Student Loan Bailout: Are Loan Forgiveness Programs In Danger?
While the vanguard of the student loan bailout movement pushes on (vanguard = me and this guy), the bailout army is in danger of being outflanked. The New York Times has been reporting that student loan forgiveness programs may not be on solid ground, especially at the state level:
If you want to become a public defender, Georgetown University can be a great place to get your legal education. So Heather Gatnarek expects to take on well over $100,000 of debt to get her law degree there and hopes to graduate in three years.Here’s the problem, though. She’s relying on a new federal program that forgives part of the student loan debt for graduates who enter public service fields. And she was scared out of her mind when she read a New York Times article on Wednesday on problems in Kentucky, where significant cuts in one of its loan forgiveness programs have put thousands of indebted public school teachers and nurses in a painful financial squeeze.
This must be how Roman generals felt when Hannibal was teaching them about double envelopment.
In fairness, we all know 1Ls who come in with humble dreams of working for the public good. Usually, money talks while commitment to public service walks. But given the retrenchment of the Biglaw market, absent strong loan forgiveness programs, many students will be looking at some tough options:
“I would be completely up a creek” without a loan forgiveness program, Ms. Gatnarek said. “I don’t know what I would do. Marry someone rich, I guess. People say that I could just do corporate law for a few years, but I wouldn’t last two days.”
Is this just a problem in a few states? After the jump, the NYT tries to find out.
The New York Times tried to take student loan forgiveness organizations to task:
The problem is that many of those running the programs also admit that there are no guarantees that financing for the loan forgiveness programs will survive the next state legislative session (or that the economy will improve enough for them to find other ways of financing the forgiveness). We found this so disturbing that we decided to call up every single entity, state or federal, that we could find that offered loan forgiveness programs. Then, we asked them point-blank if they would like to offer an absolute promise to borrowers or potential borrowers that the loan forgiveness programs would not go away while the borrowers were still using them.Some states ignored us or didn’t call back in time. Some were stumped entirely and said the question actually raised Constitutional issues, which left us a bit befuddled (and there was a trained lawyer in our posse). A few insisted that theirs was not a Kentucky situation, so scared were they of being tarred with that state’s taint.
Translation: you need to have your loan forgiveness backed up by Wu Tang Financial.
But should the instability in the loan market discourage people from going into debt for higher education?
We know, we know. How irresponsible of mere teachers to take on that much debt in the first place, right? Many of the online commenters on the article in Wednesday’s paper certainly felt this way.But if education is a fundamental right, then it’s hard to argue against public policies that try to make sure there are enough teachers to provide that education. And if loan forgiveness is what it takes to get teachers to head to rural schoolhouses or poor urban schools, then that would certainly seem to serve the national interest.
So loan forgiveness programs are not some sinister form of social engineering. Nor do they encourage overindebtedness, per se. Education costs what it costs, and if you need to borrow to attend and intend to eat while doing so, then borrow you must. In fact, borrowing to prepare for a career in nursing or law enforcement makes perfect sense if governmental entities are promoting loan forgiveness programs.
“Education costs what it costs.” I don’t accept that premise. When are we going to turn our pointy pitchforks on law school tuition?
Unfortunately, tuition isn’t likely to come down as long as so many people are eager to go to law school in the first place. Nobody expects the Spanish Inquisition, and nobody expects “overindebtedness” to happen to them.
Students Relying on Loans Wonder Whether Forgiveness Will Last [New York Times]
Earlier: Student Loan Bailout. We Are So Going to Make This Happen
Student Loan Bailout. Just Do It.
(68) 
Comments
RALPH BAXTER PAY CUT!
Marry someone rich? You guess?
Please don't make all women look bad. It is hard enough for us to be taken seriously in this profession as it is without your inane comments.
3rd cupcake for MysTTTal today
She can always get a job with me.
Interest on most student loans is capped at 8%.
+The inflation that is coming down the pipe will outpace that by a factor of ten.
->Lenders will be settling loan accounts for pennies on the dollar to get rid of them.
=We don’t need a bailout.
Your crappy writing and general cluelessness severely dulls and rusts the tines on your pitchfork.
Are you really, really going to look for someone to give you your law degree for free? That is, after all, what loan forgiveness (aka bailout) is all about.
Hey, where's my mortgage forgiveness? My business loan forgiveness?
I mean, hey, why should I be responsible for ANY of the debt I incur?
Comment removed by moderator.
7 - you bore me.
Look Kids,
All future and current law students, you will be fine! Eventually everything works out, you will get jobs, and all will be well.
That said, if you are attending UPenn State, Crane Poole & Schmidt will no longer be hiring any from this wretched institution. We have fired two summers already this year for being complete and utter Hacks! No more Upenn State at CP&S.
-Denny Crane
marry someone right.... that's a chicks solution to everything.
Elie, good job on the references to Hannibal and Wu-Tang Financial.
Wu-Tang is assuredly nothing to **** with.
#8 - Michele Obama does not have a penis. Don't be an idiot.
Simple solution to 6 figure law school debt:
Go to a Public University.
See? SIMPLE.
Or, better yet, because you don't know what you want to do with your life, DON'T GO TO LAW SCHOOL.
Guys at my high school got their JD/MRS degree all the time. It was no big deal.
These people go to law school banking on someone else (eh hem...by which I mean, you and me Mr. and Mrs. Taxpayer) picking up the tab after the fact.
Are you kidding me? These are the same irresponsible schmucks that ruined the mortgage market. If you want a $100,000 law degree, commit yourself to paying it back yourself or DON'T GO TO LAW SCHOOL!
I am sick and tired of paying for everyone else's dreams.
Definitely do all you can to avoid being tarred by Kentucky's taint.
"I don't know what I would do. Marry someone rich, I guess. People say that I could just do corporate law for a few years, but I wouldn't last two days."
This person should never be a lawyer. Even if she's so amazingly fragile that this is what she's thinking and telling her friends, how is this going to look when she inevitably tries to go the biglaw route and gets googled by them, or she tries to snare a husband and he googles her? Amazingly poor judgment. Clearly, she belongs at Quinn.
This WHOLE COUNTRY is in danger.
Don't worry, with a little more socialism the entire economic system will collapse and their won't be any money to hire bill collectors.
THERE.
my bad.
#19
Elie, a loan bailout for law students is a dumb idea. There has barely been an uptick in the number of people defaulting on student loans. People make their student loan payments at a very high rate, higher than most other forms of loan, and the percentage grows as you go up the educational ladder. The students most at-risk for defaulting are actually kids who drop out of mediocre two and four year universities who have little prospect of income and are often unaware that they even need to pay the things back. They assume they don't owe b/c they didn't get the degree.
I'm sure their are law grads struggling out there, obviously the economy sucks, but there are people who struggle with them in normal economies as well. What did you say to the person who had to stop working to care for a sick parent in 2006, and so didn't have the income to make loans payments? Nothing. There are always going to be some people struggling with their loans, that's life. Until there is a significant uptick in loan defaults, this is only going to be a dumb idea.
She wouldn't last two days in corporate law, but she thinks she is cut out to be a public defender?
I feel sorry for her future clients.
The ship be sinking...
Johnny Lawerence here. After I got my but kicked by that loser Danny Larusso at the All Valley Tournament, I went to law school, I didn't need any government bailout to pay my debts and neither should any of you. Act like a man!
9 - In other words, you haven't an intelligent rebuttal. Surprised that logic and rational thought would "bore" an attorney.
Unless, of course, you're one of the whiners looking for a free ride. Then I could see where it might bore you.
Michael Ray,
I am just curious how far?
If you went to law school and can’t get a job, don’t despair! Many people before you left law and used their degree for other purposes. You can pay back your loans some other way. You can enter politics, or use your diploma as a rag to wash windshields at a traffic light somewhere. Or you can be like judge “hard case” Hardcastle from Hardcastle and McCormick; after a distinguished career as a criminal court judge, he retired and put his legal know-how to use fighting crime.
Denny - you're in the Coast Guard, do something about it already.
24, Johnny Lawrence, raises an excellent point. If Johnny had reasonably relied on his sensei from the Cobra Kai Dojo in sweeping the leg and had done this to his detriment (i.e. losing to that bitch ass Danny), would he possibly have a claim under the Restatements? I will need to dust off my Contract notes to be sure.
I think its unfair to say that law students are being irresponsible by taking out debt for law school and then hoping for loan forgiveness if they want to work in public service. To get really good government and public service jobs, students need degrees from top law schools. These law schools cost a lot. They will not get paid anywhere near what their counterparts are being paid in the private sector. Should we really punish students who want to go and do good things with their law degree despite the fact they could make tons more money elsewhere by making it financially impossible for them to do so? Additionally, its not like these students aren't paying anything back on their loans. Their monthly payments are just calculated according to what their salary is and after 10 years, the remiander of what they owe is forgiven. Without loan forgiveness programs you can forget about good students giving back to society by taking public sector jobs because even if they desperately want those jobs, there is no way financially they will be able to do so.
Are we really going to compare students who make big sacrfices working in public sector to those who were greedy and financially screwed themselves up, thus requiring a bailout?
Someone should throw up the bat-signal for promissory estoppel guy - this is his moment if ever there was one!
People should stop wining about student loans. You made a choice to attend an expensive law school – as opposed to a less expensive and less prestigious state school. You made a choice to take out loans – instead of working and going to law school part time. You made a conscious choice to take on a massive debt, and you are not entitled to have it forgiven just because you want to take a feel-good public interest job. You should have to wallow in biglaw misery like the rest of us.
29 -
I appreciate your attempt at bringing in Restatement Section 90 of the Law of Contracts, but if you recall, the advice to sweep the leg was given to my other teammate, and not Mr. Lawrence. Based on this, and this alone, I don't believe promissory estoppel applies.
- The "put him in a bodybag" guy
I would hazard a guess that no one who has left a comment yet has made a single student loan payment.
Keep telling yourselves what you're telling yourselves.
I'm sick of private school graduates bitching about the cost of their education. You should consider the cost of your education before you decide on a law school if you want to pursue public interest. Why should tax dollars pay for a $100,000 Georgetown law degree when the attorney could have gone to State for 1/4 of the cost (or possibly for free)?
I would hazard a guess that my tax dollars are paying for 34's law degree.
First to say First.
as an economic stimulus a student loan bail-out makes sense. Recent college and grad school (including law school) are part of the KEY demographic that advertisers want. Why? because we need "stuff".
I graduated in-state undergrad from a public university with $40k in student loans. That works out to about $205 a month with student loan consolidation. I know what I'd do with an extra $205/mo. What would you do with an extra $300, $400, $500/mo?
I don't think we should be having another commie bailout plan courtesy of Barry Hussein. There is a private sector remedy for the student debt crisis, which the young lady already alluded to.
I hereby call on all old duffs in need of a younger, more nubile second or third wife to do their patriotic duty and bail out these debt-distressed damsels. Apparently women always need a bailout, whether it's from Big Brother Barry or from a nice, older gentleman.
I would rather not see a student loan bailout. What I would like to see is the AutoAdmit/Above the Law prestige-whore crowd default on their student loans and get disbarred or suspended from practice.
I want to see all the negative karma you bastards have accumulated come back to you. I want to see you have to compete for jobs you wouldn't be caught dead applying for otherwise. I want you to recognize that pride goes before a fall.
Sincerely,
--Someone who went to a Tier 2 school on a near full scholarship and didn't take out any loans at all
40,
Where do you think the money for your scholarship came from?
p.s. saytpcareerprospects
#33
I usually refrain from comment on ridiculous or inane comments/articles. Even the idea of a "student loan bailout", an idea reeking of typical Generation Y entitlement, was alone not offensive and ridiculous enough to provoke comment.
However, #33, you have gone too far. Please do not desecrate the canon of the Karate Kid. http://www.youtube.com/watch?v=ssAvULPzuzg
This is a real issue. All you rich kids should shut up. If you want to use your law degree for anything "good" we really need to look into a bailout of sorts.
Here is an idea, slash taxes across the board so that people get more take home pay. Even a public interest job with low pay gives you disposable income once you have about 40% more money to work with. That'd also solve the economic problems as people would have more money to work with. Instead, taxes just get higher and governments look for more ways to take money, and then just bail out major corporations with that money, who of course won't suddenly by "stimulated" because it's always been a consumer driven economy.
I don't understand why going to a law school that brags about its loan forgiveness programs and encourages students to enter the public interest and expecting those loans to, in fact, be forgiven is irresponsible or entitled.
22: Her belief that she'd last two days in BIGLAW probably has more to do with the content of the work in BIGLAW, not the intensity. As I understand it, being a PD is no picnic. I can't imagine it's more boring than being a BIGLAW drone, though.
40 - sorry that your mediocre at best intelligence couldn't get you a high LSAT score. however, we at XO/ATL are the elite, you are not. glad you took the full scholarship, so you don't have a ton of loans to pay off at $30k/yr insurance defense.
Let's see, a college student graduates and wants to save the world after getting a prestigious law degree. They feel they have to take out massive loans to support their do-gooder habit. It's no wonder that it would never, ever, cross their mind to work for a few years, save up, and avoid loans mostly or even altogether. Gen Y feels entitled to saving the world now, because their skills are SO unique, and they are SO much better people than those that have walked the earth before them. The rest of the nation should subsidize their liberal fairy fantasy, even when they are eventually making 6 figure salaries. Don't take out the loans if you can't pay them. This would seem obvious to those that have to actually support themselves, but Gen Y will be supported by King Barry.
47 nailed it.
Taking control of student loans is easy... Here's how:
http://www.youngtexaslawyer.com/2008/11/24/get-control-of-student-loans/
We already have a bailout in the sense that interest rates are super low b/c of the economy and like another comment said... Inflation goes up, loans go down.
30,
Most of what you say is true. However, just because something is a noble goal (i.e. attracting students to government/public interest work), doesn't mean the public should have to subsidize it if to do so would be fiscally irresponsible. Also, you ignore the fact that working for the government has other tangible benefits that the private sector does not offer. Generally speaking, these are usually normal working hours, a good amount of guilt-free vacation, good benefits and relative job security.
47,
I'm so sick of you old farts pissing on our generation. You are the reason we are in this mess. Your McMansions and disgusting need to out do your neighbors are the problem. Boomers are the most inefficient bunch of inflated egos I have ever seen. They don't understand technology, don't want to learn, and are inefficient as hell. Work to live, don't live to work.
47,
I'm so sick of you old farts pissing on our generation. You are the reason we are in this mess. Your McMansions and disgusting need to out do your neighbors are the problem. Boomers are the most inefficient bunch of inflated egos I have ever seen. They don't understand technology, don't want to learn, and are inefficient as hell. Work to live, don't live to work.
I don't understand why everyone is arguing for a complete bailout as opposed to something more reasonable. I took out 200k in student loans and have every intention of paying them back, but don't think it is fair that banks are getting interest free loans and I am paying 6.8% on my public loans.
Given the current economy, student loan whiners should advocate for a reasonable course of action by the government: lower our student loan rates. I would be thrilled if they slashed our 6.8 down to 3.4%.
51 -
I'm 29. Quite the old fart.
-47
47,
It was President Bush who signed into law the College Cost Reduction Act of 2007, which implemented a loan forgiveness program for public sector employees. Obama had nothing to do with it (except for voting for it as senator).
51 - You mean you're angry about the McMansion YOU grew up in? The private education YOU (might) benefit from if you ever catch a clue?
Dumb ass!
I heart 47.
I am 35 and I'm a PC.
51 - Um, if you want to work to live, leave Biglaw fast.
And learn the difference between not understanding technology and not allowing it to dominate our life. LOL on that one u 8=D
55 - Very true. My issue is more with those that wake up after law school crying about a student loan "bailout". But there is also the issue that the CCRA is not guaranteed to be here forever, although it would be quite the dick move to pull it out from under people (enter Restatements 90 guy). And it's not like Bush was exactly a fiscal conservative either, although it almost seems that way compared to the blank check Barry is handing out. Either way, Gen Y still hates Dubya, and Barry is their precious.
51 nailed it. The boomers are shortsighted and the most selfish group of people to have ever existed.
Yeah, I said it.
We're talking about BigLaw associates and wannabees? Let's see... really bright people who could have made important contributions to their country as scientists or engineers. Instead, they rolled the dice on making $X million/year greasing the wheels for Wall St. to make funny money, and they lost. America owes these people what, exactly?
46--the LSAT is just a dumbed-down version of the GRE anyway, so I doubt your intelligence is that much better than mine. And the LSAT has nothing to do with law anyway.
BTW, I don't work in insurance defense. I also don't have to spend the next 4-8 years of my life as some partner's ass-slave.
HTFH,
--40
61- You're absolutely right. Engineers and scientists don't need no steenking lawyers.
Were you serious or being sarcastic like me? Take a moment to think about the role the law and lawyers play in facilitating engineering and science, and then get back to me. I've billed plenty today, so I'll wait.
Hey 46, when you're finished paying off your loan, put aside some cash to buy some humility. You'll need it after you get laid off from your cushy Biglaw job.
Hey guys, I found a permanent way to relieve yourself of student loan debt:
http://www.thegunsource.com/
62 - your bitterness towards xo/atl sure do indicate you're a student at DePaul Law!
64 - full ride, sorry to burst your bubble. i'm in biglaw because i like it and can make $, especially with no real loans to speak of. :)
no bailout. make em bankruptable after 10 years. this will make it more attractive to pay the off then declare bankruptcy (by far) and yet still let those who sincerely try their hand at a degree that doesn't work out and still cant make any dent in their debt after 10 years a chance.
additionally it will add to the risk for creditors and make them not issue 200k in debt to a 4th tier student-causing the problems in the first place: artificially high demand for law school becuase of easy access to loans and also lower the amount of lawyers graduating becuase they wont be able to get loans
this is really simple...but noone wants to do what make sense
Thank you 67. Finally, an idea which actually makes sense, and won't be overly intrusive (from a regulatory and taxation standpoint).