Like many of you, I read the epic New York Times article on law school debt over the weekend. To answer the most consistent question I’ve received in the past 36 hours: no, I don’t feel like I’ve “won.” And I don’t feel like the NYT has somehow validated some of my commentary over the past two years.
Because the New York Times article, by David Segal, simply captures a story that everybody who has been paying attention already knows: law students are getting themselves into serious debt problems, with no plan for how to pay the debts back. This we know.
But there are things we don’t know. How do you get prospective law students to pay attention to the harsh economic realities before they sign up for law school? What can be done to make those economic realities a little bit less harsh? And what can be done after somebody makes a ruinous investment in higher education?
Now, as far as getting prospective law students to pay attention, your guess is as good as mine. Maybe a big-time article like this in the NYT helps. We already know, however, that unless it shows up in the U.S. News Law School Rankings, prospective law students don’t really care.
So let’s focus on the other questions…
The New York Times article profiles a number of recent graduates who are looking at a difficult legal employment environment. I want to highlight the coping mechanisms of one of the people in the article, a recent graduate of Thomas Jefferson School of Law:
If there is ever a class in how to remain calm while trapped beneath $250,000 in loans, Michael Wallerstein ought to teach it.
Here he is, sitting one afternoon at a restaurant on the Upper East Side of Manhattan, a tall, sandy-haired, 27-year-old radiating a kind of surfer-dude serenity. His secret, if that’s the right word, is to pretty much ignore all the calls and letters that he receives every day from the dozen or so creditors now hounding him for cash.
“And I don’t open the e-mail alerts with my credit score,” he adds. “I can’t look at my credit score any more.”
Michael Wallerstein, welcome to my world. I graduated from law school eight years ago, and I still don’t answer my phone unless I know who is calling. Every six to eight months, I call up the debt collection agencies that have been hounding me, and do a gut-wrenching dance where I try to give them a little more money towards debts that I’ll need to hit the lottery to ever pay off, while they ask for dollar amounts I simply don’t have. At the end of the day, I’m judgment proof. There’s only so much blood you can get out of a rock.
And “credit,” I mean, I don’t even know what that is anymore. I’ve been running a straight cash lifestyle since 2003. No really, I haven’t had a credit card since ’03, even my debit card isn’t a credit card. If I had hit the Mega Millions last week, it would still be seven years before I saw a 700 on my credit report. People say, “Elie, you know you’ll never be able to own a home or finance a car if your credit is that bad.” And I laugh. “Own”? Are you kidding me? Getting a landlord to accept my application to rent is an effort of futility. I once got passed over on a rental for a guy who had just been released from prison.”
How is a person supposed to deal with this kind of inability to cope financially? For a long time, I thought just like Wallerstein:
Another of Mr. Wallerstein’s techniques for remaining cool in a serious financial pickle: believe that the pickle might somehow disappear.
“Bank bailouts, company bailouts — I don’t know, we’re the generation of bailouts,” he says in a hallway during a break from his Peak Discovery job. “And like, this debt of mine is just sort of, it’s a little illusory. I feel like at some point, I’ll negotiate it away, or they won’t collect it.”
He gives a slight shrug and a smile as he heads back to work. “It could be worse,” he says. “It’s not like they can put me jail.”
Right. When people are in this kind of financial distress, with no real hope of paying it off (or even getting free through bankruptcy), the whole problem becomes “a little illusory.”
So what should Michael Wallerstein do? Hoping it magically gets better isn’t a plan (just trust me on this one). Hoping you magically get the kind of job you thought you’d get when you went to law school isn’t much more of a plan. Obviously, I don’t have any great answers, but it seems to me that if law schools provide alumni career counselors, they should also be providing alumni financial counselors. You’re dealing with twenty-somethings with more debt than they can get their heads around; I bet they could use a little help and a little information before things get out of hand.
I put it on the law schools because law schools are the only institutions I can see that could be designed to cope with the problem. A problem, let’s not forget, that they have done a whole lot to create:
Tuition at even mediocre law schools can cost up to $43,000 a year. Those huge lecture-hall classes — remember “The Paper Chase”? — keep teaching costs down. There are no labs or expensive equipment to maintain. So much money flows into law schools that law professors are among the highest paid in academia, and law schools that are part of universities often subsidize the money-losing fields of higher education.
“If you’re a law school and you add 25 kids to your class, that’s a million dollars, and you don’t even have to hire another teacher,” says Allen Tanenbaum, a lawyer in Atlanta who led the American Bar Association’s commission on the impact of the economic crisis on the profession and legal needs. “That additional income goes straight to the bottom line.”
Which brings me to my second point: where is the “consumer protection agency” equivalent for law students? We can talk all we want about how people should be able to make sound financial decisions, or at least be responsible for their bad choices. But, bottom-line, if you sell a toaster that explodes 50% of the time, the government won’t let you sell that toaster. Maybe the ABA doesn’t have the teeth to do it, but somebody needs to regulate law schools. How many lawyers need to be in the room before they start making up some laws?
Or maybe the answer is that we need to cut off the flow of money into law schools from federal loans? Admittedly, this is my least favorite option. I don’t think legal studies should be reserved exclusively for people from families who have the ability to put them through expensive education. The law is enough of an “old boys’” network as it is.
But I’m not convinced that the goals of social equality are served just because everybody has an equal opportunity to be screwed. The biggest argument in favor of preventing student debt from being discharged through bankruptcy is that it makes banks willing to loan the money. Well, maybe they shouldn’t? Maybe you should have to get an educational loan the same way you get a loan for a small business. Maybe you should have to sit down with a banker and explain to them how you are going to pay them back before they give you money. A 150 LSAT score and acceptance to a third-tier law school with questionable employment statistics? Sorry kid, nobody is going to give you money for that, for your own good.
I’m not sure of the right way forward, but the way forward is what we should be focusing on. How do you manage debts you can’t pay? How do you stop people from getting into this mess in the first place? The first step is admitting you have a problem.
After that? Aren’t there 11 more steps or something?
Is Law School a Losing Game? [New York Times]