good afternoon welcome to prime interest i'm harry and boring here in washington d.c. here's a story that we're tracking today. as we have actually twenty. closest media confidant to articles in the wall street journal over the weekend about major changes coming to the fed breaking news confidant janet yellen is in the lead to take over then step down next january the current vice chairwoman is not expected to deviate much from burning policy it's the second story breaks news about how the fed will scale down as records gone by the timing eventually but the fed might pause first or accelerate plastic bugs i know but we do have five fed bank president plus the chairman himself speaking this week so expect more if i'd speak

to paulo and our for profit universities similar to those predatory subprime chop shop that the fed the housing bubble well that's what nobel prize winning economist joseph stiglitz suggested in an op ed in yesterday's new york times he said bankers are again preying on the financially unsophisticated agree or disagree student loans are in the news amid soaring tuitions costs and delinquency rates we'll talk about a potential bubble with me shabaka in a bit and chart some of the drama with the prime interest producer justin under health and finally there's a lot of money sloshing around the academe capital markets so far in two thousand and thirteen we've seen sixty four public offerings in the u.s. raising seventeen billion dollars in a record since before the financial crisis and this is the last two years of thirteen billion dollars and may but there are still seven and a half months ago in two thousand and thirteen and we've seen in the last few years the i.p.o. market can easily be shut down whether it's the debt ceiling debate or an i.p.o.

blunder itself like last year's facebook offering for now. enjoy the even money here's what's in your prime interest. now the increasing cost of college do it too issue and is causing major issues among young americans the average student graduates today with about twenty six thousand dollars in student loan debt the federal government issues direct loans between three point four and seven point nine percent and the rates are set to

double on july first now senator elizabeth warren think students should be able to borrow money for the same amount that khalid are that banks are borrowing so last week she introduced a legislature and that would float money from the federal reserve to the department of education so that they could cut the loan rate to just point seven five percent or earlier i spoke with me she said lock up from said cap a civic capital about senator warren's bill and the student loan industry in general and here is what he had to say about the bill. for the student loan market and students were. these are all different questions here it's i think it misses the mark and that's the problem. what we need is more competition small's we need to be driving down costs we don't need to be doing some things just encourage students to take out loans and get education that they don't need going to want the . streets last years on their mind when we want to ask the hat. i think we need to

get we've got. i know this is there's more government and the business what it does is. by cutting the rates two percent or whatever bernanke you start a quarter percent excuse me there is zero percent it encourages more people to take out loans because they look cheap. well joining me now in studio is r.t. correspondent margaret. thank you for joining me margaret got it way and his comments and how how do you feel about the student loan but what do you think above all exist or is this. a very you ask me if i think it's right no it's not right i mean you know we should be investing in our students not our banks that is the bottom line you know an educated workforce is the crux of society and he's using that term student bubble and he's probably calling that from housing bubble we're not talking about houses here we're talking about people and i think that his

argument that we have too many educated people for a society to function just as apply with me well what about. being over educated i mean there's you know plenty of people who go and get a college education and they can't find a job or they end up working in grocery stores or bartenders or something that would not require a college education then do you not think that we're over educated this idea in any capacity in some cases yes but we should be doing in society is placing an equal value on skill in terms of you know what what can you bring to the table along with that degree and i think that's what we're dropping the ball per se you know people they need to have a skill they can't just show up and say ok well we've got the i've got this degree now i get an automatic free pass into a job it doesn't work that way you know employers want to know what you can bring to the table so you know we need to place that equal emphasis to something i want to tell you about you know we see these students particularly graduating from law

schools i was reading an article yesterday and last students are unable to find a job and they're suing their album auditors for misrepresenting lvalue of their degrees so do i think that there is too much value placed on a degree not necessarily but i think that we should have an equal value placed on skilled ok well then. i also brought up expectation it was kind of ways and of exactly what you're saying is. you know that's still on bubble and misses talking about how that field in expectations about will mean that you have to have a college degree in order to just get a basic job and here here's what nice that about it let's listen to his explanation first oh absolutely we're sued and won it's not actually the only credit expansion we've seeing throughout much of the so-called recovery and hispanic. people with students staying in school longer than what they need some because they can't find

a job they go on and get it that's degrees you have people going back to college and middle age obama tells them they need training returning for law. well theory and you know that i think he might be correct on there there needs to be the expectation needs to match the job market so people need to get a realistic perspective on what's out there before they apply for college that you know we need to have an idea of what we want to do prior to entering this this free thought process the forty years is probably not the smartest thing you can do if you're wanting to be gainfully employed at the end of it and i also feel that not everyone has as made for academia and academia is a very specific type of the economy and not everyone needs that type of training there's plenty of jobs out there that don't require this you know advance type of study so it was here we were talk about the expectation about boy ged he could play

that clip of his of mischa's. comments on expectations out absolutely we seen the x. . in hiring trends well rounded companies insist upon degrees now whether a degree is really required for the position or not just because so many people have a degree so why not hire someone once in a group so. when you look at all of these things in aggregate. it's just a step in the wrong direction we need more competition not less and that's what cheapening monny elizabeth warren wants to do it just encourages more people to get your careers they can't use and in fields where there are no johnson on the first. so i was kind of really interesting so what you're mentioning about lawyers wanting to say they're all a martyr i mean do we think think that you know the college degree is really worth

because i know you said we need college degrees to be a well functioning society is it possible that cause dreams are over cost and you know period that is a possibility you know i went to george washington at the time it was for one of the highest per cost for a year i think it was fifty two thousand a year when i went there and i you know there was this question i think that they were paying the university president at the time three million dollars a year to be the university president and you know maybe that cost doesn't really jive with what i got from my bachelor's in hindsight now does that mean that it wasn't worth it i don't know if i can say that per se but you know again going to an institution like that it sets up a student eighteen nineteen years old for a predatory loan which was the original intent of of our discussion taking it back to those predatory loans you know what what rights are they have to sign on the bottom line and maybe maybe the regulations should be a little bit different what about the need for

a vote vocational skills and vocational training i mean there's plenty of demand for these types of jobs do you think that we should put more emphasis on vocational training you know i think yes and no. it needs to be individual based if we have a student who maybe isn't fit for academic life who would be better suited in a vocational training sector i.e. welding for example you know there are a lot of jobs like that you are right and perhaps we should be focusing prior to college and helping students find out exactly what their needs in this market if it's changing so i'm with you on that locational training is a must i think in some cases yes ok now student loans that are in ninety day delinquencies they've increased steadily in the past year and i asked me if you think that government's water. have to increase lending standards because of a s. and here is what he had to say about that. well we've already seen increase default

rates just keep going up or not and we keep reworking so requesting what do we do about it so raising the lending standards president obama wants to do the exact opposite of that. so because the government is so heavily involved in student loans and there are so many and now dealing with the rates are increasing do you think that the government should increase lending standards in order not to have a debt issue with the i don't know if they should increase the standard i think the standard is pretty strong with as it is you know something a senator elizabeth warren was trying to do she was trying to say ok we're going to lower these interest rates for a year we're going to get the fed to subsidize these loans we're not going to leave it up to private banks anymore you know and i think that she made a very excellent step in the right direction in terms of helping these students you know our debt crisis is you mentioned earlier one trillion dollars isn't that amazing student debt and one trillion i don't know if we're ever going to get that

paid off but i do know that we have to do something because in july if congress doesn't act student loan interest rates are set to double it but if you can't repay loans you write about i want to be kind of that's an excellent point period but at the same time you know there has to be more than just raising the standard i think that that would shock a lot of people out of college who maybe are all over educated no i don't think we were over educated at all i think that perhaps there needs to be something else in place besides relying on loans prior to entering college that would that would be what i would say to that thank you so much for weighing in on this. of next we're going to talk with prime interest producer just underhill about the soaring cost of college tuitions and just what the rising default rate might mean for the market university and bob english and i will go at it discussing the latest bloomberg embarrassment across just saying richard branson and car latest public brock's the

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see see. i. i. i. an estimated one point eight million students are graduating college this year and

according to a survey commissioned by adam levin of credit dot com almost half of students between the age of eighteen and twenty four so they have borrowed money to pay for college this represents a drastic shift as less than a quarter of all baby boomers went into debt to pay for higher education among recent graduates one the fifth believe that students should borrow as much as they need and that no amount is too much meanwhile ninety percent of baby boomers and seniors disagree for more on shifts in college tuition costs and the rise in student loans we turn to private interest producer justin undergo. just being can you tell us a little bit more about what's happening in this trend and increasing college tuition absolutely so college tuition has been increasing steeply over the past twenty years and that's far more sharply than the consumer price index which is.

below now from one thousand nine hundred seventy one nine hundred ninety the slopes were roughly the same between college tuition and the consumer price index but between one thousand nine hundred and two thousand we can see that college tuition doubled the slope of the c.p.i. and then between two thousand and now two thousand and thirteen the slope has doubled again while the slope of the c.p.i. has remained still constant. what has. this skyrocketing cost of education well here we're just looking at to wish and cost we're not looking at the total cost of education so while tuition has certainly been increasing if we look at the total cost of education which involves more than just tuitions this is per student at public universities this is remained roughly constant and we're using the scale on that side. eighty percent of in romans college roommate in the u.s. is that state and municipal colleges so if the actual cost per student is an

increasing their tuition is. great what is causing this increase in tuition well that's a good question for that we're going to need another graph and this is tuition as a share of higher education costs so if we look at fiscal year two thousand twenty percent of the cost of higher education was paid for by tuition whereas seventy two percent was paid for by the school by states state funding and we can see that slowly shifted over the years and there is in two thousand and eight there was a precipitous drop in the share that states paid and to make up for that students had to pay more a little bit more intuition and that meant maybe taking out more loans and students were able to absorb a lot of these costs and so more loans and more more amounts for each of the loans so how's the total amount that states are spending has increased as well as. the

amount of you have been spending has actually decreased in some states but as a dollar amount what we haven't seen is we haven't seen a threefold drop as we've seen in the chart in the amount that states are paying for education that's made up for the fact that there are more people attending colleges so the same amount of money is out there to feed more or less the same amount of money is out there to feed the same amount. there are more miles and there's not as much funding per student. or it seems that a lot of the ship is now going to the federal government you know has the federal government are they picking up the bill well what we haven't seen is we haven't seen the same default rate right now as as there was in the nineteen nineties but it's certainly been increasing over the past three years and we're talking about nonprofit particularly public colleges and while it's true that there has been a modest increase in the default rate for federal loans this is far lower than the

default rate at for profit institutions for profit institutions over ninety percent of students take out federal loans and these loans have more than twice the default rate of public colleges so this is a sector that is the most responsible for the increase in the default rate. so do you think it's more important for the government to increase competition or should the government won't more to make up for the well this is a tricky thing you know it's sort of the cycle that that gets itself we see more and more people taking out loans because because they can't afford the cost of and institutions and some people believe that this actually increases the price of colleges that they can they can charge to to their consumers so to say. thank you.

it's time for the day we've all joining me now is prime minister producer bob great to start off a new week right here with you going to be back so we have a great city. bloomberg reporters have admitted that they used the information that they gathered in the company's financial terminals to gain instant financial new now in a market where every microsecond equals profits should bloomberg employees be able to use the bloomberg terminals for reporting it's funny how this came about because i think one of the reporters at bloomberg noticed that goldman trader had not logged in for a while and she called goldman or he called goldman and goldman said what do you

mean how can you tell that we don't have this log in information or that this person hasn't logged on and that's how the story came about so i think it's interesting that the chinese walls at bloomberg are not as strong as those that we see at j.p. morgan and goldman between their proper inflow departments which is kind of a joke but you see them saying well i actually feel that. why not wilbur has this is their target all their infrastructure and their company why can't they use the tools they have well like i said they're supposed to be certain chinese walls beef between different departments and what i was getting at before is that if you're a j.p. morgan and you're trying to sell your clients something you're not supposed to take information from other departments and use that to your advantage now probably happens every day but that's the way it's supposed to happen so bloomberg is finally getting called out in this and it's interesting maybe you can go into a little history about how bloomberg came about they have almost a near monopoly on the business that they're in which is selling their terminals and here's a story from economic policy journal which i used to write for this comes from

november of two thousand and nine and the editor of baldwins i was recounting exactly how this came about and bloomberg in the one nine hundred eighty s. when he was trying to gain his market share developed a system his bloomberg system and he got a monopoly on what's called the inside quote so what is the inside quote it's a quote that primary dealers those that trade with the fed show the monks themselves when trading treasury securities with the fed back in the one nine hundred eighty s. the federal reserve didn't announce in advance. changes in their fed funds policy you get a sense for what the fed was doing by watching what trades it was putting on this trading was done through the primary dealers and was reflected in the primary the primary dealers inside quote on treasury securities so when the fed entered the market you could tell by seeing the changes on the inside quote as a primary dealers adjusted their quotes to the trades before bloomberg the only people that saw the inside quote were the primary dealers themselves and afterwords if you wanted the very insightful information you had to go to bloomberg well i

mean isn't that the nature of this industry you know those with the largest computers when are those of the best infrastructure wins so you're drawing an analogy to know. it would be the only one answer according yes it would be a money monday if we could get into co-location and high frequency trading which we will be discussing tomorrow. but i guess moving on to the next topic we have well ok so richard branson over the weekend he two and a half years ago he made a bet with tony fernandez and he lost the bat and the bet was team would finish first in the two thousand and ten formula one grand prix and oddly dobby and the loser had to dress and the other four other. flight attendants on their airline they both have airlines right and so the loser has to dress as a female flight attendant on the other person's i don't know if they were. lined up that they had addressed the female flight attendant and that's the level that branson took it to this of course you would and i think we have some pictures. to

have years of do at the event kept getting pushed back because there were a wedding got in the way the house burned down and necker island but as a man of his words he kept his bat and one of the biggest advantages to this was he raised over three hundred thousand dollars for the starlight foundation which is for seriously ill children which is which is great and i'm pulling for him especially with virgin galactic i'm excited to see this to go but i don't really have my. more to say about this i want to start my own geo. ok and owner of mother's day richard branson if you come on in prime interest i will host a fundraiser here in d.c. for your mother's foundation the eve branson foundation which aims to help young girls and alice know. their education and business and health care now mr branson do you do you love how i think i love it i hope i hope he pulls through i hope he's

a big prime interest fan and i think we have some news about michael dell to get into line and picking michael how are you trying to get dell out of dell oh yeah his own namesake dell has this deal and i guess icahn has a proxy war. icon is trying to sweeten the deal dell wants to pay twenty four point four billion dollars to the shareholders for the company and icahn is offering a little bit more twelve billion dollars a share extra in cash or stock and this is carl icahn is of course the same guy who got into a big time with bill ackman on c n b c a few months ago and that was over and that's still going on and i can't wait for the next but maybe maybe we'll see dell an icon to be well michael dell is the son of the founder of dell so you was there anything about he had done maybe that didn't help the company well i'm not an expert on this particular company but i will say in terms of carl icahn he is a very powerful and astute activist investor and that means what he's buying shares

in a company he's trying to influence the board of directors and he wants to influence what you want to have a shareholder meeting and yes i would on this sale and then they they might yeah in august they're supposed to have a shareholder meeting and the question is are they going to vote before that on whether or not to take this offer or are they going to hold out for so it's a big deal. but thanks for joining me thank you. today we got gold on prime interest university we wanted a lot about student loans thanks to professor sidewalk and two of our producers fed

mouthpiece john hensel rad serves set and mouthpiece over the weekend in the campus paper not much new keep the rumors flying out the student loan are the student union john looks like the bloomberg crowe got caught cheating on goldman and usual expression over the econ one hundred one at least the i.p.o. market is looking strong thanks to the fed's monetary gree and whether its chairman bernanke he or a chairwoman yellen who is conducting the grand tightening experiment we hope the q.e. lab is well ventilated the one point six trillion dollars in accessory reserves is quite the power keg and servers are brands and all we can say is we're happy to vote you class clown thanks for watching and make sure you come back to prime interest tomorrow you can follow us on facebook at facebook dot com prime interest and from all of us here have a great night. three

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