Friday, November 11, 2011

Cooking the books

The University of Illinois Law School's latest admissions scandal is worth pausing over for a few reasons.  First, it's an illustration of the invidious influence the rankings obsession is having throughout legal academia.  Paul Pless, the "admissions dean"  -- the fancy title given to a U of I law grad who went to work in the admissions office of his alma mater, and eventually managed to raise his salary from $72K to $130K a year by generating (literally) incredible admissions numbers -- monkeyed with the admissions data to produce a median LSAT scores and GPAs that were higher than those actually possessed by enrolled students.  This fraud is part of the reason why Illinois rose from 28th to 23rd in the USNWR rankings between 2009 and 2011.


Now, if you're not a law school professor or (especially) dean, moving up from 28th to 23rd in the rankings may not seem like much of a big deal.  How many law school grads are going to get  hired for a particular job that they wouldn't have gotten if their school had remained at 28th rather than 23rd in these idiotic rankings anyway?  It seems implausible that the people doing legal hiring care about this nonsense, or at least care about it enough at the margin to justify, even in purely pragmatic terms, this absurd negative-sum positional game that law schools have gotten themselves into over the past couple of decades.

But law is an especially status and hierarchy-obsessed profession, so maybe it does make some sort of difference. 

Second, this scandal illustrates, at best, the arrogance and cluelessness to which law school administrations are prone.  The most charitable interpretation that can be put on the behavior of U of I administrators is that, even after they got caught in a bad admissions scandal due in part to what those charged with investigating it concluded was lack of sufficient institutional oversight and control over the admissions office, the school apparently did nothing to remedy that situation (the school's defense in regard to the current scandal is that all this fraud was solely the work of one unsupervised admissions office employee).

What is surprising is that the cheating in the law school went unchecked even after the Category I scandal had broken. With a median LSAT score represented as 168, the Class of 2014 was trumpeted as "the most academically distinguished" in the school's history. The actual median score was 163, four points lower than the previous year's median.

Nobody at the university was responsible for reviewing the accuracy of those numbers, even though the state commission investigating the first admissions scandal flagged the situation at the law school as worrisome. That commission's report, in 2009, criticized the university for leaving all decision-making authority in the hands of the admissions dean and recommended the school change that policy. It didn't.
 The less charitable explanation is that Pless's fraud wasn't the work of one poorly supervised rogue employee, but something more troubling.

Third, whether or not the school's explanation for what happened turns out to be the truth, this latest law school scandal naturally raises the question of what's going on at the other 199 ABA law schools, in regard to how information that affects law school rankings is gathered and reported.

A journalist doing a story on the ABA's oversight of legal education told me earlier this week that she had spoken to the ABA's Section on Legal Education (the body responsible for among other things deciding what sort of employment data law schools have to reveal), and that she had been assured that things like the Illinois and Villanova scandals were isolated incidents.  I asked her how the law school deans and faculty members who run the Section could actually know that to be the case. She responded that this seemed like a good question. Indeed it does!

As bad as the official law school employment numbers look when  you toss out all the stuff that shouldn't really count (temp jobs, part-time jobs, jobs that don't require law degrees, jobs funded by law schools to goose placement numbers), keep in mind that these much more realistic numbers are still every bit as vulnerable to fraud as Illinois's admissions stats were.  In fact they are far more vulnerable, because while prospective law students can't report phony GPA and LSAT scores when they apply, law grads are almost completely unconstrained from claiming whatever they want to claim in regard to their employment and salary information. And my preliminary research on the question of whether they report such information accurately indicates that a significant number exaggerate their employment and salary situations.

As to whether career services offices accurately report the numbers they're given by graduates to the ABA and USNWR, my sense is that law school administrators aren't exactly spending a lot of time and money (or indeed any at all) checking up on that matter.

The rationale for all this faith in the accuracy of an almost completely unregulated reporting process, the results of which determine the outcomes of rankings that people who run a multi-billion dollar per year industy obsess over, is . . . what?  That law school administrators, law faculty, and other people who work at law schools can be trusted more than, say, ordinary businesspeople? 

That is, under the present circumstances, an interesting theory.

115 comments:

  1. Hopefully the NYLS/Cooley cases will get far enough into discovery to expose their Pless's.

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  2. Isn't this the third time for Illinois? I recall some earlier situation in which they did something like count the market value of the Westlaw and Lexis services as part of the resources spent on students?

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  3. " I asked her how the law school deans and faculty members who staff the Section could actually know that to be the case. She responded that this seemed like a good question. Indeed it does!"

    You met either a lazy or a bad reporter.

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  4. "she had been assured that things like the Illinois and Villanova scandals were isolated incidents."

    When somebody cites "Isolated incidents", you know that its wide-spread industry practice. Have we learned nothing from the financial implosion of 2007? And to what kind of investigative journalist is this not obvious?

    Sad thing is that if we just eliminated student loans years ago and allowed the market to determine price, none of this would have happened. We'd have an even more stratified industry but at least the thousands of law students duped and strapped with lifetime of debt wouldn't exist. Says a lot about human nature and why more, not less, independent regulatory bodies are needed. Of course then we'd have to worry about regulatory capture....it all seems completely hopeless.

    Sadly, maybe rioting really is the only answer.

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  5. This post is exactly why I believe that state and federal consumer fraud laws should be bringing some of these law schools down.

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  6. The claim that these are isolated incidents is not true. The ABA does not make the results of its investigations public. I know of one law school that got caught around 2003. The good thing is that the class action lawsuits will have discovery. The law school I mentioned is one of those who is on the to be sued list.

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  7. The message seems to be seeping into the mainstream media.
    http://online.wsj.com/article/SB10001424052970204224604577030562170562088.html?mod=WSJ_hp_LEFTTopStories

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  8. From the Wall Street Journal article I just linked to:

    For example, in the current economy, it may make more sense to enter a technical college than to go to law school. ... "It shouldn't cost this amount of money for higher education,"

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  9. Whatever the merits, the WSJ is primed for any negative story about
    lawyers for reasons that fit the publication's right wing leanings. There
    are lots of reasons beyond concern about grads that the paper pushes
    anti-lawyer stories.

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  10. The other lesson from this story is that, until recently, financial traders were making lots of money from bundling and trading student loans. Call me a cynic, but I don't think Congress made student loans so accessible just because they liked students and education so much.

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  11. You are also going see a lot of disgruntled ex-employees testifying against their law schools. I'd hate to be a dean who fired a registrar or head of ocs in the few years. Payback!

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  12. I wish that, in addition to discussing and articulating the problem, we had ways to put *real pressure* on the schools to change. Without action, the discussions are nothing more than whining.

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  13. Would writing to the ABA work? I don't mean a single petition signed by lots of people--I think that has some, but limited effect. What about lots of separate letters from unhappy grads?

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  14. I'm in favor of reforming the federal student loan program, but I have to object to this statement:
    "Sad thing is that if we just eliminated student loans years ago and allowed the market to determine price, none of this would have happened."

    I see no evidence that this is true, and there is lots of evidence that it is not true. It was fairly obvious for most of 2000 that the "market" (i.e. banks, financial industry, etc.) was making lots of loans that would never get paid-off, creating an unsustainable debt burden that would really hurt consumers and banks in the long-term (but which juiced numbers in the short term). Bankers bent a lot of rules to hand out credit cards with unrealistic credit limits and mortgages that people could not afford. We every reason to suspect that they would do the same for student loans, particularly since there would probably still be the limits on discharging student debt in bankruptcy even without a federal loan program.

    Of course, federal student loan reform needs to occur and should be oriented towards lowering the costs charged by institutions receiving money from such loans. I'm sure this program probably made things worse. But no one should think that this reform alone would be sufficient to fix the problem.

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  15. What this guy did at Illinois is no different from what many (most?) large law firms do to climb up the AmLaw rankings. It was a joke inside my old firm (Howrey, may it rest in peace) that upper management performed all sorts of accounting gymnastics each year to make try to reach (and then to stay at or above) the vaunted $1M PPP number.

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  16. Speaking of Illinois, though I was not in attendance I am told that at the swearing in for the Illinois bar held this week in Chicago, one of the speakers at the ceremony invited the sworn-in unemployed graduates to attend a job fair / mixer, for the low, low price of $49. I find that sickening on quite a few levels.

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  17. @11:20 - you're ignoring that all of those financial instruments are dischargeable. True free market = ability to utilize bankruptcy protection. So yea...

    /not that Im a proponent...just that it would have been the lesser of two evils.

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  18. "I see no evidence that this is true, and there is lots of evidence that it is not true. It was fairly obvious for most of 2000 that the "market" (i.e. banks, financial industry, etc.) was making lots of loans"

    Your error is that when it was discovered that these loans were of poor quality, the market slapped the banks in the face (taken from the book "Slapped by the invisible hand.")

    When it was discovered that law school student loans were of poor quality, it had no effect on the supply of these loans.

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  19. 12:02

    The banks don't look too sore to me.

    People are not rational. They will make poor economic decisions in large numbers and those economic decisions will have a negative effect on people who had no hand in making those decisions.

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  20. The answer is:

    Remove the Federal Guarantee.

    If you are rich, you can go wherever you want.

    If you are not rich but you are absolutely brilliant, someone will loan you money to go wherever you want, or at worst, you will get a scholarship somewhere.

    If you are not rich and you are not absolutely brilliant, you can have a fantastic life as a cop, fireman, tradesmen, technician, etc. If you think these jobs suck because they sucked in that past, (even though they are awesome now), or if you think you are above this kind of work, please convince a private lender to give you money.

    Even if transparency happens, egotistical and/or deluded lemmings (I was deluded but not egotistical) do not have the right to take the tax payer’s money to gamble in the Higher Education casino anymore. I do not want to pay professors and administrators 150-300k a year to destroy the lemmings. Let the lemmings destroy themselves as the above posters suggested.

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  21. 12:18, Again, your error is that you confuse the short term irrationality of market economics (which, again, ends up correcting itself) with the long term and persistent problems of non-market economics.

    SOME of the banks survived the bad loans because they received a controversial government bailout, and because they had enough good loans and investments to stay afloat. Other banks went under or had to be sold off at fire sale prices. Although the bailouts prevented the market from fully taking care of the problem, what you saw regarding bad real estate loans is still far preferable to what you have regarding student loans.

    Once the market figured out that these properties were overvalued, the market crashed. The market's figured out that student loans are unprofitable long ago, back in early 1980s, but they persisted percisely because the market was not allowed to work.

    End government guarantees and subsidies of student loans (including the nondischargeability subsidy) and you will see 100 law schools close within two years.

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  22. "The banks don't look too sore to me. "

    This is only because of Too Big To Fail. That and the example above are both results of the absence of moral hazard. We can all thank our overlords for that.

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  23. Banks are actually very sore. Lehman went under. Bear Stearns had to be sold for almost nothing. Merrill too. On top of that, about 2,000 small to mid-sized banks have been shut down by the FDIC since the financial crisis.

    Too Big to Fail looks like "law of the jungle" free market economics when compared to the subsidies received by law schools.

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  24. First, I'm skeptical that the banks have learned lessons regarding other loans. When I volunteer at the local pro-bono clinic, I am astounded at how many banks continue to offer further credit to people who cannot afford to pay their current debt. I'm just skeptical that we can trust banks to assess the risks accurately, and that skepticism is well founded given recent events. The history of the financial industry strongly suggests that it needs substantial government oversight or regulation to function.

    Nonetheless, I agree that the current federal guarantee doesn't work. Personally, I would support a wide-variety of alternatives. Two might be:
    1) Do what many other countries do, and fund a certain number of public schools at a level where their tuition is very low. The Government should fund higher education and opportunity (in my opinion), but it should do so outright because it forces it to make decisions. A public university system might decide outright to only fund the education of 500 lawyers (or 2,000, or 200) depending on the State's demand. People who want to go further can (and should) go to private schools, but without the same level of government funding as they may receive today.
    2) Offer federal loans, but cap them in a way that encourages schools to lower their tuition. Say, "we estimate the return on a law degree is likely to be about X, under that theory people will by able to pay back loans around Y with reasonable interest, so we'll only fund loans up to Y, and we won't extend loans to people who are taking on more debt than Y because they're likely to default." A lot of schools would lower their tuition to Y pretty quickly.

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  25. " When I volunteer at the local pro-bono clinic, I am astounded at how many banks continue to offer further credit to people who cannot afford to pay their current debt."

    Where are these banks and what are their phone numbers?!

    Also, keep in mind that a mortgage or car loan is actually a relatively safe loan since you can repossess the property.

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  26. Good ideas, @12:49

    Another idea I would add would be to limit federal loans to those schools that have low default and IBR rates, which would be determined over a long period of time (not just w/in the first three years after law school.) In addition, schools would have to demonstrate a high, full-time, professional employment rate (that could be defined by a salary of, say, a graduate earning more than $30,000 a year or a flexible rate dependent upon the market the graduate was in. This would then, for the most part, exclude retail, restaurant and other low-paid jobs, which does nothing to ensure the graduate will be able to repay his or her debt.)

    If law schools had high default and IBR rates and low employment rates (or consistently had graduates working at low-paying jobs who were unable to repay their debt), federal loans would not be able to be used at that particular school. I should also mention that any data upon which such decisions would be based would have to be verified by and reported to and independent agency.

    The result is schools would have to be providing a useful service. Hard-working and likely-to=succeed students could still get access to education, while the government would have a good indication that its funds would be paid back. And those schools that didn't qualify would either be forced to reduce their tuition (further increasing accessibility to legal education)or improve the quality of their programs to ensure more students were successfully employed and would be able to repay their loans back so the government wasn't left holding the bag.

    While this idea and others may need some tweaking, thinking along these lines is not a bad idea and addresses some important concerns about accessibility to the legal system without leaving the government in debt for it.

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  27. People make POOR economic decisions based upon BAD, FRAUDULENT DATA. Do you think any one of those law students would have made the same BAD decision had they been told, "You are going into over 100K in debt for the law degree and the the chances of you getting a job are more like 40% rather than the US News 90% for your school...and most of those jobs pay less than 70k a year?"

    I'm so disgusted with people who keep suggesting that law students make poor economic decisions en masse. Until the last 6-7 years, this entire law school scam wasn't well-known amongst most of us in the rest of the country, who don't occupy the Northeast corridor. Many people are 1st generation law grads and college grads for that matter, who naturally have sought out the advice of PRACTICING LAWYERS, who, by definition, would have made it. When most people seek out advice for law school, it isn't as if it is obvious who the non-practicing law grads are to get their input. Someone interested in law school generally would seek out one who is practicing because how would they glean from the masses the non-practicing law grad, who has been shuffled into some other administrative task?

    Only with the generally recent influx(2004 and beyond) of blogs and bulletin boards devoted to such subjects has such information been able flow to the destinations far outside the Northeast. With that in mind, this blog and the confluence of the great many others is starting to reverberate loud and clear.

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  28. IBR rates are a great and objective way to measure which schools are ripping off the taxpayers. Too bad the ABA is rushing to cover up the IBR rates. See http://qfora.com/jdu/thread.php?threadId=21481

    I'm very disappointed that no one criticized the ABA for this. Not Tamanaha. Not Campos. Not Merritt. Not Horwitz. No one. It would have been a great opportunity to catch them red handed.

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  29. I'm not sure IBR rates offer much of a measure--doesn't almost everyone qualify for IBR? Even lawyers earning $160,000 qualify if their debt load is high enough or they have a nonworking spouse or other dependents. I see the extensive qualification for IBR as an ironic (ha, ha!) comment on how idiotically expensive legal education has become, but I'm not sure this would help in distinguishing worse law schools (from the students' perspective) from better ones. Add in the fact that IBR doesn't apply to private loans--which I believe are more common at the lower-tier schools.

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  30. You do realize that not all of the capitalized balance under IBR is a loss to the govt right?

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  31. No 3:12.

    "I'm not sure IBR rates offer much of a measure--doesn't almost everyone qualify for IBR?"

    First of all a biglawyer making $170,000 per year (I'm including bonus) would not qualify for IBR. Further, the government knows not only *whether* you qualified, but also the degree to which you qualify. Someone like me, who has to pay ZERO under should be counted differently than someone for whom IBR creates a small decrease.

    "Add in the fact that IBR doesn't apply to private loans--which I believe are more common at the lower-tier schools."

    What the hell are you talking about? Loans come directly from the government now.

    Try having a conversation where you DON'T pull everything out of your asshole. There are so many idiots on the internet who talk just to talk, even though they don't know what the hell they are talking about.

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  32. "You do realize that not all of the capitalized balance under IBR is a loss to the govt right?"

    Not all defaults are either. What's your point?

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  33. 3:53--even the idiots at Cooley Law know that some students supplement their government loans with private ones. http://www.cooley.edu/finaid/directloans.html#4 And why do Citi and other banks advertise loans for law students if no one gets them? https://www.studentloan.com/privatestudentloans/lawloans.htm.

    To quote yourself, "Try having a conversation where you DONT pull everything out of your asshole. There are so many idiots on the internet who talk just to talk, even though they don't know what the hell they are talking about."

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  34. I see, so because the $10,000 or whatever bar loans are private, then we shouldn't look at the IBR statistics for the $170,000 of federal loans used for three years of tuition.

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  35. 3:53--a lawyer earning $170,000 and with loans of $170,000 (which is what the Michigan grad and his wife each seemed to have) would be eligible for IBR--check the online calculator. The IBR reporting seems like a good idea, but the original proposal was to report simply the percentage of grads on IBR. I don't think that would expose enough. I get your point that schools could also be required to report amount of IBR, but doesn't that get complicated? The more complicated the data, the easier it is for law schools and the ABA to hide.

    I hesitate to make a different proposal--you'll probably start talking about my anatomy again. (I do find that really offensive, by the way, when people are trying to figure out ways to expose the law schools. Why do you feel such a need to insult people you don't even know?) What if schools were required to report average debt load at graduation (as I think they now do), debt load 5 years after graduation, and percentage of grads who had experienced an increase in their debt (negative amortization) since graduation? I'd probably create a separate category for grads who had been in public service for those 5 years, since they're halfway to forgiveness--but would definitely require reporting of that as well.

    Those seem like simpler numbers that the public and prospective students might understand: Here are X% of law grads who owe huge debts at graduation and earn such little return on their degree that they owe more 5 years later.

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  36. Here's your tuition dollars at work:

    http://www.thefacultylounge.org/2011/11/hip-hop-and-the-law.html

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  37. 5:19, I don't get your point. Dyson, the featured professor, has written some very influential books about Malcolm X, Martin Luther King, Hurricane Katrina, and (yes) hip-hop--all with respect to race and class issues. Check http://en.wikipedia.org/wiki/Michael_Eric_Dyson. His books aren't just read by scholars--they're pretty widely influential. And the hip-hop law site has both practitioners and professors as contributors--obviously some practitioners think there are important IP, contract, and other issues here. Hip-hop is a global industry. Do you also object to specialized law school courses focused on municipal bond practice?

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  38. "What if schools were required to report average debt load at graduation (as I think they now do), debt load 5 years after graduation, and percentage of grads who had experienced an increase in their debt (negative amortization) since graduation?"

    That would certainly accomplish your goals of (a) delaying exposition of the law school scam for another five years and (b) handing the policing role to the law schools but it's a bad idea for the following reason.

    To stay on IBR, you have to reapply every year. Despite your desire to obfuscate the process as "complicated" it's actually pretty easy. You send them your last year's tax return showing your income, and they calculate your IBR payment. We have the data right now, and it's very simple and objective black and white data.

    Your method, though, would require a five year delay at which time law schools would survey their graduates to collect the indebtedness information.

    You obviously work for legal academia. Let me ask you a question, sir. When you were young, did you think your future would involve brain storming ways to continue hiding a scam?

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  39. P.S. I don't see how someone earning $170,000 could be eligible for IBR.

    15% of (170,000 minus $20,000) divided by 12 = $1,875 per month. That means that only payments over $1,875 per month could be avoided via IBR. $1,875 is enough to fund a pretty large student loan amount.

    I'm sorry if you were offended, but please realize that I view you as a white collar criminal who is brainstorming schemes.

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  40. Talking about all the terrible, non-dischargable debt the students are taking on is misleading. With IBR, students will never have to make an unreasonable payment on their loans (save when it is forgiven by the government). No one should ever default on student loans. The total cost of attendance is covered by federal loans, so almost no student should have a private loan. If a law graduate is unemployed, his or her loan payment is $0. Basically the government is just subsidizing higher education heavily. It subsidize students who make the least the most, and students who make the most the least.

    Higher education and everyone who earns their living through it are the biggest winners in the current scheme. Students are in the middle. And taxpayers are the biggest losers. I have no problem with this aside from the fact that it is making the cost of higher education unreasonable.

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  41. IBR: You will never climb out of debt. The taxpayer may bail you out, but if you start making more money you'll have the accrued interest to wade through before the original principal balance. If you pay less than the accrued interest each month you are deeper in debt at the end of the month than you were at the beginning, Debt slavery, the new american way.

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  42. And as the disgruntled continue to philosophize around their newest water cooler, ItLSS, things in the outside world just continue along the same old trajectory...

    But at least it's a new place to vent, and the host is actually one of the people living large on a law school professor's salary!

    Kudos, Campos. This is all one big joke, isn't it?

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  43. @ LawProf -- if your research is sound, and it is true that a significant number of law grads exaggerate when reporting their job and salary situations, how can the system of using job stats as a means for deciding whether to go to law school ever work? Even if administrators did everything the right way, if a significant number of grads posted misleading information, there would be a big problem with using stats for that purpose.
    Of course we do not really know if your supposition is correct, and if the numbers of exaggerators is not "significant" but small, then the story would be different. How did you determine that significant numbers of grads were not telling the truth?

    Except for public employees, or key employees in private entities, people guard salary information closely.

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  44. http://www.thefacultylounge.org/2011/11/hip-hop-and-the-law.html

    Violets are blue
    Roses are red
    But if that shit be scholarship
    Then cap me in the head.

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  45. LT -- you have no idea what you are talking about. But that has never stops some people.

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  46. 4:00,
    My point is that the loss to the taxpayer isn't as great as some people on here make it out to be. Quantifying that loss is extremely complicated, but it certainly isn't the entire negatively amortized balance remaining after 20 years.

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  47. 8:57 and 9:03--I am someone with some background in numbers (statistics and reporting of statistical information) who would like to stop the financial abuse of law school grads. Your comments suggest to me that you fit the public stereotype of law grads: Very sure that you are right, belligerently unwilling to listen to info from others, and woefully naive about how numbers really work. If you and others want to stop what is happening, you need to pause your anger/arrogance long enough to understand a few points about numbers and reporting them:

    1. "P.S. I don't see how someone earning $170,000 could be eligible for IBR." In your calculations, you make the same mistake that so many gullible students make: You forget about the ongoing accumulation of interest. The debt will continue to rise at the beginning of the repayment period. There's an easy way to do the math, which I invited you to do--use any of the online calculators.

    As I said, and the calculators will confirm, a debt of $170,000 with an income of $170,000 will yield eligibility for IBR. Very little debt gets paid down on IBR, so even a high-salary grad may stay on IBR for more than one year. Lots of associates leave BigLaw after 2-3 years, going to unemployment or much lower paid jobs; they may be on IBR for good. If you want to fashion a requirement about disclosing IBR, you need to understand how the numbers work and what type of disclosure to demand. Otherwise, you will just fool the next generation.

    2. "That would certainly accomplish your goals of (a) delaying exposition of the law school scam for another five years . . . " That's not my goal, and why would this delay exposure? 2007 grads still have lots of debt; they were a big part of the 2008-09 layoffs. I would like law schools to begin disclosing 5-year information right away--I suspect it would be very revealing.

    3. "and (b) handing the policing role to the law schools" This is where things get really confusing. The original proposal I responded to asked the ABA to amend its standards governing law schools. The ABA has power over law schools, but not over the Dept of Ed or Sallie Mae. Despite your feelings, those agencies are not going to spend a lot of time publicizing law school scams. They love "Research I" universities, which is where most law schools are located. I'll make a separate post on the finances behind this.

    The ABA could ask the government agencies to provide information about IBR numbers, but have you ever looked at those reports? Neither have I, but I bet they are more intimidating and complicated than any prospective or current law students would be willing to deal with. I'm the type of person who loves to dig into accounting statements, but publicizing them would be pretty hilarious in terms of obfuscation.

    Or the ABA could refuse to accredit schools that fall below some IBR standard. But what standard? IBR is pretty widespread; it can't just be percentage of grads on that plan. And the amount of IBR-maintained debt at each law school will be mind-numbingly high. As I think I said in an earlier post, I'd love for those numbers to be disclosed (and they probably exist somewhere in some government report already) to show the overall problem with law school tuition. But I don't think those numbers are going to serve the purpose of identifying and closing down less worthy law schools. I could be wrong--I actually participate in these comment discussions in the ill-fated belief that I might learn something. But based on my experience with calculating and publishing numbers (on different subjects than law school debt), I suspect you're somewhat off base with that. Not barking up the wrong tree--just barking sideways at the tree and not willing to listen to ideas that might help you bark in the best direction.

    More, perhaps, in another post.

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  48. A few more thoughts on IBR and taxpayers from a number-loving wonk. Terry Malloy has the key to this: Interest keeps accumulating, and the government keeps IBR folks on the hook for a long time (25, soon to be 20, years). This has two implications. The first is the one TM points to--debt slavery for the students with these loans.

    But the second is just as important to understanding why this scheme will persist and why it will be hard to get action from the government: This is *not* that bad a deal financially from the lender's perspective. Some of you are out of work, but most of you are working at something--even if it's not law related, even if it pays no more than you would have earned as a college grad, and even if you hate the work you do. As long as you earn more than 150% of poverty level, you will be making payments to the government. At the same time, that debt will continue to grow because your payments probably won't keep up with interest.

    Meanwhile, a lot can happen in 20 years. Think about the difference between 1932 and 1952--the depths of the depression versus the post-war boom. The government lender holding your debt doesn't care that much what you're earning today; in some ways, low income is good because the debt will mushroom. The question for the lender is, what are you likely to be earning between 2021 and 2031?

    Then factor in the 6.8% interest rate--especially as compared to other interest rates today. One-year CD rates hover at 1%. Five-year rates aren't much better than that, just 2%. 15-year fixed mortgage rates are available for 3.25%. But you guys are paying 6.8% and, while on IBR, the overall debt keeps growing. Holy cow, if I could get a cut of that (with my risk spread over hundreds of thousands of students), I would.

    The bottom line is that the government is neither as stupid nor as generous as it sometimes seem. They have a *lot* of number crunchers working for them, and they're the ones who set the debt terms. They have made a bet that 20 years, 6.8% interest, and non-dischargeability will leave them in the clear. They could be wrong: Number crunchers and economists have called it wrong in the past. But, since they're government and hold all the cards in this game, they've probably built in a good margin of safety.

    You have to understand the tremendous power of high interest rates that continue to compound: It's very hard to pay down a substantial debt with an interest rate above 5%. Many of the people setting your debt terms have personal experience with this: Mortgage rates in the 1980s were as high as 15%. They fell below 6.8% only during the last decade and now, of course, they're below 5%. The money that government used to make in mortgages can now be had from education. And, although graduates can't be repossessed in the same way houses can, grads have to eat. Eating means earning income and making monthly payments on those loans.

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  49. 8:19: Grads with real jobs (permanent full-time employment requiring a law degree) almost always report their information accurately. The misreporting by grads is just another symptom of what happens when people aren't getting real law jobs.

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  50. "The bottom line is that the government is neither as stupid nor as generous as it sometimes seem. They have a *lot* of number crunchers working for them, and they're the ones who set the debt terms. They have made a bet that 20 years, 6.8% interest, and non-dischargeability will leave them in the clear."

    What an ignorant perception of the political process. Tell me, do you think number crunchers also calculated the decrease in IBR from 15% to 10% of wages over 150% of the poverty line, and the change to forgive the loans in 20 instead of 25 years?

    No one has crunched anything on IBR.

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  51. It would be almost impossible to calculate exactly what IBR is (or isn't) costing the government. You'd have to add up all of the payments made over the 20 year period and then subtract from that the original principal and the govt's cost of borrowing that money year over year. The last part is where it gets complicated as the interest rates fluctuate and the carrying cost is going to vary year over year as a function of the remaining original principal amount + accumulated carrying costs.

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  52. The naivete here is rather startling. "It would be almost impossible to calculate exactly what IBR is (or isn't) costing the government. . . ." This is exactly what economists do all day in government, banks, and insurance agencies. With computers and sophisticated forecasting models, it is actually quite easy. Fluctuating interest rates are a cinch for these programs--they automatically draw upon historical patterns and other information to make different projections. And remember that the government is dealing with a large number of borrowers, averages, and relative risk. The government doesn't care what *you* earn, whether they will win/lose on your loan, or even exactly what their net return will be in 20 years. They care about a range of possible returns, the likelihood of earning each one, and relative risks.

    "No one has crunched anything on IBR." And this assertion is based on what evidence? You have contacts in the Dept of Ed, Sallie Mae, or OMB? Or do you just assume that politicians have made these changes because they are so eager for your vote? Or scared by Occupy Wall Street? Not a chance. Under-30 voters simply aren't a reliable voting bloc for either party. If the IBR changes have a political component (rather than an economic, "let's make sure we secure a positive outcome on a 20-year horizon" one), the politics are aimed at your parents, the boomers. They are much more reliable voters and the government is saying: "Look, we care about your kids as much as you do! You've done all you can (whether or not you think it's true, your parents probably believe it's true) and now we'll help out." The boomers are the group that paid high mortgages--and also dealt with a bewildering range of mortgage variations--so they understand that the government has a very good chance of breaking even or better on IBR.

    I think I'm beginning to understand why business clients say that lawyers don't know enough about finance, risk, and the business world.

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  53. Re: eligibility for IBR, I, too, don't see how anyone making 170k could be eligible. I make 127,000 gross, have 133,000 in government loans, and I am not eligible because I do not meet the "partial financial hardship" requirement. I am eligible for "income contingent repayment," the older program that, as I understand, is soon to be phased out in favor of IBR. Not to mention that under that program they would like me to pay 1300/month, which is just not feasible for me along with my private loan payments, credit card payments, taxes, housing costs, food, etc. etc. etc., but that is another story. IBR is a joke and it does not solve the problem of crippling debt.

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  54. Income contingent is a joke. Don't waste your time with it.

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  55. "It would be almost impossible to calculate exactly what IBR is (or isn't) costing the government."

    You're clearly some devious scumbag law academic trying to obfuscate a very simple problem.

    EVERY YEAR, YOU HAVE TO SUBMIT YOUR PRIOR YEAR'S TAX RETURNS TO SALLIE MAE - WHO CALCULATES YOUR IBR PAYMENT FOR THAT YEAR. IF YOU DO NOT SUBMIT THESE THINGS, YOU GO BACK TO YOUR NON-IBR SCHEDULE PAYMENT. BY TAKING THE DIFFERENCE BETWEEN THESE TWO NUMBERS, YOU CAN SEE HOW MUCH OF THE SCHEDULED PAYMENT WAS WAIVED DUE TO IBR. IT'S A VERY SIMPLE AND BLACK AND WHITE CALCULATION, SO PLEASE STOP WITH THIS DEVIOUS FRAUD. WHAT THE HELL IS WRONG WITH YOU PEOPLE?! JESUS.

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  56. My scheduled payment is about $2,000 per month. My IBR payment is $0 per month. Thus I would go into my law school's IBR statistic as ($2,000 minus $0) x 12 = $24,000 in scheduled payments waived due to IBR.

    GOT IT?!

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  57. Dear devious scumbag at 1:28, you were asked a very precise yes/no question that proved why you were wrong with your "crunched numbers" idiocy, yet you tried to dodge. So I'm going to ask it again.

    "Tell me, do you think number crunchers also calculated the decrease in IBR from 15% to 10% of wages over 150% of the poverty line, and the change to forgive the loans in 20 instead of 25 years?"

    What is your answer? Do you think that change was motivated by number crunching which showed that the government was taking too high a percentage under IBR? Or was it a political change designed to attempt to placate the rioting kids whose lives have been destroyed by the latest Enron/Madoff (a.k.a. higher education)?

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  58. Holy shit the level of intellectual dishonesty coming out of law professors to perpetuate the law school scam is downright evil. It's exasperating just talking to them.

    They want to make you believe a simple 5th grade three step arithmetic calculation is some mystical and undefinable thing that can't be determined and so shouldn't be reported!

    The ABA is going to pass this latest example of statistical fraud (http://qfora.com/jdu/thread.php?threadId=21481) without a single comment from a legal academic.

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  59. Couple of things -- Im pretty sure that interest does not compound under IBR but we all have to repay the entire balance after 20/25 years. Not to mention all the issues of being under that debt for such a long time.

    IBR is not a good deal or a get out of jail free card like some people are trying to make it out to be.

    The main point is that the total is enormously inflated because of the existence of the loans themselves coupled with the lack of some sort of check on tuition attached to these loans. Nothing less but the ability to discharge or a heavy loan forgiveness program will make this situation equitable. And even then you'll have the rotting carcasses of ruined careers and withered skills to deal with.

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  60. "Im pretty sure that interest does not compound under IBR."

    I'm a 100% sure you're wrong. You can be 100% sure as well, if you - for once - research facts instead of running your mouth like an a**hole.

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  61. haha....ok dipshit:

    "If your reduced payment under IBR does not cover the interest on your loans, the government will pay that interest on your Subsidized Stafford Loans during your first three years in IBR. After three years, and for all other loan types, the interest will accrue but not compound."

    from their website:

    http://www.ibrinfo.org/faq.vp.html#_How_does_IBR_


    "research facts instead of running your mouth like an a**hole."

    Ironic, no?

    Idiots like you is why we can't have nice things....I'll just sit here and wait forever for your apology.

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  62. To be accurate, the government will pay the interest on your relatively small subsidized Stafford loans for your first three years under IBR. At least they used to. Not sure if the recent student loan changes modified that and regardless the vast majority of loans are unsubsidized Stafford and GRAD Plus so the above fact is negligible.

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  63. "and for all other loan types, "

    You can't do your own research and now you can't even read what given you....who is the asshole again?

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  64. 3:34, Your next step is to

    (a) calculate the percentage of the average $170,000 loan balance that is a subsidized stafford loan (less than 20%)

    (b) read the part of that text that you - in your devious intellectual dishonesty - excluded when you cut and paste the first part. the part you deleted reads, "That means it will be added to your principal, but interest will continue to accrue only on the original principal amount. Anything you still owe after 25 years of qualifying payments will be forgiven. For more information on this topic, see Question 35 of the Department of Education's IBR Q&A. "

    Holy shit you are an a**hole. What is wrong with you? I don't even care about the IBR debate anymore. I just want to know what happened to your life to turn you into such a lying scumbag.

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  65. And who the hell wrote that idiotic ibrinfo.org website any way? Its two statements, "the interest will accrue but not compound." followed by "That means it will be added to your principal" are contradictory.

    See e.g. something as simple as Wikipedia. "Compound interest arises when interest is added to the principal," http://en.wikipedia.org/wiki/Compound_interest

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  66. My god, are you completely stupid? What does the second part have to do with COMPOUNDED INTEREST? Thats what you attacked me about. Does the interest compound, yes or no?

    Being anonymous is nice isn't it? Saves you all the embarrassment from being you.

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  67. Because compounded interest, means interest that is added to the principal. The part that you deleted stated that the interest will be added to the principal.

    Got it? Maybe you're not a liar. Maybe you're just really dumb.

    Besides none of this has anything to do with collecting IBR data by school. Again, the IBR calculation is a very simple and objective one that Sallie Mae does every year. (a) Take the scheduled loan payment (that you will have to pay if you do not submit IBR forms) and (b) take the IBR payment. Subract the two. The difference is the amount waived due to IBR. Sum this up for all of the schoo's graduates and report it.

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  68. http://www.youtube.com/watch?v=cYxS5sQg8f4

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  69. Hand? Meet forehead. Let...me...explain...this...to...you...slowly.

    Its is the interest added to the principle that itself earns interest that is COMPOUNDING. It is not earning interest. Furthermore the second half of that paragraph states that that portion of the interest disappears after after 25 years....so in what way is this compounding?!?!?

    So let me get this straight - you go off about researching a topic (which I did months ago and what I based my initial post on) that you failed to research yourself and were wrong about. You are given the actual research and you still get it wrong. All the while going.%#$#%#&#%# in such an intelligent manner.

    It must be hard to find out you are what you accuse others to be.

    Now go away. You are too stupid for words.

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  70. "Furthermore the second half of that paragraph states that that portion of the interest disappears after after 25 years....so in what way is this compounding?!?!?"

    By similar logic, since the entire loan disappears after 25 years, no principal or interest ever existed?!

    Look, I'm not wasting any more time talking with you about this topic. You are either an idiot or, more likely, you are trying to obfuscate the request that the ABA - when it purportes to collect data on loan performance - collect and report IBR data.

    None of what you are talking about even has anything to do with the IBR reporting.

    Again, on Nov. 15 the ABA will create a new statistic to measure the performance of law school loans. THIS STATISTIC WILL ONLY COUNT A LOAN AS NONPERFORMING IF THE GRADUATE DEFAULTS. IT WILL NOT COUNT IBR OR DEFERMENTS AS A NONPERFORMING LOAN. THIS IS FRAUDULENT BECAUSE NO ONE WILL EVER DEFAULT WHEN THEY CAN DEFER OR GO ON IBR BY FILLING OUT TWO FORMS.

    This whole idiotic discussion started because you don't want to report IBR and deferments in the statistic, and your entire intent is to distract and obfuscate away from this very simple request.

    NOT ONE, NOT A SINGLE LAW PROFESSOR commented to the ABA regarding the deceptive nature of their new loan performance statistic, even though this was an opportunity to nip a fraudulent method in the bud.

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  71. here's the link http://www.americanbar.org/content/dam/aba/administrative/legal_education_and_admissions_to_the_bar/council_reports_and_resolutions/2011_notice_and_comment_s510_rules_22_and_5.authcheckdam.pdf

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  72. Soon you'll see the ABA reporting a 0.1% default rate, misleading the public into believing that law school loans are being paid off, when in fact a huge percentage of these loan payments will have been waived via IBR/deferments.

    It's blatant fraud, just like the ABA's methods used to collect employment data, and it was designed to be fraudulent by the devious white collar criminals who run that institution and legal academia.

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  73. here is the fixed link
    http://www.americanbar.org/content/dam/aba/administrative/legal_education_and_admissions_to_the_bar/council_reports_and_resolutions/2011_notice_and_comment_s510_rules_22_and_5.authcheckdam.pdf

    ReplyDelete
  74. (trying again. click on my name "fixed link" for the fixed link)

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  75. Nice try genius. It goes like this:

    "I am sorry good sir. It is I that is the asshole. I failed to understand what compounded interest is and I thank you, good sir, for finally explaining it to me. Furthermore, I jumped the gun and spoke out of turn when I accused you of not researching the topic. I was the one who failed to do basic research. I now know that interest does NOT compound under IBR. I apologize for wasting everyone's time with my sad attempt at distracting with side issues and muddying the waters with off-topic nonsense. Again, thank you good sir. You are far smarter than I and I will now crawl into a hole and rock myself gently to sleep, repeating over and over again, 'I am an idiot, why do I open my mouth" I am an idiot, why do I open my mouth?' Please forgive me."

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  76. So many stupid people. Here is the IBR calculator link: http://studentaid.ed.gov/PORTALSWebApp/students/english/IBRCalc.jsp

    Whoever says this doesn't work out obviously has never simply plugged in their numbers. I have already started IBR and work for a non-profit. I will have over 200K forgiven. Yes, this is REAL.

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  77. (This is 4:13 above and the guy who initially pointed out that interest does not compound under IBR.)

    @4:15 - but you work for a non-profit. Nobody else gets their principle forgiven. The 10 year non-profit track that leads to total forgiveness is anise start but needs to be expanded for everyone else. I have a bad feeling that he baby boomers will fight his tooth an nail.

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  78. "By similar logic, since the entire loan disappears after 25 years, no principal or interest ever existed?!"

    No moron, the interest is forgiven and not the principal.

    "None of what you are talking about even has anything to do with the IBR reporting. "

    You do not determine the topics to be discussed here and you were the one who went off on researching IBR and compounded interest.

    So yea...

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  79. @ Law Prof-- Okay, so "almost all" grads who have full time legal jobs report their salaries accurately.The ones who do not have those kinds of jobs constitute the bulk of the "significant" number of grads who lie about their salaries.

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  80. "This whole idiotic discussion started because you don't want to report IBR and deferments in the statistic, and your entire intent is to distract and obfuscate away from this very simple request. "

    Lolwut? the whole discussion started because you got butthurt over somebody simply pointing out that interest doesn't compound under IBR. And you continued to get butthurt when it was shown again and again that this is true. You need to relax and start thinking more clearly.

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  81. 4:27 wrote: "No moron, the interest is forgiven and not the principal."

    Actually, under IBR both the interest and principal is forgiven after 25 years. On a related note, Obama recently changed this time limit to 20 years.

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  82. Sigh. No, actually the principal left is taxed as income. And yes I'm aware of the change to 20 years but that only effects loans taken out after 2011.

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  83. Actually the entire amount forgiven - principal and interest - creates cancellation of indebtedness income, except if you qualify under the 10 year nonprofit work experience. You are kind of dumb.

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  84. No, you are extremely dumb and cannot deal with being wrong. Complete cancellation only occurs with the 10 year program and not the 25/20 year program. The 20/25 program treats the remainder as TAXABLE INCOME. I know your ego must be really hurting but you are just making it worse.

    Use citations if you dispute this.

    Oh, and again about that compounding interest?

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  85. Right, the entire amount not just the principal as you wrote earlier. Yay I just helped slightly educate the thread retard.

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  86. Everyone here knows who the thread retard is...again, about the compounded interest?...again, about the forgiveness of the principal after 25 years?

    "The 20/25 program treats the remainder as TAXABLE INCOME."

    What does remainder mean?

    You need to learn how to give things up...stop being stupid, stupid.

    ReplyDelete
  87. Learn

    To

    Write

    Paragraphs with more than one sentece.

    ReplyDelete
  88. Good comeback. You forgot:

    "I am sorry good sir. It is I that is the asshole. I failed to understand what compounded interest is and I thank you, good sir, for finally explaining it to me. Furthermore, I jumped the gun and spoke out of turn when I accused you of not researching the topic. I was the one who failed to do basic research. I now know that interest does NOT compound under IBR. I apologize for wasting everyone's time with my sad attempt at distracting with side issues and muddying the waters with off-topic nonsense. Again, thank you good sir. You are far smarter than I and I will now crawl into a hole and rock myself gently to sleep, repeating over and over again, 'I am an idiot, why do I open my mouth? I am an idiot, why do I open my mouth?' Please forgive me."

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  89. 6:19, you're evidence that some unemployed law grads deserve to be unemployed - because they're mentally ill.

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  90. Ok, says the psychopath who embarrassed himself all over this thread.

    Again, about that compounded interest? gain, about the forgiveness of the principal after 25 years?

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  91. @7:17 - what won't you say? You have been destroyed line by line, point by point. Yelling online, mixing up arguments....you got schooled. Badly.

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  92. Bro, You should write a post summarizing point by point all the ways you destroyed that idiot. I've been following the thread but some newcomer could benefit from a nice summary.

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  93. 4:15, are you still around? How much did IBR reduce your required payments this year?

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  94. 7:32, are you blind? 7:20 totally lost that debate. He did not win a single point and so has nothing to summarize!

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  95. Keep flailing bro...

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  96. So many morons. So little time.

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  97. only one moron here.

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  98. Bro, summarize all the ways you panes that guy line by line. use citations to the comments so everyone can see.

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  99. If I could please get back to the topic of "cooking the numbers", On November 15, the ABA is going to create a NEW STATISTIC designed to measure the performance of law school loans. You can read about it by clicking on my name ("New ABA fraud.")

    This new measure WAS DESIGNED TO BE FRAUDULENT. It purports to measure the ability of students to pay back loans, but it does so by only counting students who "default." They intentionally do not payments missed because the student went on deferments and IBR.

    The problem is no one would ever default under the current system. Defaults occured under the OLD system when deferments ran out and IBR wasn't available. Under the new system, you can go on IBR for as many years as you want.

    This new ABA statistic will grossly understate the ability of students to pay back their loans. It will be another fraudulent statistic, designed by the ABA to mislead applicants and the public about the value of law school. For example, someone will look at NYLS's statistic and see a 0.1% default rate (the 0.1% being the one person who was too lazy to fill out an IBR form). Based on that, and NYLS's high tuition, they will assume NYLS students are repaying their loan. This will make NYLS's $50,000 per year tuition seem less onerous and the applicant will borrow money to attend NYLS. Had the applicant seen the percentage of graduates using deferments and IBR, it would paint a different picture - one of crushing and insurmountable debt.

    Unlike the ABA's job placement statistics, YOU CAN DO SOMETHING ABOUT THIS RIGHT NOW. The link (click on my name) gives you the person to contact to protest this new statistic. Her email is Becky.Stretch@americanbar.org.

    It's one thing to write blog posts about "cooking the numbers" but it's another to nip new "number cooking" techniques in the bud. So far not one academic has talked about, or written to the ABA about this new scam. Not one. Not Campos, not Tamanaha, not Horwitz, not Leiter, not a single person. That's a shame.

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  100. If I could please get back to the topic of "cooking the numbers", On November 15, the ABA is going to create a NEW STATISTIC designed to measure the performance of law school loans. You can read about it by clicking on my name ("New ABA fraud.")

    This new measure WAS DESIGNED TO BE FRAUDULENT. It purports to measure the ability of students to pay back loans, but it does so by only counting students who "default." They intentionally do not payments missed because the student went on deferments and IBR.

    The problem is no one would ever default under the current system. Defaults occured under the OLD system when deferments ran out and IBR wasn't available. Under the new system, you can go on IBR for as many years as you want.

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  101. This new ABA statistic will grossly understate the ability of students to pay back their loans. It will be another fraudulent statistic, designed by the ABA to mislead applicants and the public about the value of law school. For example, someone will look at NYLS's statistic and see a 0.1% default rate (the 0.1% being the one person who was too lazy to fill out an IBR form). Based on that, and NYLS's high tuition, they will assume NYLS students are repaying their loan. This will make NYLS's $50,000 per year tuition seem less onerous and the applicant will borrow money to attend NYLS. Had the applicant seen the percentage of graduates using deferments and IBR, it would paint a different picture - one of crushing and insurmountable debt.

    Unlike the ABA's job placement statistics, YOU CAN DO SOMETHING ABOUT THIS RIGHT NOW. The link (click on my name) gives you the person to contact to protest this new statistic. Her email is Becky.Stretch@americanbar.org.

    It's one thing to write blog posts about "cooking the numbers" but it's another to nip new "number cooking" techniques in the bud. So far not one academic has talked about, or written to the ABA about this new scam. Not one. Not Campos, not Tamanaha, not Horwitz, not Leiter, not a single person. That's a shame.

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  102. (link here; click my name "ABA Fraud")

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  103. ABA Fraud: One reason you are not seeing discussion on your suggestion is because the suggestion doesn't fit with what the ABA is actually doing. The ABA is not creating this statistic; nor is it creating the new rule that affects independent law schools with default rates over 10%. The Department of Education created both the statistic and the standard. The statistic actually isn't new--the Department has been calculating these default rates for schools for quite some time now.

    The thing that is new is that the Department has now created IBR. *But* the Department is not, to the best I can determine, releasing IBR numbers to accrediting organizations (like the ABA) or individual schools. There was much discussion yesterday about how easy it would be to calculate these numbers, and that may be true. But the Department of Ed has the numbers and is the only one that can do the calculating--unless you want law schools to start another half-assed attempt to gather numbers from their graduates.

    I agree with you that one effect of IBR is that it will cover up much of the scandal associated with tuition rates and debt-ridden graduates. I would like to get more info about IBR amounts and rates out. But someone has to put pressure on the Dept of Education to do that. As someone wrote yesterday, the ABA doesn't have power over the Dept of Ed; they can't just command the Dept to disclose certain info. And the Dept of Ed has its own reasons for wanting to keep those IBR numbers private.

    It might be worth writing a letter to the ABA, asking them to request the Dept of Ed to calculate IBR information and report that information to both the ABA and individual schools. You could also ask the ABA, if the Dept of Ed complies, to require schools to publish these data.

    I suspect that none of the players in this game--schools, ABA, Dept of Ed--will want to disclose IBR rates. But the Dept of Ed really is the key. If they disclose that information, it's on the public record--whatever the ABA or individual schools do. Among other things, that means it's available for the media and US News rankings. On the other hand, if the Dept of Ed doesn't disclose the information, nobody else has the info to disclose to anyone.

    Your heart may be in the right place, but you've got to read the document you posted (and the click-through information from that document) more closely. If you start writing letters to the ABA accusing them of creating a new statistic, they'll just think you're a nutcase who can't read federal regulations. Same result if you persuade Campos or others to write this type of letter. And meanwhile, a lot of time gets wasted by people trying to figure out what you're referring to.

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  104. I guess I need to provide "paint by numbers" style step by step quotes for the person above. See below. You can confirm these quotes by clicking through the links in the letter I link above (and that you can find by clicking on my name in this comment).

    "ABA Standards for Approval of Law Schools . . . Standard 510" - This quote means the new rule affects accreditation.

    ***THE NEW RULE*** SECTION 510-2, "Interpretation 510-2
    For law schools not affiliated with a university, the school’s student loan cohort default
    rate shall be sufficient, for purposes of Standard 510, if it is not greater than 10% for any
    of the three most recently published annual cohort default rates." -- This is the NEW STATISTIC THAT THE ABA IS INTRODUCING. THEY ARE SAYING THAT IF YOUR "DEFAULT" RATE IS UNDER 10% THEN YOU SATISFY THE DOE'S REQUIREMENT THAT STUDENT LOANS BE PAID BACK.

    What you can do is write them a simple letter stating that a 10% default rate under the current definition does not accurately reflect the number of nonperforming loans, and that a better new rule would be to create a standard that reflects defaults (that again, no one ever does anymore because you have IBR), IBR and deferments.

    I hope this was clear enough but if you want I can literally prepare a paint by numbers walk through for you.

    Again, THIS IS A NEW FRAUDULENT ABA STATISTIC, BEING CREATED RIGHT IN FRONT OF OUR EYES, AND NOT ONE SCAMBLOG PROFESSOR HAS EVEN DISCUSSED IT.

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  105. Link to the source

    http://www.americanbar.org/content/dam/aba/administrative/legal_education_and_admissions_to_the_bar/council_reports_and_resolutions/2011_notice_and_comment_s510_rules_22_and_5.authcheckdam.pdf

    (or you can click on my name).

    For some of the quotes you have to click a link in the letter linked above.

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  106. Hopefully this all pastes into the comment.

    Standard 510. STUDENT LOAN PROGRAMS
    A law school shall take reasonable steps to minimize student loan defaults, including
    provision of debt counseling at the inception of a student’s loan obligations and
    prior to graduation.
    Interpretation 510-1
    The student loan default rates of a law school’s graduates, including any results of
    financial or compliance audits and reviews, shall be considered in assessing the extent to
    which a law school complies with this Standard.
    Interpretation 510-2
    For law schools not affiliated with a university, the school’s student loan cohort default
    rate shall be sufficient, for purposes of Standard 510, if it is not greater than 10% for any
    of the three most recently published annual cohort default rates. If the school’s cohort
    student loan default rate is not sufficient under this Interpretation, the school must submit
    a plan for approval by the Accreditation Committee for coming into compliance with this
    requirement.
    Failure to comply with title IV or having a student loan cohort default rate greater than
    the rate permitted by title IV is cause for review of a law school’s overall compliance
    with the Standards. Schools shall demonstrate that they have resolved all areas of
    deficiency identified in financial or compliance audits, program reviews

    http://www.americanbar.org/content/dam/aba/administrative/legal_education_and_admissions_to_the_bar/council_reports_and_resolutions/2011_proposed_standard_510_and_rules_5_and_22.authcheckdam.pdf

    ReplyDelete
  107. Let me try to paste it again,

    Standard 510. STUDENT LOAN PROGRAMS

    A law school shall take reasonable steps to minimize student loan defaults, including provision of debt counseling at the inception of a student’s loan obligations and prior to graduation.

    Interpretation 510-1 - The student loan default rates of a law school’s graduates, including any results of financial or compliance audits and reviews, shall be considered in assessing the extent to which a law school complies with this Standard.

    (Proposed) Interpretation 510-2 For law schools not affiliated with a university, the school’s student loan cohort default rate shall be sufficient, for purposes of Standard 510, if it is not greater than 10% for any of the three most recently published annual cohort default rates. If the school’s cohort student loan default rate is not sufficient under this Interpretation, the school must submit a plan for approval by the Accreditation Committee for coming into compliance with this requirement. Failure to comply with title IV or having a student loan cohort default rate greater than the rate permitted by title IV is cause for review of a law school’s overall compliance with the Standards. Schools shall demonstrate that they have resolved all areas of deficiency identified in financial or compliance audits, program reviews or other information provided by the United States Department of Education.

    http://www.americanbar.org/content/dam/aba/administrative/legal_education_and_admissions_to_the_bar/council_reports_and_resolutions/2011_proposed_standard_510_and_rules_5_and_22.authcheckdam.pdf

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  108. To make this completely idiot proof, here is what Interpretation 510-2 should say:

    "Interpretation 510-2 For law schools, the school’s student loan cohort default rate shall be sufficient, for purposes of Standard 510, if the percentage of students who enter the Income Based Repayment program, get an economic hardship deferments on their student loans, get an unemployment deferment on their student loans or default on their student loans is no greater than 25% for any two consecutive graduating classes."

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  109. "I suspect that none of the players in this game--schools, ABA, Dept of Ed--will want to disclose IBR rates."

    That's the whole point. You can catch the ABA red handed in this attempt to hide important information by commenting on the new rule 510-2.

    I'm not saying the ABA will listen to you. They are Madoffian/Enronian white collar criminals, but don't let them slip this new rule without even a debate.

    Standard 510 requires that accredited law schools have performing loans. They are creating a new rules re: Standard 510, a new fraudulent statistic that states if less than 10% of your student loans "default" then you comply with with 510. We should be telling them, "NO! student loan default is meaningless in a world with IBR and so your new 510-2 does not assess the performance of student loans. You need to also is IBR and deferment rates to comply with the spirit of Standard 510."

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  110. Here are all of the ABA accreditation standards, if anyone is curious.

    http://www.americanbar.org/groups/legal_education/resources/standards.html

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  111. Nutcase doesn't understand compound interest, IBR or how the ABA uses "statistics" despite helpful explanations from others. Nutcase posts hundreds of comments. Nutcase is angry.

    It is guys like you who ruin blogs like these.

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  112. Bro, you need to write a post itemizing all the ways you pwned that nutcase point by point with citations to the comments. Go for the kill move bro.

    ReplyDelete

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