Student Debts

We’ve talked extensively about the decline in law school applications. Law schools are now entering a time of consequences. Schools at the very top are going to do fine. Shockingly, schools at the very bottom are probably also okay, as there is always somebody who has no business going to law school who still wants to go.

But schools in the great middle — from just outside the top tier to anybody trying to maintain a bare minimum of standards — are feeling the crunch.

Something has to give. And one law school on the West Coast has decided that people should be the first to go. First, the school fired staff. Now, the school is slashing class size. But I’ll note that the school does not seem to be slashing salaries or cutting tuition. Apparently, people are easier to cut than budgets….

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For prospective law students, the promise of merit-based scholarship money amid a broken legal market seems like an incredible deal. So what if there aren’t any jobs? You’re going to go to law school at a significantly discounted rate, or maybe even for free, so you won’t be at any real loss.

Or will you?

What law schools don’t like to tell you with regard to these frequently conditional scholarships is just how difficult it can be to keep them. When you’re banking the terms of your financial future on a law school grading curve, things can get a little tricky. Some might even describe the situation as a big racket. Thankfully, the ABA has started keeping tabs on these programs, and now there’s a wealth of information available on retention rates for scholarships of this kind.

So out of the 140 schools offering conditional scholarships, which ones are most likely to take back your law school funny money? Let’s find out…

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Won’t be long before law schools are getting this guy to sell you legal education.

It really bothers me when law schools resort to “used car salesmen” tactics to try to induce law students to sign up for school. Say what you will about the value of legal education, but it’s not like buying a Sham-Wow. Students can’t be influenced by “special, limited time” offers when trying to decide if and where to invest three years of their time. If nothing else, you’re entering into the lottery to win a legal career, not an iPad Mini.

Law schools that try to exploit “impulse buy” reactions to fill their seats should be ashamed of themselves. They are taking advantage of kids — twenty-somethings who don’t have lawyers or accountants or appraisers representing their interests. Law schools are at a huge informational advantage concerning the true value of their services, value that they try to hide at every turn from independent third parties. Law students are trying to cobble together what they can based on word of mouth, Google, and some published rankings. Turning the screws on these prospective students with offers that “expire in 24 hours” is a good business strategy if you are trying to sell them a toaster, but it’s a disgraceful thing to do for a place that claims to be an “institution of higher learning.”

I can only hope that anybody who received this “hard-sell” email from this law school did the smart thing and just walked away…

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For all the criticism the government takes for poor money management, they really do know how to bring in the revenue. They may not intend to bring it in, but they bring it in.

For example, the U.S. government has investments poised to make 55 cents on the dollar. And these investments are also almost impossible not to collect.

And these investments are you. Or at least those of you with government loans from law school.

Steven Harper, author of The Lawyer Bubble: A Profession in Crisis (affiliate link), reviews the problem — and the less than stellar proposed solutions coming from Congress and the White House…

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Now with the internet, you don’t even need to spring for a nice plate to panhandle.

In the before times, in the long, long ago, there was no internet. There was no Shark Tank. There were banks and capitalists. You had to go to them with your business ventures, beg them for start-up money, and that’s the way the world worked.

Now, anybody can beg anybody else for money. There’s no dignity anymore. There aren’t eight Jewish bankers who control everything. You don’t have to borrow money for your house from Mr. Potter. You don’t need to promise eternal salvation before passing the hat around. Now, any idiot with a dream and a keyboard can go on the internet and beg people for money.

Kickstarter is at least a place where ideas beg for money. A tipster sent us a link to “Upstart,” where individuals ask you to fund them in exchange for a percentage of their future earnings. So far, four people with J.D.s think they’re so special you should give them money so they can do what they want…

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Regular readers of this blog know that you cannot discharge student loan obligations through bankruptcy absent a showing of undue hardship. If you go broke borrowing money for expensive cars, houses, and monkeys/butlers, no problem, file for bankruptcy and start over. But if you go broke trying to better yourself through education, the government will make you beg and prove that you are sad and hopeless. Wonderful system we’ve got here.

We’ve also talked about how many people who might be eligible for undue hardship on their student debts don’t even try. The system is daunting and complicated, and I’ve argued that prostrating yourself in front of a bankruptcy court and letting them invade your life to the point of telling you how much you should be spending on your cell phone is not something that comes naturally to people with pride and dignity. This might be hard to understand for people who have never been in this situation, but I’d much rather be a “deadbeat” and have my wages garnished with the discretion on how I spend the rest than have some old judge tell me how much money I should be spending on breakfast.

When trying to get your debts discharged through bankruptcy, there seems to be no limit to what a judge can take into account to see if you are really desperate. But a recent Ninth Circuit opinion upholding a discharge by reversing the district court put one boundary on what a court can look at to determine if you’ve tried to pay your debts in “good faith.”

The court can’t look at your household and suggest that you pimp out your wife. So at least that’s something…

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As many of you know, I went straight through from college to law school without taking any time off. And many of you know that I count this as one of my many mistakes. The people I know who took time off between college and law school came back to law school with an appreciation of school and a focus on what skills they needed to succeed in the real world.

People like me who went straight through tended to start out with a “College II” mentality, got book-raped first semester, and muddled through law school kind of wondering why everything was so boring. In my anecdotal experience, these people disproportionately ended up in Biglaw, because people who get on only one train tend to end up at the same destination.

Given that experience, I think this new pilot program from Harvard Law School could be a very good idea. Harvard Law will now admit Harvard undergraduates after their junior year of college, provided they agree to an automatic, two-year, post-graduation deferment. That’s two years after college where you can work, earn money, and experience the real world outside the ivory tower, all the while knowing that you have Harvard Law to fall back on.

At least, that’s the positive view of the program. Our tipsters point out the cynical side….

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You’ll be popular. Just not, quite as popular, as, meeeee!

* Now that Republicans have some actual issues to concern themselves with, they’re going to… vote to repeal the Affordable Care Act again? My God, they’re dumb. [New York Times]

* Sonia Sotomayor has the highest name recognition on the Court. Kennedy is the most liked. Clarence Thomas has lower favorability among African-Americans than he does in the population as a whole. [Public Policy Polling]

* Aside from bitching, is the anything the AP can actually do about the DOJ subpoenas? [National Law Journal]

* The Obama administration is running a $51 Billion dollar profit off of student loans. Billion. With a ‘B.” As in “these students are my Bitch.” [Huffington Post]

* Liberals could learn a lot from the Federalist Society. [ABA Journal]

* This is an interesting “equal time” issue. Should a network run a reality series about a prosecutor’s office when that prosecutor is up for reelection? [Daily Business Review]

‘Another tuition hike? Time for a new car!’

If liberals are to be true to our professed values, we must critically examine our own conduct, however painful and embarrassing it might be. We cannot speak truth to power yet not to ourselves. [P]rogressive law professors, I charge, have profited from a system of legal education with harmful consequences to individuals and society — while claiming (and believing) that they were fighting the system.

– Professor Brian Tamanaha of the Washington University of St. Louis School of Law, criticizing his colleagues for remaining silent while law school tuition has soared. His remarks can be found in a forthcoming essay that will be published in the Stanford Law & Policy Review.

New Rule: The next law school person who wants to bitch about the unfairness of the “employed nine months after graduation” metric must offer to make loan payments for all students who don’t have a job at nine months until they find one. If law schools are going to knock up their recent graduates they should at least have to throw in some child support.

Oh, wait, NO law school dean wants to actually be on the hook for student loans from when they come due six months after graduation until… whenever this unnamed point in the future comes when students can expect to have jobs. Given that, I don’t really want to hear about how your school is so freaking “unfairly” treated because CONSUMERS of legal education need to know if they will be employed within shouting distance of when they will start having to pay back their loans.

Fine, you want a compromise? It looks like we’re moving to ten months anyway…

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