Is College Education Overpriced?

Peter Thiel- co-founder of Paypal- garnered plenty of headlines within the past few weeks with some comments on higher education. He believes that the cost of college is a bad investment proposition for many. His comments were featured in an interview with Sarah Lacy on techcrunch.com. He brings up a couple of issues that have been circulating in my head for a while. Those two issues:

1. MIT does an admirable thing by offering almost all of their courses online for free through MITOpenCourseWare. This is an unbelievable resource for those who have the motivation and intellectual capacity to pursue this. So you can receive an MIT education for free or you can spend around $250k to obtain a degree from MIT.

One of the points Thiel brings up is if schools like Harvard, MIT and Stanford are such difference makers for people, why don't we franchise them? Why do these schools insist on elitism?

One of the beliefs that I have had about college in general is that the actual education component is worth very little. Any individual can receive a fantastic education by reading and watching videos on their academic discipline of choice. The true value of college is the relationships you form. The network is where the value is.

I spent around $40k for a business degree at Baylor University in the late 80s/early 90s. The cost of a Baylor education has probably quadrupled since then. For me, the $40k was money well spent. The network of relationships has been worth a large multiple of that figure. But would it have been worth the money if I wasn't a business major? I have my doubts. Would it have been worth $160k as a liberal arts major? Hard to imagine that it would have been.

2. How much of the rapid rise in college tuition prices in the last 20 years has been due to easy access to loans? There are plenty of students who graduate from college with over $100k in loans to repay. Costs tend to escalate when you are spending other people's money. Most people don't think about the consequences. Mark Perry had a blog post highlighting similar problems with healthcare costs. Fifty years ago, health care costs were distributed around 45% out of pocket and 55% to insurance; employers; or government agencies. Today those numbers are 10% out of pocket and 90% other people's money. And we wonder why costs have escalated out of control.

The average student debt was around $8,000 in 1990. That had tripled to over $24,000 in 2009. That figure is higher for students graduating from a private university. And has escalated to over $100k average for students graduating from medical school. Without the leverage in the system (easy access to loans), prices of education would fall. Just as they have for houses in the last 3 years as the availability of credit has tightened.

Put me in the camp of believing that college costs are artificially inflated. This could be potentially good news for those who have younger kids. The prevailing opinion today is that college costs will continue to escalate. Just as that same opinion existed about housing four years ago. If sanity returns to the financing of education debt, you'll probably see costs fall just like the real estate market in recent years.

Ashley Hodge

Natural Resources- Should One Load the Boat?

I enjoyed this interview with Bill Paul and Consuelo Mack. Bill Paul has been following the alternative energy sector for many years and had some fascinating opinions on the future of energy- specifically the potential revolution involving smart grids.

Cisco Systems put out a short four minute video explaining the smart grid.

Listening to this interview got me in a reflective mood. Many investment newsletters that I read today discuss the idea that we are in a natural resource boom that will last for the foreseeable future. You only have to listen to talk radio shows for a short period of time to hear commercials selling gold or precious metals with ominous warnings about the future of the US dollar and US economy.

I believe having natural resources as part of a diversified portfolio of investments has its place. There are some compelling arguments for owning these investments in a portfolio including:

1. The debt problems of mature economies- US, Europe, Japan- that may lead to temptations to devalue those currencies- US dollar; Euro; Yen. A devaluation of currency might lead to higher inflation and higher natural resource prices.

2. The growth of the emerging markets- China, India, Africa, South America, etc...-could produce a lot of consumers that are going to consume a lot of food, energy and the materials needed to build out infrastructure in those countries.

But I believe a healthy dose of skepticism and caution is warranted about prices of food, gold, silver and oil continuing to increase. There is a economics saying, "There is no cure for high prices like high prices." At some price, the incentives for alternatives and innovation kick in high gear. With enough incentives and revenue potential, innovation can happen quickly. And innovation can drive prices lower.

One of my favorite blogs to follow is Mark Perry's Carpe Diem blog. He had a recent post on how the cost of food as a percentage of disposable income has decreased dramatically over the last 80 years. You can find his support here.

John Hussman included this chart in a recent newsletter. The chart should make any student of history a bit nervous about "loading the boat" in natural resources right now. The story of history is progress. I like to refer to it as biblical progression. There will be cycles along the way.

But God has a plan that He is unfolding from creation to re-creation of the heavens and earth. But his stewardship mandate remains intact for humans to use the gifts and talents towards the ends of creating a better world as we eagerly hope for the day when the curse will be removed and progress will be unhindered by greed, decay and corruption- Romans 8:19-22.

As we await the complete fulfillment of this promise, we should heed the words of Sir John Templeton. The four most dangerous words in the English language are: "this time is different."

When Helping Hurts

Just finished a book recommended to me called When Helping Hurts by Steve Corbett & Brian Fikkert. They have a website that explores the ideas they share in this book.

I'll use some future blog posts to highlight some of my takeaways from this book. In general, the book is about poverty alleviation. Trillions of dollars have been spent on poverty aid and yet 40% of the world still lives on less than $2 per day.

Many Christians (myself included) have given to poverty alleviation programs or have invested thousands of dollars to go on short term mission trips without deeply considering the question: does it help?

This book tackles that question. We have seen evidence that government welfare creates a tough cycle to escape and an unhealthy dependency. Are we practicing a form of Christian welfare by giving money only to others without addressing deeper needs?

Many short term mission trips cost a church $25,000+. Is this money well spent? Before reading this book, I would have thought that the cost was worth it for a couple of reasons:

1. Lives and perspectives of those who go are changed and some decide to devote their lives to full-time missions as a result.

2. Those who go on short-term missions become generous givers to the cause of missions in the future.

However, the evidence documented in this book says different. For the most part, short term missions is a poor allocation of resources in alleviating poverty.

How do we define poverty? Those of us that have material comfort are likely to describe it as a lack of money. The poor describe poverty as shame; inferiority; powerlessness; humiliation; fear; depression; social isolation.

Poverty alleviation efforts often communicate the wrong message: that the poor are inferior and need our superiority for what we can give them. In reality, we each need something from the other. We that have resources are not ok. We trust in those resources instead of trusting in God. We need to learn from those who have less what it is like to depend on God for everything.

And those that are poor need from us help to break the cycle of poverty. Together God can fix us. Fikkert and Cobert define poverty alleviation as the ministry of reconciliation: moving people closer to glorifying God by living in right relationship with God, with self, with others, and with the rest of creation.

Looking forward to fleshing out more thoughts from this book- a thought provoking read.

For His Glory,

Ashley Hodge

Lessons from the book of Hebrews

Run the race well. Fix your eyes on the prize. Don't forget why you are running and the hopes and dreams who wish to obtain. Realize that there will be those who want to see you fail. But also many who have already finished the race and are cheering you on. Embrace discipline as you daily train. Get rid of every hindrance that keeps you from running your best race.

These are some of the lessons from the book of Hebrews. I just finished studying the book with a group of friends. Below are some of the important lessons I am taking with me from the book and also how I hope to apply those lessons to my life.

Lesson One: do we want to know God? Do we wish to know His character and His mind? Study Christ. Hebrews 1:3, "Christ is the radiance of God's glory and the exact representation of His nature..."

Lesson Two: One of the great dangers in the Christian life is apathy. Every day we need to prepare our heart for battle to fight the tendency to drift. Hebrews 2:1, "Pay close attention to this gospel, lest we drift away from it."

Lesson Three: Never quit. Have you given in to a sin every day for the last 10 years? Today is the day to start taking back territory from the enemy. Have you drifted away from Christ? Today is the day to re-engage in the battle and cling to Him who leads us in war against sin and every evil force. Hebrews 3:14-15, "Encourage each other every day as long as it is called "today" that none of you are hardened by the deceitfulness of sin. For we have come to share in Christ if indeed we hold our original confidence firm to the end."

Lesson Four: Rest in the finished work of Christ to secure our salvation but do not rest from doing good works in response to this radical grace. Christ worked and then rested. We rest in Him; work for Him and then enter His rest (Heaven). We can approach Him with confidence to receive His grace daily as we strive to live for Him. Hebrews 4:16, "Let us draw near to the throne of grace with confidence, that we may receive mercy and find grace in the time of need."

Lesson Five: Embracing suffering as the path to obedience is the normal Christian life. Through many trials and hardships, we will enter the kingdom of Heaven. Hebrews 5:8-9, "Although he was a son, he learned obedience through what He suffered. And being made perfect, He became the source of salvation to all who obey Him."

Lesson Six: We have a strong encouragement to hold fast to the promise of God- His guarantee of an oath and the unchangeable nature of His character. Our hope in Christ is a steadfast anchor for the soul. Hebrews 6:12, "Do not be sluggish, but imitators of those who through faith and patience inherit the promises."

Lesson Seven: A multitude of priests served the people before Christ- constantly offering temporary sacrifices for sins. Jesus is our permanent Priest- He offers a forever sacrifice for our sins. Hebrews 7:16, "He became a Priest not on the basis of lineage, but by the power of an indestructible life."

Lesson Eight: God is in the business of installing the new covenant in our lives. He wrote His laws on tablets to the people of Israel under the Prophets. Now he writes His laws on our hearts through the power of the Holy Spirit. Hebrews 8:10, "For this is the covenant that I will make with the house of Israel after those days, declares the Lord: I will put my laws into their minds, and write them on their hearts, and I will be their God and they shall be my people."

Lesson Nine: This life is our opportunity. There is no reincarnation; no second chances to respond to the purposes of God. He appeared once to deal with sin. He will appear a second time to bring salvation to those who are waiting for Him. Hebrews 9:27-28, "And just as it is appointed for man to die once and after comes judgment, so Christ having been offered once to bear the sins of many, will appear a second time not to deal with sin but to save those who are eagerly waiting for him."

Lesson Ten: God will remember our sins no more. We can never be more justified in God's eyes than we are now. God has dealt with the consequences of sin through the sinless death of Christ. In response, we are called to hold to Christ unswervingly. We are to encourage each other in fellowship and spur each other on to do good deeds. Hebrews 10:36, "For you have need of endurance, so that when you have done the will of God you may receive what is promised."

Lesson Eleven: It is impossible to please God without faith. We have faith that He exists and that He rewards those who seek Him. Faith does not guarantee a life of blessings. Some people receive blessings from God for faithfulness in this life. Others get killed; live in caves; are considered outcasts. God has purposes for each of us, but one thing is certain: He is just. He will right all wrongs in eternity. Hebrews 11:1, "Now faith is the assurance of things hoped for, the conviction of things not seen."

Lesson Twelve: Embrace discipline as our friend. We have a race to run. Don't ask the question is it sinful? Ask- does it hinder my ability to run my best race? Sanctification is a process that is 100% the work of the Holy Spirit in us. And 100% our striving to be trained well for the race. Without holiness we will not see God. We receive an unshakable kingdom, we must be thankful and worship God with reverence and awe. Hebrews 12:1-2, "Therefore since we are surrounded by so great a cloud of witnesses, let us lay aside every weight and the sin which clings so closely, and let us run with endurance the race that is set before us, looking to Jesus the founder and perfecter of our faith, who for the joy set before Him endured the cross, despising the shame and is now seated at the right hand of the throne of God."

Lesson Thirteen: Show love to strangers and fellow Christians. Be submissive to authority. Flee sexual immorality. Shun greed. Hebrews 13:5, "Keep your life free from the love of money, and be content with what you have, for He has said, 'I will never leave you nor forsake you.'"

Application to my life: Hebrews was a much needed wake up call for me. Apathy in the Christian life had set in. Sins that I used to battle against were creeping in and taking up residence in my heart. Weeds were overtaking the garden. The book was a glass of ice cold water in my face as I fell asleep. I thank God for it.

The message of Hebrews is to not drift; hold on tight; fight; run the race hard and steady; go to war each day; strive for the things of God each day. My applications were two things:

One- a renewed commitment to spend time with the Lord at a set time each morning. Reading His word; keeping journals of prayers for a transformed life; my kids; and the clients God has entrusted to me. I have made a commitment to memorize a verse of Scripture every day. How great would it be to have 365 verses of Scripture stored away in the heart each year? And over 3000 verses in the course of 10 years?

Two- redeeming the time at the end of the day. I had fell into a pattern of retreat from 6pm-9pm (watching TV; wanting time to myself, etc...) instead of investing that time in my kids. So my renewed focus to redeem that time engaging with my family and taking a no/low technology pledge during those hours.

Resources if you want to study Hebrews:

Hebrews for Everyone by N.T. Wright: quick overview of the book.

The Letter to the Hebrews (Pillar Commentary Series) by Peter O'Brien: worth the effort; readable in depth study of Hebrews.

John Piper Sermon Series on Hebrews: 52 sermons; typical Piper- outstanding and Christ centered; no fluff.

For the glory of Christ,

Ashley Hodge

Quotes

I'm a lover of quotes. Here are a few that I wrote down this week while studying the book of Hebrews and some other quotes I have pondered recently.

John Calvin: In each of our hearts are the seeds of insanity. Our will is carried away by some sort of insane impulse to rebel against God... even though we know rebellion leads to despair and death. And obedience leads to peace and life.

CS Lewis: Those who claim Jesus knows nothing of weakness make a ridiculous claim. Those who give in to temptation after 5 minutes of struggle against it know nothing about temptation. Only those who struggle day after day in the face of temptation and yet do not give in... those are the ones who know fully about weakness and temptation. We have a high priest who identifies with our struggles.

From the Stewardship Bible: In the old covenant, the people of God offered sacrifices and tithes in anticipation of something greater. Under the new covenant, we give and sacrifice to God in response to the fulfillment of that promise.

Henry David Thoreau: Most men live lives of quiet desperation. I have chosen to live deliberately.

Also I think about this scene from the movie the Book of Eli. To me it differentiates the mindset of someone who believes God's goodness is dependent on circumstances versus a person of faith who believes God is always good despite circumstances.

There is a gun battle between Carnegie (an evil leader of a town) and his men versus Eli/Solara (the heroes in the movie).

Eli (Denzel Washington) is seriously wounded. Carnegie comes up to him and is about to finish him off.

Carnegie: "God is good, isn't He?" (sarcasm)
Eli: "All the time."
Carnegie: "Not all the time" (as he shoots Eli and leaves him for dead)

I thought about that scene as I read Romans 8:35-39:

Who shall separate us from the love of Christ? Shall tribulation, distress, persecution, famine, nakedness, danger or sword? As it is written, "For your sake we are being killed all the day long; we are regarded as sheep to be slaughtered." No, in all these things we are more than conquerors through Him who loved us. For I am sure that neither death nor life, nor angels nor rulers, nor things present nor things to come, nor powers, nor height nor depth, nor anything else in all creation, will be able to separate us from the love of God in Christ Jesus our Lord.

What an encouraging word! No trial or amount of suffering in this world can take from us the promise of God's Presence and God's Place- Heaven/the new Jeru (city)Salem (of peace).

For God's Glory,

Ashley Hodge

Conversations

I'm blessed to have relationships with many godly men and women as clients, friends and mentors. Here are some snippets of things going through my mind lately- most of which had been gleaned from conversations with these people.

Marriage/relationship advice: don't read books on your needs or love languages which tend to focus your mind on how your spouse is falling short in those areas. Instead, concentrate on loving God and how your relationship with your spouse or friend is an outpouring of your desire to serve God.

Drifting: The dangers in the Christian life are not usually the sinful behaviors we know are wrong and repentant about- lust, pride, greed, deceit, selfishness. The chief danger in the Christian life is usually related to drifting away. Hebrews 2:1, "We must pay careful attention, therefore to what we have heard, so that we do not drift away." Good things in life become idols- basketball, golf, the pursuit of money, family, vacations, friendships. These things must always be viewed as resources to honor Christ and not ultimate pursuits.

Contentment: the mature person is grateful every day. Much of the world spends their time, money and energy pursuing clean water and food. Anyone reading this is blessed beyond measure and needs to be reminded daily how merciful God is to us. We deserve God's wrath. He has poured out mercy upon us. We are called to be a funnel for His mercy. A comical reminder that we live in an amazing time.

Fundamentals: we never outgrow the need to practice the fundamentals of the Christian faith. Every day we must stay on the path towards God- prayer; studying the Word; encouraging each other with truth; serving others. Without the daily practice of these disciplines we drift. Psalms 1:1-2, "Blessed is the man who does not walk in the counsel of the wicked or stand in the way of sinners or sit in the seat of mockers. But his delight is in the law of the Lord, and on His law he meditates day and night."

Without this meditation, we start by walking in the counsel of the wicked. Then we stand and stay awhile. The final progression is pitching our tent near Sodom and sitting down with the mockers. Only a holding on to Jesus daily will prevent our hearts from growing cold and finding comfort in the pleasures of sin.

Fix Your Thoughts on Jesus,

Ashley Hodge

Random Thoughts

I'm thankful to live in a country that enjoys a great deal of freedom and prosperity. I'm grateful for the sacrifices that many have made to make the United States a great nation. I realize that there is a tension between freedom and entitlements. The further we move down the road towards entitlements- government funded health care; government funded education; government funded retirement, etc... the less freedom we will enjoy. I am praying for our nation and hopeful that better days lie ahead.

I recently watched the "Book of Eli". Very violent film with bad language. But the faithfulness to a message of preserving the Word of God at all costs was inspiring. I thought Denzel Washington did an excellent job as Eli- a man who felt the Holy Spirit was guiding him to an unknown place to deliver the last Holy Bible remaining on Earth in a post-apocalyptic world. Definitely made me meditate on how important it is to treasure and memorize the Word of God.

Some books that I have been working on lately:

Genesis: Beginning and Blessings by Kent Hughes- highly recommend this book for anyone wanting to study a book of the Bible that is integral to the Christian faith. The book is a commentary on all 50 chapters of Genesis but the chapters are usually less than 10 pages so it makes for a good devotional each day.

Hole in the Gospel by Richard Stearns- Stearns is the President of World Vision. He calls Christians to demonstrate the hope of the gospel in practical ways to a hurting world. This book came highly recommended by two of clients who I respect immensely. So I felt God was trying to get my attention to read it.

Some advice that I have been gleaning from the plethora of investment articles and conference calls that I have been listening to:

Emerging market stocks and high quality multinational stocks appear to have the most favorable risk/reward characteristics of the stock market- Jeremy Grantham

Deficits, debt and demographics are major headwinds for investment returns. An inflation spike is probable in the next 10 years due to the need to devalue our debt problems as a nation. Buy the inflation protection now while it is cheap to buy (TIPs; commodities; shorting long-term treasuries)- Rob Arnott

Concentrate on stock, bond and real estate investments that pay consistent income and funds that have the flexibility to move between asset classes (absolute return funds); these type of investments do much better in the environment we are in. Steer clear of investments that depend on debt to grow- David Rosenberg

I'm thankful that Baylor survived the conference realignment discussions and continued as a member of the Big 12 (minus 2). I'm a basketball junkie and I have really enjoyed Baylor's ascent as a basketball program. Playing on television a lot is critical to Baylor being able to continue to recruit well. I'm looking forward to a fun basketball season as a Baylor fan this year with a nucleus of Quincy Acy, Lace Dunn, AJ Walton and incoming freshman- Perry Jones who many predict to be drafted in the top 3 picks in the NBA draft in 2011. Andy Katz has Baylor #4 in his preseason ESPN poll.

Perry has sick talent- one of my dreams is to be able to play basketball like the video attached to his name in my resurrected body in a restored Earth.

Finally, I thought this quote was good that I heard on the Dennis Prager show today while driving around lunch time. "The believer in God has to explain the problem of evil. The believer in atheism has to explain everything else."

For God's glory,

Ashley Hodge