Student Loans

Citi Sells Student Loan Division: Can’t You Hear the Bubble Bursting?

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In a couple of years, we might look back on today as the first point where the giant, unsustainable bubble that is the student loan market began to burst. Check out this press release:

The Student Loan Corporation (NYSE:STU – News), a subsidiary of Citibank, N.A., and a leading originator and servicer of student loans, announced that The Student Loan Corporation (“SLC”) and Discover Financial Services (“Discover”) have entered into a definitive agreement for Discover to acquire SLC, and thereby become the owner of its private student loan business as well as $4 billon of its private student loans. Separately and immediately prior to the transaction, (i) SLM Corporation (“Sallie Mae”) will acquire from SLC $28 billion of securitized federal student loans and related assets and (ii) Citi will acquire from SLC certain federal and private student loans and other assets totaling $8.7 billion. Upon the closing of the transactions described above, shareholders of SLC will receive $30 per share.

So Citi is getting out of the student loan origination business (although they’ll still have some existing loans on their books). I guess they don’t want to be the Lehman Brothers of this failing market…

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Quote of the Day: At Least You Don’t Have Chlamydia

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Unfortunately, I have a terrible secret that is making it difficult for me to get close to women: I have $190,000 in student loan debt.

– a correspondent calling himself “Debt Leper,” who wrote in to advice columnist Dear Wendy (via Instapundit). Reading the full question on The Frisky, this guy sure sounds like a lawyer.

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Quote of the Day: Actually, they just want your tuition dollars.

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Law Schools Now Require Applicants To Honestly State Whether They Want To Go To Law School.

– headline for an article in The Onion

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Most Schools Would Like Law School Transparency to Just Go Away

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In July, we profiled the efforts of a group of Vanderbilt law students who are trying to bring more accuracy and transparency to the employment statistics provided by law schools. Their group, Law School Transparency, has requested all ABA-accredited schools to provide useful information to prospective law students — information that neither the ABA nor U.S. News currently collects.

Without the regulatory hammer of ABA (which the organization inexplicably refuses to wield), or the public shaming of U.S News (a for-profit magazine, not an industry watchdog), LST is up against some long odds. They’re trying their best, but their interim report indicates that thus far, 188 law schools have completely ignored their efforts to report simple facts on the employment prospects of law school graduates.

In fact, to this point no school (not even Vanderbilt Law) has agreed to provide the information LST is requesting. Poor Zenovia Evans would have starved to death by now.

But 11 schools did find the time to send out a courtesy letter citing the reasons these schools cooked up to justify keeping people in the dark about employment prospects for law school graduates…

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The Student Loan Racket: Now in One Easy-to-Understand Graphic

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I’ve written a lot about the horrible reality of the student loan industry. I’ve talked about how schools have no incentive to keep costs under control, how student debt is the next “credit bubble,” and how student loans cannot be discharged through bankruptcy (which is ridiculous).

But I’m not good with pictures. Luckily, the people at CollegeScholarships.org are good with pictures. They brilliantly break down the entire student loan racket in one easy to understand graphic.

Look at it; share it with your friends. Send it to parents of kids bound for higher education. If you are wondering why America’s students are in such a bind, here’s all you need to know…

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Quote of the Day: They may take our jobs, but they’ll never take… our freedom!

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[S]tudents should embark upon a legal education with their eyes open; the job market is difficult, and likely to remain so. Legal education is not, as the comments of some would suggest, an entitlement program….

[T]he real value of legal education is not, and never has been, primarily economic. It’s not about money; it’s about freedom. Legal education gives students what 99.9 percent of humanity yearns for but is denied: control over one’s own life. It is a license to make of your life what you may, to live the American dream to its fullest.

– John Farmer Jr., Dean of the Rutgers School of Law-Newark, defending legal education in a guest column last Tuesday for the Newark Star-Ledger.

(Gavel bang: ABA Journal.)

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A Sit-Down with the Law School Transparency Hunger Striker, Zenovia Evans

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Ed. note: When Zenovia Evans (a.k.a. Ethan Haines) outed herself as the law school graduate going on a hunger strike for the cause of law school transparency, she revealed that she lives in Denver. Also living in Denver: Caleb Newquist, lead editor of Going Concern, Above the Law’s sister site for the accounting profession. Zenovia ended her hunger strike today, but Caleb was able to sit down with her for a revealing interview over the weekend. His thoughts — and pictures — appear below.

I met with Zenovia Evans last Friday at a Starbucks in Denver on Colfax Boulevard. The 28-year old, barely-employed law school graduate has been making a stir in the mainstream press and the legal blogosphere ever since she started a hunger strike on August 5th. Admittedly, I was (and remain) skeptical as to her approach as a way of promoting law school transparency and career counseling reform.

When I met Evans, she had a glass of water and a nearly empty 32-ounce Gatorade sitting in front of her.

The purpose of Evans’s hunger strike is well-documented in the coverage here at ATL and in several other news outlets. The bottom line for her is that law school transparency and career counseling at law schools are overdue for change. Major change.

On the day we met, Evans had allegedly abstained from solid food for the last 23 days, so I was expecting someone who was knocking on death’s door. Having experimented with fasting (for health reasons) in the past, and knowing the mental and physical preparedness that is involved, I was surprised to find her lucid — although extremely weak, fatigued and slow-moving…

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UMass Law School is Open: Law Dean Robert Ward and I Talk About It

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UMass School of Law (fka Southern New England School of Law) is open for business. Orientation happened last week, and students started classes yesterday, at Massachusetts’s first public law school.

As has been well-documented in these pages, I’m unimpressed. Put simply: there isn’t enough of a demand for new lawyers right now to justify a revamped public law school — no matter how many times you emphasize the word “public” in your press releases.

Yesterday, I had the opportunity to voice my concerns to the dean of UMass Law, Robert Ward, on NPR’s Radio Boston program. Click here to listen (I start running my mouth at the 8:30 mark).

I was asked on the program to provide an alternative perspective to the dean, and that’s what I did. But the mentality of the callers was particularly interesting. They really illustrated why there is so much support for more law schools…

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Hunger Striker Revealed: Scambloggers Unimpressed

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Zenovia Evans

A couple of weeks ago, we reported on “Ethan Haines,” a law school grad who is allegedly on a hunger strike to support the cause of law school transparency. Today, Ethan has outed herself in USA Today, as Zenovia Evans (pictured).

Here’s the USA Today report about her hunger strike:

One recent grad even went on a hunger strike on Aug. 5. “We have a new crop starting, and no one’s telling them anything about this,” says Zenovia Evans, 28, of Denver, who uses the name “Ethan Haines” on her blog, UnemployedJD.com.

The first in her family to finish college, she says that “no one wants to say, ‘Hey, career office, you failed me,’ ” but “I couldn’t take this lying down.” She says she owes more than $150,000 in loans.

So she’s a girl! Well, that’s one twist.

At least one anti-law-school blogger (aka “law school scamblogger”) who initially supported Haines / Evans now feels like the whole thing is a publicity stunt, maybe even a hoax…

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New Rankings List ‘Best Value’ Law Schools

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In a time of rising tuition prices and declining job prospects, looking at the value proposition of going to law school is more important than ever. For the second year in a row, the National Jurist has named the 60 best value law schools in its preLaw magazine. From these 60 schools, it has further honored the top 20 value schools (unranked for now, but to be ranked, one through twenty, in October).

For the second year in a row, the methodology used to formulate these rankings needs to be much better if anybody is going to pay attention. The National Jurist recognized law schools as “best value” schools if they met four criteria:

1) their bar pass rate is higher than the state average;

2) their average indebtedness is below $100,000;

3) their employment rate nine months after graduation is 85 percent or higher; and

4) tuition is less than $35,000 a year for in-state residents.

We’ll get to naming the top 20 in a minute. First, we need to break down these inputs — inputs that could have been so much better and more relevant…

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