BERKO: Some IRA (and college) advice
Friday, November 16, 2012 7:00 AM
• Nationally syndicated columnist
• Email: email@example.com
• Address: P.O. Box 8303, Largo, FL 33775
Dear Mr. Berko:
We told our son that if his high school grades were good, we’d pay for his college education. We consider his 3.36 grade-point average very good; however, my job was downsized last March, and now we don’t have the income to pay the $30,000 annual sum to cover the costs of tuition, fees, books and room and board. My wife and I study with him every night to help him maintain his grade-point average. I’ve enclosed our individual retirement accounts, which are worth $185,000, and we want your suggestions on which issues to sell to pay for the first year. This is our only child. We love him so much and want to give him every advantage to make sure he has a good future.
H.D., Kankakee, Ill.
Perhaps your kid could attend Kankakee Community College (it has a fine reputation) so you could study with him “every night” and help him keep his grades up. Or stop loving and smothering that kid so much. Give him some wiggle room so he can learn how to do things without your help. Meanwhile, a high school 3.36 grade-point average isn’t worth a bucket of night soil today. Colleges know that most high school teachers inflate a student’s grades, notably in the big cities, to justify their eight-month jobs and $100,000 pay packages. But I wonder why your kid only has a 3.36 GPA if you and his mother “study with him every night.” You might consider attending classes with him a few days a week.
Your IRAs are a mess. They are bleeding principal, are riddled with bullet holes and are starved for quality. Your IRA portfolios are a hodgepodge of volatile junk, the results of which look as if you’ve been shooting yourselves in both feet.
It’s imperative that you seek trustworthy and knowledgeable professional help so you won’t hemorrhage to death. Meanwhile, sell Bank of America and Citigroup, which are dogs. Sell General Motors before the government does and trashes the price further. Sell Zynga, probably the most imbecilic, valueless company ever to come public. Sell Strayer Education and DeVry, where a $75,000 student loan guarantees a Ph.D. in 12 months and a job placement three months later. Sell Facebook; the bloom was never on this rose. Sell Cliffs Natural Resources, because earnings are crashing, and sell those eight floundering biotech stocks with fishy names trading at less than $4 a share. That will raise about $32,000, probably enough to pay for two semesters at the University of Illinois.
College costs are absurd. And sending your kid, who can’t wipe his nose without doting parents, away to school also would be absurd. The best help you could give your kid would be to advise him to join the armed services. In that structured environment, he would learn maturity, independence and purpose. The government would pay for his college classes, as well as graduate school, if he were to sign up for the required tours of duty. The kid would complete college with no debt. He’d have at least eight years of solid hands-on experience in his chosen field and be able to pick and chose most civilian jobs in his profession. I pity the poor schnooks who graduate from the University of Illinois with majors in business, French, English history, sociology, political science and literature. They will have limited job choices – sales associates at Verizon, trainees at McDonald’s or Target, car sales, telephone sales or bank trainees. The luckier graduates will be offered low-level entry positions to sit inside 5-by-8 cubicles at numerous drab, prison-gray federal, state and municipal office buildings. Most colleges are unable to give students the skill sets they need in the labor market. So put the kid in the Army. You’d get to keep your IRAs and maybe some extra dollars for when you hang up your tools.
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