THE NEXT TEAR DROP

"Before the Next Teardrop Falls" was one of the late great Freddy Fender's big hits.

According to a recent article in Forbes, since 2007 the average salary for college graduates is down 5%, even though the Bureau of Labor Statistics claims average workers' earnings are up 10%. (We recommend a quick visit to the old salt lick before you swallow that BLS stat, however.)

Point is the value of a college degree is falling while the cost is skyrocketing. It's the cost part you want to keep your financial eye fixed on as "America's college student loans ballooned into a $900 billion crisis."

So forget rock turning and distant lands, the next teardrop in right in front of you. The Forbes article explains it all in one short, declarative sentence: "It's the federal government."

The nation's total credit card indebtedness is roughly $690 billion, auto loan debt $730 billion. And student loan obligations, just one more once, $900 billion. That's roughly 30 times the Scold of Omaha's worth. But don't expect Mr. Buffett to bail them out unless there's some kind of package deal with mezzanine financing involved.

If you're familiar with the term smell as in Pell grants, you've probably missed your calling. You probably should have been a sommelier. In 1991, Forbes states, one in ten Americans carried student loans. It's one in five today. Forbes charges "it's the huge expansion of federal grants to higher education."

Between 2001-2008 that amount tripled. And in 2008 Congress passed a five year, $34 billion a year aids package, "making federal support for colleges and universities one of the fastest growing parts of federal discretionary spending in history."

Since we're talking education, here's an easy one. What over the same period went from 40% to 80%? My old girlfriend's spending pattern is close, but incorrect.

Correct answer: The amount of these loans the fed holds.

Enter stage left Pell grants. In the 11 years from 2000 to 2011 they "increased threefold from 3.8 million to 10 million." One more point from the article. Roughly "53% of recent college grads are either unemployed or acutely underemployed" with a whole gaggle more holding down menial jobs.

In Freddy's version he sings: "If the teardrops ever start, I'll be there before the next teardrop falls."

Unfortunately, Freddy' gone. But when the first student loan teardrop hits the old terra firma, the only one who will be there is Mr. and Mrs. and Ms Taxpayer, the real lenders of last resort and the only lenders in society government views as neither too big nor too small to fail.