. 

As the New York Times reported recently, more than half of the American residency programs are "unfriendly" toward graduates of foreign medical schools. In fact, only 60 percent of international medical-school graduates get a residency in the United States compared to 94 percent of doctors who graduated from American medical schools.

Most Caribbean medical schools are for-profit institutions, often owned by American investors. Many have very lax admission standards. The admission rate at some Caribbean medical schools is 10 times higher than at American medical programs.

What are the takeaways? First, Americans should be wary of attending a foreign medical school because they run a high risk of not being selected for a residency program that they will need to get a medical license.

Second, Congress should stop subsidizing foreign medical schools, which are horribly expensive and leave many of their graduates with no job prospects.

But the for-profit industry has powerful lobbyists, and Congress is unlikely to act. At the very least, then, Congress should reform the Bankruptcy Code so that jobless graduates of foreign medical schools can discharge their enormous student debt in bankruptcy. 

California Coast University v Aleckna: College liable for student debtor's attorneys' fees after it refused to send her a complete transcript

 Jaime Aleckna was a student at California Coast University until 2009, and she met all the academic requirements for graduating. However, she still owed CCU $6215 when she filed for bankruptcy in 2012. Under the Bankruptcy Code, her bankruptcy petition triggered an automatic stay on all collection actions.

CCU filed an adversary complaint against Ms. Aleckna, arguing that her student loans were non-dischargeable in bankruptcy. Then, while the bankruptcy proceedings were pending, Aleckna asked CCU to send her college transcript.

CCU sent Aleckna an incomplete transcript that did not note her graduation date. The university argued that she had not technically graduated because CCU had put a "financial hold' on her account.

Aleckna then filed a counterclaim against CCU in the bankruptcy court, charging the university with violating the automatic stay provision when it failed to send her a transcript that included her graduation date. She argued that CCU had unlawfully attempted to collect on a  pre-petition debt by withholding her full transcript.  Aleckna asked the bankruptcy court to award her damages and attorneys' fees. 

CCU filed a motion to dismiss Aleckna's counterclaim, which the bankruptcy court denied in 2013. The university then withdrew its adversary complaint against Aleckna. According to the Third Circuit Court of Appeals, CCU's withdrawal "was essentially a confession that Aleckna's debt was dischargeable under the Bankruptcy Code . . . ."

CCU and Aleckna ultimately went to trial on her claim that the university had willfully violated the automatic stay provision and was liable for her damages and attorney fees. CCU lost the case in 2016 and faced a potential judgment for Aleckna's fees.

CCU appealed to the Third Circuit Court of Appeals, where it argued that it had complied with any legal obligation to give Aleckna her transcript when it sent her a  transcript that did not include her graduation date.

A panel of Third Circuit judges didn't buy CCU's arguments. In a 2021 decision, the panel agreed with the bankruptcy court that "'a final transcript, with no graduation date, [is] akin to a letter of reference with no signature,' and was essentially useless."

The Third Circuit also agreed with the bankruptcy court that "providing an incomplete transcript is tantamount to providing no transcript at all."  The Third Circuit affirmed the lower court ruling that CCU's action was a willful violation of the automatic stay provision, making the university liable for Aleckna's damages and attorney's fees. 

The end result? CCU's foray into a Pennsylvania bankruptcy court was costly.  In a failed effort to recover $6,215 from Aleckna, it wound up being liable for her attorney fees--which the Third Circuit estimated to be around $100,000! And, of course, CCU's own attorney fees were undoubtedly substantial.

Perhaps a lesson can be gleaned from California Coast University v. Aleckna. A college would be wiser to write off a small debt owed by a bankrupt former student rather than litigate in the federal courts for eight years.

Why? Because, as philosopher Forrest Gump might have put it, bankruptcy court "is like a box of chocolates. You never know what you're gonna get."

References

California Coast University v. Aleckna, 494 B.R. 647 (Bankr. M.D. Pa. 2013).

California Coast University v. Aleckna, Adversary No. 5:12–ap–00247–RNO, 2014 WL 4100702 (Bankr. M.D. Pa. 2014).

California Coast University v. Aleckna, 543 B.R. 717 (Bankr. M.D. Pa. 2016).

California Coast University v. Aleckna, 3:16-cv-00158, 2019 WL 4072405 (M.D. Pa. 2019).

 California Coast University Aleckna, 13 F.4th 337 (3d Cir. 2021).

14,000 Law Firms Received Payroll Protection Money: Why Not Forgive All Student-Loan Debt?

 Our government spent trillions of dollars responding to COVID, and just about everybody got a little something from Uncle Sam.  Sometimes I think my wife and I are the only people in the United States who didn't get a COVID relief check.

For example, 14,000 law firms got Payroll Protection money, ostensibly to help them avoid laying off lawyers during the COVID crisis.  Eleven firms got $10 million each, but all 14,000 firms got at least $150,000.

Prisoners also got some COVID cash. More than a half-million incarcerated individuals got three-quarters of a billion dollars in stimulus checks.

Even drinking establishments managed to get their noses in the trough. Hooters of Louisiana, a "full-service restaurant," got $156,000.

In short, the U.S. government has been spewing out COVID cash like a drunken sailor on shore leave. So why not forgive all student-loan debt--all $1.7 trillion?

After all, student-loan forgiveness makes more sense than handing out Payroll Protection money to professional athletes and politicians.

Wiping out all student-loan debt would benefit 45 million student borrowers, giving them extra cash to put into the American economy. That's got to be a good thing.

Moreover, many student debtors took out loans to get college degrees that are worthless to them. Maybe they attended one of the dodgy for-profit colleges where they paid too much for a mediocre educational experience. Perhaps they borrowed $100,000 to get a gender studies degree from an elite college--a degree that did not lead to a good job.

So--you can put me down as a supporter of total student-loan forgiveness.  That's right; let's wipe out everybody's federal student-loan debt.

But we should recognize the perils of this course of action. First of all, student loans constitute the largest category of federal assets. If those loans disappear from the nation's balance sheet, the government's fiscal situation will look bleaker than it already does.

Secondly, we should recognize the moral hazard of wholesale student-loan forgiveness. People who take out student loans in the future will likely do so with the expectation that the feds will eventually forgive the debt. Thus, they may conclude they can default on their loans with no penalty.

Finally, wiping out all student debt does nothing to pressure colleges to get their costs under control. The higher education industry will continue raising tuition rates, forcing future students to take out more student loans to finance their studies.

In conclusion, I support student-loan forgiveness. Nevertheless, wholesale loan forgiveness will not solve the student-loan crisis. Until higher education cleans up its act and reduces costs, future generations of colleges students will continue getting hammered with unmanageable college-loan debt.

Thanks for the PPP money!

Under Water On Your Student Loans? Don't Count On Your Parents to Bail You Out

 In the 1990s, Wendi LaBorde took out student loans totaling about $75,000, but she could not repay those loans. Over time, interest accrued on the debt. 

In 2010, the Department of Education obtained a judgment against Ms. LaBorde for approximately $395,000--five times what she borrowed.

In 2014, LeBorde received the proceeds from her late mother's life insurance--$485,902, which was enough money to pay off the judgment on her student debt.

LaBorde didn't use the insurance money to pay off her student loans. Instead, she created a trust that named Connie Christine LeBorde, her daughter, the beneficiary. The trust bought a condo in California and then sold the condo and purchased a home in Riverside County, California, for $403,000. 

In 2020, the federal government sued LaBorde, accusing her of making a fraudulent transfer to avoid paying the judgment against her for her unpaid student loans. The feds pointed out that LaBorde's daughter, the trust beneficiary, lived in Arkansas and LaBorde lived in the Riverside County house. 

A federal court agreed with the federal government. Late last month, the court ruled that Laborde's transfer of life insurance money to the trust was fraudulent. It ordered that LaBorde be named the owner of the Riverside County house, making it subject to the government's lien for $437,000--the amount of her unpaid student loans plus accrued interest.

What happens next?  The federal government will enforce its lien on the California home where LaBorde was living. Ultimately, the house will probably be sold, and most of the proceeds will go to Uncle Sam.

Millions of Americans are burdened by college loans they can't repay. Many have given up even trying to pay off their student debt. Meanwhile, interest continues to accrue. It is not uncommon for people to owe three, four, or even five times the amount of their student loans due to penalties and accrued interest.

Undoubtedly, many of these debtors are counting on an inheritance from their parents or life insurance benefits to bail them out. Perhaps they intend to use inheritance money or life insurance proceeds to help prepare for retirement or purchase a modest home.

Unfortunately, as the LaBorde decision demonstrates, the feds can claim life insurance proceeds to satisfy a judgment for unpaid student loans. Moreover, the same logic that applies to life insurance may also apply to inheritances. At least one court has held that a student-loan debtor was not entitled to discharge student loans in bankruptcy because she did not use inheritance money to help pay off her student loans.

In retrospect, Ms. LaBorde's mother would have been wise to have made her granddaughter, Connie Christine LeBorde, the beneficiary of her life insurance policy. Connie could then have used the insurance proceeds to purchase a house and rent it to her mother at a modest price.  Structuring the transaction in that way would have avoided an allegation of fraud.

In my view, the LaBorde decision is unfortunate. I do not believe student-loan defaulters should be deprived of their inheritances or life insurance proceeds for the sole reason that they were unable to repay their student loans.

I want your house!