Student Debt

These days, when we speak about new lawyers, we tend to focus less on the mere accomplishment of graduating from law school, mainly because the only admissions requirement at some institutions is a pulse, and more on sobering topics like incredibly high student debt loads and rampant joblessness. This is the “new normal” for law school graduates, and it isn’t as appealing as deans would have you believe.

Given the fact that the market for legal employment dropped out from underneath those who graduated between 2009 and 2011 (and continues to falter to this day), servicing high amounts of law school debt is more difficult than ever before. Declaring bankruptcy isn’t a real option for many, and enrolling in income-based repayment is a temporary solution that has been called a ticking time bomb. You just can’t win.

Unwelcome debt situations usually go hand in hand with law degrees, and they can happen to the best of us — even those who were once lauded as geniuses, like Andrew Carmichael Post. In America, even if you graduate from college at 17, enroll in law school at 18, and pass one of the most difficult bar exams in the nation at 22, you’ll still be saddled with unmanageable debt — in this case, to the tune of $215,000.

How in the world will Post be able to shoulder such a heavy debt burden?

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Andrew Kravis, recent Columbia Law School grad and new millionaire.

Congratulations to Andrew Kravis. He graduated from Columbia Law School this past May, but he’s already earned enough money to pay off all his student loans.

And no, he doesn’t work at a hedge fund or private equity firm. He doesn’t even work in Biglaw. He’s a public interest lawyer, about to start a fellowship at Lambda Legal, the nation’s oldest and largest legal organization working for LGBT civil rights. He was honored upon graduating from CLS as one of two students “who have demonstrated outstanding achievement in the furtherance of lesbian, gay, bisexual, and transgender rights.”

So how did this outstanding do-gooder also do so well? How did he earn enough money to pay off all his student loans, and then some — a cool $2.6 million, to be exact?

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As we mentioned in Non-Sequiturs last night, JPMorgan Chase is getting out of the student loan business. The bank will stop accepting new student loan applications this October.

A spokesperson for the bank said: “Students and their families are increasingly relying on government-backed loans rather than private student loans, and as a result the market has declined by 75% in the last five years.”

My friends, this is a bad sign. JPM is just a minor player in the student loan game, but the fact that they don’t think lending money to students for education is a good business anymore should make us worried. The fact that the federal government has crowded out this private lender is not good.

It means that we’re one step closer to the whole student loan bubble bursting…

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Our readers love nothing better than law school rankings, so it was kind of the National Jurist to roll out its first-ever list of the Best Value private law schools. This new ranking comes in addition to its regular ranking of Best Value schools (which is usually dominated by public institutions of learning). These lists are usually released in alphabetical order, but this time, National Jurist assigned letter grades to each school due to a post-publication error. We’re off to a great start already.

The Best Value ranking typically takes into account the following criteria: tuition, cost of living, average student debt, the percentage of graduates employed nine months after graduation, and bar passage rates.

When the National Jurist created the Best Value rankings to “honor schools that took the cost of legal education seriously,” why choose to highlight private law schools at a time when tuition is higher than ever?

We’ll explore possible answers to that question, as well as reveal the rankings, after the jump…

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With nothing else to rank at the moment, U.S. News decided to try its hand at “news” and put out an article analyzing the expected fallout from the new mortgage lending rules coming down from the Consumer Financial Protection Bureau. The new rules are intended to stem the tide of future foreclosures by clamping down on profligate lending.

But all clampdowns leave people out in the cold.

To put this more directly: if you thought being a lawyer with good credit would put you in a position to buy your own home, you’re probably wrong….

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Student loans are a real bitch, and declaring bankruptcy won’t even save you from them — unless you can prove you’ve got undue hardship and a “certainty of hopelessness” about you, which most people have too much pride to admit. Without government payment plans like Income-Based Repayment, Pay As You Earn, and Public Service Forgiveness, a much larger portion of our population would be living in a van down by the river, still drowning in educational debts, but too far off the grid for the bill collectors to come a-knocking.

This is why people absolutely lost their minds when the Daily Currant, a satirical online newspaper, published a story about President Barack Obama’s supposed bid to forgive all student loans. Given the responses, it looks like the youth of America is still in need of some change they can believe in…

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This is some quality dissembling. Dean William Treanor of Georgetown Law decided to enter the fray by responding to the New America Foundation report that I wrote about last week that claimed that Georgetown Law was using a loophole to use its public service debt repayment program to profit off the federal government. By way of recap, the school agrees to pay off the income-based payments of its students in the federal income-based repayment plan itself, then raises tuition for the next crop of students and uses that money to pay off their payments later, creating a big circle where tuition is artificially (if only marginally) inflated and taxpayers pick up the tab and the school pockets the profit.

Dean Treanor’s response attempts to deflect the criticism, but the article misses the entire point of the controversy.

What’s the important life lesson that Dean Treanor learned from Patches O’Houlihan? Oh right: Dodge, Duck, Dip, Dive.

And Dodge….

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You might remember Matt Taibbi from such hits as “F@$% Goldman Sachs” and “Wall Street Trades Soylent Green.” He is a blistering critic of… everything.

In an upcoming Rolling Stone article, Taibbi has turned his withering gaze to the student loan industry. He criticizes Democrats, Republicans, and President Obama. Taibbi points out Obama’s hypocrisy on the student loan issue, something that I’ve been doing since 2009, but on this issue, the more the merrier.

While Taibbi’s article focuses on the crisis as it applies to college students, he can’t help but include some examples from the legal industry. I think that’s because no matter how much colleges and universities take advantage of college kids, law schools are worse….

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There’s been a lot of talk recently about the value of a law degree, and whether or not it’s actually worth a million dollars, degrees from some law schools are obviously worth more than others. Let’s be real for a moment here: If you’re taking out six figures of debt just for the privilege of attending, your starting salary damn well better be somewhere near the same amount, otherwise you’re going to be underwater for most of, if not all of, your adult life after law school.

Living with debt is scary, and if you want to have a better chance of being able to comfortably do all of the things you thought you’d be able to after getting a law degree, things like owning a home and having a child, you need to choose your law school wisely. You can start evaluating your options — or giving yourself a pat on the back — by checking out the latest U.S. News rankings for the 10 law schools with the biggest return on investment.

Which schools made the list? Not all of them are in the T14, so you may be surprised…

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As mentioned in Non-Sequiturs last week, this story is why we can’t have nice things. Specifically, why lawyers make it so we can’t have nice things.

On Friday, the Washington Post reported that Georgetown Law had worked out how to bilk the federal government into fully paying for some its students’ tuition and managed to create a profit for itself on the side. This is caused a bit of a stir Friday afternoon, but unfortunately the practice is neither new nor limited to Georgetown.

Though some tactics Georgetown employs may go beyond what any other school has the gall to attempt….

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