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YOUR MONEY

Facebook CEO Pushes Web Access for All; Tech On A Tear; America Adding Part-Time Jobs In Recovery; Higher Education Prices Continue to Rise; Education Programs in Other Countries Examined

Aired August 25, 2013 - 15:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


CHRISTINE ROMANS, CNN HOST: NASDAQ shutting down. Microsoft CEO Steve Ballmer stepping down. Yahoo!'s Marissa Mayer upside down. Technology rules the world.

And all of this, while Facebook's Mark Zuckerberg says he wants to wire the world.

I'm Christine Romans. This is YOUR MONEY.

Make no mistake. NASDAQ's nightmare put your retirement at risk. It shows once again that computers run the stock market, and that humans don't yet know how to manage the risk created by the rise of the machines.

So what happens if we wire the world?

That's just one of the reasons I headed over to the "NEW DAY" set to speak with my colleague in the morning, Chris Cuomo, about what he learned directly from Mark Zuckerberg this week.

(BEGIN VIDEOTAPE)

ROMANS: Our very own Chris Cuomo visited Mark in Palo Alto, asked him about his new plan to connect the world -- he changed the world once. He wants to do it again.

CHRIS CUOMO, CNN HOST, "NEW DAY": Now, it's obvious to look at this about the growing market and the mobile space. But Mark Zuckerberg says this is not about making money for him, it's literally about changing the world.

(BEGIN VIDEO CLIP)

MARK ZUCKERBERG, FOUNDER & CEO, FACEBOOK: Here we use things like Facebook to share news and catch up with our friends. But there, they are going to use it to decide what kind of government they want, get access to health care for the first time ever and connect with family hundreds of miles away that they haven't seen in decades.

Getting access to the Internet is a really big deal.

CUOMO: What about the how? How do you do this? How developed is the plan? ZUCKERBERG: You know, we have a plan, a rough plan for what we think we're going to need to do to pull it off. And, of course, the plan will evolve over time and we'll get better ideas. But, you know, if you look at the trends, I mean, data is becoming more available to people, apps are more efficient to run. There are new business models to help more people get online.

CUOMO: It's also good for Facebook and companies like that, because mobile access to the Internet is where your business lies, right?

ZUCKERBERG: You know, if we were just focused on making money, the first billion people that we've connected have way more money than the rest of the next 6 billion combined. It's not fair but it's the way it is. And we just believe that everyone deserves to be connected and on the Internet. So, we were putting a lot of energy towards this.

(END VIDEO CLIP)

CUOMO: So, there you have it. Mark Zuckerberg, five billion people sounds huge, you know, especially even compared to 1 billion with him.

ROMANS: Right.

CUOMO: But he believes that it's a tool, that everyone should have, and what they do with it and what company they use is up to them.

ROMANS: Can he really do it? I mean, there are some companies that are already trying to do this. For example, Google has balloons, right, with radio antennas so that they can bring connectivity after a natural disaster. For example, there are tech companies scrambling to develop a smartphone that cost less than $15.

I mean, a lot of different companies are racing out there trying to change and trying to bring this about. Can he do it? How mature is this idea?

CUOMO: I think that judging by what he said, it's in its nascent stages, right? You have possibility and then you have feasibility.

And I think what takes him from one to the next will be how big a coalition he puts together, how much skin there is in the game. And also playing that against the inevitability of this change -- the market must grow, people must get more involved with access to the Internet, timeframe, the period involved I think is a much more cloudy conclusion.

ROMANS: Right.

CUOMO: You have to think 5, 10, 15 years. From the perspective of Facebook, that's where your mission takes you anyway.

ROMANS: He has so many social goals in his mission, but his social goals at some point could become financial goals, and the more people who are connected and the more people who are on Facebook, the more who you can advertise to. So, it's interesting to me how sometimes it seems like his social mission can be a little bit off from a financial goal, but they will merge.

CUOMO: Well, some great mind said that altruism is often motivated self interest, right? And that doesn't make it wrong, right? The fact that he's going to find a way to grow his market and also expand reach to people who need is a good thing. It would be nice if all business priorities worked that way.

And I think that what we are also seeing in Mark Zuckerberg is personal maturity.

ROMANS: Right.

CUOMO: He's not even 30 years old yet, but he is taking on what the significance of Facebook is, the issue of immigration. He's starting to wade into deeper waters that go beyond his own business model.

ROMANS: It's legacy stuff, legacy stuff, and he's not even 30.

CUOMO: Right? He already did the movie of his life. He is doing pretty well.

ROMANS: Chris Cuomo, nice to see you.

You know, Chris has had a very busy week. So, we thank you for joining us, because he also sat down with the president to talk about his new plan to cut college costs.

We're going to show Chris' conversation with the president later. Don't miss that. Really important stuff for anyone borrowing money for college or anyone who cares about the future of this country and our workforce.

Coming up: Steve Jobs, Mark Zuckerberg, Bill Gates, just a few of the founding fathers of tech. But now, the boys' club has some serious competition in shaping the future.

Meet Marissa Mayer. She's spending billions to save Yahoo! -- investors seem to love her; fashion magazines, they are taking notice, too.

But is it worth your money to buy her company's stock? We play buy or sell, next.

(COMMERCIAL BREAK)

ROMANS: Stock ownership in this country is at a record low. Many people think the market is just a big electronic casino and Wall Street always wins anyway.

On Thursday, the NASDAQ basically shut down for three hours. The company called it a connectivity issue. But when the President of the United States has to be briefed on the situation, you know it's a huge deal. And it did not help investor confidence at all.

Matt McCall is the president of Penn Financial Group.

Matt, NASDAQ nightmare put everyone's retirement at risk. How big a deal is it when a major American exchange goes down for three hours?

MATT MCCALL, PRESIDENT, PENN FINANCIAL GROUP: It's a huge deal. Two reasons, Christine, one because there was no update during those three hours, there was this uncertainty in the market; traders were freaking out, but more importantly, the individual investor at home turned on the news at night and they saw the headline that the NASDAQ shut down.

So, there's already this lack of confidence in the financial markets of the individual investor. This just adds to it. So, now, there's people sitting at home, I don't even know if I can trade my stocks during the day, I don't trust anybody, I don't trust Wall Street already, now this happens.

What do I do? Do I get out of the market completely because I don't trust the system?

So this is a much bigger situation, people think.

ROMANS: Is it the rise of the machines, electronic trading, you know, whether it's high-speed traders or is it high-tech exchanges, humans just can't monitor the risk?

MCCALL: They can't. But at the same time, there are still humans on the floor of the New York Stock Exchange, or on a floor in Chicago. This is when humans come back, because if humans were there, they could sit there and take the trades and make a market.

So, I think this actually may be good longer term, because it makes people realize we still need humans on the floor of the exchange.

ROMANS: All right. Three thousand of those -- many of the tech stocks were shut down on a trading day this week for four hours, but I want to talk -- volatility aside, I want to talk about the tech sector and how hot it is. NASDAQ up 20 percent this year, more than the Dow or the S&P 500.

They're the big old companies that make the hardware like Dell, Intel and Microsoft -- those stocks have done well in 2013, but those companies are still struggling to catch up to the cool kids. That's Facebook, Google and Apple, not all the cool kids make stuff that comes in a box, but they think outside of it, and that innovation has tech investors buying.

Matt, you're one of those tech investors. I want to play this game called buy or sell.

First, Apple. Apple reports a new iPhone on the way, a new budget version maybe as well, and a gold phone. Here is this performance year-to-date. Look at that. Buy or sell Apple shares?

MCCALL: This is definitely a buy down here based on two things. One, based on this chart -- you can it formed a big bottom back in April and June. That's what they call a double bottom. It's very, very bullish.

But even more importantly, longer term, if you look at the fundamentals of Apple, it's what is called the PEG ratio, take the P/E ratio over growth. It's below 1 at 0.7. That's a screaming buy to me.

You know, I'm on the side of Tim Cook. Carl Icahn is now dabbling in this stock. So, I think that, you know, at 525, 530, we see 700 probably the next 12 months.

ROMANS: Seven hundred. So, you put this one a very big buy.

MCCALL: It's a big buy for me.

ROMANS: All right. Let's take a look at this one. Next one on Facebook. When it went public you were not interested at all and you changed your mind and since have bought the stock. I want to show you what the stock looks like.

This week, it had a great move, rose above the IPO price of 38 bucks, even crossed 40 bucks. Are you still buying?

MCCALL: I will tell you this -- I'm going to point a hand in there. I sold some right about there, because when it popped earnings, it took a bit of a profit, but I still believe that there is more upside on this, so I kept some of my Facebook.

If you are a new investor, maybe you buy in the high 30s. But I still think this -- you know, mobile revenue went from zilch to 41 percent of revenue now. Their mobile users jumped 51 percent, and everyone is using iPhone. Everyone is using tablet. They are going to take advantage of this.

ROMANS: All right. So you are a buy. You are a buy. You sold a little bit, but you're a buy.

Cisco, 4,000 job cuts, but the stock is up big this year. You buy or sell Cisco?

MCCALL: I am selling Cisco. You can see here on the chart. It's dropping off. This is looking to grow about 4 percent of earnings next year, but it's still trading like it's a big tech stock. It's going the wrong direction for me. I'd get out of Cisco.

ROMANS: All right. So, you're out of Cisco.

Yahoo! beat Google in traffic. That was the first time in, what, two years. CEO Marissa Mayer, she's made a lot of acquisition. She got Tumblr.

Is Yahoo! a legitimate online company again? You buy or sell Yahoo!? It's up like 80 percent over the past year.

MCCALL: She looks pretty darn good in her new "Vogue" layout, too. I think she looks pretty good. She is a buy. So is Yahoo! a buy. They are both buys for me.

(CROSSTALK)

ROMANS: She's already sold. (Inaudible).

MCCALL: No, I'm buying Yahoo!. I think the name Yahoo! still resonates really big in the tech world and search world. So, I think she is doing a great job. I think it's a great buy, around $27.

ROMANS: All right. Buy around $27.

All right. Then, finally, Google, tell me what you think about Google?

MCCALL: Google is everything that you want to be. I mean, driverless cars -- you name it. I would buy Google way down here about 10 years ago.

But look at, as you mention, that pull back, look at that pull back right there, it's actually 850, 860, it's a great buy on Google right here. Long term, I mean, it's a P/E ratio of 17. This is a growth story. I'm buying Google.

ROMANS: All right. You're buying Google.

So, let's recap here. You say buy Apple. You say buy Facebook. You say buy Yahoo!. You say buy Google. Cisco is your only sell here.

You have two other bonus stocks that you like. They are tech companies, but they also have a retail presence.

MCCALL: Netflix is one of them because I think the cable box is done. I think we're done with cable box. Big thing here in New York -- TimeWarner-CBS debacle, going back and forth, I can't watch my shows. So, it's driving me nuts. If I had Netflix I could do that. So, I think Netflix is definitely in the future.

The other one is Amazon. I looked this morning. Did you see what I could buy on Amazon, Christine? I could buy organic baby food or I could buy parts for my ATV.

I mean, this company sells everything and anything. They have cloud services that they are offering right now, I think Amazon is a great buy, too, long term.

ROMANS: All right. Picking Amazon.

What do all these companies have in common? They spent millions of dollars on something that is becoming increasingly controversial. What that is and what the companies should do about it next.

Thanks, Matt McCall.

MCCALL: Thank you.

(COMMERCIAL BREAK)

ROMANS: Part-time jobs, a full-time worry for millions of American families. I'm Christine Romans. This is YOUR MONEY.

(BEGIN VIDEO CLIP)

ROMANS (voice-over): Only in America can you grow talent like this. We'd like to think of America as innovation nation. But the numbers reveal a slogan that should read part-time America.

Call it the "do you want fries with that?" economy. Part-time jobs have exploded, nearly doubling since 2007. And 8.2 million Americans who would rather have a full-time job punching the time clock part- time instead.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We're not there yet.

ROMANS: President Obama admits there is more work to do, but is his signature achievement, Obamacare, partly to blame?

REP. SHELLEY MOORE CAPITO, (R) WEST VIRGINIA: More companies have said that because of this law they'll have to shift full-time workers to part-time.

OBAMA: Teen retailer Forever 21 now the latest company demoting some full-time workers to part-time, not because of Obamacare, the chain says. It's just good business.

But even unions are worried. The Teamsters and two others sending a letter to Democratic leaders saying the Affordable Care Act could, quote, "destroy the foundation of the 40-hour work week that is the backbone of the American middle class."

A middle class in trouble with 600,000 more Americans forced to take part-time gigs since March. Whatever the reason, the numbers don't lie. Is America becoming a nation of part-timers?

(END VIDEO CLIP)

ROMANS: Those are the numbers, but let's get personal.

Dolly Martinez works two part-time jobs. She hasn't been able to find a full-time position since she graduated from college in 2009.

(BEGIN VIDEO CLIP)

DOLLY MARTINEZ, WORKS TWO PART-TIME JOBS: I usually wake up between 6:30 and 7:30, and then, of course, I would head over to the coffee shop first. That's usually an 8:00 to 2:00 shift. And then, of course, I would have like a 10-minute break, which isn't enough.

And then, of course, I'll have an hour break from 2:00 to 3:00 going to my next job, and I'll work from 3:00 to 9:00, but that job will give me a 30-minute break. After that I get off about 9:00 and then head home.

(END VIDEO CLIP)

ROMANS: Dolly says she brings home just about $1,500 a month.

Stephen Moore is an editorial writer for "The Wall Street Journal," Dan Gross is the business editor for "Newsweek" and "The Daily Beast."

Dan, many Americans are just like Dolly. They're asking, where is my recovery? Median household income has fallen nearly 4.5 percent to just over $52,000 in the four years, since the recovery began, since the recovery began.

Can America lead if the kinds of jobs we're growing are Dolly jobs?

DANIEL GROSS, BUSINESS EDITOR, "THE DAILY BEAST": The short answer is no. We have a jobs crisis and we also have a wage crisis. In other words, we are adding jobs that are 7 million more private sector jobs than there were three years ago, but they're just not paying more.

They're not paying more because companies don't feel they have to. There is a lot of slack in the labor market. They're able to move people around, and this is also part of the reason why they're not making people full-time.

They don't feel the pressure to treat employees, especially in these service industries like retail, to give them the terms that they want. These people would prefer to have full-time jobs.

ROMANS: It's a bartender economy for sure.

Stephen, Dolly also told us she has $15,000 in student loans. The president spent the week pushing to make college more affordable. Listen.

(BEGIN VIDEO CLIP)

OBAMA: We can't price the middle class and everybody working to get into the middle class out of a college education. We're going to have to do things differently.

(END VIDEO CLIP)

ROMANS: Stephen, you don't often agree with this president, but sometimes you do. Do you agree with him on college affordability?

STEPHEN MOORE, EDITORIAL WRITER, "THE WALL STREET JOURNAL": Well, I'm not sure. I certainly agree that college costs way, way too much, Christine. I have two kids in college, so it is killing me financially.

But I think the solution is not to keep throwing more and more federal dollars at these universities. I think the universities are the biggest scam going in America, the cost. There is no reason a college education should cost $30,000, $40,000, $50,000 a year.

And by the way, I think there is good news on this score. I think you're going to see more and more people moving towards online education, cutting these costs of colleges, because it circles back to what you were just talking about, Christine. If people's salaries and wages are falling, how in the world can they afford to send kids to school when it's taking up more than half of their income? ROMANS: The one thing is, $26,000 in student debt, you can afford to pay that back if there's a job on the other end. But if we are part- time America, that investment that we are encouraging kids to take just doesn't make any sense.

MOORE: You know what is the saddest part of the story you were talking about about the part-time nation, and there's no doubt the statistics document that. What's really discouraging is when you talk to those burger flippers and the people who are behind the counter at McDonald's or Forever 21 or retail stores, it's amazing, Christine, how many of them do have a college degree.

That's the real tragedy here. Even people graduating from college can't find that, you know, job that's going to lift them up into the middle class.

ROMANS: And we know that the average age of a fast food worker is like 29, so these are people with college debt, want to move forward and they're stuck in these jobs.

Dan, I want to bring in advertising legend Alex Bogusky (ph), out with this video urging all of us to buy American.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: If each of us spends just five percent more on things made in America, economists say we will create a minimum of a million new jobs for Americans.

(END VIDEO CLIP)

ROMANS: Is that what we need to do? Is America's desire to chase cheap one of the reasons why we only have jobs selling things, we're not making stuff. Is that part of the problem?

GROSS: Actually, this trend is actually happening. If you look at our trade deficit, which is the difference between what we import and what we export is down about 15, 20 percent over the last couple years. A lot of it has to do with the fact that we now produce a lot of energy, oil, natural gas, our own electricity; we're using a lot less imported fossil fuels.

And guess what, North Dakota, which is an energy state, has an employment rate of 3 percent. We are eating a lot more of what we grow, the food that we eat overwhelmingly comes from here; energy increasingly comes from here.

And then you're seeing at the margins, there was just a thing, Wal- Mart and GE talking about how Wal-Mart was buying more light bulbs and GE is making them at home. At the margins, some of those jobs are starting to come back. But yes, if we made a conscious effort to consume more American stuff, obviously we would put more people to work.

ROMANS: So Stephen, how do we create jobs that aren't part-time jobs right now? Or is part-time America the new normal? MOORE: First of all, I love the idea of buy America. I'm a free trader, as you know, Christine, but I also believe that people should buy good produced here in the good old United States of America. And I hated to see American businesses offshore their businesses to China or Japan or Germany or Mexico.

But we do need to get competitive in Washington. We have to take competitiveness seriously. How do we make American companies the most efficient in the world? How do we give them an edge?

I think when you talk about the big tax increase this year, when you talk about, you know, cap and trade legislation, when you talk about things like, you know, raising the minimum wage, I think those are things that make America less competitive and, therefore, make it very difficult for American companies to compete.

You certainly would like to see American CEOs let hold of the purse strings, get some confidence and start building factories, growing stuff here again. They're sitting on record amounts of cash. What is it going to take to unbottle all that? We'll talk about it next time.

ROMANS: Dan, Stephen, thank you so much guys. Have a great weekend.

Up next, more about making college more affordable. President Obama wants students to get a better return on their college investment. We're going to take a really closer look at why costs are climbing and whether this president's plan can stop that relentless rise.

(COMMERCIAL BREAK)

ROMANS: College is the gateway to the middle class, but that gateway is becoming much narrower. We already know that college graduates enjoy higher wages. They have lower unemployment. But students are leaving college with more than just this. Two-thirds of students graduate with debt, an average amount of more $26,000, and all that debt adds up.

(BEGIN VIDEO CLIP)

OBAMA: Our economy can't afford the trillion dollars in outstanding student loan debt, much of which may not get repaid because students don't have the capacity to pay it.

(END VIDEO CLIP)

ROMANS: So why are American students being driven into debt? Rising prices. Over the past 10 years the cost to attend a four-year public college is up a whopping 104 percent. That's in response to cuts from state and local government. It's putting more of the burden on students. The sticker price for a four-year private college, up a more modest 60 percent.

It's true, colleges are offering more financial aid to offset rising tuition. More than 20 percent of students get some financial aid from their school an average of $6,400 per student. That's on top of student loans and federal grants. But that aid is putting a strain on school budgets, forcing tuition prices higher.

The average sticker price today for four years of tuition at a public college is $38,000. That's a bargain compared to $127,000 for a private college. But for a child born today, it could be three times that -- $108,000 for public school, more than $360,000 for private college, unbelievable.

So as states, colleges and families struggle to pay the bills, President Obama wants the federal government to help. After speaking to students at the University of Buffalo, President Obama sat down with our very own Chris Cuomo and outlined his college plan.

(BEGIN VIDEO CLIP)

OBAMA: We want to create a new system of ratings for colleges so that parents and students know what schools graduate kids on time, are a good value for the money, lead to good jobs, because right now the rating systems -- the commercial rating systems tend to just focus on what's the most selective school or the most expensive school or has the nicest sports facilities.

(END VIDEO CLIP)

ROMANS: Return on investment. Rick Newman is a columnist for Yahoo! Finance.

Rick, could this ratings system, could it work? Could it help students and their families make better choices about how much money they're borrowing for which school and what they'll get out of it?

RICK NEWMAN, COLUMNIST, YAHOO! FINANCE: I think it could. What I think is encouraging about this is we hear all these plans out of Washington. Almost all of them go nowhere because they require Democrats and Republicans in Congress to agree and actually pass something.

Part of what Obama is talking about does not require any congressional action of all. This would be the Department of Education, which is already collecting this kind of data from colleges, basically putting this into a format that allows you to compare schools. So you can look at affordability from school to school and you can look at graduation rates and how much students earn once they graduate and enter the job market.

I think just providing that information in one place in a way that's easy for students and their parents to tap into can be very helpful.

ROMANS: How does that check tuition? We just showed you how tuition is going up, up and up. Some parents complain that their kids are in these dorms that are more luxurious than anything their parents ever stayed in. They've got rock climbing walls in the gym and they've got all these amazing facility.

You go to any college campus today, you see backhoes. You see building. You see (inaudible).

Is that part of the problem?

NEWMAN: I think that's part of the problem.

What's really going on in higher education is it's a seller's market. We've got more demand for college. That's going to continue.

(CROSSTALK)

ROMANS: If you don't have that degree, you don't --

NEWMAN: Everybody knows you have to go to college to get ahead. At the same time, it's not as if new colleges are opening up all over America the way like let's say a new airline might start up. We basically have a fixed amount of supply and when demand is going up and supply isn't, prices rise.

That's why college costs are getting higher.

ROMANS: And there's a lot of cheap money that you can borrow. So a 17-, 18-, 19-, 20-year-old kid can borrow $10,000, $20,000, $40,000, $50,000, $60,000, $70,000 to go to school. There's an endless supply of money for chasing after this really important investment.

Right. And that puts no pressure on universities to find ways to be more efficient, cut costs and so forth. So what might happen, if people find the information on the government website that's not going to necessarily directly force colleges to lower tuition.

What it will do is it will make consumers better shoppers for college. So you will have more tools that will help you figure out, where do you get the best return on your investment?

And you said that before, I think that's exactly the way people need to be thinking about college education. It's an investment.

Would you invest your retirement savings in something if you had no idea what the return was? You wouldn't.

ROMANS: And I think a lot of families don't think about it early enough. It's about four years we showed you the numbers, so for four years in a row, essentially you're buying a new car. You would save like hell if you had to buy a new car for four years in a row. There are also kids who are buying the Mercedes when really they can only afford to get a used car.

(CROSSTALK)

NEWMAN: Here's one of the reasons people do that. They think if I go to more of a name brand school that might cost two or three times as much as a state school, that might benefit me in the job market in the future.

But does it really? We actually don't know whether going to a name brand school that sounds good actually helps you get a job and earn more money. So this kind of information will help people -- it's not going to give you every answer you want, but it's going to help you think more clearly and more thoughtfully about how to spend this huge bucket of money.

ROMANS: I think you have to go to college with 18 CLEP credits under your belt. You've got to make sure when you're entering college you're not going to spend $15,000 getting caught up on math and reading. That's unbelievable.

And 25 percent of kids are ready in all the subjects when they go to college. It means you're spending borrowed money to do what we should have done in high school. I just feel like there's this mediocrity that's accepted. And look, all of us have been there, right? Take three years to figure out what your major is, whatever.

It's just not going to fly anymore. It just isn't.

NEWMAN: And one good thing about all this attention that the rising cost of college has produced is there are new ways to get through college without so much debt, perhaps without even any debt. Some schools are starting to offer three-year degrees, for instance.

ROMANS: I love those.

NEWMAN: So you go to school in the summer. If you think about it, why do college students take off in the summer, anyway, to relax at the beach or get a job as a lifeguard? Is that necessary? No, it's not, really. There are ways to use new online tools to take some of your courses that way.

Another thing people can do, go to community colleges to get those basic credits, make sure they can transfer into another school, and then do your last two years and get that degree from the name brand school. There are a lot of strategies for --

ROMANS: Or you can take those community college credits while you're still in high school in order to get you ready. Be very careful about the community college credits, they do transfer where you want to go because sometimes kids get stuck on that. There are a lot of options, but it means being 17 years old and being more strategic and a little financial manager, and we all know they're not.

NEWMAN: Teenagers are not the most financially literate people. So what does that mean? Someone else has to get involved, which is parents. Parents need to apply all the financial smarts they have.

Everyone talks about your house is your biggest investment and your car is your second biggest. I'm not sure that's true. Your kids' education may be an even bigger investment than your house when you consider what's at stake. Treat it that way.

ROMANS: People who are crying about $26,000 an average of student debt, you can pay that back. That is actually an amount of money you can pay back. It's these kids who have $60,000, $70,000, and $80,000 that I worry about so much. Rick Newman, so nice to see you again, at Yahoo! Finance. Nice to see you again.

Last year Americans spent $15 billion on video games. Halfway around the world, Koreans spent $17 billion on private tutors for their kids. What we need to change to keep our place in the global economy. That's after the break.

(COMMERCIAL BREAK)

ROMANS: The smartest kids in the world are not here in America. The U.S. spends more on education than almost every other developed country. What do we get for our money? U.S. high school students rank 31st in math and 23rd in science versus other developed countries. This is according to the highly regarded PISA rankings.

Our education system has barely made any progress in the last half century. Education levels can drastically change for better or worse. Nations like Finland, South Korea, and Canada have made huge gains in international test scores while those like Norway have more recently fallen.

Amanda Ripley is the author of the incredible book, "The Smartest Kids in the World and How They Got That Way." She's also a "Time" contributor.

Amanda, this book I think is required reading for anyone who cares about the education debate in the world now, especially in this country. You've been around the world. You looked at top-performing countries. You collected data on all of this, which is so important, because so much of what happens in education are opinions and feelings and not data.

You also enlisted the help of some field agents. You got American high-schoolers studying abroad in South Korea, Finland and Poland. They noticed a certain attitude in those schools. Listen.

(BEGIN VIDEO CLIP)

TOM, AMERICAN STUDENT IN POLAND: On the first day of school everyone was wearing black suits, black ties, and (inaudible) assembly and it was very formal. You could tell that people took their education a lot more seriously here.

KIM, AMERICAN STUDENT IN FINLAND: The students here care more. They understand that it's important. They see the reaction how what they do now will affect them. It's more real to them.

(END VIDEO CLIP)

ROMANS: We are number 31 in math, 23rd in science. We only get 2,300 days in school to prepare our kids for a lifetime.

What do we need to do differently?

AMANDA RIPLEY, AUTHOR, "THE SMARTEST KIDS IN THE WORLD": You know, one of the most exciting things about this is that the smartest countries in the world were not always so smart, so change is possible. It sometimes feels like it's impossible, but one thing that all of these countries did was they made school harder.

It sounds really simple, but in every conceivable way they made it much harder to become a teacher. They made the material more challenging, and the testing and the homework and everything was just of a more rigorous, higher quality. So it was quality over quantity.

ROMANS: And the information you got from these embedded students is just amazing.

Another one you shadowed, a kid named Eric, he went from an affluent Minneapolis suburb to South Korea. That's a country spends $14 billion a year on after-school tutoring. They actually have raids conducted to make sure children obey the 10 o'clock studying curfew because kids are so aggressive and so motivated. Listen.

(BEGIN VIDEO CLIP)

ERIC, AMERICAN STUDENT IN SOUTH KOREA: I really, really admire the way Koreans teach math because it's so much more integrative than the American system. They were learning advanced concepts of calculus and they were learning algebraic concepts in geometry and trigonometry.

(END VIDEO CLIP)

ROMANS: Interestingly, the stress eventually got to Eric and he transferred out.

How do you strike that balance between what you call the hamster wheel and the moon bounce schools?

RIPLEY: Right now the United States is definitely in the moon bounce category in most places. So when we think that our kids are under pressure and we have high-stakes tests, that is not anything close to what much of Asia is dealing with. That is a pressure cooker, which is the other extreme.

A much healthier model is a place like Finland, where when the kids are in school, they're doing pretty high-quality, challenging work, and they've got incredibly well-educated teachers who -- getting into teacher training college in Finland is the same as getting into MIT in the United States. So you have that quality again over quantity.

ROMANS: Some teachers in Finland who really want to be teachers and who are very bright, they don't make the cut. Something like 10 percent of people who want to be teachers actually can be teachers. It's a very respected profession.

Is that part of it, too, that you've got really dynamic teachers and not everyone can do it?

RIPLEY: Right, and this is something I knew would be important, but I was surprised at the ways that it affects kids themselves. So obviously when you have very highly educated people becoming teachers, that is great because they know their subject and they have a fluency for teaching.

But the kids actually pick up on this, and that's what really exciting. As you send the signal to kids about how serious you are about education, when you make it that competitive to become a teacher to begin with. ROMANS: A recent study in this country found that 18 percent of elementary school teacher preparation programs taught all of the most widely accepted practices here.

Are we in this country failing to teach our teachers properly?

RIPLEY: This has been a longstanding challenge in this country and also many countries around the world where we give lip service to say that education is important but we're not very rigorous in the way we train teachers in most places.

So most education colleges admit almost anyone who is interested in studying education, and we end up educating twice as many teachers as we need as a result.

ROMANS: Why don't we care more about it? We talk about it, we care about it. There are a lot of opinions about education reform. But you say something in the book that's so interesting that wealth has replaced -- we don't need rigor in this country in education because we have wealth.

We've always been a rich country. And that's starting to change, and the patterns of wealth are starting to change, and it makes education that much more important.

RIPLEY: I think that's right. Historically, we really haven't needed to produce millions of students who can think critically in math, reading and science. We didn't need to do that.

But now we're getting to a place where those skills are becoming more valuable than gold, and we really do know now that those international test scores you cited, there is nearly a one-to-one match between long-term GDP growth and increases in those scores.

ROMANS: Really interesting book, "The Smartest Kids in the World." Amanda Ripley is the author. It's so nice to meet you and I think it's really well done. I'm so glad you tackled it and I love the kids who were your super spies in there to help you navigate through it. Thank you so much. Nice to meet you.

RIPLEY: Thank you.

ROMANS: Think sports cars are sexy? It turns out big spenders actually might be a big turnoff. That's next.

(COMMERCIAL BREAK)

ROMANS: Yahoo! is back on the map. According to Com-Score, Yahoo! sites were the most visited in the country in July. It's the first time Yahoo! has beaten Google in more than two years.

For more stories that matter to your money, give me 60 seconds on the clock. It's money time.

(BEGIN VIDEOTAPE) ROMANS: It's back to school but not for everyone. Government spending cuts known as the sequester hit Head Start programs, eliminating 57,000 spots for preschoolers starting in the coming weeks.

You might think flashy cars and clothes are the key to love, but it turns out saving is sexy. A new study finds people are more attracted to savers than big spenders whose behavior may seem wasteful.

If you're a wealthy genius, there's a good chance you use Google. A new study finds that people who use the search engine tend to live in states with above average household income and college graduation rates.

Rumor has it Apple will ship two new iPhones in September, a high-end version and the budget iPhone. The lower cost option could boost Apple's presence in China, the fastest growing market for smartphones.

The safest car on the road is the Tesla Model S. The car earned the highest possible rating in government crash tests. And the company said that's not only a perfect score but the highest score ever.

And Kodak is finally ready to reinvent itself. A judge approved the company's plan to exit bankruptcy, but don't expect to see those iconic rolls of film back on shelves. It will now focus solely on printing.

(END VIDEOTAPE)

ROMANS: All right, he's already changed the world once, now Mark Zuckerberg wants to do it again. He has an ambitious plan to bring Internet access to everyone anywhere in the world. But he's not the only tech titan with a very big idea. Visit our blog at CNN.com/YourMoney to see some of the other wacky projects from the biggest names in tech.

"CNN NEWSROOM" starts right now.