Student Loan Bubble

Some of the study’s more eye-popping statistics pertained to law school students, whose job prospects are famously declining. The level of indebtedness for this group rose by more than $50,000 from 200[4] to 2012, with the typical law student now owing $140,000, the study found — a jump that’s unprecedented in any other field, including medicine.

Molly Hensley-Clancy of BuzzFeed, discussing a recent report by the New America Foundation about the student debt crisis.

Do you hear that sound? It’s the sound of the music stopping. It’s the sound of a tap running dry. Law schools are living in an F. Scott Fitzgerald novel, and the party is wrapping up.

Professor Paul Campos estimates that 80 to 85 percent of law school are operating at a loss right now. Cratering law school applications put a stop on federally backed loan money that has been used to prop up outrageous law school tuition for years. In most industries, such realities would spur creative and substantive reform. Smart people would try to do something to fix the industry. Instead, people running law schools don’t think like that even when they have an opportunity for clarity.

As Fitzgerald writes: “arid for a moment people set down their glasses in country clubs and speak-easies and thought of their old best dreams. Maybe there was a way out by flying, maybe our restless blood could find frontiers in the illimitable air. But by that time we were all pretty well committed; and the Jazz Age continued; we would all have one more.”

Maybe all deans can do now is to play it out to the bitter end….

double red triangle arrows Continue reading “The Law School Bubble Is Bursting: Over 80% Of Law Schools Estimated To Be Operating At A Loss”

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…

double red triangle arrows Continue reading “Taxpayers Should Worry When JPMorgan Gets Crowded Out Of The Student Loan Business”


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….

double red triangle arrows Continue reading “Matt Taibbi Joins The Student Loan Crisis Bandwagon: Good Seats Still Available”

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…

double red triangle arrows Continue reading “Federal Government Profiting Handsomely Off Your Debt”

With the Notre Dame Fighting Irish’s attempt to win their first national championship in a quarter of a century, and at the same time, their attempt to end the Southeastern Conference’s years of dominance of the BCS, I am hoping that this return to glory by a once storied franchise will be accompanied by a return to glory for the storied legal profession.

When I was growing up, most thought of lawyers as highly educated, intelligent, and self-motivated (even to a fault) professionals. Many considered lawyers to be part of the upper echelon of society, and most people also believed that simply being a lawyer would result in a huge, guaranteed payday. And for most of college football history, the Fighting Irish received similarly high praise.

In recent years, however, both the legal profession and the Irish have been held up to strong criticism, and were unable to enjoy the same success people became accustomed to. Even while I was still in law school at my TTT, respected attorneys told me not to worry about the school I was attending, because by the time that I got to my second or third job, no one would care anymore. The little detail that everyone left out was just how much it would matter for that first job — because it’s rough to get to the second or third job when you can’t even find your first, no matter how hard you try.

Going along with the Fighting Irish’s return to the top, here’s a look at a few other things that were once closely associated with the legal profession that are no longer true, but would be welcomed back with open arms….

double red triangle arrows Continue reading “Gradenfreude: The Legal Profession Has the Luck of the Irish”

Here at Above the Law, we frequently address law school loan debt and the many ways it has screwed over various members of the legal profession, including some of our own editors. As many of you know, both Elie and I graduated from law school with six figures of loan debt. And although we both have a seemingly insurmountable pile of debt to pay off, we’ve gone about doing so in different ways. He’s been paying collection agencies not to break his knees since 2007, and I’ve been paying my loans like a good little indentured servant since 2010.

But I’ve got to admit, that wouldn’t even be possible if it weren’t for income-based repayment (IBR), the magical plan that caps your payments at 15 percent of your discretionary income. With IBR, I’ve been able to continue making interest-only payments for about two years, gleefully awaiting the day that I’ll finally be able to dig into the principal amount — which will likely never happen, but hey, a girl can dream.

The pesky thing about IBR is that you have to reapply each year to tell your loan servicer that yes, you’re still ridiculously poor, and no, you still can’t afford to pay those insane amounts they’d expect you to fork over otherwise. I sent in my reapplication packet more than a month ago, specifically so that I’d know what my new payment amount would be for the upcoming bill’s due date.

So you can imagine my COMPLETE AND UTTER shock when I opened my mail this morning to see that with my glamorous “entry-level journalism salary,” I’d apparently been kicked off of my IBR plan.

Happy f**king New Year to me, right?

double red triangle arrows Continue reading “How the Heck Will You Pay Your Law School Loans After You’ve Been Kicked Off Income-Based Repayment?”

Ed. note: Gradenfreude is a new series chronicling a recent law school graduate’s life after attending an unranked school. Feel free to email the author at TristanTaylorThomas@gmail.com, and he’ll respond ASAP. After all, it’s not like he has anything better to do.

When President Obama was debating Mitt Romney, he patted himself on the back because of the strides he took to give young people the chance to get an education by making student loans available.  I guess making loans available is all that really matters, because after all, who cares about having the loans paid off? That’s the one thing that he didn’t mention: once you accept the loans, you’ll be bent over a barrel for the rest of your life — unless, of course, you’re able to become a Senator and then write a couple of best-selling books.

I think that most students realize they’ll spend the vast majority of their lives paying off the loans they took out to further their educational pursuits.  What many may not realize is just how ridiculous the government is when it comes to getting their money back.  Their tactics and terms fall just short of being classified as Mafia-like. On the bright side, if there is one, at least no one’s broken my legs yet.

Although the government may allow for a deferment for economic hardship, if you have a full time job, it’s likely that you won’t meet the strict requirements to attain that deferment.  Because even when you work a job that only allows you to live in your parents’ basement, essentially as dependent upon them as you were in high school, the fine United States government still expects timely repayment.

That’s right: I currently make too much money to qualify for an economic hardship deferment, and I work for just over minimum wage.  Earning the least amount of money per hour that I ever have in my life, I am making too much money to earn the government’s pity….

double red triangle arrows Continue reading “Gradenfreude: Loan Debt Repayment for Law Grads Is a Scam”

I’ve said countless times that discharging student debts through bankruptcy is nearly impossible because you must make a showing of “undue hardship.”

Showing undue hardship is a very high bar, and it takes a very long time. Prospective law students don’t really understand the difference between student loan debt and something like credit card debt until it’s way too late. And even when it’s too late, most people (and many lawyers) feel that it’s not even worth trying to convince a bankruptcy judge that a person holding a J.D. has the “certainty of hopelessness” required to get student debts discharged.

But an article this weekend in the New York Times suggested that more people should give “undue hardship” a whirl. Sure, the guy the Times chose to feature is freaking blind, but even absent a physical disability, the article suggests that undue hardship might be a real possibility for most people.

Hey, it doesn’t hurt to try. At least, it hurts less than the likely plan B of stabbing out your own eyes….

double red triangle arrows Continue reading “Can You Show ‘Undue Hardship’ On Your Student Loans? You May Be Surprised.”

Professor William Birdthistle

Welcome to the latest installment of Lawyers & Economics, our occasional video series on financial topics by Professor William Birdthistle of Chicago-Kent College of Law. He’s joined in some of these videos by an acting professional: Johnny Kastl, television actor turned 2L at Iowa Law, better known to some of you as Dr. Doug Murphy of “Scrubs.”

In the last video, Birdthistle and Kastl tackled the Greek debt crisis. Sadly enough, that problem remains unsolved, to the detriment of the world’s financial markets.

Today’s topic isn’t going away anytime soon either. If you have — or are thinking of taking on — student loans, keep reading….

double red triangle arrows Continue reading “Lawyers & Economics: Student Debt”

Page 1 of 212