Whether such behavior amounts to soliciting fraud in the technical legal sense is something an ambitious Assistant United States Attorney might want to research. Consider that if student loans were dischargeable in bankruptcy, it would be to say the least legally problematic for a school to solicit business by pointing out that students could discharge their loans in bankruptcy. What Prof. Taylor is recommending is very similar in substance if not in form. In any case that this is fraud in the broader moral sense of a fraud on the public seems indisputable.
Professor Aaron S. Taylor informs prospective students that law school is still a good investment because, among other reasons, you can borrow hundreds of thousands of dollars from the U.S. government and then stick the taxpayers with the bill:
Of course, not all student loans are created equal. Federal loans are vastly superior to private loans, and fortunately, most law students are able to finance their entire cost of attendance with federal loans only. Interest rates are fixed on most federal loans, and they are much lower than rates offered in the private market. Federal student loans also come with payment grace periods, deferral and forbearance options and an array of repayment plans — the most generous of which being the Income-Based Repayment Plan (IBR).
Through IBR, debtors with low income, relative to federal student loan debt, are allowed to make reduced payments of no more than 15 percent of their disposable income (defined as the difference between Adjusted Gross Income and 150 percent of the poverty guideline). After 25 years, any remaining loan balance is forgiven. If the debtor is working in a public service job, as a prosecutor, for example, balances are forgiven after just 10 years. IBR and other repayment options help ensure that debtors don’t have to choose between basic necessities and paying their federal student loans. Moreover, the loan forgiveness aspects of these plans are essentially back-end scholarships. (emphasis added)But hurry -- quantities are limited:
Given the political obsession with the federal deficit, you should probably take advantage of these favorable options while you can. One of the cost-saving “deals” made during the debt-ceiling-debacle ended interest subsidies on graduate and professional school student loans. These subsidies went to financially needy students and were typically worth thousands of dollars. So, along with increased tuition, politics could make law school more expensive in the future.
I'm not going to bother to critique Prof. Taylor's egregious abuse of placement and salary statistics. That kind of thing is by now par for the course. But this business (and I do mean business) of luring unsuspecting marks into 25 years of perpetual quasi-bankruptcy before sticking taxpayers with the bill, and then characterizing this scheme as a generous grant of "back-end scholarships," is the kind of thing that should draw the attention of the relevant authorities.