Student Loans

Stop Handing Out Student Loans Like Candy, Or Else You’ll Get Sued Like Sallie Mae

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You may recall that back in 2011, before all of the law school litigation came into being, the California Culinary Academy (CCA) was hit with a multi-million dollar class action lawsuit filed by its graduates. The allegations contained therein — misleading job data, high tuition, and difficulty finding jobs after graduation — were very, very similar to those found in the law school lawsuits we revel in covering. Unlike the law schools that are currently under fire, the CCA offered to settle the case for $40 million, and that settlement was approved and entered as a final judgment this summer.

While the only law school lawsuit that’s come anywhere close to CCA’s status has been Alaburda v. Thomas Jefferson School of Law — currently in discovery, where all sorts of interesting stuff has been unearthed — law school plaintiffs may have another avenue to explore, thanks to yet another lawsuit that’s been filed by CCA graduates. This time, the bitter would-be cooks are out for blood against the very company that funded their failed culinary education.

That’s right, Sallie Mae is being sued for handing out private loans with “credit-card interest rates” like candy — really expensive, life-ruining candy. When will law school graduates do the same thing?

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Morning Docket: 12.18.12

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* Change may be coming soon in light of the Newtown shooting, but any talk about new federal restrictions on guns will hinge on the Supreme Court’s interpretation of the Second Amendment through the lens of the Heller case. [National Law Journal]

* Joel Sanders and the Steves are facing yet another “frivolous” lawsuit over their alleged misconduct while at the helm of the sinking S.S. Dewey, but this time in a multi-million dollar case filed by Aviva Life and Annuity over a 2010 bond offering. [Am Law Daily]

* Always a bridesmaid, never a bride: Pillsbury has had the urge to merge since February, and now the firm may finally get a chance to walk down the aisle with Dickstein Shapiro. [Thomson Reuters News & Insight]

* Income-based repayment is a bastion of hope for law school graduates drowning in student loan debt, but when the tax man commeth, and he will, you’ll quickly find out that the IRS doesn’t have IBR. [New York Times]

* Is the premise of graduating with “zero debt” from a law school that hasn’t been accredited by the ABA something that you should actually consider? Sure, if you don’t mind zero jobs. [U.S. News and World Report]

* Daniel Inouye, Hawaii’s Senate representative for five decades and a GW Law School graduate, RIP. [CNN]

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How the Heck Will You Pay Your Law School Loans After You’ve Been Kicked Off Income-Based Repayment?

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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?

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Non-Sequiturs: 12.11.12

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Don’t be fooled by her smile; Justice Kagan knows how to benchslap.

Don’t be fooled by her smile; Justice Kagan knows how to benchslap.

* Kagan, J., benchslapping. [Josh Blackman's Blog]

* I think I’d get this if I understood gymnastics. [Associate's Mind]

* Some people think IBR is pointless, but if you disagree, check out this petition. [We the People: Your Voice in Government]

* Partner readers, check out this new podcast (featuring law firm consultant Ed Wesemann and yours truly). [Attorney Search Group]

* Our annual Law Revue Video Contest is still a few months away, but if you like making legally themed videos, keep an eye on this contest (more details forthcoming, including info on the prizes). [Federal Bar Association]

* Speaking of contests, we welcome your votes in the ABA Journal’s Blawg 100 (under “News/Analysis”). [ABA Journal]

* And speaking of Above the Law, the deadline for applying for our writer/editor position and our internship is tomorrow — so act now if interested! [Above the Law]

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Buying In: Thoughts on Making Partner (Part 2) – The Financials

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Last week I wrote about how making partner can be a vehicle for making positive personal changes. I was not kidding. As a partner, I want my fellow partners to be happy with their personal lives. Much better for business that way. We all know that the pre-partner years are rough on personal lives, so the heady days immediately after making partner may be the best chance someone has to make any necessary course corrections on the personal front.

I don’t believe that Biglaw partners are any more capable than anyone else in insulating their work performance from the goings-on in their personal lives. Trouble has a way of spilling over. No one is saying that relationships are easy in Biglaw, even for partners. So why continue to dump emotional energy into relationships that are not satisfying? Better to take stock, and fix what needs fixing. Earlier is better than later, especially from your fellow partners’ perspective.

So let’s talk a bit about the financial ramifications of making partner. I’ll concentrate on a few aspects….

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Is Writing A Best Seller The Only Way To Pay For Law School?

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Marco Rubio

Man, I need to write a book. At this point, it could be about anything. Law. Debt. Raising a baby who can take a punch. It doesn’t matter. I’ve known for some time that selling a book is the only way I’m ever going to pay off my massive law school debts.

What I didn’t know was that becoming a best seller was the only idea our nation’s political leaders have for paying off their own law school debts. Seriously, you’d think my book idea was a fanciful plan that is the cause of terrible financial planning. And it is. But I’ve written before about how our president, Barack Obama, didn’t pay off his law school debts and until he published a best-seller. It’s not exactly a sound financial plan, even though it does work out in some cases.

But this “just write a book” approach to law school debt knows no party lines. Today I found out that Republican Senator (and likely presidential candidate unless Republicans figure out that “Cubans from Miami” are not the same as “Mexicans living in Colorado”) Marco Rubio took the same path to paying off his law school debts.

So, I don’t know, maybe I shouldn’t feel bad about still having this much debt, and instead get busy writing, “How to Write a Successful Blog When Your Readers Kind of Hate You.” Because apparently, that’s how a leader approaches the vexing problem of educational debt….

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Morning Docket: 12.05.12

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* Mirror, mirror, on the wall, which is the fairest firm of them all? According to the 2012 Acritas Brand Index survey, the current leader of the Global 100 is the most powerful Biglaw brand for the fifth year in a row. [American Lawyer]

* But that might not last for long, considering the dilemma Baker & McKenzie is facing when it comes to joining the Shanghai Bar Association in China. The firm is one of the first to indicate that it’ll take the plunge. [Wall Street Journal]

* Thanks to the Second Circuit, Rajat Gupta will be a free man on bail pending the appeal of his insider trading conviction. We wonder what Benula Bensam would have to say about this new twist. [DealBook / New York Times]

* Jason Smiekel, the lawyer who pleaded guilty in a murder-for-hire plot involving a former client, was sentenced to eight and a half years in federal prison. The things men will do for HHHBs. [Chicago Tribune]

* Student loan payments: coming to a paycheck deduction near you! Congress is considering an overhaul of the country’s student debt collection practices, and Rep. Tom Petri has some interesting ideas. [Bloomberg]

* The Cleveland-Marshall College of Law is the latest school to hop aboard the solo practice incubator train, but graduates will have to rent their office space from the school. Nice. /sarcasm [National Law Journal]

* “We didn’t file this complaint lightly.” Sorry, Judge Norman, but as it turns out, you can’t just sentence a teenager to attend church for 10 years as a condition of parole without pissing off the ACLU. [Tulsa World]

* When your alterations cost more than your wedding gown, it’s pretty much a given that you’ll have some problems — ones worth suing over, if you’re a true bridezilla (like moi). [Thomson Reuters News & Insight]

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Chuck Klosterman Becomes the Latest Human to Misunderstand the Point of Law School

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Apparently, Chuck Klosterman believes law deans without checking to see what they’re hiding.

Man, the New York Times is just full of people defending law schools these days. First we had Lawrence Mitchell, Dean of Case Western Law School, write an op-ed about why he is “proud” to be a law dean. I’m not sure if he’s proud to have written an op-ed that has been savaged by everybody, but there you go.

This weekend, the Times ran an Ethicist column by noted pop culturalist Chuck Klosterman about the “morality” of law schools enrolling students at hefty tuition prices when they know the job market is very challenging.

Klosterman defended law schools, though it’s not clear that he intended to. In fact, it’s not clear that Klosterman knows just how “unethical” law schools have become.

But hey, you don’t actually have to understand the challenges of legal employment to defend law school in the New York Times these days….

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Inside Straight: Whiffing At The NYT On The Future Of Legal Education

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I reported back in October that the New York Times had asked me to write an op-ed piece about the future of big law firms, but a Dealbook special unceremoniously preempted my piece.

I figured the editor at the NYT might think she owed me one, so I cranked out a replacement piece proposing to reform legal education. I’m pleased to report that this op-ed piece was not preempted! No, no, no: It was rejected on the merits. The editor said that my article made too many points and felt like a “report, rather than an opinion piece.”

But she was wrong. And, in any event, you should judge for yourself.

So here’s my recently rejected op-ed piece proposing how we should reform legal education. (I do believe this is the last in my short-lived series of “crap I wrote for the Times that the Times didn’t publish.” It’s an awful lot of work to produce 1,200-word pieces that become mere fodder for another column here at Inside Straight.) . . .

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Students and Recent Graduates Speak Out About Dean Mitchell’s Defense of Law School

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Law students react to op-ed in the New York Times.

Yesterday, we discussed a New York Times op-ed, “Law School Is Worth the Money,” by Dean Lawrence E. Mitchell of Case Western Reserve University School of Law.

Mitchell has been slammed — by me, by Professor Paul Campos, by Alison Monahan, and by many others. If you’ve been looking seriously at the state of legal education, it wasn’t hard to eviscerate Mitchell’s arguments.

But Mitchell seems to believe that looking critically at the value proposition of legal education is a media-driven phenomenon. As he wrote in his op-ed, “For at least two years, the popular press, bloggers and a few sensationalist law professors have turned American law schools into the new investment banks.”

It seems that Mitchell has forgotten about the students. Bloggers and law professors don’t really have any skin in this game. But actual students feel like law school deans have taken advantage of them, and telling them “everything is okay here” isn’t a winning argument.

These kids are tired of law deans, like Mitchell, who continue to act like law schools can keep doing what they’re doing while recent graduates don’t have jobs and are crushed under a mountain of debt. They’re really sick of the subtle implication that they only reason the “great deal” of law school didn’t work out for them was that they were “lazy” or somehow undeserving.

In short, they are sick and tired of the very kind of arguments Mitchell made in the New York Times — and yesterday they spoke out about it, loudly….

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