What Determines Cost?
Last week we saw how the cost of raw materials may vary over time. We also discussed the influence changing currency markets have on product costs. There are many other factors, although we only have space to discuss a few.
1. Transportation. When petroleum exceeded $140 a barrel, prices of all commodities jumped. Almost all products are energy dependent. Even farm stands, where the produce is sold where it is produced, reflect increased transport prices as merchants pay for packaging, items they cannot produce themselves, and shipping.
Interestingly, as transportation prices fell, the retail costs did not drop as rapidly. This was due to a need to make up previous losses and the fear that the reduction in oil costs was just temporary. With commerce interlaced, it takes only one area of elevated merchandise expenses to affect all others.
2. Insurances. How do I insure thee? Let me count the ways…. Businesses maintain liability, fire, production, and property insurances. They may pay for or contribute to employee health, dental, and other insurance plans. Although per product the expense may be minimal, these costs have to be passed on to the consumer.
3. Salaries and Payroll Expenses. Salaries are among the greatest expenses a company has, especially in the United States, Japan, and Europe. A major factor in moving to a third-world company for production is the relatively low cost of labor, a lack of employee benefits, and few government regulations.
In addition to salaries, many countries require additional expenses such as Social Security (half is paid by the employer), unemployment insurance, and business taxes. Add in business contribution to medical insurance, pensions, sick time, vacations, and office perks, and the actual cost of labor may be double the salary rate.
4. Taxes. When will people stop falling for the politician’s lower tax ads? If Federal or State taxes are reduced, local property and school taxes rise. You always land up owing more no matter what they do. There are income taxes, land taxes, usage taxes (such as toll roads and bridges), and taxes on purchased items.
You are aware of sales tax. Almost every state and many localities add a percentage of the product purchased as a tax. I happen to live in New York, which has state, county, city, and other add-on fees. But even before the sales tax, many products get import taxes known as tariffs. They serve a dual purpose: raise funds for the government and increase the cost of foreign goods that can sell for less than similar domestically produced items (usually due to low foreign labor costs).
There are also excise taxes added to products and services. These can be added at the front end (taxes the production company pays) or directly on the consumer. Examples of such fees included those added to gasoline and other fuels, alcoholic beverages, tobacco products, and on telephone and cable bills. New York has been considering a tax on sugary beverages such as certain fruit drinks and soda.
5. Building Costs. It costs lots of money to build a factory, and considerably more to maintain it, upgrade it, and fix problems. Many companies (in part due to local ordinances) spend millions anually on landscaping, safety or security fencing, parking lots, and the maintenance of all such things. As you might expect, all these costs are added to the price of the product.
6. Profit. No one is in business to break even or to lose money, although that does frequently happen. All along the line, every company, person, and associated group takes a share of the pie. Each slice adds to the total cost. Let’s consider who may take profit from the cost of an apple:
a) Farmer
b) Sorter
c) Trucking company
d) Crate builder
e) Cold storage facility
f) Another trucking company
g) Wholesale produce market
h) Commodities traders and product brokers
i) Retail store chain
j) Local store
While the apple does not cost the tree anything to produce, when you consider the maintenance of the farm and equipment, the taxes, insurance and fees owed each step of the way, salaries and benefits, spoilage, and profits for all people involved, even if all involved takes a fraction of a cent per fruit, that one poor apple may become worth 20 or 25 cents before it reaches the consumer.
The Unknown Factors. While it may be possible to calculate a simple product produced or grown locally, it is nearly impossible to even guess at how much a more complex product costs. When a store cries that it’s selling for below cost or is losing money, or when an advertisement announces a major sale, just how accurate is the information in the ad?
During the next few weeks we will investigate how advertisement and store statements mislead the customer into believing they are getting a great deal. Don’t cry for the store owners.
Wednesday, January 20, 2010
Saturday, January 9, 2010
What Determines Value and Cost (Part 1)
(Consumer Safety & Awareness article: Part 43)
What is Value?
Technically, something is valued if it is needed, wanted, or generates special memories. When we refer to an economic value, though, we are looking at a product we want at a price that is less than we expect to pay. Generally the only way we have to know if a thing is truly on sale is if we make it ourself, believe the store that is selling it, have compared the price of that product at many other locations, or know how much it costs the store to purchase it (wholesale).
In a blanket statement, although one that does not always apply, consumer economists suggest that you never believe a “list price,” an advertised rate, or a store sign as an indication of the true value of the product.
Thus to know if something is a good bargain, the consumer must know how much it costs to produce. The true cost can be determined in two ways. One is the Supply and Demand method and the other is an actual calculation of all the factors that goes in to creating the product, bringing it to the store, and making it available for you to purchase. Few people know what those factors are. This week we will look at a few of them, and conclude in the next article.
1. Raw Material. All products originally come from natural resources. Be it grown, mined, harvested, artificially altered, or chopped down, the cost of removing the raw material from its original source can vary. This is where Supply and Demand has the most influence. If the product contains a rare material, and many people want it, the cost of production may be elevated.
We see changes in raw material prices frequently as a food item’s availability is affected by storms, drought, blight, or other “act of God.” A frost in Florida may reduce the amount of oranges available, and thus increase the cost of production. The farmers still have to pay for the care of the trees, taxes, fertilization, pest control, etc., for their orchard. They have fixed costs, yet may be getting a fraction of their normal crop production. Prices go up so that they can stay in business.
Another fixed cost of raw material is the search for new sources of the item. One reason oil production is expensive is due to the need to constantly search for new fields. They may be under the ocean, in hard-to-access locations, or in populated regions. The cost of geological surveys, land leases, the moving of equipment, and many other factors all add to the cost of the product. Even if the new oil wells are unproductive, the expense of drilling has to be passed on to the consumer or the company cannot stay in business.
2. The Human Factor. Ineptness, power, and greed play a huge role in the cost of an item. When a petroleum transport goes aground and spills oil into the ocean, the company has to pay for the repair and replacement of the ship, the clean up, any fines, as well as the cost of the lost product. The expense of such actions is passed on to the consumer.
International policy also affects how much a product costs. When the United States placed a boycott on products from Iran in the 1980s, we lost our main source of pistachios. Prices tripled in less than a year. The increased prices reduced demand. Eventually pistachio farms were developed in California and elsewhere, increasing the supply and thus lowering the cost.
Throughout recent history, petroleum has been used as a power-pawn. OPEC artificially reduces production in an effort to: a) obtain more money for member nations; b) increase their international power and importance; c) use as a hammer to force through policies that are beneficial to them. Hugo Chevez used Venezuela's oil production as a propaganda tool, offering discounted prices to America’s poor in order to win friends.
In 1980, Nelson Bunker Hunt and William Herbert Hunt, together with some wealthy Arabs, controlled the supply of silver in an attempt to gain extra profit. Silver had been selling for under $2 an ounce in 1973 when their scheme started. By 1979 their manipulations increased the cost to over $5 an ounce, and they were not satisfied. These people purchased more than half the world’s supply of silver and withdrew it from availability, causing prices to skyrocket. At its peak in early 1980, silver was going for $54 an ounce. Once the Federal Government stepped in, the prices collapsed falling 80% in less than a month.
3. Currency Exchange Rate. The price of most products float – they are unrelated to the value of a specific currency. Petroleum and other commodities are tied in to the value of the American dollar. With political, economic, and other factors constantly changing the value of currency, the costs of products related to them vary as well. The current high cost of petroleum and oil products is in part due to the lower value of the American dollar as compared to other currencies.
Exchange rates can have both positive and negative effects. A lower American dollar means that products produced in this country cost less overseas and thus sell better. This lowers our trade deficit and helps multinational companies. Products produced elsewhere, though, such as cocoa, bananas, electronics, European wine, and raw material, cost more in the United States.
Next week we will look at transportation, insurance, and fees that add to the cost of a product.
What is Value?
Technically, something is valued if it is needed, wanted, or generates special memories. When we refer to an economic value, though, we are looking at a product we want at a price that is less than we expect to pay. Generally the only way we have to know if a thing is truly on sale is if we make it ourself, believe the store that is selling it, have compared the price of that product at many other locations, or know how much it costs the store to purchase it (wholesale).
In a blanket statement, although one that does not always apply, consumer economists suggest that you never believe a “list price,” an advertised rate, or a store sign as an indication of the true value of the product.
Thus to know if something is a good bargain, the consumer must know how much it costs to produce. The true cost can be determined in two ways. One is the Supply and Demand method and the other is an actual calculation of all the factors that goes in to creating the product, bringing it to the store, and making it available for you to purchase. Few people know what those factors are. This week we will look at a few of them, and conclude in the next article.
1. Raw Material. All products originally come from natural resources. Be it grown, mined, harvested, artificially altered, or chopped down, the cost of removing the raw material from its original source can vary. This is where Supply and Demand has the most influence. If the product contains a rare material, and many people want it, the cost of production may be elevated.
We see changes in raw material prices frequently as a food item’s availability is affected by storms, drought, blight, or other “act of God.” A frost in Florida may reduce the amount of oranges available, and thus increase the cost of production. The farmers still have to pay for the care of the trees, taxes, fertilization, pest control, etc., for their orchard. They have fixed costs, yet may be getting a fraction of their normal crop production. Prices go up so that they can stay in business.
Another fixed cost of raw material is the search for new sources of the item. One reason oil production is expensive is due to the need to constantly search for new fields. They may be under the ocean, in hard-to-access locations, or in populated regions. The cost of geological surveys, land leases, the moving of equipment, and many other factors all add to the cost of the product. Even if the new oil wells are unproductive, the expense of drilling has to be passed on to the consumer or the company cannot stay in business.
2. The Human Factor. Ineptness, power, and greed play a huge role in the cost of an item. When a petroleum transport goes aground and spills oil into the ocean, the company has to pay for the repair and replacement of the ship, the clean up, any fines, as well as the cost of the lost product. The expense of such actions is passed on to the consumer.
International policy also affects how much a product costs. When the United States placed a boycott on products from Iran in the 1980s, we lost our main source of pistachios. Prices tripled in less than a year. The increased prices reduced demand. Eventually pistachio farms were developed in California and elsewhere, increasing the supply and thus lowering the cost.
Throughout recent history, petroleum has been used as a power-pawn. OPEC artificially reduces production in an effort to: a) obtain more money for member nations; b) increase their international power and importance; c) use as a hammer to force through policies that are beneficial to them. Hugo Chevez used Venezuela's oil production as a propaganda tool, offering discounted prices to America’s poor in order to win friends.
In 1980, Nelson Bunker Hunt and William Herbert Hunt, together with some wealthy Arabs, controlled the supply of silver in an attempt to gain extra profit. Silver had been selling for under $2 an ounce in 1973 when their scheme started. By 1979 their manipulations increased the cost to over $5 an ounce, and they were not satisfied. These people purchased more than half the world’s supply of silver and withdrew it from availability, causing prices to skyrocket. At its peak in early 1980, silver was going for $54 an ounce. Once the Federal Government stepped in, the prices collapsed falling 80% in less than a month.
3. Currency Exchange Rate. The price of most products float – they are unrelated to the value of a specific currency. Petroleum and other commodities are tied in to the value of the American dollar. With political, economic, and other factors constantly changing the value of currency, the costs of products related to them vary as well. The current high cost of petroleum and oil products is in part due to the lower value of the American dollar as compared to other currencies.
Exchange rates can have both positive and negative effects. A lower American dollar means that products produced in this country cost less overseas and thus sell better. This lowers our trade deficit and helps multinational companies. Products produced elsewhere, though, such as cocoa, bananas, electronics, European wine, and raw material, cost more in the United States.
Next week we will look at transportation, insurance, and fees that add to the cost of a product.
Wednesday, December 23, 2009
What Is Wrong With Education?
In response to our recent series of articles about Education-related scams, an honored educator suggests that we take a long look at traditional education practices. Perhaps there are better approaches.
What Is Wrong With Education?
Generation after generation of human beings are educated by those who came before. It is how knowledge and survival skills get passed down to maintain continuity of knowledge. Every system of education has its benefits, and its pitfalls. There are those who are well served, and those who fall between the cracks and are lost, sometimes to society itself.
So what is the best way to educate? To know that, we must know what education is. Until we have a working definition, how can we determine how to do it, and judge whether or not we are doing it well?
Education means different things to different people. To some, particularly those who are of religious bent, education is merely indoctrination into the catechisms of a particular faith. It is no accident that, for so long, the only literate people was of the clergy. As knowledge increased and made changes to the way we live our lives, it became imperative that knowledge and skill sets not be lost. Knowledge was passed from master to apprentice, from professional to intern. In this manner, knowledge and skills have been passed from generation to generation, guaranteeing the perpetuity of human knowledge.
Of course, nowadays, we have the greatest repository of knowledge history has known since the Library of Alexandria. It’s called the Internet, and it is loaded with everything you might want to know (as well as some things you probably didn’t want to know). Now that knowledge has been deposited in such a manner, the skills needed these days include the parsing of information to weed out that which is useless for a purpose or just downright false. A basic fund of knowledge in all kinds of subject areas is required for survival in our society. So how do we give that knowledge and development of critical thinking skills?
Schools.
A school is a building where education ostensibly takes place. In the course of a school day, children are shuttled from room to room, from teacher to teacher, to be filled up with knowledge like buckets with water. The classroom might or might not have appropriate resources, the teacher might or might not be familiar with how to make the best use of those resources. There might or might not be enough money in the budget from year to year that the people in the community might or might not vote through for use in obtaining the necessary resources.
The students might or might not have had a good night’s sleep, a place to sleep, or a place to do their work undisturbed. The administration might or might not be concerned with education over what is their usual main concern…maintaining a positive image of the school within the community, no matter what that takes or how big a rug is needed to sweep things under. It is the favorite whipping boy of the community members who are anti-tax, and the funding of schools is inequitable and unsustainable in the extreme.
The students are subjected to standardized testing from year to year to assess…what? Their growth? Their knowledge? Their application of knowledge? Their teacher’s ability to teach to a standardized test? The students are subjected to a one-size-fits-all curriculum (which might or might not be more individualized and differentiated by teachers) and the goal of education is always given as a vague, indefinable “it will prepare you for college/adulthood/etc.”
First, not all students are going to be going to college, and that should not be our goal. Some of our students are going to be going into trades, and our current BOCES system (vocational training in New York), while good, does not go nearly far enough. Apprenticeships need to be brought back. You learn by DOING, and those who learn with their hands are always going to be frustrated in a traditional school setting. There are also lots of children who will be going on to more artistic pursuits, and the resources are seldom available for them to realize these dreams unless parents have great walloping scads of cash available to send their tots off to an appropriate private institution.
Also falling between the cracks are the truly gifted children, those who excel in an academic environment. So much in the way of time and resources are used to address discipline issues and just get the kids to shut up so that a class can take place, that the bright student quickly gets bored and shuts down. Honors classes help, but when honors classes are opened to anyone, and pressure is brought to bear to make sure everyone succeeds, once again the time, effort and resources are weighted towards the lower end. High school used to be stratified, but the “one-size-fits-all” mentality that pervades public education at the present time frowns at “tracking” students into levels of ability, fearing that it will stigmatize those who are in the “lower” track. Meanwhile, those in the “higher” track are made to pay the price.
What is wrong with education? Pretty much everything.
Unless we as a society start to glamorize intelligence and real achievement based on making a positive and material contribution to society instead of glamorizing people on “reality” TV shows, we will never make education attractive enough for our young folks to buy into. Until we get those who learn with their hands out of formal schools and into apprenticeships, where they can finally be free, until we treat our best and brightest students AS our best and brightest students, we can never have real progress in education.
Education must be student-centered, not school-centered, teacher-centered or administrator-centered. Once we recognize that, maybe we can work on fixing the problem.
What Is Wrong With Education?
Generation after generation of human beings are educated by those who came before. It is how knowledge and survival skills get passed down to maintain continuity of knowledge. Every system of education has its benefits, and its pitfalls. There are those who are well served, and those who fall between the cracks and are lost, sometimes to society itself.
So what is the best way to educate? To know that, we must know what education is. Until we have a working definition, how can we determine how to do it, and judge whether or not we are doing it well?
Education means different things to different people. To some, particularly those who are of religious bent, education is merely indoctrination into the catechisms of a particular faith. It is no accident that, for so long, the only literate people was of the clergy. As knowledge increased and made changes to the way we live our lives, it became imperative that knowledge and skill sets not be lost. Knowledge was passed from master to apprentice, from professional to intern. In this manner, knowledge and skills have been passed from generation to generation, guaranteeing the perpetuity of human knowledge.
Of course, nowadays, we have the greatest repository of knowledge history has known since the Library of Alexandria. It’s called the Internet, and it is loaded with everything you might want to know (as well as some things you probably didn’t want to know). Now that knowledge has been deposited in such a manner, the skills needed these days include the parsing of information to weed out that which is useless for a purpose or just downright false. A basic fund of knowledge in all kinds of subject areas is required for survival in our society. So how do we give that knowledge and development of critical thinking skills?
Schools.
A school is a building where education ostensibly takes place. In the course of a school day, children are shuttled from room to room, from teacher to teacher, to be filled up with knowledge like buckets with water. The classroom might or might not have appropriate resources, the teacher might or might not be familiar with how to make the best use of those resources. There might or might not be enough money in the budget from year to year that the people in the community might or might not vote through for use in obtaining the necessary resources.
The students might or might not have had a good night’s sleep, a place to sleep, or a place to do their work undisturbed. The administration might or might not be concerned with education over what is their usual main concern…maintaining a positive image of the school within the community, no matter what that takes or how big a rug is needed to sweep things under. It is the favorite whipping boy of the community members who are anti-tax, and the funding of schools is inequitable and unsustainable in the extreme.
The students are subjected to standardized testing from year to year to assess…what? Their growth? Their knowledge? Their application of knowledge? Their teacher’s ability to teach to a standardized test? The students are subjected to a one-size-fits-all curriculum (which might or might not be more individualized and differentiated by teachers) and the goal of education is always given as a vague, indefinable “it will prepare you for college/adulthood/etc.”
First, not all students are going to be going to college, and that should not be our goal. Some of our students are going to be going into trades, and our current BOCES system (vocational training in New York), while good, does not go nearly far enough. Apprenticeships need to be brought back. You learn by DOING, and those who learn with their hands are always going to be frustrated in a traditional school setting. There are also lots of children who will be going on to more artistic pursuits, and the resources are seldom available for them to realize these dreams unless parents have great walloping scads of cash available to send their tots off to an appropriate private institution.
Also falling between the cracks are the truly gifted children, those who excel in an academic environment. So much in the way of time and resources are used to address discipline issues and just get the kids to shut up so that a class can take place, that the bright student quickly gets bored and shuts down. Honors classes help, but when honors classes are opened to anyone, and pressure is brought to bear to make sure everyone succeeds, once again the time, effort and resources are weighted towards the lower end. High school used to be stratified, but the “one-size-fits-all” mentality that pervades public education at the present time frowns at “tracking” students into levels of ability, fearing that it will stigmatize those who are in the “lower” track. Meanwhile, those in the “higher” track are made to pay the price.
What is wrong with education? Pretty much everything.
Unless we as a society start to glamorize intelligence and real achievement based on making a positive and material contribution to society instead of glamorizing people on “reality” TV shows, we will never make education attractive enough for our young folks to buy into. Until we get those who learn with their hands out of formal schools and into apprenticeships, where they can finally be free, until we treat our best and brightest students AS our best and brightest students, we can never have real progress in education.
Education must be student-centered, not school-centered, teacher-centered or administrator-centered. Once we recognize that, maybe we can work on fixing the problem.
Tuesday, December 15, 2009
‘Tis the Never-Ending Season
(Consumer Safety & Awareness article: Part 44)
Guest Editorial from
Nancy Dickerson, Slightly Creaky Active Living Columnist.
Teachers once taught that a year held four seasons: spring, summer, fall or autumn, and winter. Now certain parts of the country probably had to use a great deal of imagination to divide the days of sunshine from sunshine, but maybe the oranges grew riper during one season or something of that nature. At any rate, children knew fall approached when Halloween and Thanksgiving dominated their art work at school. And finally the winter season had confirmation in pictures of snowflakes and snowmen made of Styrofoam or other art supplies.
Today seasons have completely changed, and the change has absolutely nothing to do with global warming or even political correctness. If spring is now welcomed with a picture of a cardinal, the bird is plainly decorating a baseball uniform. Fall, of course, is welcomed with the bright red bird on a football uniform. In some strange manner the seasons have gone from falling leaves and snowflakes to failing drug tests, breaking bats, and an entire battalion of assorted creatures which somehow have come to represent team spirit and aggressiveness. Who knew that a dolphin could be so dangerous? Or that a cardinal could be induced to tear someone’s head off or stomp on another player?
This change in the seasons has not restricted itself to one nation; indeed, some nations have divided themselves along national sports boundaries. Soccer games or some other event can ignite riots and a national emergency. Stampeding fans and stadiums that are ill-equipped for the enthusiasm of sports fans have been responsible for deaths in many countries.
Finally, from these changes have come new heroes—the national champion sports stars. Strength, agility, precision, and natural athletic abilities bring admiration beyond belief to men and women who become national symbols. Those men and women receive remuneration many times higher than many other well-known individuals.
But the wealth and fame come with a price. Just as the flashy cardinal is instantly recognizable, so too are many famous sports figures. Unfortunately, notoriety quickly follows the loss of anonymity when these men and women lack the morals or character of true heroes. Thus has developed the latest seasonal game: disparagement of the intrepid dissolute. Will teachers soon be teaching children how to draw and use a megaphone?
Guest Editorial from
Nancy Dickerson, Slightly Creaky Active Living Columnist.
Teachers once taught that a year held four seasons: spring, summer, fall or autumn, and winter. Now certain parts of the country probably had to use a great deal of imagination to divide the days of sunshine from sunshine, but maybe the oranges grew riper during one season or something of that nature. At any rate, children knew fall approached when Halloween and Thanksgiving dominated their art work at school. And finally the winter season had confirmation in pictures of snowflakes and snowmen made of Styrofoam or other art supplies.
Today seasons have completely changed, and the change has absolutely nothing to do with global warming or even political correctness. If spring is now welcomed with a picture of a cardinal, the bird is plainly decorating a baseball uniform. Fall, of course, is welcomed with the bright red bird on a football uniform. In some strange manner the seasons have gone from falling leaves and snowflakes to failing drug tests, breaking bats, and an entire battalion of assorted creatures which somehow have come to represent team spirit and aggressiveness. Who knew that a dolphin could be so dangerous? Or that a cardinal could be induced to tear someone’s head off or stomp on another player?
This change in the seasons has not restricted itself to one nation; indeed, some nations have divided themselves along national sports boundaries. Soccer games or some other event can ignite riots and a national emergency. Stampeding fans and stadiums that are ill-equipped for the enthusiasm of sports fans have been responsible for deaths in many countries.
Finally, from these changes have come new heroes—the national champion sports stars. Strength, agility, precision, and natural athletic abilities bring admiration beyond belief to men and women who become national symbols. Those men and women receive remuneration many times higher than many other well-known individuals.
But the wealth and fame come with a price. Just as the flashy cardinal is instantly recognizable, so too are many famous sports figures. Unfortunately, notoriety quickly follows the loss of anonymity when these men and women lack the morals or character of true heroes. Thus has developed the latest seasonal game: disparagement of the intrepid dissolute. Will teachers soon be teaching children how to draw and use a megaphone?
Monday, December 7, 2009
Education Scams (Part 5)
(Consumer Safety & Awareness article: Part 43)
(Continued from two weeks ago.)
Previously we looked at Pennco Tech, a school in New Jersey and Pennsylvania that, according to many who reviewed it on the Internet, does not live up to their promises.
ITT, a highly advertised technical correspondence school, also has a huge amount of complaints listed against it. Here is one from a former ITT instructor. “The school is a scam that preys on stupid, uneducated people for the $40,000 federal student loans that they obtain. The books are a joke, the curriculum is written for morons, and the credits don't transfer.”
There is a list of litigation taken against ITT including, “ITT Educational Services, which operates ITT Technical Institute across the country, agreed to pay $725,000 to settle an investigation by the California attorney general’s office. The investigation found that the school improperly calculated students’ grade-point averages in order to facilitate students’ collection of financial aid from the state. It was launched as a result of numerous allegations from former employees and instructors.”
Here is another of the many complaints against them: “It's amazing how easy it is to make money in America. America used to be the land of the free. Now-a- days, it's the land of the free to be exploited. ITT Tech is a prime example of this. Their scam? Let virtually anyone in, and charge top dollar for an education that is comparatively worthless. ITT is just like the sub-prime mortgage lenders of recent years. Their prey is exactly the same. Both promise our less qualified citizens a heretofore unavailable piece of the American dream – a home or a college education -- and then they break that promise with educational standards that are too low or mortgage payments too high. And the end result is virtually the same – a lot of debt and nothing to show for it, except a wealthier corporation. Well, at least until the house of cards come crashing down.”
Associated Content.com has this: “According to the Department of Labor, Information Technology careers occupy four of the five fastest growing occupations in the United States with phenomenal growth foreseen over the next seven to ten years. In response to this, a huge industry has sprung up to provide training to people who want to ride the wave of ITT success. The advertisements are slick, moving and very enticing. Testimonials from actual students talking about how attending this or that technical school changed their lives, saving them from a life of laying roofing shingles or flipping burgers. Sometimes there will be large ads in the local paper about how people with the right certifications can make 50, 60 or even 70 thousand dollars per year.”
For a person who may have gotten off track after leaving high school or an older person who is forced to start a new career, these opportunities appear very appealing and the ads make it look quick and simple. In a matter of a few months, a person can make the leap from manual labor to working in an exciting and rewarding career in the Information Technology industry. The reality is something different.
When a student signs up for a technical school among the first things they will be asked about is financing. The cost of completing all of the courses is generally between $9,000 and $15,000 depending on the school. The student will be asked to fill out forms to request a career loan from one of several providers.
It is important for the student to realize that these are not "student loans" and they are not government backed, although some of the schools may intimate that they are. The student is responsible for the full amount of the loan whether the courses are completed or not. Repayment of these loans is under a special set of rules that allow for minimum monthly payments for the first year and then higher monthly payments for a period of eleven to fifteen years.
The trap in these loans is that unlike normal student loans, the money is often paid by the lender to the school, not to the borrower. In many cases the school receives all of the money up front before the student ever sets foot in a classroom. If the student drops out or fails to complete for any reason, the school usually keeps the money and the loan must still be repaid by the borrower.
I could go on, as there are many more similar complaints. The point is simple: Community Colleges are the best option for those interested in a technical education. There are some good schools out there, but none have the reasonable tuition, the guarantee that the teachers are qualified, and the quality classes offered that the state’s two-year schools offer.
(Continued from two weeks ago.)
Previously we looked at Pennco Tech, a school in New Jersey and Pennsylvania that, according to many who reviewed it on the Internet, does not live up to their promises.
ITT, a highly advertised technical correspondence school, also has a huge amount of complaints listed against it. Here is one from a former ITT instructor. “The school is a scam that preys on stupid, uneducated people for the $40,000 federal student loans that they obtain. The books are a joke, the curriculum is written for morons, and the credits don't transfer.”
There is a list of litigation taken against ITT including, “ITT Educational Services, which operates ITT Technical Institute across the country, agreed to pay $725,000 to settle an investigation by the California attorney general’s office. The investigation found that the school improperly calculated students’ grade-point averages in order to facilitate students’ collection of financial aid from the state. It was launched as a result of numerous allegations from former employees and instructors.”
Here is another of the many complaints against them: “It's amazing how easy it is to make money in America. America used to be the land of the free. Now-a- days, it's the land of the free to be exploited. ITT Tech is a prime example of this. Their scam? Let virtually anyone in, and charge top dollar for an education that is comparatively worthless. ITT is just like the sub-prime mortgage lenders of recent years. Their prey is exactly the same. Both promise our less qualified citizens a heretofore unavailable piece of the American dream – a home or a college education -- and then they break that promise with educational standards that are too low or mortgage payments too high. And the end result is virtually the same – a lot of debt and nothing to show for it, except a wealthier corporation. Well, at least until the house of cards come crashing down.”
Associated Content.com has this: “According to the Department of Labor, Information Technology careers occupy four of the five fastest growing occupations in the United States with phenomenal growth foreseen over the next seven to ten years. In response to this, a huge industry has sprung up to provide training to people who want to ride the wave of ITT success. The advertisements are slick, moving and very enticing. Testimonials from actual students talking about how attending this or that technical school changed their lives, saving them from a life of laying roofing shingles or flipping burgers. Sometimes there will be large ads in the local paper about how people with the right certifications can make 50, 60 or even 70 thousand dollars per year.”
For a person who may have gotten off track after leaving high school or an older person who is forced to start a new career, these opportunities appear very appealing and the ads make it look quick and simple. In a matter of a few months, a person can make the leap from manual labor to working in an exciting and rewarding career in the Information Technology industry. The reality is something different.
When a student signs up for a technical school among the first things they will be asked about is financing. The cost of completing all of the courses is generally between $9,000 and $15,000 depending on the school. The student will be asked to fill out forms to request a career loan from one of several providers.
It is important for the student to realize that these are not "student loans" and they are not government backed, although some of the schools may intimate that they are. The student is responsible for the full amount of the loan whether the courses are completed or not. Repayment of these loans is under a special set of rules that allow for minimum monthly payments for the first year and then higher monthly payments for a period of eleven to fifteen years.
The trap in these loans is that unlike normal student loans, the money is often paid by the lender to the school, not to the borrower. In many cases the school receives all of the money up front before the student ever sets foot in a classroom. If the student drops out or fails to complete for any reason, the school usually keeps the money and the loan must still be repaid by the borrower.
I could go on, as there are many more similar complaints. The point is simple: Community Colleges are the best option for those interested in a technical education. There are some good schools out there, but none have the reasonable tuition, the guarantee that the teachers are qualified, and the quality classes offered that the state’s two-year schools offer.
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