August 2022 (w) by Luckbox Magazine

life. money. probability.

Is College Worth it? Compelling new research shows higher ed doesn’t always pay off -- YOUR DEGREE’S ROI --YOUR --COLLEGE -COLLEGE ALTERNATIVES --TEXTBOOK -TEXTBOOK MARKUPS --EDTECH -EDTECH INVESTMENTS

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AUGUST 2022

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August 2022

12 | Beware of a College Degree

Political science major Paul Fabsik wears a price tag with the estimated cost of his education during commencement ceremonies at Boston College.

The cost may not be worth the return. Take a look at how some universities are using their hefty endowments.

16 | Liberal Arts Advantage

Richard Detweiler asserts that the value of a liberal arts college education should not be viewed solely through an economic lens.

18 | The Great College Debate

Seven leading higher education experts share their thoughts on the value of a college degree as tuition skyrockets and online education explodes.

25 | American College Testing

Many colleges and universities went “test optional” in their admissions process during the pandemic, but the ACT remains a determining factor for scholarships, courses and admissions.

26 | Textbook Oligopolies

Books and course materials cost students hundreds, if not thousands, of dollars. Some say it’s time for a change.

30 | Digging Deeper into Debt

The nation’s student debt exceeds $1.7 trillion, and people over 65 are the fastest growing group of debtors.

32 | The College Myth

Author and entrepreneur James Altucher argues a bachelor’s degree isn’t the best choice for everyone, and he offers alternatives, including Google Career Certificates.

PHOTOGRAPH: REUTERS

34 | Hire Education

Once considered vocational training, today’s Career and Technical Education (CTE) schooling has grown into something nearly unimaginable half a century ago.

Is College Worth It?

Preston Cooper’s research finds some degrees increase lifetime earnings by millions, while others have no net financial value. The biggest factor is your major.

36 | Virtual Learning

The pandemic, the great resignation and a thirst for lifelong learning have sparked a growing $1 trillion online education market.

August 2022 | Luckbox

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Virginia-based band Dying Oath is paving a path for other metalcore artists.

editor in chief ed mckinley managing editors yesenia duran elizabeth schiele associate editors kendall polidori mike reddy editor at large garrett baldwin technical editor james blakeway contributing editors vonetta logan, tom preston mike rechenthin creative directors katherine bryja, tim hussey contributing photographer garrett roodbergen editorial director jeff joseph comments, tips & story ideas feedback@luckboxmagazine.com contributor’s guidelines, press releases & editorial inquiries editor@luckboxmagazine.com

trends life, luxury & the pursuit of happiness RECORD HIGH

41 Schools of Rock ARTS & MEDIA

44 Educate Yourself ROCKHOUND

46 Dying Oath Revives 2000s Metalcore CALENDAR

47 Back-to-school Month

trades&tactics

advertising inquiries advertise@luckboxmagazine.com subscriptions & service support@luckboxmagazine.com

actionable trading ideas CHEAT SHEET

ERT INS Covered

Call Basics

CHERRY PICKS

49 2 Trades for the Cautious Gold Bug TACTICS BASIC

51 Self-education Starts Here TECHNICIAN

52 Technical Analysis Makes the Grade

TRADER

57 Meet Payal Swami CRYTPO CURRENTLY

58 Crypto Curriculum DO DILIGENCE

60 A Nurse, a Lawyer and a Mail Carrier UNLUCKY INVESTOR

62 Investing Where Tech Meets Education

media & business inquiries associate publisher elizabeth schiele es@luckboxmagazine.com publisher jeff joseph jj@luckboxmagazine.com Luckbox magazine, a tastytrade publication, is published at 19 N. Sangamon, Chicago, IL 60607 Editorial offices: 312.761.4218 ISSN: 2689-5692 Printed at Lane Press in Vermont luckboxmagazine.com

PHOTOGRAPH: COURTESY OF DYING OATH

THE PREDICTION TRADE

54 Student Debt Bets

FAKE FINANCIAL NEWS

8 Comedy 101: A Confidence Game

Luckbox magazine

@luckboxmag

THE LAST PICTURE

On the cover: Illustration by Melinda Beck

64 Is There Anything Left to Regulate?

2019 & 2020 Best New Magazine Folio Award for Custom Content

Luckbox magazine content is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, transaction or investment strategy is suitable for any person. Trading securities and futures can involve high risk and the loss of any funds invested. luckbox magazine, a brand of tastytrade, Inc., does not provide investment or financial advice or make investment recommendations through its content, financial programming or otherwise. The information provided in luckbox magazine may not be appropriate for all individuals, and is provided without respect to any individual’s financial sophistication, financial situation, investing time horizon or risk tolerance. luckbox magazine and tastytrade are not in the business of executing securities or futures transactions, nor do they direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. luckbox magazine and tastytrade are not licensed financial advisers, registered investment advisers, or registered broker-dealers. Options, futures and futures options are not suitable for all investors. Transaction costs (commissions and other fees) are important factors and should be considered when evaluating any securities or futures transaction or trade. For simplicity, the examples and illustrations in these articles may not include transaction costs. Nothing contained in this magazine constitutes a solicitation, recommendation, endorsement, promotion or offer by tastytrade, or any of its subsidiaries, affiliates or assigns. While luckbox magazine and tastytrade believe that the information contained in luckbox magazine is reliable and make efforts to assure its accuracy, the publisher disclaims responsibility for opinions and representation of facts contained herein. Active investing is not easy, so be careful out there!

August 2022 | Luckbox

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THE BIG D

Mommy, daddy, look at me I went to school and I got a degree All my friends call it “the big D” I went to school and I got the big D I got the big D I got the big D I got the big D I went to school and I got the big D —Chaise Lounge, Wet Leg, 2021

he reason for Luckbox’s existence isn’t shrouded in mystery. We’re here to help active investors make choices that lead to success in the markets and in life. To that end, we offer actionable information based on the probability of a range of outcomes. We want to separate the good trades from the bad, whether the subject is stocks, futures, whiskey, rock ‘n’ roll or just about anything else that comes to mind. This issue, Luckbox is examining the business of higher education, and we found plenty of data to help readers differentiate good trades from bad. With tuition already through the roof and continuing its ascent, making the wrong choices about schools, majors and style of learning couldn’t be more crucial. Yet, it’s especially easy to be led astray when making what is arguably the most important financial decision of a lifetime. First, there’s the choice of whether to spend five or six figures on postsecondary schooling. Then comes the conundrum of what to study and where to study it. The situation can bring to mind the housing bubble that burst in 2008. Most readers will remember that predatory

lenders coaxed homebuyers into taking out mortgages on houses far too expensive to fit their budgets. In much the same way, colleges and universities impose staggeringly high tuition and fees on a captive market of young people conditioned to believe they must attend at any cost. That cost keeps increasing because government-backed loans continue to pay for it—at least for now. In the longer term, too many grads—not to mention dropouts—face monthly payments they may not be able to make. Even if they can stay current, they may accomplish it at the expense of other vital financial responsibilities. Schools keep hiking the cost of their degrees simply because they can. Students keep borrowing to meet the cost because they feel they must. None of this serves the public interest. The upwardly spiraling cost of tuition does nothing to guarantee grads a job that will enable them to pay back the money they’ve borrowed. Depending upon one’s major and institution, lots of degrees won’t boost income enough to pay for themselves. Yes, they represent a negative return on investment.

Thinking Inside the Luckbox

Luckbox is dedicated to helping active investors achieve skill-derived, outlier results. 1 Probability is the key to improving outcomes in the markets and in life.

2 Greater market volatility brings greater opportunity for astute active investors.

3 Options are the best vehicle to manage risk and exploit market volatility.

4 Don’t rely on chance. Know your options because luck smiles upon the prepared.

But it doesn’t have to be this way, and former Indiana Gov. Mitch Daniels has proven it during his 10 years as president of Purdue University. He’s rejected the idea that tuition increases come automatically and kept an eye on the mundane details that keep expenses low. Above all, Daniels has sought to provide value at Purdue. For Daniels, value doesn’t just mean keeping tuition low. It also requires producing a good product—a degree that raises a grad’s income enough to pay back the loans that fostered it. (For more on his work at Purdue, see the April 2020 issue of The Atlantic.) Few would deny the importance of viewing college as a financial investment, but many of the education experts interviewed for this issue also stress the importance of the less tangible benefits of higher ed. They’re talking about leadership, community service and personal fulfillment—everything desirable that money can’t buy. Let’s not forget about them. It’s also worth noting that the same way any given trade is subject to a variety of outcomes, the new data cited in this issue regarding lifetime earnings for college grads represent averages. And, of course, nothing’s average about Luckbox readers. We play host to outlier outcomes. While this issue takes a financial lens to the college “trade,” you’ll have to decide for yourself if college still warrants the price of admission.

Ed McKinley Editor in Chief

Jeff Joseph Editorial Director

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OPEN OUTCRY We asked Luckbox readers about the high cost of a college education, student loan debt and forgiveness.

I believe that an undergraduate college education should be free to all who want it and are qualified to engage in it, and that it should be funded by the federal government. The returns to society would far exceed the costs. —Jake Burkey, Reno, NV Forgiving student debt isn’t addressing the problem. Student debt is the symptom of the problem, a system of tenured professors, administrators and athletic programs that hoards cash at the cost of the students. Forgiving student debt without addressing the root of the problem is nothing more than a political move. —Aaron Montell, Denver These cost increases are absurd and occur because the colleges wish to grow and have more professors, programs, etc. More colleges should follow the lead of Purdue which has frozen their tuition for over five years under the leadership of Mitch Daniels. —Tom Sprunger, Richardson, TX MBA in the ‘80s, able to retire from investment banking at 50; not sure [the degree] would be worth it today. —Mark Roberts, Chicago

Decisions have consequences. If your college degree cannot support your loan payments, your degree is worthless. However, your loan is carried as a credit on someone’s books and must be returned. —Earl Libby, Crystal River, FL

SCAN THIS

Moral hazard. These folks are much better positioned to succeed in our society than folks who have been discriminated against or have had bad luck. I propose to help those folks who really need help, not those who made bad choices. —Rob Yorke, Aloha, OR The easy availability of student loans has enabled institutions to raise tuition at ridiculous rates and given them little incentive to control costs. Hence, institutions are offering programs that have little practical value and also have become bloated with overhead costs. —Jack Hayes, Dallas I worked in higher ed administration for eight years. There are two primary reasons costs have increased so much. First, there is still a false belief that a college degree is a key to success. It is not. The second reason is that government loan and grant programs made money readily available to folks, so they did not have to think about the actual cost of higher education. —Jay Steele, Bloomington, IN

As always, I loved the entire issue. Congrats on a great publication; nothing else like it. One of my favorite articles was Garrett Baldwin’s Housing Meltdown. I never heard the terms “24-hour cities” and “18-hour cities” used before. The article definitely affected my thinking about the current housing environment and future possibilities. —Tom Ahman, Castle Rock, CO I always like the trading and tactics articles—interesting insight on Making Rain. I learned some new things from the crypto article, Post-pandemic Reset. —Mark Roberts, Chicago I like Luckbox overall. It provides a much-needed perspective on worldwide issues. —Jay Steele, Bloomington, IN

There’s more to Luckbox than meets the page. Look for this QR code icon for videos, websites, extended stories and other additional digital content. QR codes work with most cell phones and tablets with cameras.

1 Open your camera

2 Hover over the QR code

3 Click on the link that pops up

Email feedback@luckboxmagazine.com Two ways to send comments, criticism and suggestions to Luckbox

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Visit luckboxmagazine.com/survey A new survey every issue. Your thoughts on this issue? Take the reader survey at luckboxmagazine.com/survey

4 Enjoy the additional content

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SHORT INTEREST

EDUCATION A student’s choice of program and specific college or university is perhaps the most important financial decision he or she will ever make.

SEE PAGE 14

—Preston Cooper, freopp.org

3 LARGEST UNIVERSITY ENDOWMENTS $53B Harvard University

$43B Yale University

$42B University of Texas System

SEE PAGE 12

30% of colleges have more than half of their students earning less than high school graduates after 10 years. —Georgetown University Center on Education and the Workforce

$2.8 M A bachelor’s degree’s worth on average over a lifetime

SEE PAGE 16

—Georgetown University Center on Education and the Workforce

1.3 M

The number of SEE standardized PAGE 25 test-takers in the U.S. in 2021— down from 1.7 million in 2020 —Forbes

$1.7 T Total student loan debt in 2022 —Forbes

SEE PAGE 30

SEE PAGE 14

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The first time I went to see a Second City show, I was in awe of everything. I just wanted to touch the same stage that Gilda Radner had walked on. It was sacred ground. —Tina Fey SEE NEXT PAGE

$198 MILLION Grants from the U.S. Department of Education

SEE PAGE 18

to the nation’s colleges and universities under the American Rescue Plan and the Higher Education Emergency Relief Fund

—U.S. Department of Education’s July 13, 2022 announcement

80%

The estimated dropout rate for reading-based piano lessons in the U.S. after three years of study

20% SEE PAGE 41

The dropout rate for music students after three years of study at Let’s Play Music

—The School of Music at the University of Ottawa, 2010

$1,240 > Average price of books and school supplies for college students in the 2021-22 academic year

SEE PAGE 26

—collegedata.com August 2022 | Luckbox

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FAKE FINANCIAL NEWS

Comedy 101: A Confidence Game It was love at first sight when I discovered improv By Vonetta Logan

The Second City alums Bill Murray, John Candy, Tim Meadows and Aidy Bryant.

IMAGE: SHUTTERSTOCK

o this day, I still remember the first time I ever saw an improv show. It was in the basement of my dorm, freshman year at Indiana University, and a rag-tag troupe of improvisers called Pumpernickel performed in our dorm’s coffee house. One of the dudes on stage queried the quiet crowd, “Someone tell me what my job is!” An intrepid audience member yelled out, “pilot!” The performers reconfigured themselves on stage, and the guy who asked for the suggestion grabbed his scene partner by the front of his shirt. With an intense look overtaking his previously serene features, the dude bellowed, “Jesus, do you know why you’re standing before me today? I must punish you for your crimes.” The audience murmurs and he shrugs and says to his scene partner, “Answer me! I’m Pontius Pilate!”—the fifth governor of Judea who sentenced Christ to crucifixion—and everyone in the audience just lost it. I had never seen such a blatant display of rapier wit and lightning-fast comedy. I couldn’t understand how no one on stage knew what was going to happen next, yet they could turn any suggestion into art. Huh, look at that, love of improv at first sight. This issue of Luckbox is all about the highs and lows of higher ed, but to me, the most important education anyone can receive is the gift of crafting the skill of improvisation. Being comfortable in uncomfortable situations, making yourself open to the options you’ve been given and, most importantly, learning to work in harmony with others are all things I learned while training at Chicago’s famed The Second City.

Luckbox | August 2022

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located next door and she figured she’d give it a shot. She explains the experience this way: “The Second City does not teach funny, but they do teach confidence.” My classmates were lawyers, journalists, teachers, artists, accountants—a totally normal slice of working young adults who wanted to see what this improv thing was all about.

Vonetta takes the stage in Phoenix at the tastytrade “That’s What She Said” tour in March 2020.

PHOTOGRAPHY: GARRETT ROODBERGEN

The incubator of comedy The Second City was founded in Chicago in 1959 and operates a training center to provide education in improvisation, writing, singing, acting, directing and a host of other performative disciplines, as well as a theater that hosts stage-based sketch and improv shows. Even if you don’t know The Second City by name, you surely know its graduates: John Candy, Bill Murray, Harold Ramis, Steve Carell, Stephen Colbert, Tina Fey, Tim Meadows and Aidy Bryant—just to name a few. It’s truly remarkable that the cradle of American comedy is across the street from a sketchy Walgreens. Yes, and… The foundation of improv is the concept of “yes, and.” I’m sure there’s a TED talk about it, but boiled down to simple terms “yes, and” means no matter what the scene (or life in general) hands you, you must simply say “yes” and add your own contribution to keep things moving forward. In improv, this plays out as someone yelling out a suggestion or your scene partner establishing a scene and instead of saying, “That’s the dumbest thing I’ve ever heard,” you say, “Yes, we are babies who are plotting an escape from daycare, and it appears our goal is climbing Mount Everest … wah.” No matter the absurdity, randomness or incongruence of the suggestion, you accept

it and find ways to enhance it. How many negative Nancies in your life do you think could benefit from this worldview? Live, laugh, improvise I started Level A improv at The Second City in 2009. At the time, I was working in pharmaceutical sales (legally) and my manager Mike mentioned that improv could help me in interactions with customers. Because what’s more random than a convo with a doctor escalating into, “My patient developed spontaneous rectal bleeding from your drug.” Yes, and ... their heartburn went away! Ever since that day in the basement of my dorm I had thought about getting into comedy, but I didn’t know how. Look, I don’t know how to say this without sounding like a complete prat, but I’m funny. My innate gift is comedic timing. I wish instead it was an ass that just wouldn’t quit, but them’s the breaks. I’m bringing this up because you don’t have to be funny to take a comedy class. I spoke about The Second City with coworker and badass stock and options trader Liz Dierking. She attended classes herself because the gym she worked out at was

Confidence is a muscle. If you don’t work on it, it’ll atrophy.

Comedy is fundamental For me, what started as an eight-week course turned into a year-long program, which turned into writing programs, directing a show and my current job at tastytrade. Look people, comedy works! True story: I found this job because Tom Sosnoff, co-founder of tastytrade, put up a very random job posting on The Second City’s bulletin board. Liz is right, The Second City didn’t teach me how to be funny, but it sure did equip me with the confidence to work with traders all day. I get to do improv every day and I love it. I literally never know what’s going to happen on the morning show, but I just have to smile and roll with it. It delights me when I hear viewers tell me my comedic skills make erudite topics seem approachable. Stop saying no; start saying yes If you have even the smallest inkling of wanting to learn to be comfortable with the uncomfortable, I urge everyone to take an improv class. If nothing else, you’ll get better at public speaking and your PowerPoint presentations won’t be visual Ambien. After the pandemic, The Second City really leaned into offering classes online. In-person comedy is best, but ZoomProv is better than nothing. Check your town’s resources to see if they offer in-person classes. The results Confidence is a muscle. If you don’t work on it, it’ll atrophy. Look, I’m just a small, nerdy Black girl who got bullied a lot and leaned into comebacks and witty retorts to help put bullies in their place. “Oh, it appears you’ve broken up with your girlfriend and deodorant in the same week. Bummer.” But now I get paid to roast people as a job. Thanks comedy! Vonetta Logan, a writer and comedian, appears daily on the tastytrade network. @vonettalogan

August 2022 | Luckbox

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x a Mmatter

of degrees

O O O O O

––

he business of higher education sometimes seems exempt from the dynamics that constrain most enterprises. For one thing, the law of supply and demand doesn’t apply. Tuition is skyrocketing not because more students are enrolling but instead because undergrads keep taking on more debt. Many of those students are committing themselves to a lifetime of payments to chase degrees that won’t land them the jobs they need to succeed financially. The return on investment of some majors at some institutions is actually negative. But tuition isn’t the only culprit. The cost of textbooks and supplies can exceed $1,000 a year at many institutions. Still, change is looming. A significant number of schools are making standardized admissions tests an option instead of a requirement. Career and technical education is becoming all-encompassing. Online learning is coming of age and assuming its place in the curriculum and the marketplace. Alternatives to four-year bachelor’s degrees are arising, too. Certificates can qualify students for good jobs in a matter of months instead of years at a greatly reduced cost. There’s also a bright side to higher ed. It’s not just about money. Education experts praise the nation’s colleges and universities for turning out well-rounded grads capable of achieving personal fulfillment, leading their communities and making a difference in the world.

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1 2 Bloated Endowments 1 4 Negative Returns 1 6 Personal Fulfillment 1 8 The Value of College 2 5 Standardized Tests 2 6 Textbook Expenses 28 College Boards 30 Student Debt 32 Alternatives to College 33 Google Certificates 34 Career Prep 36 Online Learning

Luckbox | August 2022

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ILLUSTRATION: MELINDA BECK

August 2022 | Luckbox

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xmatter of degrees aM

WARNING: A COLLEGE DEGREE MAY BE HAZARDOUS TO YOUR FINANCIAL HEALTH –– Let the buyer beware when the product is a college degree. Even the most prestigious institutions are offering credentials that will never pay for themselves. Gender studies majors: Caveat emptor. by Garrett Baldwin

artmouth College, the No. 13-ranked national university by U.S. News & World Report, announced a seismic shift in tuition in June 2022. The school eliminated loans for entrants whose families earn less than $125,000 annually. Instead, they’ll receive scholarships. Students who qualify won’t have to pay most of the $83,802 annual cost for tuition, room, board and other fees. That sounds like a solution to soaring education costs. But consider this: Dartmouth has the 16th largest endowment in the United States. The school had roughly $8.5 billion in its coffers at the end of its 2021 The positive return fiscal year. The school also benefits from on investment for a steep tax exemptions under section bachelor’s in mathematics 501(c)(3) of the Internal Revenue Code from Dartmouth and endowment tax thresholds from the Jobs and Tax Cuts Act of 2017. So, is the endowment drawing on its sizable nest egg and tax benefits to fund this scholarship initiative? Nope. The money came from private donors. Roughly 450 students will enjoy the benefits. Condolences to families earning $200 over the cap. Plus, tuition will likely increase for wealthier students because this program doesn’t address the underlying reasons it’s so high in the first place. Yes, Dartmouth is extremely expensive. But is the cost worth it… and for whom?

––

PHOTO: REUTERS

$2.68 million

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Universities should use their hefty

The affordability problem

gender and group studies it’s -$276,685. Once again, that’s a negative number. endowments to fund And for someone in the theater and research and provide drama program—which Seinfeld’s Julia Louis Dreyfus attended—the ROI is once deserving students again more negative: -$522,273, Cooper’s data shows. with financial support. Many degrees produce negative ROI across the nation, many of them in the arts. One of the most prominent warnings Cooper tabulated expected financial earnabout ROI in those disciplines came from a ings for more than 30,000 bachelor’s degrees 2014 study by PayScale, a company that helps in the U.S. The results reveal a major disconemployers manage compensation and data. nect in degree-based returns from liberal arts It showed that 20 years after completing a degrees from schools like Dartmouth. bachelor’s at the Maryland Institute College For example, a Dartmouth mathematof Art (MICA), the average grad was more ics degree provides a lifetime ROI of $2.68 than $90,000 worse off than someone who didn’t attend college. million when adjusted for completion of the degree and underlying spending. A computer MICA challenged the study, but it’s hard to science degree returns $2.11 doubt its accuracy. In 2014, million. An economics degree the average price of a fouroffers $1.8 million. Political year MICA degree was north science, engineering, physics of $200,000. In 2022, the THE NEGATIVE RETURN cost of on-campus tuition and philosophy (likely feedON INVESTMENT OF A over four years is roughly ing into law schools) generate BACHELOR’S IN THEATER $280,000, with an addimore than $1 million in lifeAND DRAMA FROM time ROI. tional $64,000 for room, board and other expenses. But several other DartNORTHWESTERN mouth degrees should come That makes the ROI for a fine with a Surgeon General’s warning based on arts degree at MICA -$381,503 after adjustthe expected impact on one’s financial health. ment for completion time and total spending, For example, Cooper’s data suggests the lifeaccording to FREOPP. time ROI for a fine arts and studio arts degree is -$172,362. Yes, that’s a negative number. The need for a fix A degree in “cultural minority, gender and So long as cheap capital remains available for group studies” produces a -$107,391 ROI. students, borrowers will pump money into It remains uncertain whether students these schools and the schools will pad their receive upfront financial guidance on their endowments. investment. But they should. But students, the government and the Still, Dartmouth isn’t alone in the vast media should consider the financial dangers disconnect between ROIs in STEM and associated with certain degrees that fail to liberal arts degrees. provide strong returns and can leave students Take Northwestern University. (Full disclodeep in debt for decades. The simple solution sure: Several alumni work for Luckbox.) is to provide everyone involved with better The ROI of an industrial engineering financial disclosures before anyone declares degree from Northwestern is $1.49 million, a major and signs up for a loan. according to FREOPP. By comparison, the Plus, there’s no reason to abandon liberal ROI of a degree from Northwestern’s Medill arts degrees. Universities could use their School of Journalism is approximately hefty endowments to fund research and $686,000. For ethnic, cultural minority, provide financial support for group studies or the fine arts. But they should also explore ways to mitigate specific programs’ weak or negative ROI. The return on investment Just leave U.S. taxpayers out of it. They’ve suffered enough. for a Dartmouth

Think of Dartmouth as a microcosm of an education system run amok around affordability and return on investment (ROI) issues. Ivy League schools have experienced the most dramatic uptick in costs over the last few decades. In short, the stunning rise in college tuition since the 1970s is due primarily to high demand and cheap access to student loans. In analyzing the gravity of the situation, one must remember that Dartmouth sells a product (a college degree or any number of advanced degrees). It sells these products the same way Ford Motor Co. sells trucks. The big difference is that Ford doesn’t call customers over the next 25 years after a purchase to request donations to an endowment or cash to add to its balance sheet. Plus, Ford pays a lot more in taxes. In April 2022, Kavya Nivarthy, a Dartmouth student who writes for The Dartmouth newspaper, argued that the school’s tax exemptions drive it to focus more closely on its financial interests than on students. That’s compelling. In the last decade, Dartmouth has dramatically strengthened its financial position while creating a student housing crisis. In 2012, Dartmouth’s product, paid for in tuition, fees, and room and board, cost $57,996, according to The Chronicle of Higher Education. Today’s all-in cost represents a more than 44% increase in less than a decade. Also, in 2012, Dartmouth’s endowment was just $3.8 billion. Today’s figure represents a 123% leap on a minimally taxed endowment run by a school legally called “The Trustees of Dartmouth College.”

The return-on-investment problem

While affordability remains a challenge, students and parents should closely eye the ROI for every degree sold at any U.S. college or university. Government-backed loans guarantee capital for many unprofitable programs and schools, resulting in a terrible investment for taxpayers, students and society, according to Preston Cooper of the Foundation for Research on Equal Opportunity (FREOPP). His research tabulates earnings and ROIs at ages 25, 45 and total lifetime returns. (See p. 14 for more on Cooper’s work.) Science, technology, engineering and mathematics (STEM) degrees offer healthy ROIs, Cooper said. Liberal arts degrees? Not so much.

-$522,273

fine arts and studio arts degree comes to -$172,362. Yes, that’s

Garrett Baldwin, a commodity and trade economist, serves as Luckbox editor at large. He actively trades value and momentum stocks and wagers on sports and prediction markets.

a negative number. August 2022 | Luckbox

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xmatter of degrees aM

IS COLLEGE WORTH IT ? –– Some degrees increase lifetime earnings by the millions, while others result in a negative return on investment. The biggest factor is your major. by Preston Cooper

Median ROI FOR A BACHELOR’S DEGREE HOLDER WHO GRADUATES ON TIME

$1 million POSSIBLE LIFETIME RETURN ON SOME ENGINEERING, COMPUTER SCIENCE, NURSING AND ECONOMICS DEGREES

FINANCIAL VALUE OF SOME DEGREES IN ART, MUSIC, RELIGION AND PSYCHOLOGY

and what college to

80%

1/4 OF COLLEGE PROGRAMS HAVE NEGATIVE ROI

attend are the most important financial decisions most people

OF ENGINEERING PROGRAMS HAVE ROI ABOVE $500,000

1% OF PSYCHOLOGY PROGRAMS HAVE ROI ABOVE $500,000

100 PROGRAMS AT COLLEGES WITH AN ACCEPTANCE RATE BELOW 20% HAVE NEGATIVE ROI

–Preston Cooper

ot egelloc tahw dna rojam a gnisoohC laChoosing icnanfi tnatropa mimajor tsom eht era dnetta .ekam reve lliw elpoep tsom snoisiced

will ever make.

names almost always have higher ROI than film or gender studies programs in the Ivy League. Many bachelor’s degree programs don’t make sense, financially. Having a bachelor’s is usually better than not having one, even if the degree comes with $30,000 of student debt. But after accounting for mediocre completion rates and high costs, many bachelor’s degree programs don’t look too good. Thirty-seven percent of programs do not deliver a financial return when adjusting for spending and completion. Another 32% have a lifetime ROI below $250,000. Mediocre or nonexistent ROI suggests a misal-

Redacted and reprinted with permission from FREOPP

$306,000

ing majors nationwide but to reduce their scale. Attending an elite institution can pay off—but not always. Should you pay more to attend a fancy private school? Sometimes. The best programs in the country are usually at top schools. These colleges and universities may offer more support to boost completion rates, and graduates of elite colleges also have access to professional networks that supply lucrative job opportunities. Pricier tuition can be worth the money if expensive colleges can deliver higher earnings. But elite schools aren’t necessarily golden keys to success. Even at Ivy League schools, several programs have negative ROI. The choice of major matters more. Engineering and computer science programs at schools without powerful brand

M ––

ost young Americans say they want a college degree. But from a financial perspective, choosing a major and an institution can make all the difference. Some programs leave students worse off financially than if they’d never attended, while others can increase lifetime earnings by millions of dollars. With that in mind, we’ve estimated earnings and lifetime return on investment (ROI) for nearly 30,000 bachelor’s degree programs across the nation and made the information available in an article under my byline at the freopp.org website. Much of the underlying data comes from the U.S. Department of Education and the Census Bureau (see, “The Lesson?” right). In financial markets, ROI measures profitability relative to cost. For this study, the ROI of a college education is defined as the increase in lifetime earnings a student can expect from that degree, minus the direct and indirect costs of college. These ROI estimates can help students make better decisions about postsecondary education and also provide direction to anyone interested in higher-education policy. Foremost among the findings is the importance of choosing the right major. College rankings like those in U.S. News and World Report emphasize choice of institution, but research shows the choice of major explains nearly half the variation in ROI. Students will have a much greater chance of financial success if they study engineering, computer science, nursing or economics—not art, music, religion, psychology or education. That isn’t to say that lower-earning majors are worthless. Society needs artists and musicians. But low incomes for these majors signal a supply-demand mismatch. Universities are producing too many art majors and too few engineering majors relative to the number of jobs available. As a result, employers bid up the wages of engineers while surplus artists flood the labor market. The answer is not to eliminate low-earn-

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location of resources. Many of the students in programs with poor ROI might be better served if those resources were shifted to other forms of postsecondary training, such as apprenticeships, vocational schools or career-oriented associate’s degrees. Because many students do not directly fund most of their own education, policymakers should have a role in a reallocation of funding. Granted, many bachelor’s degrees have non-financial benefits that students should take into account. Social benefits accrue to some degrees. The engineers who developed the iPhone probably captured only a small fraction of the social value they created. But

When accounting for the risk that a student will drop out of college or take longer than four years to finish, median ROI drops from $306,000 to $129,000. Twenty-eight percent of bachelor’s degree programs have negative ROI when adjusting for the risk of non-completion. If ROI is adjusted to reflect the underlying cost of education, not just tuition charges, the share of nonperforming programs rises to 37%. Major category

Negative ROI

$0 to $250,000

$250,000 to $500,000

$500,000 to $1 million

Above $1 million

ALL PROGRAMS

28%

36%

17%

15%

ENGINEERING

14%

60%

22%

TRANSPORTATION, CONSTRUCTION AND ARCHITECTURE

21%

34%

37%

MATHEMATICS AND STATISTICS

32%

30%

25%

League degrees

ECONOMICS

27%

30%

21%

15%

have negative ROI.

BUSINESS, FINANCE AND MANAGEMENT

10%

43%

27%

16%

COMPUTER AND INFORMATION SCIENCES

10%

20%

21%

34%

15%

PHYSICAL SCIENCES

12%

40%

36%

11%

HEALTH AND NURSING

13%

17%

27%

38%

AGRICULTURE AND NATURAL RESOURCES

24%

45%

22%

COMMUNICATIONS AND JOURNALISM

27%

48%

21%

POLITICAL SCIENCE AND OTHER SOCIAL SCIENCE

32%

53%

11%

PUBLIC ADMINISTRATION

39%

54%

ENGLISH, LIBERAL ARTS AND HUMANITIES

42%

49%

EDUCATION

44%

52%

LIFE SCIENCES AND BIOLOGY

45%

46%

MISCELLANEOUS

47%

34%

15%

PSYCHOLOGY

59%

38%

PHILOSOPHY AND RELIGIOUS STUDIES

74%

23%

VISUAL ARTS AND MUSIC

78%

17%

Attending an elite school doesn’t

The Lesson? Graduate on Time

guarantee financial success; some Ivy

degrees that generate social benefits often come with gratifying private rewards. Yet, the idea that most negative-ROI programs are generating enough social benefits to justify themselves is doubtful. Degrees with social benefits can also have large private ROI. Moreover, bachelor’s degrees can generate social costs. As the share of the population with a college degree rises, employers seek stronger educational credentials from job candidates, even though the skills required for those jobs have not changed. It follows that some college graduates simply take jobs away from non-college graduates. This displacement effect likely explains much of the college wage premium. While college graduates benefit, the economy does not grow overall. For prospective college students, though, those considerations reside largely beyond their immediate decisions. Estimates of ROI should empower students and their families to make more informed decisions. The most important financial question is not whether college is worth it, but how they can make college worth it. Preston Cooper, is a senior fellow in higher education policy at the Foundation for Research on Equal Opportunity. He is also a contributor to Forbes.com. @prestoncooper93

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xmatter of degrees aM

LIBERAL ARTS: PREP SCHOOL FOR LIFE –– Don’t view the value of a liberal arts college education solely through an economic lens. This professor has the stats to support that idea. by Ed McKinley Besides benefitting from mentoring relationships with instructors, students are involved with peers who introduce them to unfamiliar OF COLLEGE GRADS HAVE perspectives. “They learn to BETTER LIVES AND HIGHER work together with people of INCOME BECAUSE OF AN all kinds,” he said. “AUTHENTIC COMMUNITY” The enviable results of those interconnections are quantifiable and are documented by Detweiler’s research, he mainOF COLLEGE GRADS FARE tained. Interviews with grads BETTER IN LIFE IF THEY of all ages indicated students STUDY BROADLY, NOT who experience the kind of NARROWLY community he outlines are 32% –The Evidence Liberal Arts Needs: to 39% more likely to achieve financial success, ascend to Lives of Consequence, Inquiry, powerful positions and lead and Accomplishment Richard Detweiler give talks to their communities—compared spread the word on the value of by Richard A. Detweiler with those who don’t enjoy a liberal arts education. the advantages of a tight-knit academic community. t’s not so much what you study Richard Detweiler calls an “authentic” Students can seek out these enclaves of but how you study it that leads community. It’s a group of college students mutual benefit at large institutions, but they’re to financial success and personal and faculty who interact not only in the more likely to stumble upon them at small classroom or lecture hall but also on a fulfillment. That’s one of the big liberal arts schools designed to foster them, ideas that emerged from a study personal level. Detweiler said. of 1,000 college graduates ages 25 “People are really connected with one Majors are minor another, and faculty know individual to 65 for the book The Evidence Liberal Arts Needs: Lives of Consequence, Inquiry, and students by their first names,” Detweiler told Besides demonstrating the importance of Accomplishment. Luckbox in a description of such communicommunity, Detweiler’s research indicates Students who go on to prosper economities. “Students talk with faculty outside of that what a student studies doesn’t dictate cally, contribute to society and realize their class time—not just about academic matters success or failure in life. What’s importdreams are often shaped by what author but about the rest of their life.” ant, the study shows, is studying broadly

32%-39% 59%

––

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A Fortuitous Choice of Schools

The common good

It’s seemingly conventional wisdom these days that college should prepare students for a useful, successful and probably lucrative career. Detweiler and other advocates for liberal arts education realize the value of a good job. But they don’t believe that students should pursue an education solely for their own benefit. They should seek a life that benefits society, too. “A liberal arts education is always focused on the common good,” Detweiler said. “That’s different than some forms of education, which say our purpose is to technically educate you so that you can be a good widget maker or a person good at analyzing numbers.” But a liberal arts education, which includes majors like history, psychology, philosophy, linguistics and literature (in order of descending popularity), won’t attract many students if only a few people recognize its value. That’s why Detweiler set off on a journey to compile data that would prove the worth of studying the liberal arts.

The proof

Interviewers spoke with more than a 1,000 college graduates by phone, asking up to 50 questions in conversations that ranged from 40 minutes to an hour and 15 minutes. They chose interviewees of different ages to gauge how a liberal arts education carries over into various stages of life. “The question really was what educational experiences increase the probability that a person will have various kinds of life outcomes, like success or leadership,” Detweiler said.

lihood, Detweiler said. Viewed as an investment, an increase of 40% in the probability of success is significant, he noted. Plus, the effect of community and courses outside a major field of study had more impact on the lives of students who came from lower socioeconomic backgrounds than for those who came from more fortu-

ot egelloc tahw dna rojam a gnisoohC -iced Education laicnanfi tnatropisn’t mi tsomsolely eht era dnetta .ekam reve lliw elpoep tsom snois

Even though his father studied engineering—one of academia’s most practical majors—Richard Detweiler chose to attend a San Diego college because it had its own truly spectacular beach. It just happened by accident that the school was a liberal arts college that set him on his life’s path. His alma mater, California Western University, has since been absorbed into another institution, but Detweiler has carried on its tradition of liberal arts education. After earning a doctorate in social and intercultural psychology at Princeton University, he became a professor and vice president at Drew University in Madison, New Jersey, and then a professor and president at Hartwick College in Oneonta, New York. From there, he continued to devote himself to the liberal arts tradition as a distinguished fellow and interim president at the Council on Library and Information Resources. These days, he serves as president emeritus of the Great Lakes Colleges Association and the Global Liberal Arts Alliance, while working as managing director of HigherEdImpact, a consulting firm.

for economic gain. It should benefit

instead of narrowly. “Those people who took more than half of their courses outside of their major,” he said, “were 59% more likely to report living a fulfilled life than were those who had a very narrow focus in their educational experience.” Viewed solely from a financial perspective, students who take more than 50% of their courses outside their field of concentration increase the probability of a higher income by 24% across all years, according to the study, Detweiler said. Grads who study broadly earn even more with the passage of time, their income increasing by 39% in their later working years. Students can choose taking a wide approach to study at large universities in nearly any curriculum, but liberal arts majors at smaller schools are more often encouraged to take a wide variety of courses, Detweiler maintained.

society, too.

nate circumstances. “All of these effects were tested statistically,” Detweiler said, “so all of them are statistically significant.” But despite the proven value of a liberal arts education and the strong statistics that attest to its utility, the public hasn’t caught onto the story.

Solving the mystery

“The liberal arts is a vastly misunderstood and confused idea,” Detweiler said, adding that students, parents, politicians and even educators don’t really grasp it. Thus, they talk about it in different ways, using different terms to express different ideas. “Some end up thinking it’s just studying impractical things.” That prompted Detweiler to devote his All of the interviewees had graduated professional life to defining and defending from college, but some had attended large a tradition that’s been thousands of years in universities instead of smaller liberal arts the making. His purpose has been to maximize the impact of liberal arts education. schools. Some had experienced the “authentic community” and the It’s designed to prepare students for a lifetime of liberal arts to a great degree and some had not. A LIBERAL ARTS EDUCATION learning in a society that’s constantly changing and Detweiler identified six OFFERS AN EXPANSIVE “outcomes” to explore in offering up opportunities that the phone conversations INTELLECTUAL GROUNDING have never before existed. It IN ALL KINDS OF with interviewees. The list aims to help students underHUMANISTIC INQUIRY. BY stand the full range of human included leadership, altruism, continued learning, EXPLORING ISSUES, IDEAS knowledge and grasp the cultural involvement, living AND METHODS ACROSS THE strong relationship among a fulfilled life and personal areas of study. HUMANITIES AND THE ARTS, success. The latter category Students aren’t just empty AND THE NATURAL AND addresses jobs and income. vessels to fill with knowlA supportive academic SOCIAL SCIENCES, YOU WILL edge, Detweiler insists. community and a broad field LEARN TO READ CRITICALLY, They’re capable of developof study don’t guarantee a ing broad perspectives and WRITE COGENTLY AND graduate will achieve any of understanding the different THINK BROADLY. those desirable outcomes, ways people view life, values –Princeton University website but they do increase the likeand priorities.

––

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xmatter of degrees aM

THE GREAT COLLEGE DEBATE –– Does a bachelor’s degree still make sense in the face of skyrocketing tuition and a dearth of jobs for some grads? A Luckbox panel of higher education experts share their thoughts.

James Altucher Preston Cooper Mitchell E. Daniels Jr. Richard Detweiler Arne Duncan Barbara Gellman-Danley Tim Summers

What’s the value of a college education, and is it worth the investment?

Mitch Daniels: We produced a study [with

the Gallup organization] looking at the longterm value in intervals after college. A principal finding was it matters less where you go but how you go. Does the student choose a path that is likely to make him or her more valuable in the future? That’s not true of everyone. Some have gone to the wrong college in the wrong way at the wrong price. They might not have made the best choice on what to study and where to study it or may not have applied themselves in the best way. Cost control is only half the equation. It is value we are after. We’re out to produce higher education at the highest proven value.

Preston Cooper: The value of a college education depends on a number of factors. The most important of these is your major. Students who major in engineering, economics, computer science, nursing or business are extremely likely to fully recoup their investments, and then some. But those who study art, music, philosophy or psychology have a much lower chance of earning enough over their lifetimes to justify the amount spent on college.

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Arne Duncan:

I absolutely think it’s worth the investment. Historically, those who have had the chance to go to college have twice the lifetime earnings of those who have not had that opportunity, so it is vitally important.

sending kids to college

Tim Summers: Minority teens are more

likely than white teens to say graduating from college is important to them. In fact, nine in 10 minority teens consider graduating from college important, compared with 75% of their white peers, according to a Washington Post-Ipsos poll. According to their findings, 92% of Black and Asian teens, along with 88% of Hispanic teens, said that graduating from college was important.

Why are college tuition costs continuing to rise, and what justifies increases of nearly five times the rate of inflation over the past 50 years? OPPOSITE PHOTO: SHUTTERSTOCK

Daniels: It’s been the path of least resis-

tance. People charged more because they could. No one, until recently, had devised convincing ways of differentiating quality. It didn’t cost them customers like in most of the world. It often increased customers. People leading institutions had little background balancing books or managing expenses—many people come up through the system. In this environment, each year the opportunity was there to raise tuition. The only question was how much more.

was a bad idea ... in today’s day and age, it’s a horrible idea.

James Altucher: I first wrote about this

in 2005. I thought sending kids to college was a bad idea, not only for the kids but also for the parents financially and for society. We need to take another look at the value of college. Now, in today’s day and age, it’s a horrible idea. The real reason for me is I saw so many people in student loan debt, and this was causing major stress in their lives. During one of the most productive learning periods of their lives, they spent four years in college getting into massive debt instead of learning the skills that would help them for their eventual careers. Many college graduates are not doing jobs that correspond with their degree and also are underemployed, meaning they’re doing jobs that you don’t need a college degree for. For instance, 115,000 janitors have college degrees, and you don’t need a college degree to be janitor.

ot egelloc tahw dna rojam a gnisoohC laIn icnan2005, fi tnatroIpmthought i tsom eht era dnetta .ekam reve lliw elpoep tsom snoisiced

–James Altucher

Cooper: College costs are rising because more and more people want to pursue a college education. This surge in demand, fueled in part by expansions of federal student loans and grants, has enabled colleges to ratchet up their prices. Policies such as accreditation make it difficult for new institutions of higher learning to enter the market and drive prices down, while a perverse financial aid regime allows colleges to hide the prices that students will truly end up paying. It’s no wonder that an effective cartel with opaque pricing can raise the cost of tuition so high. Richard Detweiler: Salaries are the larg-

est single component of an institution’s budget and have increased more rapidly than inflation. Even though these institutions are nonprofit, they are deemed competitive. So, all of those things have driven higher education pricing to levels that are clearly not sustainable.

Duncan:

It makes no sense. It’s infuriating to me, and it rises because it never gets challenged. It’s a very stoic, very inef-

efficient, you really have to look at those three legs: One is debt, second is cost and expense, third is value. There are two ways of looking at it: One is the federal government can and should do more. But the other part is to question whether there are any checks to skyrocketing costs, and there haven’t been. It’s been a blank check coming their way, and I think that’s part of what is structurally wrong with

662,000 FEWER STUDENTS ENROLLED IN UNDERGRADUATE PROGRAMS IN SPRING 2022 THAN THE YEAR BEFORE

–National Student Clearinghouse Research Center, 2022 this equation. It always troubled me that we gave out literally hundreds and hundreds of billions of dollars every single year to universities with zero ability to have impact in terms of, or even transparency around, outcomes. And for me, that never made any sense. It was not a good use of taxpayers’ money. I didn’t feel good about that. If we’re going to look at higher education, I’d be looking at the intersection of those three legs of the stool.

Altucher: Normally, if you increase the price

of something, fewer people want it. But more people than ever want to go to college. So

–– MITCHELL E. DANIELS JR. became president of Purdue University in January 2013 after serving two terms as governor of Indiana. Breaking a 36-year string of increases, he led Purdue in a series of tuition freezes and also cut room and board costs by 5%. He’s set to retire from Purdue at the end of 2022. @purduemitch ficient marketplace with very few checks and balances. We never talk about expense and cost, and we also don’t talk about quality outcomes. So there are three legs of this triangle, and one of those legs is getting a lot of attention now. But if we really want to make higher ed more effective, more

what’s wrong with this equation? Well, the first problem is that the government backs these student loans to basically whoever wants one and who’s of the age of a college student. The second thing is you can’t get rid of student loan debt—it’s the one type of debt you can’t get rid of in bankruptcy. So the government

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xmatter of degrees aM

–– PRESTON COOPER serves as a senior fellow in higher education policy at the Foundation for Research on Equal Opportunity. @prestoncooper93

should spend four years in college to get a job when good jobs are available right now. Hence, college enrollment has fallen. learning, as well as campus ‘presence,’ will forever change. Those who were hesitant

O O

How did the pandemic affect higher education and enrollment?

Cooper: The pandemic initially suppressed

<50%

Barbara Gellman-Danley: Teaching and

has no risk, and colleges don’t have any risk. Because the government pays the college directly, the student has the risk. The student is the one who can’t get rid of the debt. So, why do students take on this debt? Well, 18-year-olds just don’t have experience. There’s a biological reason: The prefrontal cortex is the part of the brain that evaluates risk and encourages risk-taking. Well, that’s not fully formed in humans until the age of 25. College-age students are 18 years old and they don’t have the brain function to properly assess risk. The system is set up so that they’re encouraged to take this risk because they don’t have to feel the consequences of this risk until many, many years later, when they realize, ‘Oh, I didn’t properly understand that there was a chance I would not be making the income to justify taking on this debt.’ So, colleges have the incentive to just keep raising the tuition because no one’s pushing back. At the very least, let’s take a step back and see what’s wrong before we continue perpetuating what seems like kind of a scandalous system.

return on investment. This means that the costs of college—tuition, time spent out of the labor force and the risk of not completing your degree—do not outweigh the financial benefit of increased earning capacity. This means that a bachelor’s degree is worth it most of the time, but there is a significant subset of degrees where the investment doesn’t pay off. This is something that students should know about before dropping tens of thousands of dollars on a college education. I’d argue that disclosure of earnings outcomes for a student’s chosen program should come before students make a commitment to a particular college or program.

ot egelloc tahw dna rojam a gnisoohC laDisclosure icnanfi tnatropmof i tsoearnings m eht era dnetta .outcomes ekam reve lliw e l p o e p tsom snoisiced for a student’s chosen program should come before students make a commitment to a particular college or program. –Preston Cooper

about online learning were catapulted into it during the pandemic. Campuses went remote. These pivots demonstrated what could be done differently, and there is no turning back.

Bachelor’s degrees from a variety of colleges and universities have demonstrated a negative return on investment. How would you describe those results, and do you think schools should notify students of each major’s ROI?

OF BACHELOR’S DEGREE RECIPIENTS WORK IN A JOB CLOSELY RELATED TO THEIR MAJOR

–National Center for Education Statistics, 2022 Daniels: I do think, with the appropriate

cautions, this is very important information, and there is an initiative nationally to do this. We certainly try to understand it and share it with our students. This is historical data and does not accurately predict someone graduating today. There are some areas to be very careful of before you spend your time and money.

Detweiler: That’s the wrong focus. If one

assumes the only reason to get a higher education is to have higher income, then one needs to approach the question of education beyond high school differently. A student should look at college majors that generate the largest ROI and at programs, collegiate or not, to become plumbers, electricians, etc., because the ROI for those is going to be far greater than almost any college major. The real question is what a young person is going to do in their lives and how much is that worth? But if we take merely the ROI approach, we’re going to have no teachers, no preachers, no social workers, no risk-takers in creating new things.

higher education enrollment—after all, who wants to pay full tuition for Zoom University? But it was surprising to many that college enrollment continued its slide even Cooper: In my study, I estimated that 28% after classes went back in-person. The major of bachelor’s degrees do not provide a positive reason for this is that the strong labor market has made it easier to get a decent-paying job even without a bachelor’s degree. In order to attract workers, many employers DASHBOARD HELPS STUDENTS AND FAMILIES EXPLORE are removing degree requirements DIFFERENCES BETWEEN SCHOOLS, PROGRAMS AND AREAS from middle-income job postings. OF STUDY People rightfully wonder why they

MyFloridaFuture

How would you reform the student loan industry?

Cooper:

There should be hard limits on how much students and their parents can borrow

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from the federal government for college. Moreover, the government should stop providing loans for programs where there is no return on investment. We know that students’ ability to repay their loans is strongly linked to how much they earn after graduation—so if we restrict lending to high-quality programs, we can largely solve the student loan crisis.

Detweiler:

First, a student loan should be dischargeable under bankruptcy. It is a unique kind of debt because if a student’s life develops in a way where they cannot afford their loan payments, that doesn’t make any difference. They still owe that money. If a court determines a person should not be required to repay that debt, they ought to be able to be relieved of it. Second, student loans ought to be managed entirely by the federal government or state government, not outsourced to profit-making companies. They are virtually guaranteed loans, and when you begin adding profit to a reasonable loan rate, it makes them far less affordable. Third, base the rates on percentage of income or discharge or reduce them if a student goes into a society-serving, low-income kind of profession, like teaching. Or have a certain number of years after which the balance of the loan debt is discharged.

Altucher:

I would get rid of all student loans—then you’ll find out the true value of colleges. Everybody will start complaining that it’s going to create income inequality because super rich people will be able to afford college, and the middle class will no longer be able to afford college. But that’s simply not true. Right now, there’s $1.7 trillion in student loan debt, and you’re graduating a large number of people who have critical life consequences because they got into this debt. Then there’s people who

didn’t go to college, who are not in debt and start making income right away at the age of 18. So what’s happening is the middle class is being destroyed by student loan debt. It’s actually increasing income inequality and what’s creating this haves-and-have-nots country we live in now. If you just eliminate government backing of student loans, we will quickly find the value of a college tuition because now

Should President Joe Biden forgive all student loan debt? If not, what would be an adequate amount?

Daniels:

I think it’s a very bad idea for multiple reasons. It’s grossly unfair to those who fulfilled their obligations and unfair to the taxpayers who never got to college in the first place. The more money the government floods into higher ed, the easier it is for the

–– ARNE DUNCAN former U.S. Secretary of Education and chief executive officer of Chicago Public Schools, is now a managing partner at Chicago CRED, a nonprofit providing outreach, therapeutic, education and employment opportunities for young men most likely to be engaged in gun violence. @arneduncan it’s a regular market, and it will act like any other market. People will start looking at alternatives very quickly. If I was a young person of 18 and I couldn’t afford college, I would start looking and I’d see plumbers at the age of 18 can start making over $70,000 a year when the average bachelor’s degree graduate makes $64,000 a year. The decision is too easy for people. No one’s assessing the proper value of a tuition because it’s unclear with the government backing it and colleges raising it every year faster than inflation. Bad decisions are being made. My argument is if you get rid of the backing of student loan debt, fewer bad decisions will be made.

–– TIM SUMMERS CEO of global strategic advisory firm Summers & Co. and executive director of Third Horizon Initiatives for Arizona State University, founded and leads Pocket, an education technology platform. @howhackersthink

50% THE UNDEREMPLOYMENT RATE FOR SEVERAL COLLEGE MAJORS

–Federal Reserve Bank of New York institution to pocket and raise costs. A great irony is this generation is being treated so unjustly by their elders, dumping unimaginable amounts of government debt, and will get a bigger tab and get the bill later. It’s not well-advised, and I don’t think he has the power to do it.

Cooper: Debt forgiveness is not a real solution to the student loan mess. The federal government is on track to make over $1 trillion in new loans over the coming decade, and unless you address that reality, debt forgiveness today is nothing more than kicking the can down the road. Instead, we should focus on policies to make it easier for current borrowers to repay their loans, such as promoting income-based repayment plans and reducing the penalties for default. Detweiler: Loan debt forgiveness should be linked to income, not to some fixed amount.

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xmatter of degrees aM So, if a graduate is making $30,000 a year and has accumulated $50,000 of debt, that’s not affordable. Assuming that person is attempting to be gainfully employed, that entire $50,000 should be discharged. If a person has become a mortgage banker and is making hundreds of thousands of dollars a year, then there’s none of that debt that ought to be forgiven. They ought to be able to repay their debt.

84% HOW MUCH MORE PEOPLE WITH A BACHELOR’S DEGREE EARN THAN THOSE WITH ONLY A HIGH SCHOOL DIPLOMA

–The Bureau of Labor Statistics, 2022

finances to pay off their loans, they’ll remain in debt. Minority students are dispropordirection. I’m a big believer in public service tionately impacted. If we want a bright loan forgiveness for folks who go into teachfuture to look toward, we need to invest in it. ing, go into social work, or they work in the community where they’re not going to have lucrative careers but they’re going to make If you could tear down the

Duncan: It’s absolutely a step in the right

>25% OF THE 30,000 BACHELOR’S DEGREE PROGRAMS STUDIED HAVE A NEGATIVE ROI

–freopp.org, 2021 a huge difference. But not everybody needs their loans forgiven. If you’re making a ton of money coming out of college, that’s a different story. But yes, providing some relief would obviously be extraordinarily helpful in a tough economic time. But I just want to emphasize that it’s a starting point. We either put a Band-Aid out there, or we really try and fix the system. I do think there’s a chance to try and fix the system. I’m more interested in how we look at this holistically, how we look at this comprehensively, systemically—not just look at that slice of the pie.

Altucher: It’s really unfair. First off, he’s

entire university system and start from scratch, would you favor classroom instruction, online courses, a hybrid of those two or some other model?

Gellman-Danley:

All of the above. I am very impressed by the work of Arthur Levine and Scott Van Pelt in their book The Great Upheaval: Higher Education’s Past, Present, and Uncertain Future. The basic tenet is that we built a higher education system that was established in an industrial era, and we now must evolve into the

Summers: All of the above. I’d meet learners

where they are. It’s important that we provide as many opportunities to learn as possible, and this comes back to access. I’m inspired by ASU’s charter, which calls for serving anyone with the desire to learn. That means that we must meet the learners where they are, regardless of their preferred modality.

What alternatives would you like to see for students who choose not to attend college?

Cooper: What students want most from

college is economic mobility—they want to be able to get a job that pays a decent salary. But there’s no reason that economic mobility has to come from a college. There

–– BARBARA GELLMAN-DANLEY was named president of the Higher Learning Commission, a higher education accrediting agency, in 2014. The organization focuses on quality assurance and outcomes-based assessments. @hlcpresident

not going to do that because that’s equivalent to a $1.7 trillion stimulus package. We saw what happened with the COVID-19 stimulus packages, as needed as they were. And I do believe that they were needed— the risk was runaway inflation. Now with the worries of inflation, if Biden suddenly forgives all student loan debt, you’re going knowledge industry. I firmly believe there to have more inflation, so I don’t think he’s is an emerging credential market that helping matters if he were to do that. will either strengthen higher education or many institutions. Students want Summers: How many of us know some- displace agility and expediency in earning credenone who has successfully paid off all of their tials, whether they are certificates, licenstudent loans, especially if they’ve pursued sure or full degrees. Institutions that do not advanced degrees? All of this points to a respond will be left behind. long-term issue—borrowers struggle to make payments toward the loans and this Duncan: The goal is degrees that help means that in the long run, they pay more people achieve their dreams. So if you’re for their loans. For students who lack the leaving college with more debt than you can

afford to pay back, based upon the quality or lack thereof of your degree, we’re actually leaving people in a worse financial situation. For me, the whole goal of college has to be to break cycles of poverty and climb the economic ladder and increase social mobility. For me, the perfect university should be a school that’s focused on inclusion, not exclusion, that’s focused on completion, not just access, but is creating real value in terms of the quality of the education and the meaningfulness of the degree.

are many promising alternatives—apprenticeships, short-term ‘bootcamps,’ vocational schools and work-based learning programs. The main question before us is how to ensure those alternatives operate on a level playing field with traditional colleges and universities because traditional schools right now get most of the funding.

Detweiler: We make a mistake by believing

that everybody should be going to college. When you look at a country like Germany

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that has a highly developed apprenticeship model, that ends up being a government responsibility. We ought to develop far more of those kinds of models in the United States, so that students who are interested in alternatives to college are given opportunities to develop meaningful, skilled vocations.

–– JAMES ALTUCHER, a bestselling author, successful entrepreneur, angel investor and chess master, hosts The James Altucher Show podcast and founded notepd.com. @jaltucher

Altucher: I think fewer and fewer compa-

nies are requiring college degrees, and Google is a great example. They aligned with 120 other companies that will accept

ot egelloc tahw dna rojam a gnisoohC laIf icnayou’re nfi tnatroleaving pmi tsom ecollege ht era dnetta .with ekam rmore eve lliwdebt elpoepthan tsom snoisiced you can afford to pay back, based upon the quality or lack thereof of your degree, we’re actually leaving people in a worse financial situation.

–Arne Duncan

people who don’t have a college degree but do have a Google certificate, which they earned at Coursera for $39 a month. The gig economy is where people are finding independent means to earn sources of income, and that economy is growing 17% a year. People who drive Ubers, people who do web design, people who do consulting or coaching—that’s grown from a $200 billion a year economy to $450 billion a year. We see people are starting to consider alternatives.

Gellman-Danley:

There are alternatives to college, which include certificate programs, certifications like the ones from Microsoft and Google, combinations of courses-only versus a full degree, online education offered by a variety of sources— both within and outside of higher education—consortium models, etc. Higher

61.4 million —or 9.4% THE DECLINE IN UNDERGRADUATE ENROLLMENT DURING THE PANDEMIC

–National Student Clearinghouse Research Center, 2022

Learning Commission is publishing an online student guide, entitled Ask the Right Questions: A Student Guide to Higher Education.

What do you predict for higher education?

forever, where there’s no history of access? What chance do they have in a globally competitive economy? I worry about us having a caste system, and the only way to avoid that is to have a system of higher education that increases upward mobility, increases social mobility, increases job opportunities—that’s the system we need to embrace and hold ourselves accountable for, whatever college looks like post high school. For me, the divide in our country is really between the education haves and have nots. That’s what scares me. Higher education should be the great equalizer. But if it’s not, it actually exacerbates the divide between the haves and the have nots and it perpetuates inequity, inequality, and locks in that caste system.

Duncan:

Altucher:

Summers: We want to ensure mobility and

portability of learning so that learners can take their achievements with them anywhere. This includes stackable representations of their learning via advanced achievements like digital credentials. I expect that we’ll see learners constructing learning pathways that include traditional education, professional certificates, badges representative of knowledge and skills, and much more.

This is a place where we need radical change, we need transformation. Today, most Americans literally do not go to college, and the vast majority of Americans don’t graduate from college. Those two facts are what keep me up at night. How do we provide a lot more opportunities for a lot more people whose families had been locked out of the college process

I do think the rise of online learning and alternatives to college and fewer companies requiring a degree will be the future. Basically, the need to go to college is going to end, and the rise of the gig economy—which doesn’t require a college degree—is going to bring down the tuitions and the kind of monopoly that college education currently has.

–– RICHARD A. DETWEILER, author of The Evidence Liberal Arts Needs and managing director of higheredimpact.org, has served as president of Hartwick College, the Council on Library and Information Resources, the Great Lakes Colleges Association and the Global Liberal Arts Alliance.

August 2022 | Luckbox

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LUCKBOX LEANS IN WITH

AMERICAN COLLEGE TESTING CEO JANET GODWIN ––

by Elizabeth Owens-Schiele

Many colleges and universities went “test optional” in their admissions process during the pandemic, but the ACT remains a determining factor for scholarships, courses and admissions

––

s it still important to take the ACT and submit a test score to the college or university where you’re applying?

ACT scores are still beneficial for students and valuable to colleges. For students, beyond just helping them “get in,” a test score tells them where they are academically prepared for college and where they might need more help. Taking the test can also help students qualify for meritbased financial aid. We know that even as colleges continue to extend their temporary test-optional admissions policies, they are still using test scores when awarding scholarships.

PHOTO COURTESY OF ACT

What was ACT’s reaction to University of California schools, and other universities and colleges, going test optional this last year?

We have made clear that we stand by institutions in their efforts to best support the students we all serve. It’s no surprise to see colleges adapting their practices in response to market and competitive pressures. What did ACT witness as a result of that decision?

It will take time to fully understand the ramifications of test-optional policies. While some institutions have reported an increase in the application or enroll-

ment of diverse students, for example, it’s still unclear whether these gains are being offset elsewhere. We do know that institutions are having a harder time recruiting students, including those from underserved backgrounds.

important discrepancies in GPA. But in general, if you compare two students with the same high school GPA, the one with the higher ACT score is more likely to earn at least a 3.0 GPA as a college freshman. We also know that high school grade inflation is an increasingly widespread, systemic issue that is weakening the value of student transcripts as a single measure of academic success.

The number of students taking the ACT has declined in the last couple of years. What’s the financial impact on your organization?

ACT is financially healthy and well-positioned for the future. We finished fiscal year 2021 with positive operating income of $10 million. Today, the total number of test takers is well ahead of 2020. That’s, in part, thanks to unprecedented demand for our state and district programs, through which record-high numbers of students are taking the ACT test during the school day at no cost to them.

ACT CEO Janet Godwin

1,835 U.S. colleges and universities did not require ACT or SAT scores from applicants for 2022 admissions.

How do you respond to criticism that standardized tests discriminate on the basis of income and race and that they favor the wealthy who can provide test-prep tutoring?

ACT test doesn’t create America’s education inequities—it helps reveal –National Center for them. To solve these probFair & Open Testing (FairTest) lems, we need to address Many argue that high the root causes, not school grades predict dismiss the tools that help college academic success us understand them. When OF ALL U.S. BACHELOR’S more accurately than it comes to the correlation DEGREE-GRANTING testing. What’s the ACT’s between income and test INSTITUTIONS NOW position? scores, most of this is due PRACTICE TESTto inequities in high school ACT has long argued OPTIONAL OR TESTcoursework and grades, that the best predictor of BLIND ADMISSIONS, school characteristics college success is neither AN ALL-TIME HIGH THAT and noncognitive student high school GPA nor test MAY CONTINUE. characteristics, such as scores, but a combination –National Center for study habits. of the two. For one in four Fair & Open Testing (FairTest) ACT is committed students, their ACT score is to an equitable testing not what would be expected process that is accessible based on their high school to all students. More than one in five who GPA—it’s either higher or lower. That register for the national ACT test use a fee means an ACT score—which is an objecwaiver. Not only do these students not pay tive, research-based measure of what to take the test, they are also eligible for students should have had the opportufree test prep through ACT. nity to learn in high school—can reveal

76%

August 2022 | Luckbox

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A TEXTBOOK CASE STUDY OF OLIGOPOLIES

–– Spending on course materials is declining, but that doesn’t mean textbook prices are going down. Students just aren’t buying them.

by Mike Reddy

rudi Radtke’s first day of community college—like most students’— included a trip to the campus bookstore. For a first-generation college student, it was an exciting rite of passage. But rather than leave with any books, Radtke left with sticker shock. “They rang them all up, and they were like, ‘It’s $700,’” Radtke told Luckbox. “My mouth dropped open.” The cost of textbooks often stands in the shadow of the cost of tuition—especially at pricey private colleges and universities. Yet, what happened to Radtke is far from unique. Nearly two-thirds of college students nationwide reported in 2020 that they skipped purchasing a textbook despite concerns about their grades, according to the U.S. Public Interest Research Group’s Education Fund. That’s a small increase over the 63% of students who skipped purchasing one during the same period the year before. Today, Radtke works as a project manager for the Scholarly Publishing and Academic Resources Coalition (SPARC), a nonprofit advocacy organization focused on expanding open and equitable access to research and education. Specifically, they manage inclusiveaccess.org, a website designed to raise awareness about a new and growing automatic textbook billing model called inclusive access. Although it makes sense that tuition gets the spotlight in discussions about the cost of higher ed, Radtke said, it’s just one piece

O O

––

of a package of problems that can make academic success an overwhelming financial challenge. “If a student can’t buy a textbook, they’re not going to be as effective in that course,” Radtke said. “That’s going to affect their academic performance, which is going to affect their GPA, which is going to affect their grant status. It’s all

isn’t discretionary. Plus, there’s a principal-agent problem. Students have no say in which course materials will be assigned for their classes. Meanwhile, administrators and faculty are solicited by publishers and ultimately make those decisions. It doesn’t help that there isn’t a lot of competition in the textbook-publishing industry. According to Marketplace, just

-iced laicnanfi tnatropmi tsom eht era dnetta ot egelloc tahw dna rojam a gnisoohC ekam reve lliw elpoep tsom snois

Just three publishing companies control 80% of the U.S. textbook market.

so interconnected.” So how did textbooks get so expensive in the first place? “To understand the situation,” Radtke said, “you have to understand the market.” They explained it this way: Students are a captive market for textbook publishers because required reading typically

Millions OF STUDENT RECORDS, INCLUDING DATES OF BIRTH AND EMAIL ADDRESSES, WERE STOLEN IN A 2018 DATA BREACH THAT AFFECTED PEARSON

three publishing companies control 80% of the U.S. textbook market: Pearson, Cengage and McGraw Hill. Neither Pearson nor McGraw Hill responded to several requests for comment for this piece, but Cengage Academic’s executive vice president and co-general manager Nhaim Khoury did. And Khoury didn’t sugarcoat the past practices of publishing companies. “For too long, the textbook industry pushed outdated business models that didn’t put students first,” he said via email. “Students voted with their wallets and chose more affordable options. For years, publishers, including Cengage, were part of the problem.” It’s a problem Cengage has been working to address with an all-access digital

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$2M TOTAL LOBBYING EXPENDITURES BY THE ASSOCIATION OF AMERICAN PUBLISHERS IN 2021

–opensecrets.org what’s best for their individual and financial needs, and giving them the option to choose has contributed to the decline. But some take issue with the language used in Student Monitor’s report. “The numbers don’t tell the whole story,” said Nicole Allen, director of open education for SPARC. “Student spending is not the best measure of the impact that textbook costs are having on students, and that’s for a few reasons.” Chief among them, Allen said, is that

eTextbook subscription platform called Cengage Unlimited. Students can access all of Cengage’s eTextbooks, online learning platforms, study guides and more for $125 for a four-month term or $190 a year. Students who prefer printed materials can access up to four print rentals at no added cost except a shipping fee. “As long as there are customers who want print,” Khoury wrote, “we will continue to provide it.” While models like Cengage’s may be a step in the right direction, there’s a lot of ground to cover. An NBC review of U.S. Bureau of Labor Statistics (BLS) data found that from January 1977 to June 2015, textbook prices rose 1,041%. That’s over three times the rate of inflation for that period. Last school year, the average price of books and school supplies for college students was $1,240, according to the free online college advisory service collegedata.com. But don’t take collegedata.com’s word for it. Colleges and universities themselves don’t shy away from the fact that textbooks are expensive. Northwestern University recommends setting aside nearly $1,600 for books and supplies for the 2022-23 school year. The University of California at Berkeley recommends $1,140. However, some sources are quick to dispute those numbers. An often-referenced report conducted by Student Monitor—a research service that targets the college student market—found that student spending has been dropping significantly in recent years. A press release about it published on the Association of American Publishers (AAP) website was even headlined “A Victory for Affordability: Student Spending on Course Materials Declines 22% During the 2021-2022 Academic Year.” Looking at the bigger picture, the report found a 44% decline in student spending over the past decade. “I would attribute the decline to two factors,” Kelly Denson, AAP’s vice president of education policy and programs, said via email, “first, publishers have made both affordability and quality a major focus, and as part of that effort they’ve introduced a wide range of cost-effective options, including Inclusive Access programs, offered at the lowest market rates according to US Department of Education federal regulations.” Second, Denson wrote, students know

ot egelloc tahw dna rojam a gnisoohC laicnanfi tnatropmi tsom eht era dnetta .Only ekam reve 38% lliw elpoof ep tsom snoisiced

required course materials were acquired by students in the spring 2022 term.

spending isn’t synonymous with cost. Focusing on student spending doesn’t address the fact that many students don’t buy all of their required course materials. Students who don’t buy any textbooks, for instance, technically don’t spend any money. When asked about the BLS data pointing to a 1,041% increase in prices for textbooks

$1M AMOUNT PEARSON PAID TO SETTLE U.S. SECURITIES AND EXCHANGE COMMISSION CHARGES THAT IT MISLED INVESTORS ABOUT THE 2018 DATA BREACH

from 1977 to 2015 and what the publishing industry has done to address it, the AAP’s Denson again pointed to reports about student spending. “The three leading sources—student watch, student monitor and college board— all show a clear decline in student spending on course materials,” Denson wrote. “The recent data from these reputable sources contradicts the BLS data which dates back 5-7 years ago.” Luckbox reviewed the Student Monitor report for the spring 2022 term. It also found that students acquired only 38% of their required course materials on aver-

83% OF CENGAGE’S U.S. HIGHER ED SALES COME FROM DIGITAL RESOURCES age, that 16% of students have dropped— or haven’t taken—a course because of the cost of its course materials, and that more than two-thirds of students agreed the cost of textbooks is excessive. But affordable options are out there. Besides the all-access subscription initiative launched by Cengage, other alternatives are gaining traction to help students cut costs. Advocates like Allen and Radtke champion open educational resources, or OER, as a possible solution. These resources typically grant an open license, such as Creative Commons, that allows anyone to use, adapt and share them freely. It’s a popular idea among students, too. Revisiting the Student Monitor report, 83% of students said using OER materials is more appealing than purchasing or renting an eTextbook. More than two-thirds said they believe the quality of an OER textbook is just as good or better than an eTextbook. The biggest barrier to OER, Allen said, is that it disrupts the way the system has long operated. “Every new technology goes through that phase where you’re transitioning from the world that was, where you had to print and ship a book to every student you wanted to educate,” she said, “to the world that is, where we can access a vast amount of information instantly over the web … for a much lower cost than has ever been possible before.”

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COLLEGE BOARDS –– There’s no shortage of data on the business of higher education. These stats come from a variety of sources, including Luckbox readers, and illustrate some of the trends shaping America’s postsecondary institutions.

IN OUR MOST RECENT SURVEY, WE ASKED LUCKBOX READERS ... WHAT TYPE OF DEGREE THEY HAVE:

DO YOU THINK THE HIGHER EDUCATION SYSTEM IN THE U.S.

Graduate or post-graduate degree ..... 43% Bachelor’s degree ................................. 42% I do not have a college degree .............. 15% DO YOU SUPPORT OR OPPOSE FORGIVING UP TO $10,000

IS GENERALLY GOING IN THE RIGHT DIRECTION OR THE WRONG DIRECTION?

Wrong direction ....... 76% A COLLEGE DEGREE OR CREDENTIAL TODAY IS...

OF A PERSON’S FEDERAL STUDENT LOAN DEBT?

Strongly support ........ 13% Somewhat support ..... 12% Somewhat oppose ...... 13% Strongly oppose .......... 62%

Definitely worth it Probably worth it Probably not worth it

Do you think your degree was worth the total associated costs?

Employers 49% 38% 13%

Adults 27% 33% 29%

Luckbox readers 15% 43% 38%

—Employers and adults data provided by the Association of American Colleges and Universities, 2021

Yes ....... 77%

Top Five Institutions with Best Long-term Economic Gains: 1. UNIVERSITY OF HEALTH SCIENCES AND PHARMACY IN ST. LOUIS 2. ALBANY COLLEGE OF PHARMACY AND HEALTH SCIENCES 3. MASSACHUSETTS COLLEGE OF PHARMACY AND HEALTH SCIENCES 4. CALIFORNIA INSTITUTE OF TECHNOLOGY 5. MASSACHUSETTS INSTITUTE OF TECHNOLOGY LESS CAN MEAN MORE WHEN IT COMES TO EDUCATION AND INCOME. THIS GRAPHIC COMPARES THE EARNINGS OF EVERYONE FROM DROPOUTS TO DOCTORS, RELATIVE TO THOSE WHO HOLD A BACHELOR’S DEGREE.

7.3%

14.3%

23.1%

28.2%

61%

73%

83%

LESS THAN HIGH SCHOOL

HIGH SCHOOL DIPLOMA

SOME COLLEGE BUT NO COLLEGE DEGREE

ASSOCIATE’S

MASTER’S

DOCTORAL

PROFESSIONAL

28.2% OF

61% OF THOSE

73% OF THOSE WITH DOCTORAL DEGREES EARN MORE THAN THE MEDIAN BACHELOR’S DEGREE HOLDER

BACHELOR’S DEGREE MEDIAN LIFETIME EARNINGS

7.3% OF THOSE WITH

LESS THAN HIGH SCHOOL EARN MORE THAN THE MEDIAN BACHELOR’S DEGREE HOLDER

14.3% OF HIGH

SCHOOL GRADUATES EARN MORE THAN THE MEDIAN BACHELOR’S DEGREE HOLDER

23.1% OF THOSE WITH SOME COLLEGE EARN MORE THAN THE MEDIAN BACHELOR’S DEGREE HOLDER

THOSE WITH ASSOCIATE’S DEGREES EARN MORE THAN THE BACHELOR’S DEGREE HOLDER

WITH MASTER’S DEGREES EARN MORE THAN THE MEDIAN BACHELOR’S DEGREE HOLDER

83% OF

THOSE WITH PROFESSIONAL DEGREES EARN MORE THAN THE MEDIAN BACHELOR’S DEGREE HOLDER

—Georgetown University, Center on Education and the Workforce

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>50%

––

The underemployment rate for several majors.

Preston Cooper,

–Federal Reserve Bank of New York

2,580% THE INCREASE OF AVERAGE IN-STATE TUITION AND FEES FOR ONE YEAR AT A PUBLIC NON-PROFIT UNIVERSITY FROM 1970 TO 2020. ($394 TO $10,560)

–National Center for Education Statistics

THE MEDIAN BACHELOR’S DEGREE HAS A NET ROI OF $306,000. MORE THAN A QUARTER OF PROGRAMS HAVE NEGATIVE ROI. FOUR IN FIVE ENGINEERING PROGRAMS HAVE ROI ABOVE $500,000, BUT THE SAME IS TRUE FOR JUST 1% OF PSYCHOLOGY PROGRAMS.

66% The average additional income of employees holding a bachelor’s degree compared with those with a high school diploma.

–collegestats.org

––

SINCE THE START OF THE PANDEMIC, EXPECTATIONS THAT EDUCATION WILL BE WORTH THE COST HAVE STEADILY DECLINED AND ARE DOWN 18 PERCENTAGE POINTS SINCE SPRING 2020. SIMILARLY, EXPECTATIONS AROUND THE ABILITY OF EDUCATION TO HELP ADVANCE ONE’S CAREER OR GET A STABLE JOB HAVE ALSO FALLEN ... THE PERCEIVED BENEFITS OF ADDITIONAL EDUCATION ARE DECLINING Would be worth the cost

Would help me get a stable job

Would advance my career

Spring 2020

50%

48%

59%

Fall 2020

35%

39%

48%

Fall 2021

32%

39%

46%

Source: Strada Education Survey 2020-2021

a senior fellow in higher education policy at the Foundation for Research on Equal Opportunity, compiled a report estimating return on investment—the increase in lifetime earnings minus the costs of college—for nearly 30,000 bachelor’s degrees. Here are a few highlights:

ELITE SCHOOLS, SUCH AS CALTECH AND PENN, DOMINATE THE LIST OF HIGHEST ROI PROGRAMS. SOME IVY LEAGUE DEGREES HAVE NEGATIVE ROI.

A student’s choice of program is perhaps the most important financial decision he or she will ever make. Most bachelor’s degree programs in engineering, computer science, economics, and nursing increase lifetime earnings by $500,000 or more. The best program anywhere in the nation is the computer science major at the California Institute of Technology. Students in this program can expect an ROI of over $4.4 million. One of the most lucrative programs anywhere is the finance major at the University of Pennsylvania. Graduates of this program will have median earnings of over $288,000 by age 35, according to my estimates. But students at the exact same school who choose a major in film and photographic arts can expect earnings of just over $45,000 by age 35. MEDIAN EARNINGS FOR BACHELOR’S DEGREE PROGRAMS: AGE 25 ....... $39,000 AGE 35 ....... $65,000 AGE 45 ....... $71,000

AFTER 40 YEARS, 71% OF PSYCHOLOGY PROGRAMS HAVE REACHED POSITIVE ROI. August 2022 | Luckbox

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DIGGING DEEPER INTO DEBT

by Elizabeth Owens-Schiele

–– Americans of nearly every socioeconomic background are burdened with student loans

A ––

n 80-year-old woman reached out to The Institute of Student Loan Advisors after she discovered her Social Security was being garnished for a $60,000 Parent Plus loan she had taken out 30 years prior for her child who had promised to pay it back but never did. Betsy Mayotte, founder of The Institute of Student Loan Advisors, or TISLA, and a 25-year veteran of the student loan industry, suggested she apply for total and permanent disability because she was too frail to work. The loan was eventually discharged. “The fastest growing population of people struggling with student debt are over the age of 65,” said Mayotte. “A lot of policymakers are trying to solve the student debt problem, and they’re still thinking of a 20-year-old.” A 15-year or even 20-year repayment doesn’t sound bad because people don’t start focusing on retirement savings until they’re 40, she continued. But if half of all student loan borrowers are over the age of 30, and a quarter over age 45, the loans create a barrier to retirement savings and retirement itself. Outstanding federal student loan debt stood at $1.7 trillion in the first quarter of 2022, a $14 billion increase from the fourth quarter of 2021, according to the most recent quarterly report on Household Debt and Credit from the Federal Reserve Bank of New York. Student loan debt is second only to mortgage debt in the United States. The private student loan market has grown more than 70% over the last 10 years to $130 billion. Those loans often have higher interest rates and don’t offer the same protections as Parent Plus and federal loans. President Joe Biden’s administration froze student loan repayment during the pandemic and extended that moratorium through Aug. 31—a measure that has benefitted the most

hearing that your loans will get

forgiven in another 25 years, it’s not a

ot egelloc tahw dna rojam a gnisoohC la“When icnanfi tnayou’re tropmi tso65, m eht era dnetta .ekam reve lliw elpoep tsom snoisiced

comfort.” –Betsy Mayotte

vulnerable federal student loan borrowers. The Public Service Loan Forgiveness Program (PSLF) is also providing a temporary waiver for those in public service jobs, such as teachers, public defenders, social workers and others in the public sector to apply for loan forgiveness before Oct. 31. Biden was expected to announce his decision on this limited waiver, the student loan payment, interest and collections pause sometime in July, but had not done so at press time. “What frustrates me from a policy perspective, is that student loans are not the problem—student loans are the symptom of the problem,” Mayotte said. “The problem is the cost of higher education.” Middle-income and high-middle-income families struggle the most with student loan debt because they don’t qualify for federal Pell Grants intended to support low-income students, Mayotte said. The average student loan debt is $39,351, with an average monthly payment of $393, according to educationdata.org. An estimated 43.2 million borrowers have student loan debt, and among them, 2.6 million owe more than $100,000. Mayotte and other experts recommend Parent Plus loans over private student loans that don’t offer the federal protections. She believes debt-to-income (DTI) should be a component of the Parent Plus loan applica-

tion and based on both the student and the parents’ income. Because very few undergraduate students can get a private loan without a cosigner, she believes students should be an equally liable cosigner. Mayotte said she founded TISLA because she firmly believes all consumers should have access to free expert and neutral student loan advice and, if needed, dispute resolution. She helped over 16,000 indi-

–– Truth or Skepticism College Costs: Is Higher Education Worth It? TOM SOSNOFF • “Canceling student debt—at least even a portion of it—is not a long-term solution. But it is a short-term solution until we work on something to at least get people fired up enough to get the system fixed.” • “If college costs were done right, there would be different costs for different degrees.”

DYLAN RATIGAN • “How can you talk about canceling student debt without talking about regulating or capping tuition? Because what’s really happening is the schools are basically taking American tax money to enrich themselves for million-dollar administrative jobs and infinite tenure, spiraling the price of tuition up because they have a price insensitive client because they’re borrowing this money and they’re told they’ve got to go to college.”

–Excerpted from the Truth or Skepticism podcast, where Tom Sosnoff and Dylan Ratigan dive into topics ranging from business and finance to technology, politics and global news.

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vidual borrowers last year and reports her volume has increased 60% year over year. Ben Kaufman, director of research and investigations at the nonprofit Student Borrower Protection Center in Washington, D.C., advocates for policy for student loan borrowers, conducts investigative work, and pushes for greater protections and oversight of the student loan markets at all levels of government. He said the Student Borrower Protection Center regularly publishes investigative reports on harmful conduct by participants in the student loan industry, ranging from federal contractors who are paid to manage people’s student loans to new entrants, often in the private student loan business. “It has always been true,” Kaufman said, “that there is a whole shady world out there of lenders and creditors who will offer financing at even riskier and more lightly regulated for-profit institutions of higher education.” Parent Plus loans are typically more affordable, have more generous terms and come with all of the protections of federal student loans, unlike private loans and income share agreements, Kaufman said. (See The Income Share Alternative). Income-contingent repayments applicable to Parent Plus loans provide a safety net for borrowers who are low-income or lose a job. Interest rates are typically lower, he said, adding Parent Plus loans are fixed at

ot egelloc tahw dna rojam a gnisoohC la“Student icnanfi tnatroploans mi tsom are eht era dnetta .ekam reve lliw elpoep tsom snoisiced

now the second

largest area of consumer credit

behind mortgages.” –Ben Kaufman

7.54% while private student loan borrowers are typically taking on loans with interest rates in excess of 10%. Credit checks, he said, are also more lenient for Parent Plus loans. “The rate of growth of federal student loans is slowing, but the rate of growth of private student loans is accelerating,” Kaufman said, “which means that the student loan portfolio across all fields is becoming riskier.” Research shows that students will not exhaust their federal student loan availability before turning to private loans. Kaufman and others project $140 billion in private student loans. That’s not a number

that’s published by any government agency but one based on overall student debt and federal student debt. However, Kaufman did reference MeasureOne, a consumer data platform that calculates private student loan debt. If consumers must take out a loan, Kaufman advises they keep records of all their payments and communications with the companies. He warned consumers to be wary of the information provided by lenders. “We regularly see companies that own the loans losing people’s records, mistaking people’s records, misreporting their credit or their payment,” Kaufman said. “Unfortunately, borrowers just have to be on top of that.”

$1.7 trillion OUTSTANDING FEDERAL STUDENT LOAN DEBT IN Q1 2022 Many of the leading private loan providers, Kaufman said, have been caught overcharging borrowers and facing settlements with the Consumer Financial Protection Bureau related to issues with their servicing. He characterized student loan borrowers as people in every age group and in every corner of the country and of every race. Older borrowers often have to cosign for loans for their kids and their grandkids, and they’re defaulting and struggling, he said. “We are increasingly going to see people dying with student loans,” Kaufman said. “We see it already, but it is going to become much more prevalent.” If someone dies before paying off a federal student loan, it’s considered non-recourse debt. However, if a private loan cosigner dies, the lender will often accelerate the balance of the loan, meaning the entire balance may be owed immediately by the other cosigner. When it comes to student loan debt forgiveness, Kaufman believes it’s the right place to start correcting the situation. “It is clear to us that choosing to have a debt-based higher ed system has generated all but immeasurable carnage on people’s financial lives with reverberations across the families, the communities, the entire country,” Kaufman said. “With inflation rising and people’s pocketbooks feeling the weight of a slowing economy, we can think of no better intervention than to offer people relief on this debt.”

The Income Share Alternative Purdue University President Mitch Daniels has been a pioneer in introducing income share agreements (ISA) as an alternative for funding a college education. “Investors, the university and foundations front the money, and the student signs a contract to pay a certain percentage on a basis of income after graduation,” Daniels told Luckbox. “If they don’t get a job, they owe nothing.” The risk shifts away from the student and provides equity as an alternative to debt, he said. It fixes the student’s obligation and ties it to income. He recommends an ISA instead of a subsidized federal loan or a private student loan. But others remain skeptical of ISAs. “It sounds elegant on paper but proves to be more complicated and expensive than anybody, and especially Mitch Daniels, wants to admit,” said Ben Kaufman, director of research and investigations at the nonprofit Student Borrower Protection Center. Some students who signed ISA agreements reportedly felt tricked into using a product they didn’t understand, he noted. His organization has written to the Federal Trade Commission and the U.S. Department of Education to express concerns about the legality of the structure and execution of the program. However, Purdue officials said the university has not been contacted by any federal agency about these assertions. “Most borrowers thought that Back a Boiler-ISA Fund was like a philanthropic venture,” Kaufman said. “It is a private student loan program that generates a return on capital for investors, including hedge funds and wealthy individuals and institutional investors.” The Purdue Research Foundation administers the ISA with the “school as lender” exception under the U.S. Department of Education’s preferred lender rules, according to Trevor Peters, Purdue senior communication specialist. “It is the funding provider not the student who bears the downside risk of an unfavorable job market, a not-so-lucrative career path, or a life event that takes one out of the labor force,” Peters said. August 2022 | Luckbox

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THE COLLEGE MYTH

–– Author and entrepreneur James Altucher argues a bachelor’s degree isn’t the best choice for everyone, and he offers alternatives by James Altucher

give up. I can’t convince my kids not to go to college. I’ve tried all the usual statistics: • Student loan debt you’ll never be able to pay back. • For the first-time ever, greater than 50% of the unemployed have college degrees. So, that whole myth of “you can’t get a job without a degree” is over. • You don’t learn anything in college that you can’t learn on your own. • You can get a five-year head start on your peers if you give up on college.

––

None of that works. The myth is too strong. I had to fight harder. So, I wrote the book 40 Alternatives to College. I found out a lot of people who were criticizing me didn’t have calculators. A lot of people, for instance, said that “starting a business costs money” —one of my alternatives. But they didn’t compare it to the cost plus the opportunity cost of college. The last business I started required about $2,000. The last undergraduate degree I got cost almost $100,000. If readers pursue any of the alternatives listed here, they will no longer buy into the societal myth that you have to go to college to be happier and more successful. And it’s not about money. Meeting the challenges will make them healthier, more creative and wealthier. And none of the challenges require that much money. People have a huge attachment to the “fact” that college is a part of life, the same as birth, marriage, parenting and death. It’s not. It’s a relatively modern invention. Mainstream Americans have had that idea for about 50 years. Unfortunately, college administrators have abused this modern invention so much that the next generation of kids we gradu-

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Other Altucher Alternatives: DO ANYTHING YOU WANT FOR ONE YEAR MASTER A SPORT WRITE A SCRIPT FOR A MOVIE DIRECT A DOCUMENTARY AUDITION ON BROADWAY FOR A WHOLE YEAR VOLUNTEER TO GARDEN AROUND YOUR NEIGHBORHOOD

ate will be mired in debt and won’t have the skills required for basic jobs. Let’s not forget that nobody learns how to be a doctor in college. That’s pre-med. They learn a little in one or two years of medical school, but then they really learn when they are residents in actual hospitals. And with the debt, insurance, and the burdens the government place on doctors, how will they ever pay down their debt? The system needs to change. What follows are viable, cheaper alternatives to college that provide an education and a path to fulfillment. They’re the seeds of opportunity.

Start a business

Not everyone is meant to be an entrepreneur. I agree with that. Failure is a horrible thing. But we all face it in one form or another throughout our lives. There’s nothing wrong with an 18-year-old failing and learning from it. But being an entrepreneur teaches you how to form ideas and how to sell those ideas to investors, customers, and employees (if you have any). It teaches you a lot about managing limited resources, such as money and

labor. It also teaches you about negotiation execution and many other things not taught in college. This is the college of the streets. And when you have to eat what you kill, you learn quickly. Doesn’t it cost money to start a business? Yes. But it’s much less than the costs of college. Plus, the costs of starting a business are going down precisely when the costs of going to college are going up. I started my last business, Stockpickr, for $2,500, and I probably could’ve started it for less. I made my investment many times. And that was five years ago. It would be cheaper now because the internet has leveled the playing field.

Master a game

What’s your favorite game? Ping pong? Chess? Poker? Mastering a game builds discipline, and provides opportunities to socialize with people of all ages and backgrounds who share similar passions. It helps develop the instincts of a killer without having to kill anyone. Nice! Mastering one game teaches how to

Excerpted and edited for brevity with permission from James Altucher, 50 Alternatives to College.

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“master” in general. This is an incredibly useful skill, particularly if you can do it for cheap. A chessboard and some chess books cost much less than a college education.

Evaluate becoming a lawyer

Work as a paralegal, do it for free for a year and see what really goes on in the law firm. Watch those lawyers working 80 hours a week, sleeping in the office. See the firstyear associates come in with huge debts to pay only to find themselves in rooms filled with boxes of boring documents.

Be job ready in 3-6 months. Google Career Certificates

Consider these alternatives to college:

• MIT Open Course Ware • The Open University • University of California Irvine OCW • Harvard Medical School • Open Yale Courses • Stanford Engineering Everywhere • Google Code University

ot egelloc tahw dna rojam a gnisoohC laThe icnanfinext tnatropgeneration mi tsom eht era dnetta .ekam reve lliw elpoep tsom snoisiced

of kids we graduate

will be mired in debt and won’t have the

skills required for basic jobs.

ILLUSTRATION: SHUTTERSTOCK

Take a job

Yeah, that’s right. Why wait until age 23 when you’re $200,000 in debt? Take one now when you’re free of debt and see what happens. Doesn’t matter where. Be the janitor at a McDonald’s. You’ll learn how to work. You’ll learn about customer satisfaction. You’ll be forced to deal with people who are not like you (and you might not even like). These skills aren’t taught in college, and many people learn them too late in life. Not only that, a job has two other benefits: • You rise in the organization and make a lot of money • You can see where the gaps are in an industry, which will give you ideas on how to start a business. James Altucher has started and ran more than 20 companies, and is a bestselling author, successful entrepreneur, angel investor, chess master, host of The James Altucher Show podcast, and the founder of Notepd.com. @jaltucher

Google Career Certificates Google has been offering career certificates in technology, retailing, finance, energy and other fields since 2018 through the Grow with Google initiative. Google develops the certificate courses to “equip learners with knowledge and real-life problem-solving skills to be successful in any entry-level job,” according to the company website. The IT industry recognizes Google certificates as valid credentials, and graduates of that course were earning an average of $67,881 annually as of June 28, according to ZipRecruiter, a website that connects job seekers with employers. Signing up to earn a certificate doesn’t require work experience, and the company doesn’t charge for a seven-day trial. After that, the classes cost $39 a month. Students work at their own pace and finish the course in three to six months if they study about 10 hours a week. After completing the Google Career Certificate, graduates have access to a platform to apply for jobs. The site offers 1.5 million in-demand job openings, and 75% of graduates report progress in their careers within six months of completing the course. Author James Altucher is a big fan of this program as an alternative to college, particularly since Google aligned with 120 other companies that accept job candidates who don’t have a college degree but do have a Google certificate. “Google offers these Google certificate programs for almost no money at all, and 82% of the people who graduate from one of these global certificate programs get jobs with an average starting salary $20,000 higher than the average college graduate starting salary,” Altucher said, “and you don’t need a college degree for that.” August 2022 | Luckbox

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HIRE EDUCATION –– Carving out a decent career doesn’t require spending four years and a king’s ransom in pursuit of a bachelor’s degree by Ed McKinley

C––

associated with it,” said Steve Klein, center director at Education Northeast, a nonprofit that provides schools with research, evaluation and technical assistance. “In the past, it typically was a place where you put kids who didn’t function in a traditional academic, ‘sit tsom eht era dnetta ot egelloc tahw dna rojam a gnisoohC and get’ kind of classroom.” .ekamthe reve lpast, liw elpoe[vocational p tsom snoisiced laeducation] icnanfi tnatropmi “In CTE continues the vo-tech tradition of helping typically was a place where you to prepare young people for put kids who didn’t function in a honorable and often wellpaid manual work as plumbtraditional academic, ‘sit and get’ ers or electricians, while also kind of classroom.” becoming broad enough to give students a taste of what –Steve Klein, center director at Education Northeast might lie ahead for them in prestigious fields like engineering and healthcare. world of work, teaches high schoolers how “More and more educators view CTE as abstract academics apply to real jobs, helps this huge umbrella,” noted James Greenan, college students understand where their chair and professor of CTE at Purdue majors may take them in life, and refurUniversity. “CTE encompasses all careers.” bishes older workers for new careers. Besides prepping a student for a job, “They’ve moved away from using the word firsthand experience in the workplace can ‘vocational’ because there’s a lot of baggage also have a fortuitous side effect, Klein said.

It can show high school or college students that they’re not cut out for a particular line of work. “Learning what you don’t want is better than learning what you do because it saves you a lifetime of misery,” he maintained. In one unfortunate example, his old roommate didn’t admit to himself that he really had no interest in legal technicalities until after he’d wasted two years in law school and run up $80,000 in debt.

A coherent system

At first glance, CTE can seem like a patchwork of uncoordinated classes and training sessions offered by schools of every description—not to mention the apprenticeships operated by trade unions. But some schools are working to introduce coherence. Once students settle on their career path, Utah State University Eastern provides a clear, logical avenue toward higher levels of study in job-oriented fields, said Gary Straquadine, the institution’s associate vice president for CTE. It’s an unusually well-

PHOTO: SHUTTERSTOCK

areer training has expanded so much lately that it’s creating alternatives to expensive four-year college degrees. Fifty years ago, vocational-technical education primed high school students for jobs like meat cutting or auto mechanics— almost anything that took some skill but didn’t require a college degree. Students took practical classes like home economics or shop. They spent part of the school day on the job, getting real-world work experience at local businesses. But now, career-oriented schooling has grown into something nearly unimaginable half a century ago. Today, it’s called career and technical education, or CTE, and it introduces middle school students to the

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O O O

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its ear.” –Gary Straquadine, Utah State University asso ciate vice president for CT E

a gnisoohC dna rojam w h a t netta c o l l ot ege maehstsereasd sop i tm mo p o r t a c ed n t n fi e i n o a TE laic“nC om sn sic elpoepsts.” w i l l e v e r .ekam career

planned “stackable” approach with one program building upon another. In other words, students can pursue CTE study in any of about 30 areas that lead to a certificate in a year or less, an associate’s degree after two years or a bachelor’s degree after four years. They can finish a course of study, work for a few years, and then return to pursue the next step, Straquadine noted. To help students get started in life, the school somehow manages to charge lower tuition for certificate courses. “We’ve flipped higher ed on its ear,” Straquadine said of the CTE curriculum. The school has tossed aside the usual pattern of taking general courses in the first two years of college and specialized courses in the latter two years. Instead, students in the USU Eastern system concentrate on the job-oriented learning first, and the theory behind it comes later. In one example, students earn a certificate by spending two semesters focused narrowly on the skills needed to work as a CNC (computer numerical control) machinist. If they pursue an associate’s or bachelor’s degree, they learn the math, physics and chemistry underlying CNC machining. In the CNC machining major, a third of USU Eastern students don’t go beyond a certificate, but a third eventually go farther academically. The other third get “lost” when they change careers or otherwise drop out of sight of the school’s data keepers. Businesses are taking note of the USU Eastern CTE programs. They’re coming to realize, for example, they can meet their needs by hiring a cybersecurity worker with an associate’s degree for $45,000 a year, instead of one with a bachelor’s for $80,000, Straquadine said.

tend to bring their own tech skills with them, Purdue’s Greenan said. Whatever their background, CTE majors find plenty of opportunities to help young people, he noted. After all, CTE reduces the number of students who drop out after a couple of years of college with nothing to show for it but $22,000 of debt, Straquadine said. That’s why he refers to CTE as “hire education, not higher education.” Still, CTE’s not perfect. Introducing it too early and too stridently can stifle students. In Western Europe, which is becoming notorious for stunting kids through early placement, tests can steer a 13-year-old into a life as a baker, Straquadine noted. Plus, schools can go too far in allowing businesspeople on CTE advisory boards to dictate academic policy, he acknowledges. Yet, CTE offers hope. “It can be a strategy to help all students gain a better sense of what it means to work and what skills they would need to be successful,” said Northwest Education’s Klein. “To a question of what percentage of students would benefit from CTE, my response to that would be all of them.”

CTE as a major

Meanwhile, CTE has become a field of study onto itself, and students can pursue a bachelor’s, master’s or doctorate. The courses don’t focus on technical subjects but instead concentrate on professional and administrative skills. CTE majors, who range from pilots to psychologists,

all enan, chair –James Gre of CTE or and profess ersity niv at Purdue U

A 5-star Career The University of Utah Eastern, an institution that works hard to put students on career paths, rates occupations by assigning them stars for high wages and high demand. The field of diesel mechanics, for example, rates five stars. Cosmetology earns three stars in general, but wages rise significantly with specialization in lashes and nails. Familiarity with the rewards of specific jobs is an important part of high school and college career and technology training, or CTE. It’s the successor to the vocational-technical training that began in secondary schools. UTU Eastern offers career paths in 30 areas that fall into three categories: business, healthcare and general. Jobs in the latter group are usually associated with coveralls and safety glasses. CTE PARTICIPATION, 2019-2020 SCHOOL YEAR

7.5M HIGH SCHOOL STUDENTS

3.5M POSTSECONDARY STUDENTS

–Advance CTE Who Controls CTE?

CTE:

Venerable and All-encompassing It’s fair to say today’s career and technical education, or CTE, evolved from fairly recent vocational-technical classes. But its roots reach deeper: The original mission of land grant universities was to teach mechanics and agriculture. Those schools began appearing on the American scene as early as the 1860s. Plus, one can argue that every class taught anywhere at any time qualifies as a vocational class. That’s because most people eventually have to get a job.

Politicians of almost every stripe can agree on at least one issue: They concur that government should help underwrite the cost of career and technical education, or CTE. Nearly $1.3 billion in annual federal CTE funding flows to the 50 states, accompanied by a few requirements and standards that give Congress some say in how it’s administered, said Kate Kreamer, deputy executive director of the Advance CTE, an association of state CTE directors. But most of the power to administer CTE resides with the states, colleges and local governments. That means CTE initiatives and opportunities vary considerably, Kreamer noted. August 2022 | Luckbox

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THE NEW REALITIES OF VIRTUAL LEARNING –– The $1 trillion online education market is benefitting from the pandemic, the great resignation and a thirst for lifelong learning. The trend appears likely to continue.

PHOTO: SHUTTERSTOCK

by Elizabeth Owens-Schiele

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he pandemic forced students and professors online, joining dozens of educational resource companies already there. The resulting growth of skills-based learning and the gig economy, coupled with the great resignation, could make virtual learning a $1 trillion market by 2025. At the height of the COVID-19 pandemic in fall 2020, an estimated 73% of postsecondary students—14.1 million—were enrolled in at least one distance education course, according to the National Center for Education Statistics (NCES). Of those students, 39%, or 5.4 million, were taking some but not all classes online, while 61%, or 8.6 million, were signed up exclusively for remote learning, NCES said. Institutions ranging from Ivy League schools to local community colleges are turning to online learning to supplement course offerings, expand hybrid learning that combines in-person and online classes, or provide courses for online learners globally. According to NCES, a government agency, more than 97% of public four-year and two-year higher education institutions are offering online classes, and more than 50% of private institutions are following suit. The market seems ripe for growth. But even beyond offering traditional education in a virtual environment, dozens of companies are offering lifelong learning platforms online. Some, like Coursera, 2U, Udemy and Fiverr, are publicly traded and are acquiring smaller niche curriculum platforms. This online growth spiked during the pandemic as people trapped at home looked to gain knowledge, learn a new hobby or train for a side hustle. It happened just as many high school graduates looked at alternatives to college. Some 662,000 fewer students enrolled in undergraduate programs in spring 2022 than a year earlier, a decline of 4.7%, according to the National Student Clearinghouse Research Center. As of January 2022, only 51% of Gen Z teens reported an interest in pursuing

––

a four-year degree, down from 71% from May 2020, according to a recent national study by the ECMC Group of more than 5,000 high school students between the ages of 14 and 18. Learners of all ages are turning on their computers to take skills-based classes they often find affordable, accessible, inclusive and flexible, said Chase Jarvis, CEO of CreativeLive, which offers 2,000 online

ot egelloc tahw dna rojam a gnisoohC la“Online icnanfi tnatlearning ropmi tsom ehhas t era dnetta .ekam reve lliw elpoep tsom snoisiced democratized education

and is allowing anyone with access to the internet to keep pace with technological advances and gain the skills they need to start or advance their careers.”

–Stephanie Stapleton, senior vice president, Udemy Business

classes in creative and business categories to more than 10 million learners. “It took the pandemic to really take online learning to the masses and make it mainstream,” he said, “and it forced us to innovate in ways that we had not, in rather uncomfortable ways over a short period of time, to satisfy learning requirements.” Some of CreativeLive’s business classes are taught by such entrepreneurs as Richard Branson, Mark Cuban, Daymond John and Brene Brown. It was acquired by Fiverr in October 2021. “Now, because of that innovation, it’s become a lot more dynamic, it’s become a lot more diverse, it’s become more inclusive, it’s allowed people to work from home or remote,” Jarvis said. “Both colleges and what I call lifelong learning—the relationship between obtaining a

61% OF 14.1 MILLION POSTSECONDARY STUDENTS WERE ENROLLED EXCLUSIVELY IN DISTANCE COURSES THE LAST TWO YEARS.

–National Center for Education Statistics skill through any means and putting that skill to use in the marketplace—it helped transform that.” Lifelong learners are the target of companies like CreativeLive, Fiverr, Udemy, Skillshare, Coursera, MasterClass and others. They are individuals willing to invest in their own professional and personal growth, using online learning to gain new skills and prepare for whatever comes next. More companies are also offering these classes as a job benefit to help employees master new skills. Although many of these courses are not accredited like traditional colleges and universities, they’re skills-based so after completion learners can promote themselves as independent contractors. The course fees are minimal, typically around $150 annually for subscription access to

$152.2M UDEMY Q1 TOTAL REVENUE, UP 22% OVER LAST YEAR, AND UDEMY BUSINESS IS UP 77% YEAR OVER YEAR. ANNUAL RECURRING REVENUE WAS UP 80% TO $279.6 MILLION.

–Udemy

thousands of classes, instead of $20,000 or more annually to attend college. “Not everyone can afford to go to college or university and in the post-pandemic era, people are focusing more on practical, workplace skill development,” said Stephanie Stapleton, senior vice president for customer success at Udemy Business. Traditional classroom learning can’t keep

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up with rapidly evolving technologies and the skills needed to stay ahead, she said. “Online learning has democratized education and is allowing anyone with access to the internet to keep pace with technological advances and gain the skills they need to start or advance their careers,” Stapleton said. Udemy serves 52 million learners worldwide in over 75 languages and 196,000 skills development courses led by 68,000 instructors in areas that include technical, leadership, functional and personal well-being. Udemy Business offers 16,000 courses for employee training and development worldwide. Skillshare, another online learning platform, offers 40,000 classes covering creative topics with learners who turn around and teach classes on the platform. “We’ve got 10,000 creators who are building a livelihood on Skillshare, with our top earners pushing $1 million a year on our platform—not bad for a little side hustle,” said Matt Cooper, CEO of the privately owned Skillshare. The great resignation of people switching career paths also contributed to the company’s growth, he noted.

ot egelloc tahw dna rojam a gnisoohC la“Were icnanfi tn atropmi ttoward som eht era a dnetta moving .ekam reve lliw elpoep tsom snoisiced skill-oriented universe

where the future looks a lot more like a portfolio

than a resume.”

–Chase Jarvis, CEO, CreativeLive

“When the economy sucks, people go back to school, they reinvest in their personal skills and their knowledge,” Cooper said. “I think we’re kind of sitting at the juxtaposition of a lot of important things going on.” The short classes, he said, are not academic, but they’re functional and hands-on. The focus is on information, access, affordability, flexibility and giving learners the leverage they need. “I don’t think traditional education is going away,” Cooper said. “But there’s no easy way for me to go back to the traditional model to stay up to speed and keep up with all the trends, such as if you want to learn about blockchain and NFTs. You come to

Mark Cuban

these online learning platforms like Skillshare to learn those things.” Schools are responding to those trends. Take the example of Arizona State University in Tempe, Arizona, which has been an innovator and leader in online education for more than a decade. Beyond its ASU Online endeavors, ASU has also developed a variety of global online extension programs. Its Universal Learner courses are firstyear college classes taught by ASU faculty and served more than 65,000 students of all ages globally during the 2021-22 school year, according to Rachel Reed, ASU student success designer. There are no prerequisites and transcripts are optional. Students pay $425 only if they choose to convert the course for college credit transferable to the college of their choice. ASU also has expanded its Learning Enterprise division to serve students K-12 to mid-career to post-retirement. “The Thunderbird School of Global Management launched the Francis and Dionne Najafi 100 million learners global initiative,” said Tim Summers, executive director of Third Horizon Initiatives for Arizona State University where he is the founder and lead of Pocket, “which aims to offer online, global education in 40 different languages across the globe, at no cost to the learner. It’s just one example of the kind of massive global learning initiatives that ASU is embarking on.”

Purdue University in West Lafayette, Indiana, also was an early entrant into the online education market for higher

–– ASU in Your Pocket Arizona State University has been at the forefront of technology-enhanced teaching and is developing a “Pocket” app for students to take their learning wherever they go. “To assist learners along their journey, we’re developing Pocket, a technology solution that enables learners to privately and securely capture and store the holistic evidence of their learning—what learners create in any format,” said Tim Summers, ASU’s executive director of Third Horizon Initiatives and founder and lead of Pocket. Users can then share what they’ve learned with employers, he said. Learning evidence fits into the Pocket, including transcripts, papers, diplomas, digital credentials and badges, capstone projects, art, videos, performance pieces, experiments, discoveries—and the list goes on. “It can all be stored in a secure, verifiable and instantly accessible Pocket,” Summers said.

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education learners. Under the leadership of President Mitch Daniels, Purdue University Global was born but it was also integrated into the undergraduate curriculum even before COVID-19. Most Purdue students take at least one online course or a hybrid course which includes in-person and online study. Degrees and certificate programs are also offered at Purdue through online education. “It is expanding higher ed, giving a second chance to people who tried and didn’t finish college before or never tried,” Daniels said. “One of my most moving moments was the commencement of Purdue Global where you will see mothers and daughters graduating together, elderly people, folks who never expected to achieve that credential and what it might mean to them.” At Purdue and other universities, students who are on the fast-track to graduate in three years will often take online classes throughout the summer months to achieve their goal. But not everyone was a fan of online learning when the country shut down during the COVID-19 pandemic and universities moved their courses online but

expected. “Except for targeted information delivery or special needs delivery, I don’t see higher education adopting a digital model broadly because students don’t like it and it’s not effective,” Detweiler said. “For specialized education and for certification programs, I think it’ll take an even greater role.” But James Altucher, author of 20 books, including 50 Alternatives to College, characterized online learning as “amazing.” “There’s so much more variety, so many more courses, and I can learn more quickly, more cheaply,” Altucher said. “I remember Entrepreneurs like Richard Branson (above), Daymond John (below) and Mark Cuban (opposite page) are among the celebrity instructors on online education platforms like CreativeLive.

51% OF GEN Z TEENS ARE INTERESTED IN PURSUING A FOUR-YEAR DEGREE, DOWN FROM 71% IN MAY 2020.

PHOTOS: REUTERS

–ECMC Group often maintained high tuition costs. “The pandemic has turned many people off online learning, and you can understand why—watching stodgy traditional universities try to bumble their way through Zoom classes was a spectacle to behold,” said Preston Cooper, founder of the nonprofit Foundation for Research on Equal Opportunity. “But done thoughtfully, online education can be quite effective,” he continued. “I think it’s most useful as a supplement rather than a replacement for brick-andmortar instruction. Online education opens up lots of new classes for students to take even if their campus doesn’t offer those courses in-person. You can combine the new frontiers of an online education with the benefits of an in-person education if you do it right.” However, not every college and univer-

sity is doing it right, according to some education experts. “Student satisfaction with online learning is actually extremely low, and measures of the effectiveness of higher education online is actually also pretty low,” said Robert Detweiler, author of The Evidence Liberal Arts Needs and managing director of higheredimpact.org. Detweiler sees colleges and universities cautiously adopting online methods to connect with students unable to attend classes in person full time. He also believes the costs of delivering online education have not been as low as some universities may have

just as much from these courses as I do from a college course I might not have been interested in but was required to take.” Altucher sees the thirst and need for learning at any age contributing to the explosion of online learning, which he predicts will change the landscape of college. “The effect on higher education is that it’s slowly convincing students and corporations that you don’t always need a college degree—it’s just as good if you get something like a Google certificate at Coursera,” Altucher said. “I do think it has a long-term effect that fewer people will go to college and more people will do online learning.”

August 2022 | Luckbox

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7/21/22 3:13 PM

BY 1893 INSPIRED

F E W H A S T H E S P I C E . H A N D - M A D E I N S M A L L B ATC H E S, U S I N G A M A S H-B I L L INSPIRED BY WHISKEY ’S PRE-PROHIBITION GOLDEN ERA. F E W COMBINES A HIGH RYE CONTENT & PEPPERY YE A ST TO MAKE A UNIQUELY SPIC Y BOURBON.

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trends life, luxury & the pursuit of happiness

RECORD HIGH

Schools of Rock From Guitar Hero to online classes and from apps to in-person jam sessions, musicians plug into curricula that get them amped up By Kendall Polidori

PHOTOGRAPH: REUTERS/KAI PFAFFENBACH

rowing up in a musical family, Matrisha Armitage felt pressured to follow a traditional path in music education. The judgment of others led her to view music as a chore instead of her passion. Just the same, she and the young man who later became her husband started a high school band— something meant to be fun. Armitage wanted to create music freely and help others do the same. Nearly a decade later, she formed the nonprofit Music Education & Performing Arts Association, which uses group-led jam sessions to support people of all ages and abilities in performing music and arts in safe spaces, free of expectations. “How we’re teaching seems to work for everyone,” Armitage said. “Teaching is really just being super supportive of helping students know how to find these resources on their own. I think every music education moment needs to be structured for that student.” Music education is not one size fits all. With technological advances, the way musicians are teaching and learning the craft is dramatically changing musicians’ skills. From video games to online classes and from self-taught apps to traditional music schools, students tune in whatever way feels comfortable to find their groove.

A visitor plays Guitar Hero during the Gamescom fair in Cologne, Germany.

August 2022 | Luckbox

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trends

SCHOOL OF ROCK

Back to school School of Rock, the global music performance company serving more than 55,000 students, also created its own app as a tool for individual at-home practice. It includes over 1,000 songs, warm-ups, feedback scores and exercises. “It has been a game changer,” said Sam Dresser, School of Rock’s chief innovation officer. “There’s now an opportunity to not replace what we do in person, but to augment and enhance it.” Aside from apps like GarageBand, MuseScore and Flipgrid, musicians are using programs like Coach’s Eye—a sports video

307

schools in 14 countries

SCHOOL OF ROCK

instructors

55.4K

students enrolled globally

analysis app—for educational purposes. Judith Bowman, professor emerita at Duquesne University in Pittsburgh, said educators are using the app to replace in-person performance critiques. “I talked to one instructor who felt it was important for her students to learn how to teach online,” Bowman said. “It was for an instrumental music methods class. So, she actually had a conversation with the athletics director at her school who was using Coach’s Eye.” On that app, students can record video and audio, and instructors can analyze the student videos and offer feedback by drawing lines on the video and providing voiceovers. Most importantly, social media has drastically improved artists’ reach. Emily Sangder, a graduate and now full-time employee of Berklee College of Music in Boston, said technology has created an oversaturation of content, but it also provides opportunities that weren’t there 10 to 15 years ago. With a basic understanding of production software and programs, independent musicians can now record and produce an entire album from the comfort of home.

“ Technology has been a game changer. There’s now an opportunity not to replace what we do in person but to augment and enhance it.”

— Sam Dresser, School of Rock’s chief innovation officer

4,586

Online sound Music education looks different for everyone today because of the shift to remote learning spurred by COVID-19. “It created better distinctions between those subjects that need intensive, one-on-one or small-group training, such as private lessons, versus music composition or anything else that can be taught to a larger group,” said Sebastian Huydts, interim chair for the music department at Columbia College Chicago. Meanwhile, Bowman, who is also the author of The Music Professor Online, said online lessons have proven helpful but that the real magic of music is in person, in the classroom. Knowledge- or text-based courses transfer well, but it’s nearly impossible to conduct performance-based classes efficiently on the internet, she said. “With ensembles, that really turned right upside down with the pandemic,” Bowman noted. “I don’t know how you do ensembles online.” However, online education has helped strengthen the effectiveness of in-person learning. Both ways of teaching and learning music can be effective but have different outcomes, she said. Feel the music For 17 years, Music To Your Home has emphasized hands-on music education. Lessons on a plethora of instruments were strictly in-per-

PHOTOGRAPH: MICHAEL DELEON; ILLUSTRATION: SHUTTERSTOCK

Tech hero In 2005, the music rhythm video game Guitar Hero revolutionized the way songs were purchased and downloaded during the iTunes era. Guitar Hero and Rock Band posted combined sales of over $105 billion in 2007—more than all of the digital sales for iTunes and ILK. Aside from the game persuading the biggest band in history— The Beatles—to go digital, Guitar Hero influenced younger players to pursue real instruments. Although Guitar Hero wasn’t necessarily a music education platform, its success shed light on the role technology plays in the evolution of consuming, teaching and learning music. Today, iTunes no longer dominates the digital music market—new apps bring simple music lessons to our fingertips, phones and tablets carry online sessions, YouTube provides endless video tutorials, and Tik Tok offers quick music tips. “Technology definitely changes everything,” said Shelle Soelberg, founder of the music education company Let’s Play Music. “There are more shareable resources now than ever before. It’s amazing to be able to distribute that type of work.” When Soelberg started the company 23 years ago, she used cassette tapes. Now, Let’s Play Music has its own app delivering music directly to students.

School of Rock offers in-person, performance-based lessons.

Luckbox | August 2022

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son at its base in New York. The pandemic changed that, and the school now enables students from all over the globe to take lessons from the company’s 100+ educators, all professionals in the music industry. Despite the new online reach, Vincent Reina, owner and founder of Music To Your Home, said students learn music better in interactive lessons. The idea comes from the Orff Approach created by German composer Carl Orff and colleague Gunild Keetman in the 1920s. It grew from a child’s world of play that combined music, movement, drama and speech. Soelberg of Let’s Play Music said the key to music education is to start lessons at an early age and focus on body movements like physically placing musical notes on a large, blank music chart. It should also incorporate the physical reaction to playing, holding or even hearing instruments live—like feeling an amplified bass pumping in your chest at a concert. “The real thing is important,” Soelberg said. “When [someone] plays and has an interaction with an instrument, they play the tone, it goes in their ear and they get this auditory feedback and they feel the vibrations in their hands.” That teaches the ear and the mind and helps students develop skills sooner by touching the instrument and playing it themselves. Professionals vs. academics One of the biggest developments in the music industry over the past 20 years has been musicians’ independent approach, leaving formal music education as an option, not a necessity. There has been an influx of successful selftaught or independent artists, but technology and tools enable music education through many avenues. Huydts, a classically trained pianist and acclaimed composer, said someone can claim to be self-taught and still learn from sources like YouTube tutorials. “Going to school [for music] is just a shortcut to an enormous amount of information,” Huydts said. “A lifetime is not enough these days to reinvent the wheel, though.” It’s important for an older generation of musicians, who are educated in music history and have witnessed the advent of technology to teach a younger generation of musicians to “bake their own bread, ” Huydts said. When a musician attends a music school like Columbia College Chicago, The Juilliard

Famous Self-taught Artists David Bowie Prince B.B. King Jimi Hendrix Joni Mitchell

School or Berklee College of Music, they’re learning directly from professionals. But students should not conform to a curriculum— the curriculum should conform to the student. The same goes for education outside colleges. Music To Your Home’s teachers are accomplished musicians who “set the tone for a lifelong interest” in music. Not all musicians make good educators, Reina said, and they must have a bag of tricks ready at any moment. The best part: The professionals also learn from the students.

Soelberg said this is where the question of “nature versus nurture” comes in. Hendrix, for example, had an immense amount of nature, meaning he was born to be a musician. “I mean, look at Mozart, too,” Soelberg said. “He became fantastic even though he was taught in a way that’s not great.” Wolfgang Amadeus Mozart was 4 years old when his father began teaching him music. It happened sitting at a desk, with little or no body movement and physical learning. Plus, he never attended a formal music school.

Tech makes it easier for artists to become more versatile—not only writing music but also learning to record, produce and master their sound. Today vs. yesteryear There’s no denying the role of electronics in today’s music. In Sangder’s experience at Berklee, tech makes it easier for artists to become more versatile—not only writing music but also learning to record, produce and master their sound. So, does that mean today’s self-taught musicians have become more accomplished or skilled than those of the past? Think Jimi Hendrix. He never learned to read sheet music but picked up a guitar at a young age, playing upside down and dealing with the strings in reverse order because he was left-handed. He made himself one of the most influential guitar players in history—and he learned by doing.

But music education has come a long way from the pen and paper approach, according to Soelberg. It’s now widely recognized that an artist needs to connect with music to learn about it. Huydts argues it this way: “It’s a complete fallacy to think that things used to be better—it doesn’t help you create a future. You can have ideals. You can take the best of the past and try to adapt it to the needs of the future. But at a certain point, you have to realize that there’s unstoppable progress built into humanity.” That’s not to downplay the importance of hard work. Dresser of School of Rock said access to information doesn’t directly translate into skill. It comes down to execution, which comes with time and practice.

August 2022 | Luckbox

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trends

ARTS & MEDIA

Get Smart

There’s no shortage of books, documentaries and podcasts with education themes. Here are some of Luckbox’s favorites.

Documentaries

Podcasts

Ivory Tower

Borrowed Future

Ivory Tower explores the contentious question of whether the value of higher education is worth its increasingly exorbitant cost. From community colleges and fouryear universities to vocational schools and online courses, Ivory Tower looks at nearly every facet of higher ed—and its alternatives—through the lens of education as a business. Named one of the best documentaries of 2014 by IndieWire, the film uses real stories of students and parents to paint a sobering picture of the impact that loans and other costs associated with attaining a college degree have on people’s lives. Despite being released in 2014, the film explores challenges and experiences that remain relevant to this day.

Ramsey Network’s Borrowed Future podcast argues that student loans are killing the American dream. It backs that up with nine episodes of hardhitting—and oftentimes hard-toswallow—coverage of the student loan industry and its unrelenting stranglehold on 46 million American borrowers. Exploring topics such as the “traps of higher education,” whether college is even worth it and how to pay for college without taking out loans, Borrowed Future demystifies the student loan industry and presents actionable ideas students and parents can consider before they commit to indebting themselves. Boasting a 4.9-star rating on Apple Podcasts, the show has been met with widespread acclaim. “I wish this was required listening for every high school student,” one listener wrote.

Books How to Write One Song by Jeff Tweedy

Songwriting isn’t a prerequisite for most college degrees, but if it were, Jeff Tweedy’s How to Write One Song would be on the required reading list. The Wilco guitarist’s New York Times bestseller delivers practical advice in a playful, charming tone that makes songwriting seem less daunting—accessible, even. Tweedy kicks things off with an anecdote about how he considered himself a songwriter long before he had ever written a song. But being something is different than doing something, he notes, and everyone is capable of simply being a songwriter. As for the doing part, that’s where Tweedy’s expertise shines through: Exercises, recommendations and motivational reassurances abound. And even if you don’t wind up writing a song, you’ll walk away glad you learned how to.

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Books

The Evidence Liberal Arts Needs Education in the tradition of the liberal arts fulfills a different purpose [than career-oriented instruction]. Rather than focusing only on individual benefit and near-term employment and income, it is designed to benefit both the individual and society over the longer Excerpted from The term. As research has Evidence Liberal found, longer-term Arts Needs: Lives of outcomes for not only Consequence, Inquiry, individual success, and Accomplishment by but also leadership, Richard A. Detweiler, contribution to society, © 2022 Massachusetts cultural involvement, Institute of Technology. life fulfillment, and (See articles on p. 16 continued learning, and p. 18 for more on are consistently Detweiler’s views.) related to liberal arts educational practices. These positive life outcomes are associated with learning in an educational community, developing larger perspectives, experiencing engaging pedagogy, developing intellectual skills, studying a broader span of knowledge, and having a nonvocational major. Indeed, while first job placement and income may be better for those with specialized training, this advantage disappears rather quickly. For liberal arts education, becoming higher educated is not based on the accumulation of facts in a person’s head that may lead to their first job; rather, it is preparation for life success, as opportunities and challenges inevitably change. This liberal arts outcome is accomplished through a comprehensive educational ecology involving a full set of in-class and out-of-class learning experiences. Quality assurance by government agencies or private ratings groups is more challenging in this case: rather than measuring first job salary, quality indicators must examine current educational practices (e.g., degree of faculty and student involvement, span of student learning, engagement with new perspectives) and the longer-term success, contributions and life satisfaction of graduates.

So, what is the value of a liberal arts education? It depends on one’s goal. For the student whose priority is that first job, and for a society most concerned with employability upon graduation, the liberal arts may have only limited value. However, for the student whose goal is a life of consequence, inquiry and accomplishment over the longer term, and for a society concerned with growing and supporting an economically and socially successful democracy, the liberal arts has great value. For two centuries, American-style colleges and universities have been distinguished by their commitment to the common good—to the wellbeing and advancement of both the individual and the society. It is clear that a refocus on the impactful long-term practices of the liberal arts, rather than the Prussianized specialization that is currently in vogue, is essential for the health and longevity of the ideals upon which this nation was founded.

August 2022 | Luckbox

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trends

THE ROCKHOUND

By Kendall Polidori

etalcore is more than just music for the Virginia-based band Dying Oath. For them, the genre is about delivering a message through the energy and passion of body language and facial expressions. The power of emotion drives their live performances. “You can feel what we’re trying to say in the music,” says Mindy Jackson, co-vocalist for the band. “You can see what we wrote in real life and not just things that we made up and put on paper.” Building off influences of 2000s metalcore bands like Avenged Sevenfold, Killswitch Engage, Bullet for My Valentine, Asking Alexandria, Bring Me the Horizon and many more, Dying Oath brings forth the best of what made that era in metal so great: strong elements of melodic death metal. But, they try to do it with a modern view, with a clean male vocal and harsh female vocal combo. Jackson says it’s something “people that enjoyed the 2000s metalcore genre back in the day can still cling to, but it’s also something unique to Dying Oath that people will enjoy and interpret for themselves.” The band, kick-started back in 2018 by lead guitarist Josh Hagee and rhythm guitarist Ryan Endicott, has taken many forms. After playing with a completely different lineup of musicians, the two ventured out to find new members who agreed with what they wanted to do musically. They didn’t find them right away, but Jackson says the band now has its final lineup, which features her, co-vocalist Nestor Idler, drummer Sean Stafford, lead guitarist Josh Hagee, rhythm guitarist Ryan Endicott and bass guitarist Kristen Sawyers. That lineup has played only a handful of live shows together but recently won a fan-vote-based contest, Vote For Your Favorite Band, sponsored by tastytrade, DWPresents and That Zebra Show, despite entering a week later than everyone else. The competition exposed the band to 319,229 viewers, which Jackson says means more than making money. After entering the contest, Dying Oath’s music was played on That Zebra Show’s Twitch livestream. Then each week for a month, fans were sent

The Rockhound bridges the gap between classic rock and today’s music. 46

Virginia-based band Dying Oath is on a mission to resurrect and revamp the metalcore era.

links to vote. Dying Oath came out up with the money for repairs. But on top with 2,572 votes. their fan base quickly rallied, sending “Everything you do helps with donations through the band’s PayPal exposure,” Jackson notes. account to get them back on the road. Because the band doesn’t have a Now that they’re back in motion, recording contract, they’re on their Dying Oath is set to play a few festiown to expand their fan reach. vals during the summer, delivering Although it costs money and eats up their melodic metal tunes. With two a lot of free time, reachvocalists, Jackson and Idler bounce off one ing out to fans brings another with hearty, comfort to Dying Oath. They’re part of a music deep emotional screams community that supplies and smoother melodies, them with an outpouraccompanied by heavy ing of support, and they instrumentation. More rely on word of mouth to After working on a Dying Oath bring in new fans, as well full-length album for the End of Days as DIY mass promotions past year, the band hopes and marketing through to release it in the next their social media pages. few months, displaying a more develThe band also keeps up with a oped and mature sound, Jackson says. separate, more intimate fan page As an independent group, Dying Oath with about 1,000 followers. There, would like to reach the point where they interact personally with fans music could be their full-time gig. If and post exclusive videos and other they don’t, though, Jackson says they’ll behind-the-scenes content not avail- continue making music regardless. able on their public accounts. Start with Dying Oath’s End of “The good thing is that all these Days, a song that shows the progpeople support the band, not only by ress the band is making. Each song coming to shows or buying merch, for them is like a natural evolution. but by helping us by promoting as Pay attention to the emotion the well,” Jackson says. vocalists express and how that’s Their support goes beyond that, countered by sporadic and upbeat though. The band recently set out instrumentation. The band’s goal is in their van to travel and play a few to make listeners feel connected and shows in different states. As a band empowered. on the road, they experienced the Kendall Polidori is The Rockhound, Luckbox’s obligatory van troubles, forcing resident rock music critic. Follow her reviews them to cancel two shows and come on Instagram and Twitter @rockhoundlb.

PHOTOGRAPH: COURTESY OF DYING OATH

Dying Oath Revives Metalcore

Luckbox | August 2022

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trends

CALENDAR

AUGUST 4 National India Pale Ale Day 4-7 Hinterland Music Festival St. Charles, IA 4-7 Windy City Smokeout Chicago 4-21 Melbourne International Film Festival Australia 5-7 Outside Lands Music & Arts Festival San Francisco 5-7 The Chicago Comic & Entertainment Expo 12 National Vinyl Record Day Mid-August Most U.S. Colleges and Universities Begin the Fall Semester 27 College Board SAT Test Date 29 U.S. Open Queens, NY

PHOTOGRAPHS: SHUTTERSTOCK

31 U.S. Student Loan Payment, Interest and Collections Pause Expires

Comics Rule The Chicago Comic & Entertainment Expo, also known as C2E2, has been attracting fans of comics, graphic novels, manga, toys, video games and television since its founding in 2010. Attendees often dress as characters from comics and attend star-studded meetings, discussions, panels and parties centered on comics. It’s one of dozens of comic cons held throughout the United States and around the world, earning host cities billions of dollars in revenue. The phenomenon began in 1970 when about 100 people gathered for the first San Diego Comic-Con, an event that now attracts more than 130,000 attendees. Comic cons have benefitted in recent years from the runaway popularity of superhero films. Spider-Man: No Way Home, which released in December 2021, became the first film to earn more than $1 billion at the global box office during the pandemic. It carries on in a tradition of comicsthemed movies with increasingly impressive production values and growing viewer loyalty that began in 2008 with the Iron Man movie. Here are some of the most popular characters to dress up as at these events: Harley Quinn, Spider-Man, Joker, Batman and Harry Potter.

Standardized testing The Scholastic Aptitude Test, or SAT, was first administered in 1926 and quickly became one of the most commonplace of the standardized exams used to help determine college admissions. But these days many U.S. institutions of higher education are making the SAT an option instead of a requirement. In fact, most American colleges and universities have become “test optional,” meaning they no longer require prospective students to take the SAT or the American College Testing exam, better known as the ACT, according to the Inside Higher Ed website. In October 2021, the higher education platform stated that “more than 1,775 U.S. colleges and universities— three quarters of the four-year institutions in the U.S.—are either test optional or test blind.”

August 2022 | Luckbox

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tastyworks.com/get200 LOVE WHERE YOU TRADE * Starts 3/1/22 and ends 8/31/22. Offer only valid for new tastyworks customers or existing tastyworks customers who have never funded a tastyworks account

prior to 08/31/22. Must be legal residents of the 50 United States (or D.C.), 18 years+. Must have a $2,000 min. funded account for 3+ mos. to qualify. Qualified customers receive a minimum $200 in stock. Stocks randomly selected by tastyworks, and stock value may fluctuate up or down due to market volatility. Offer not valid for non-US residents, IRA or Trust accounts. For additional eligibility requirements and all details, see the Official Terms and Conditions at www.info.tastyworks.com/get200.

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NO.

trades& tactics

Covered Call Basics Neutral to bullish on a stock? Investors can use a covered call without continually checking their portfolios. By Eddie Rajcevic

Generating income via the premium received for selling the calls. This is a popular reason for selling covered calls, and many investors sell them on a regular basis to generate consistent income. It can boost annual returns by several percentage points. Creating a target price for the potential sale of a stock position. Timing the market is incredibly difficult, especially when it comes time to sell a stock position. Selling covered calls can take the guesswork out of setting target prices for stocks because if the strike on the short call is breached, the equivalent shares will be sold at that price. Lowering the purchase price of a long stock position. If an investor purchased a long stock position for $100 per share and sells a call with a strike price of $110 for $1 per share, then the theoretical purchase price or “cost basis” is lowered to $99 per share. Covered calls can mitigate the downside risks associated with holding long stock. Over time, the premium adds up and can reduce the cost basis even further.

2208_TACTICS&TRADES_cheatsheet.indd 2

Let’s walk through an example of a covered call using a popular education stock, Udemy (UDMY). Assuming it has a share price of $11, it would cost $1,100 to buy 100 shares, and an investor could sell a call with a strike price of $15 for approximately $0.45 per share. That would make the cost basis $10.55 per share. What would happen to this position if the stock price moved? The answer is below.

The way it goes Stock movement

Resulting profit/loss

Stock goes up

If stock price goes past the strike price, the P/L would be strike price - cost of shares + premium from the call

Stock goes down

P/L would be the final price - cost of shares + premium from the call

Stock goes sideways, doesn’t change in price

P/L would simply be the premium from the call

Covered call risk and reward Covered calls can mitigate the downside risks of holding long stock, but they do cap the upside potential. $500 250 0 -250

Profit/Loss

ork smarter, not harder. That’s sound advice on the job or at home, but it also applies to the markets. Investors who buy a stock and hold it until retirement can sell covered calls to improve performance without working any harder. Think of a covered call as a two-part strategy consisting of long shares of stock and short calls equivalent to the number of shares held. When determining the number of calls to sell, remember that each represents 100 shares of the underlying stock, and the seller assumes the obligation to sell 100 shares at the strike price anytime before expiration. So, investors with 300 shares can sell three calls against those shares of stock. Covered calls offer three main benefits:

-500 --750 -1000 -1250 -1500 $0

20 Stock price

7/15/22 1:28 PM

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trades&tactics actionable trading ideas

CHERRY PICKS

R I PE & J U I CY T RADE IDEAS

PHOTOGRAPH: SHUTTERSTOCK

2 Trades for the Cautious Gold Bug Here’s how investors can make money from the glittering precious metal, even when it’s declining in value By Michael Rechenthin

any in the financial world think of gold as a safe investment and a counter to the overall stock market. But as equities decline and the economy shows signs of weakness, gold isn’t increasing in price. Instead, it’s doing the opposite. Since April, the price of the S&P 500 and the price of the Gold Exchange-Traded Fund (GLD) have both declined by 15%. That makes it tough being a gold bug—bullishness may have turned to cautiously optimistic bullishness. But investors who still want to be long gold might consider two strategies that can make money when the price is bullish, neutral or decreasing only slightly.

The first strategy Using a short put is a bullish strategy but provides downside protection in case one is wrong about the direction of the underlying stock. It even made money when the price of gold declined between 2012 and 2016. Consider the following strategy: Sell 1x put in GLD using the closest monthly expiration 30 days away.

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August 2022 | Luckbox

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trades& tactics

Choose the strike closest to 30 deltas. Over the past 15 years, a bullish short put has been profitable 79% of all months. The distribution of the profit and loss shows losses can be large but still manageable. Here are the results over the years, with each dot representing a different trade: n Largest profit was $332 in March 2020. n Worst loss was -$1,656 in March 2013. n Median profit/loss was $79. n Average profit/loss was $13.

The second strategy The skewed strangle in GLD: Sell 1x put in GLD using the closest monthly expiration 30 days away. Sell the strike closest to 30 deltas. Sell 1x call in GLD using the same month. Sell the strike closest to 10 deltas. It’s “skewed” because it’s a slightly bullish trade. If it goes up or down too much, it loses money. Selling the call brings in money that can protect against a larger-than-expected move to the downside. Here are the results. Note the largest loss is slightly smaller than the most significant loss from the first strategy, which called for placing only the short put. Usually, short strangles have larger losses than a single position alone, but that’s not what happens when backtesting this strategy: n Percentage of profitable trades was 75%. n The largest profit was $368 in March 2020. n Worst loss was -$1,621 in March 2013. n The median profit/loss was $100. n The average profit/loss was $24.

Price of the gold exchange-traded fund Plot of price

GLD price ($) 200 180 160 140 120 100 80

2008

2010

2012

2014

2016

2018

2020

2022

Source: tastytrade

Profit and loss distribution Historical backtested results

Occurrences 80 70 60 50 40 30 20 10

–1750

–1500

–1250

–1000

–700

–500

–250

250

Profit/loss

Source: tastytrade

Trade small, trade often Trade-by-trade profit and loss

Profit/loss 250 0 –250 –500 –750 –1000 –1250 –1500 –1750

2008

2010

2012

2014

2016

2018

2020

2022

Source: tastytrade

Michael Rechenthin, Ph.D., aka “Dr. Data,” heads research and development at tastytrade and is the lead developer of the free backtesting software at tastytrade. com/backtest. @mrechenthin

Luckbox | August 2022

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trades& tactics

TACTICS: BASIC

Learn the Trade: Start Here These essential resources can help any active investor navigate the equity markets By Eddie Rajcevic

earning about finance on the internet can seem challenging because so many courses and resources are hidden behind paywalls. Plus, would-be online learners have to navigate the distractions of a never-ending stream of pitches for “how to become a millionaire fast and easy.” But persistent seekers of knowledge can avail themselves of dozens of free self-education resources and thus avoid spending thousands of dollars on courses. Investors intent on learning about the past and applying its lessons to the future can begin with FRED. That’s short for Federal Reserve Economic Data, an online database with hundreds of thousands of datasets covering banking, employment, interest rates and mortgages. For those interested in furthering their knowledge of macroeconomic conditions, FRED provides not only lots of information but also tools to help them understand the data. Users can freely download the data or use an API for access to the data with a variety of programming languages.

Market information The next step is to find stock market data, and the Nasdaq website offers an incredible amount of it for free. It includes news, price data, dividend history and anything in-between. In the market activity tab, investors can find commentary and data for stocks, futures, cryptocurrency and exchange-traded funds. The breadth of information on Nasdaq. com may seem intimidating, so start with the stocks tab. It displays valuable information at a glance, including share volume, analyst recommendations and news updates. Nasdaq.com even offers a stock screener

FRED

Federal Reserve Economic Data reveals macro market trends

Nasdaq

Access stock price data and dividend history

investors can use to filter by sector, ratings or market cap and then download the data for further analysis. Advertisements crowd each page of the Nasdaq website but keep this resource free. Just remember that ads can cause bias in stock tips or recommendations. Futures and options Investors will find no better place to begin exploring futures than the CME Group website. They can browse dozens of product groups, from grain to bitcoin. Each futures contract has specs that include restrictions, minimum price changes, how much of the underlying each contract represents and other important information. The minimum price fluctuation is especially important because futures don’t all have the same multipliers, which can make profits and losses confusing. Once investors develop a feel for macroeconomic factors, changes in stock prices and multipliers for futures, it’s time for them to

CME Group

Plan your futures trading future

tastytrade

A one-stop shop for active investors

learn about options. tastytrade.com is an excellent resource for beginners and experienced investors alike because it offers hundreds of hours of video devoted to strategy, management and trade ideas. For visual learners, tastytrade offers live shows with a varied lineup of hosts covering a wide range of topics. Each host has a different style, so there’s something for everyone. By scrolling through the on-demand catalog, viewers can find the shows that fit their interests—anything from the mechanics behind options to how strategies would have performed in the past. tastytrade also offers free courses that teach beginners the basics of options trading. The site’s Trading Concepts and Strategies page describes the intricacies of options. Whether it’s stocks, futures, options or economic data, numerous resources can help investors educate themselves free of charge. Eddie Rajcevic, a member of the tastytrade research team, serves as co-host of the network’s Crypto Corner and Crypto Concepts. @erajcevic11

Don’t let paywalls and distractions derail your efforts to become a successful self-educated investor. August 2022 | Luckbox

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trades& tactics

THE TECHNICIAN

A V E T E RA N T RA D ER TAC K LES T EC HNICALS

Technical Analysis Makes the Grade Are you inclined to question the merits of technical stock analysis? Then consider this history lesson. By Tim Knight

arly in 2021, Luckbox examined the charts of public companies in the education sector in an article called Seven Smart Stocks. Let’s look at how those stocks have fared in the intervening 18 months and see what lessons investors can learn. The paragraphs in italics hearken back to observations from the original article, while the passages in regular type carry current commentary.

Strategic Education Inc. (STRA) had survived some hard times by early 2021, and its stock had begun climbing but not to its former highs. The chart looked vulnerable because the recently completed topping pattern resembled a sequence from 2007-2011 that

preceded a severe decrease in share prices. It was vulnerable indeed and lost 30% of its value. The stock does not have significant support on the chart until approximately the $35 to $40 range, where there’s a substantial block of ownership. GP Strategies (GPX) had increased in price slightly in early 2021, but its chart had been creating lower highs and lower lows—the very definition of a downtrend— for more than half a decade. It seemed that buying would be overmatched by owners liquidating, creating selling pressure from the overhead supply that resulted when the stock was trading in the 20s and 30s. This case differs from the other six. It’s the only stock that increased in price, rising 75%

Delayed descent Strategic Education started to drop in value in mid-2020, while Chegg was still rallying. Chegg peaked in January 2021. CHGG

STRA 180

100

160 140

120 60 100 40

80 60

20 Jan 2020 Apr 2020 Jul 2020 Oct 2020 Jan 2021 Apr 2021

Jul 2021

Oct 2021 Jan 2022 Apr 2022 Jul 2022

Source tastytrade

in a matter of months thanks to a buyout by the London-based firm Learning Technology Group (LTG.LSE). Note that since early 2021, the new parent company decreased 35%. Luckbox reported in early 2021 that Perdoceo Education (PRDO) had closed quite a few of its brick-and-mortar campuses. A topping pattern was first found spanning 2008-2011, which preceded an enormous drop in equity value. The more recent topping pattern might presage a similar decline in price. The chart looked vulnerable. This security did fall in price, but its 19% decline represents a solid performance compared with peers. For having such a well-formed topping pattern, the stock has meandered aimlessly for two years, suggesting it’s far less vulnerable than the original pattern suggested. Luckbox said in early 2021 that Chegg (CHGG) had been doing remarkably well since early 2016, when it climbed about 20-fold. Even in 2020, the stock tripled from March through August. But the trend line broke in August 2019, and what had been support had become resistance. Still, it continued to climb robustly. Luckbox noted, however, that the purpose of the reliable trend line had changed and its cleanness had ended. Chegg, the only U.S. firm profiled here that fell as precipitously as the Chinese companies, has lost 80% of its price. The stock peaked in February 2021, at above $100 but began a downtrend that persists to this day. The most severe shock to the stock took place in November 2021, with an enormous gap lower in price. China Online Education (COE) didn’t have a long history as a publicly traded entity, but its saucer pattern was relatively well-formed in early 2021 and featured growth in trading volume. The stock was near its lifetime highs, and a clean break above this saucer suggested higher prices ahead. From a charting perspective, this stock is especially interesting. The “well-formed” saucer had the markings of a bullish breakout—if and only if it broke above the saucer itself. That didn’t transpire. Instead, the price languished near the top of the saucer and slowly began breaking down. The breakdown picked up speed in spring 2021, and since then, the stock has suffered a staggering

Luckbox | August 2022

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96% drop, at one point even reaching “penny stock” status. Luckbox observed in early 2021 that over the past eight years, stock in TAL Education Group (TAL) increased 8,000% in a steady, unrelenting climb. TAL had pushed higher, month after month, year after year, with no meaningful downturn. Even the strongest bear markets hadn’t broken the uptrend. The stock’s chart peaked in February 2021 as it approached $100. Since then, it has plunged to depths where a share would not even buy a cup of coffee. By March 2022, it was trading at levels last seen a dozen years ago, wiping out the progress it made since coming to the public markets. Although the stock price of New Oriental Education (EDU) was not as calm and steady as TAL in early 2021, the trend was obviously up. What made it intriguing was the increasing sharpness of the uptrend. Normally, stocks diminish in energy, but this one seemed to accelerate its ascent. This stock peaked in February 2021 before losing virtually all its value, wiping out 15 years of price gains and matching price levels witnessed in 2007. The 92% drop since the original article illustrates how universal the plunge in Chinese education stocks has been. China flunks out With the exception of GP Strategies, which would probably be showing a loss had it not been for a corporate takeover, all of these stocks dropped in price, some of them spectacularly. So, the lesson from this examination of before-and-after performance is that it’s vital to examine charts continuously. Don’t just scrutinize a stock chart, make a decision, place a trade and forget about it. As Luckbox said in the original article: Back in 2014, any equity analyst would probably look grimly at the for-profit education sector, but the apex of the public rancor against this sector was actually the nadir of those stock prices. The public markets seem to be showing the most enthusiasm for Chinese-based companies. This is a trend that is likely to continue in 2021. After taking a position in a stock, tirelessly monitor its progress or decline. That doesn’t mean tick by tick, but review stock charts and ask whether an investor would want to own

Post-pandemic lows Perdoceo collapsed as the pandemic hit before gaining ground in mid 2020 but remains well below pre-pandemic levels. Once a $200 stock, New Oriental Education now sits below $25 (accounting for the split). PRDO

EDU 200

175 150

125 14 100 12

75 50

25 8 Jan 2020 Apr 2020 Jul 2020 Oct 2020 Jan 2021 Apr 2021

Jul 2021

Oct 2021 Jan 2022 Apr 2022 Jul 2022

Source tastytrade

Chinese education Both TAL Education and China Online Education collapsed over the last year and a half and seem unlikely to return to former glory. COE

TAL

35 80

30 25

20 40

15 10

20 5 0

0 Jan 2020 Apr 2020 Jul 2020 Oct 2020 Jan 2021 Apr 2021 Jul 2021 Oct 2021 Jan 2022 Apr 2022 Jul 2022

Source tastytrade

this stock now. In each example, warning signs flashed long before severe price drops. The charts would have warned the observant investor before these eye-watering losses had a chance to harm a portfolio. Based on present conditions, it could take years for education

companies like these to have healthy capital markets again. Tim Knight has used technical analysis to trade the equity and options markets for decades. He founded Prophet Financial Systems and created the website Slope Charts which offers free access to his charting platform. @slopeofhope

August 2022 | Luckbox

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trades& tactics

THE PREDICTION TRADE

Student Debt Bets Wagering on policy markets can seem challenging, but public opinion polling and political context can provide valuable clues By Mike Reddy

The pulse of the polls An NPR/Ipsos poll found that 55% of Americans surveyed supported forgiving up to $10,000 of a person’s student loan debt. The same poll found that 47% supported $50,000 in forgiveness, and only 41% supported total student loan forgiveness. That slim majority in favor of $10,000 of student debt forgiveness should hypothetically put the odds of the policy becoming law

STUDENT DEBT FORGIVENESS BECOMES LAW BY DEC. 31

Buy Yes

60¢

Buy No

45¢

—PRICE DATA AS OF 7.14.22, KALSHI.COM

HOW PREDICTION MARKETS WORK Prediction markets use real money to forecast outcomes of events. Contracts trade between 1¢ and 99¢, and the price reflects the market’s forecasted probability of an event occurring. When an outcome is reached, correct contracts pay out $1, and incorrect contracts become worthless.

a little greater than calling a coin toss. Yet, at press time, the respective prediction market at Kalshi has the odds considerably higher, with “Yes” shares trading for 60¢. And they’ve traded as high as 76¢ in the past. Why that might be Is the market mispriced? Do its traders know something the pollsters don’t? One possible answer, according to the hosts of The Prediction Trade podcast, lies deeper in the gran-

ular polling trends and the political context surrounding them. Three-quarters of respondents to an intelligent.com survey—all of whom are registered voters—said a midterm candidate’s stance on student loan debt cancellation was “very” or “somewhat” important to them. Nearly 80% of those respondents also indicated they supported at least $10,000 in student loan debt cancellation per borrower. Similar sentiments are echoed elsewhere.

PHOTOGRAPH: REUTERS/RONEN ZVULUN/POOL

uckbox readers have a lot to say about student debt forgiveness. “Students shouldn’t be saddled with crushing debt while starting off in life,” wrote one reader. “You take out a loan, it’s your responsibility to pay it back,” wrote another. All in all, more than 72% of readers indicated they opposed forgiving up to $10,000 of a borrower’s federal student loan debt, according to the latest Luckbox Readers Survey. That number balloons to over 82% when asked about forgiving all of a borrower’s federal student loan debt. Support or opposition aside, those with strong convictions about what will actually transpire can wager on the outcome, thanks to prediction markets. A variety of legislation-related markets attract traders to predictit.org and kalshi.com: from rescheduling cannabis under the Controlled Substance Act to passing Build Back Better before the midterm elections. But prediction market traders need more than just hunches to profit consistently in policy markets. Short of a direct line to Congress or President Joe Biden himself, public opinion polling may be traders’ most valuable resource. In the spirit of this issue’s higher education theme, let’s use Kalshi’s “Student debt forgiveness becomes law by Dec. 31, 2022” market to demonstrate how.

Luckbox | August 2022

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According to Harvard University’s Spring 2022 Youth Poll, 85% of young Americans (ages 18 to 29) favor some form of government action on student loan debt, 38% of whom favored total debt cancellation. The Harvard Youth Poll seems especially noteworthy because, more so than any other age group, 18-to-29-year-olds have displayed the steepest decline in approval of the Biden presidency, according to Gallup. The 61% of 18-to-29-year-olds who approved of Biden’s presidency from January to June 2021 shrank to 38% from September 2021 to March 2022. Moreover, 94% of Democratic voters in that age group feel their party should nominate someone other than Biden to lead the 2024 presidential ticket, a July New York Times/Sienna College Research Institute survey indicated. The discouraging poll results come just before a pivotal midterm election. Both

FiveThirtyEight and RealClearPolitics, two polling aggregators, forecast that party control of the Senate after the midterms is a toss-up. And both currently give Republicans a slight edge. Pair that with a string of headlines like Forbes’ “If Student Loans Don’t Get Cancelled, Borrowers Threaten To Vote Against Democrats” and Politico’s “Dems fret Biden’s inaction on student debt will burn in midterms,” and it’s far less surprising that the markets give the edge to forgiveness becoming law. It’s important to keep in mind that polling doesn’t necessarily translate into policy. That said, it does paint a telling picture of voter sentiment—and what policy decisions could help or hinder a political party ahead of an election. Even if student debt forgiveness doesn’t become law by the end of the year, the traders who bet that it would have had ample opportunity to sell their shares for a profit.

Short of a direct line to Congress or President Joe Biden himself, public opinion polling may be prediction market traders’ most valuable resource.

More TPT Watch the podcast

Listen Here Truth or Skepticism

Tom Sosnoff, entrepreneur, options trader and co-CEO of tastytrade, joins Dylan Ratigan, businessman, author and former host of MSNBC’s The Dylan Ratigan Show, for a weekly podcast covering everything from sports and investing to politics and monetary policy. One’s an iconoclast, and the other’s a contrarian. Tune in each week to find out who is who. It’s unscripted and unpretentious—some like to think of it as rants, but refined.

The Prediction Trade

If you can trade it, or bet on it, you can bet they'll talk about it on The Prediction Trade— the only podcast for gamblers, traders, investors, math geeks, data freaks and superforecasters devoted to the intersection of probability, prediction and profit. Each episode features expert guests with proprietary forecasting models and insights into the outcomes of prediction market events. So whether you live to bet or bet to live, check out the next episode of The Prediction Trade.

Truth or Skepticism and The Prediction Trade are available on your favorite podcast platform and the tastytrade financial network's YouTube channel.

2208_TRADES&TACTICS_tpt.indd 55

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GET REAL TIME

TRADE ANALYSIS!

Backtest your trades for FREE visit tastytrade.com/lookback

tastytrade, Inc. does not provide investment advice or make trade recommendations. This content is intended only for informational and educational purposes. Past performance is not indicative of future results. Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before investing in options.

2208_TRADES_trader.indd 56

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trades& tactics

1. tastyworks platform

TRADER

2. tastytrade Live 3. Album cover from the He Said She Said tour

4. The Tony Battista T-shirt

1 3 4

More LIZ & JNY Learn the Jade Lizard Options Strategy

MEET

PAYAL SWAMI Home/Office location

Tustin, California

tastytrade network online almost every day. Who knew learning could be so much fun? Favorite trading strategy?

For stock and exchange-traded funds that I want to trade long-term, I like to own the stock—ideally starting with a naked put for a better entry price—then sell strangles around it each month. For short-term trades, I like the jade lizard.

Age

Average number of trades per day?

Two to three

Years trading

Seven

How did you start trading?

My sister introduced me to options trading. I had just walked away from a 20-year career in technology but wanted to continue to challenge myself with learning new skills while trying to find that elusive work-life balance. I had no finance background but was interested in learning how to manage my own money. A few months after the first tutorial from my sister, I stumbled across tastytrade videos on YouTube and was hooked! I watch the live

What percentage of your outcomes do you attribute to luck?

I don’t think I can put a number on the luck factor, but it is definitely a part of trading. The key is to stay mechanical and not get emotional about trades that go horribly wrong. It is easier said than done. I still find myself staying in certain positions longer than I should. Favorite trading moment?

It took me a really long time to find a short delta strategy that works well for my portfolio size. I needed something where I am not

taking unlimited upside risk and that also serves the purpose of why I want those short deltas—whether it be for balancing portfolio delta or if I had a directional bias in an underlying. I set up a poor man’s covered put strategy in SPY. [A poor man’s covered put strategy is a put diagonal debit spread that’s used to replicate a covered put position.] The strategy gets its name from the reduced risk and capital requirement relative to a standard covered put. It was enough short deltas to make my portfolio lean slightly short, which is what I wanted at that point. I then happened to get the directional move I needed within a couple of days of placing that trade, and it was exhilarating to take in a very nice profit in such a short time and have my portfolio profit/loss be up on a down day! Favorite trading book

Don’t have one. I learn everything from the tastytrade shows. One of my favorites is the Jade Lizard Options Strategy (see QR code). Want to be featured as the next issue’s trader? Have story ideas? Let us know: tips@luckboxmagazine.com

August 2022 | Luckbox

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trades& tactics

CRYPTO CURRENTLY

T H E STAT E O F C RYPTO CU R R ENC IES AND DEC ENT RALIZED FINAN CE

Crypto Curriculum These videos, websites and white papers provide the basics on cryptocurrency and blockchains By Mike Martin

tarting a cryptocurrency education can be daunting. A Google search for “cryptocurrency resources” yields more than 100 million results. It’s difficult to know where to go for the best news and research, what tools are at your disposal, and how all this information applies to the real world. To help, Luckbox has gathered some key resources to start you on your journey.  You can’t truly appreciate cryptocurrency without understanding blockchain. A cryptocurrency is simply a cog in the wheel of a blockchain. In fact, some blockchains operate with no native currency at all. Once you understand blockchain, you can confidently expand your education into cryptocurrencies and tokens. Understanding blockchain (particularly the Ethereum blockchain network) will also make learning about smart contracts, decentralized applications (dApps) and non-fungible tokens (NFTs) more intuitive. Below are some great resources for crypto beginners.

Crypto Corner

Blockchain basics Crypto Corner, which was created by tastytrade, addresses fundamental questions beginners have on both cryptocurrency and blockchain. It defines blockchains, explains how they work and lists their uses.

Messari

Crypto data Messari, a site that offers research data and tools, provides an intuitive interface that enables users to create custom watchlists and charts while simultaneously monitoring the pulse of the market with real-time reports and news. The site presents data on numerous cryptocurrency sectors, including smart contract platforms, stablecoins, DeFi (decentralized finance) and Web3.

B E A N

Once you understand blockchain, you can confidently expand your education into cryptocurrencies and tokens. Udemy For a comprehensive look at blockchain, check out an intuitive video called Blockchain A-Z: Learn How to Build Your First Blockchain. It goes beyond broad definitions to delve deep into the mechanics of both blockchain and cryptocurrency. The lessons are juxtaposed with segments on how to build a blockchain. But don’t worry—armchair crypto enthusiasts can skip over the technical parts.

Udemy

Block explorer Blockchain is built on a peer-to-peer system, meaning that all information is public. Whenever someone sends or receives cryptocurrency, the transaction is ultimately put into a block. Block explorers pull that information Block Explorer into a database, and blockchain.com enables participants to view the complete transaction history of numerous protocols, including Bitcoin and Ethereum.

ta ta C pr w

TA R

Luckbox | August 2022

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The Block

Crypto news Think of The Block as the cryptocurrency world’s version of CNBC. This comprehensive news site covers current events involving DeFi, NFTs, Web3 and the metaverse. Besides breaking news, it provides market analysis and research.

Smart contracts Unlike Bitcoin, Ethereum allows participants to interact with its blockchain. Developers use Solidity, Ethereum’s programming language, to build and run smart contracts. The contracts are the building blocks for advanced programs, such as dApps.

Solidity

Blockchain Use Cases

Blockchain in action So, enough theory. Are you ready to see how blockchain is actually changing everything? Mat Zago has put together a great article called 50+ Examples of How Blockchains are Taking Over the World that points out the real-world use cases happening right now in blockchain.

NFT marketplace Most people have heard about investors’ significant purchases of big-ticket NFTs, but they may not know where the transactions take place. Most occur on OpenSea, the world’s first and still largest Web3 exchange for both crypto collectibles and NFTs. Be aware that transactions on OpenSea require a wallet.

OpenSea

Mike Martin is head of content, digital assets, at tastytrade.

BITCOIN & ETHEREUM AVAILABLE NOW AT tastyworks.com/tradecrypto tastyworks, Inc. provides its brokerage customers with access to cryptocurrency trading with Zero Hash Liquidity Services LLC, MSB # 31000181510564, and Zero Hash LLC, NMLS # 169937. tastyworks, Inc. is a separate company and is not an affiliate company of Zero Hash Liquidity Services LLC or Zero Hash LLC. Cryptocurrency accounts are not protected by SIPC coverage. Cryptocurrencies are not covered by the FDIC, which covers fiat currency. Cryptocurrency trading is not suitable for all investors due to the number of risks involved, including volatile market prices, illiquid market conditions, lack of regulatory oversight, market manipulation, and other risks. You are solely responsible for evaluating your financial circumstances and determining whether or not trading cryptocurrencies is appropriate for you. TASTYWORKS, INC. IS A MEMBER OF NFA AND IS SUBJECT TO NFA'S REGULATORY OVERSIGHT AND EXAMINATIONS. HOWEVER, YOU SHOULD BE AWARE THAT NFA DOES NOT HAVE REGULATORY OVERSIGHT AUTHORITY OVER UNDERLYING OR SPOT VIRTUAL CURRENCY PRODUCTS OR TRANSACTIONS OR VIRTUAL CURRENCY EXCHANGES, CUSTODIANS OR MARKETS.

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trades& tactics

DO DILIGENCE

QU I E T FOU N DAT I O N HELPS INV ESTO RS FIND NEW T RADING O P P O RT UN I TI ES

A Nurse, a Lawyer and a Mail Carrier

Career choice can affect your financial future in unexpected ways By James Blakeway

ebate over the value of higher education often centers on the relentless rise in tuition over the past few decades. But there’s also the issue of opportunity cost—the income that’s lost by entering the workforce four or more years later. The two factors can combine to produce massive debt for some college grads. What’s usually missing from the discussion is how a degree affects lifetime investment potential. In July, Luckbox described a strategy called “dollar cost averaging” that can amass wealth over time. It calls for putting a relatively small portion of income into the market consistently. So, the question becomes how that would theoretically work out for someone with a high school diploma compared with a bachelor’s degree or graduate degree. Consider the example of three professions: mail carrier, registered nurse and lawyer. The mail carrier doesn’t go to college, avoids taking on student loan debt and enters the workforce at age 18 but has the lowest earning potential of the three. The nurse goes to college for four years, relies on student loans and enters the workforce at age 22 but earns more than the mail carrier. The lawyer delays entering the workforce until age 25, with seven years of education and much larger student loan debt but the highest lifetime earnings potential. The chart Long-term earnings shows Chicago area data from Glass-

Long-term earnings Mail carriers start earning paychecks years earlier than nurses or lawyers, but their income doesn’t increase much over time. $160,000 $140,800

140,000

$132,200

Mail carrier Nurse

120,000

Lawyer

$112,300

$109,400 $101,800

100,000

$95,100 $88,900

$85,700

$93,200

80,0000 $69,400

$69,400

$61,100

60,000

$52,100

$47,400

$44,600 40,000

20,000

Age 18

Age 22

Age 25

Age 30

Age 35

Age 40

Source: Glassdoor, Chicago area statistics

door—a website that aggregates salary data—on how much each profession earns at various ages (in base pay). The graphic Piling up debt shows the cost of student loans for each profession and expected monthly payments for 10 years after graduating. The examples use a 5.8% interest rate, the national average according to the think tank New America, though some loans have higher rates.

Perhaps the most important education anyone can receive is simple financial literacy.

Luckbox | August 2022

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Level-ish playing field Young people who learn about investing can participate in the market’s growth over the decades to amass enough wealth to retire comfortably. $3,805,734

Nurse $3,500,000

Lawyer

$3,303,821

Mail carrier

Portfolio Value

$3,000,000 $2,603,253

$2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 0

Age 20

Age 30

Age 40

Age 50

Age 60

Source: Glassdoor, Chicago area statistics

The graphic titled Level-ish playing field shows how much cash people in each profession could amass by sinking 6% of their gross monthly pay into a 401(k) plan or IRA account. The market has, on average, returned 10% per year over the past few decades and, while history does not necessarily repeat itself, experts on investing often cite that number as a reasonable estimate for long-term growth. While the nurse takes the top spot among these three hypothetical professionals by the age of 65, neither the lawyer nor the mail carrier winds up empty-handed, each with projected multi-million-dollar retirement funds. Perhaps the most important education anyone can receive is simple financial literacy. James Blakeway, Luckbox technical editor, serves as CEO of Quiet Foundation, a data science-driven subsidiary of tastytrade that provides fee-free investment analysis and trade ideas for self-directed investors. @jamesblakeway

Piling up the debt While taking on debt is a necessity for many students, they can wind up paying more in interest than tuition. Mail carrier College debt Grad school debt Total interest paid Total cost of education Monthly debt repayment (10 years)

Nurse College debt Grad school debt Total interest paid Total cost of education Monthly debt repayment (10 years)

Lawyer College debt Postgraduate school debt Total interest paid Total cost of education Monthly debt repayment (10 years)

$0 $0 $0 $0 $0

$42,000 $0 $13,449 $55,449 $462

$42,000 $150,000 $61,483 $253,483

A PAY BONANZA FOR NURSES Travel nurses are earning up to $6,500 a week— more than four times as much as they did before the COVID-19 pandemic placed intense demands on the American healthcare system. Several jobs offering that much pay for nurses willing to travel where they’re needed have appeared recently on Vivian Health, a marketplace for healthcare employment. Admittedly, those paychecks qualify as outliers, but the gain in average remuneration has been staggering, too. Typical travel nursing pay increased from $1,706 a week in December 2019 to $3,290 today—meaning a travel nurse working 48 weeks a year could now gross $157,920. Meanwhile, median annual pay for nurse anesthetists, nurse midwives and nurse practitioners—occupations that typically require a master’s degree—climbed to $123,780 last year, according to the U.S. Bureau of Labor Statistics. For perspective on that $123,780 in annual pay for specialized nurses, consider the fact that median income was $127,990 for lawyers.

$1,135

August 2022 | Luckbox

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7/22/22 10:05 AM

trades& tactics

THE UNLUCKY INVESTOR

A M AT H E MAT IC IAN’S GU IDE TO SUSTAINAB LE T RADING —NO LUCK REQUI RED

Education Technology Plays

Edtech companies are increasing access to online education. But does that make their stock a good investment? By Julia Spina

facing education companies because many of them, namely Duolingo, Coursera and Udemy, have been publicly traded only since 2021. But, an analysis of the past few months can give us an idea of how their short-term performance compares with other tech companies, the tech sector (XLK) and the broader S&P 500 (SPY). However, the market has been far from ideal since 2021, and only

Education-focused tech companies still have tradable options markets, particularly Chegg and Coursera.

time will reveal the long-term potential of these education-focused tech companies as investments. The first major factor limiting the tradability of these stocks is liquidity because many of these companies, with the exception of Chegg, are new to the public market. A liquid instrument generally has well over 1 million shares traded daily, and the table titled Not very liquid shows the median daily volume for these

Not very liquid

Volatility and big drawdowns

This table of median daily volume shows Duolingo, Coursera and Udemy don’t qualify as liquid investments because not enough shares of their stock are traded.

These performance statistics for Chegg, Duolingo, Coursera, Udemy and SPY include cumulative price change and the historical returns volatility. Other technology stocks and a technology ETF are shown for comparison.

MEDIAN DAILY VOLUME (MILLIONS OF SHARES) CHGG

2.9

DUOL

0.4

COUR

1.0

UDMY

0.4

S&P 500 ETF

91.4

TOTAL PRICE CHANGE

HISTORICAL RETURNS VOLATILITY

CHGG

-68%

5.9%

DUOL

-38%

5.5%

COUR

-55%

3.9%

UDMY

-60%

4.8%

AMZN

-32%

3.0%

AAPL

-2%

2.1%

GOOGL

-20%

2.2%

MSFT

-20%

2.0%

XLK

-18%

2.0%

Data from Oct. 2021 to July 2022

PHOTOGRAPH: SHUTTERSTOCK

he tech industry has truly redefined education. In fact, companies such as Chegg (CHGG), Duolingo (DUOL), Coursera (COUR) and Udemy (UDMY) have made a wide breadth of educational resources accessible to consumers from every demographic. But are these assets reliable as investment vehicles? It’s difficult to form long-term expectations for these consumer-

Luckbox | August 2022

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7/22/22 10:02 AM

Richer premiums The implied volatility history for Chegg, Duolingo, Coursera, Udemy and SPY from January to July 2022 indicates investors may find opportunity in the tech stocks while enjoying bigger premiums. CHGG

250%

DUOL COUR UDMY

200%

SPY

150%

100%

50%

0% Feb 2022

Mar 2022

Apr 2022

May 2022

Jun 2022

Jul 2022

Source: tastytrade

assets is either near or below that threshold, indicating a degree of liquidity risk. The performance statistics in the table labeled Volatility and big drawdowns also indicate these stocks have experienced significant loss of value since 2021 and have had a more volatile run than some more-established tech companies, the tech sector and the overall market. While it’s still too early to draw conclusions about the longterm viability of these assets, the short-term statistics indicate significant risks for passive investors. However, the options market presents notable opportunity. Options traders should be mindful of the liquidity risk, but these education-focused tech companies still have tradable options markets, particularly Chegg and Coursera, but also Duolingo and Udemy to a

2208_TRADES&TACTICS_unlucky.indd 63

lesser extent. Options traders may find these underlyings attractive because they have significantly higher implied volatilities and larger premiums than SPY. This is shown in the chart titled Richer premiums. Options traders may cope with liquidity risk by, for example, keeping positions wide (i.e., sticking to high probability of profit trades) and by keeping position sizes small so the capital at risk is minimized. Readers can find more details on structuring options trades and sizing positions in The Unlucky Investor’s Guide to Options Trading. Julia Spina, a member of the tastytrade research team and author of The Unlucky Investor’s Guide to Options Trading, holds degrees in engineering physics and applied mathematics and a master’s in physics. @financephoton

7/22/22 10:02 AM

THE LAST PICTURE

“ Without prejudging any one platform or any one token, there’s a lot of non-compliance. Meaning that if you raise money from the public, and that public is anticipating, based on your efforts, some profit—that comes into the securities laws.” “ If the crypto sector is going to persist, it’s only with trust. Otherwise, a lot of people will get hurt.”

—Gary Gensler, Bloomberg TV, July 20, 2022

Securities and Exchange Commission Chairman Gary Gensler is under pressure to regulate cryptocurrency. Sen. Elizabeth Warren (D-Massachusetts), for example, has called upon Gensler to put “guardrails” on the industry that’s breaking the backs of investors. Gensler contends that many cryptocurrency tokens are securities and the crypto trading platforms—like the now-bankrupt Celsius Network and Canada’s Voyager—are exchanges. Thus, in his view they fall under his agency’s jurisdiction. Wherever regulatory authority lies, the crypto meltdown is raising concern. Between November 2021 and June 2022, the value of some

cryptocurrencies declined more than 70%, leaving investors on high alert. They’ve lost more than $2 trillion, and the government wasn’t there to pick up the pieces. Yet the saga of the U.S. dollar’s emerging strength may eclipse the story of the digital currency implosion. The greenback has reached parity with the euro and moved to the center of the world stage. The September/October Luckbox will chronicle cryptocurrencies’ struggle for survival and assess the burgeoning power of the dollar. Readers will see where both currencies have been and where they’re headed.

PHOTOGRAPH: REUTERS

Is There Anything Left to Regulate?

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August 2022 (w)

Articles inside

Dying Oath Revives Metalcore

Beware of a College Degree

Digging Deeper into Debt

American College Testing

Liberal Arts Advantage

Hire Education

The College Myth