Friday, April 13, 2012

Money Heaven

December 15, 2008:

Securities and Exchange Commission inspectors have been working overtime to go through the records of Bernard Madoff and his investment firm. Bloomberg News reports that investigators "found evidence he ran an unregistered money-management business alongside his firm’s brokerage and investment-advisory subsidiaries." Also, "Investigators are still trying to figure out where customers’ money went," as Madoff's estimate of $50 billion in losses may be "roughly accurate."

Madoff, the 70-year-old former chairman of Nasdaq, confessed to employees—including his sons—that his well-performing investment firm was actually a Ponzi scheme, as the returns to earlier investors were taken from money of new investors. Madoff allegedly oversaw the entire operation from the 17th floor of the Lipstick Building on Third Avenue (pictured), two floors from his company's trading floor. The NY Times calls the floor" Where Wealth Went to Vanish," and notes another big question is "how one person could have pulled off such a far-reaching, long-running fraud, carrying out all the simple practical chores the scheme required, like producing monthly statements, annual tax statements, trade confirmations and bank transfers."

The head of Seabreeze Partners, a Palm Beach and NY hedge fund, told the BBC, "It appears that at least $15bn of wealth, much of which was concentrated in southern Florida and New York City, has gone to money heaven." In Palm Beach, where many of Madoff's clients were recruited, one woman explained to the Times how to pronounce the scamming investor's name: "Made off. You know, like he made off with all our money.”
I hear all the time from recent law graduates who have $100,000 or $150,000 or $200,000 in educational debt, and who are either working in jobs, legal and non-legal, that barely pay their modest living expenses, or who don't have jobs at all.  Many if not most of these people are never going to find work that allows them to pay more than a nominal amount on what they owe on their loans.

I got together recently with one of my oldest friends in this business, a guy I worked with at Latham more than 20 years ago.  He was in the original associate class that got Lathamed in the early 90s, and he was amused to learn from me that Latham had become a verb. Since then he has worked almost continuously as a lawyer, and currently holds a government job that most people in the legal world right now would probably consider in about the 95th percentile of desirability in terms of legal work (decent salary, reasonable lifestyle, good job security).

He graduated at the top of his class from a pretty good private law school in the late 80s with about $55K in debt.  I asked him if he still owed anything on his law school loans, and he laughed and told me that the balance on them was almost exactly the same today as it was the day he graduated.  He's worked as a lawyer for 20+ years, he's in his late 50s, and he can't possibly retire any time in the foreseeable future. He's never been in default on a loan and is currently trying to move his balance into the federal government's ten-year loan forgiveness program for government and public interest work.

Over the next few years, a lot of politicians are going to slowly come to the realization that when Cameron and Abigail "borrow" $150,000 of taxpayer money and give it to an institution of higher learning, that money is going to money heaven. Sure, it's technically a "loan," but it's the special kind of loan that we know in advance is not going to get paid back, because to pay back a loan of that size you need a high-paying job, and they're never going to have that kind of job. It would be far more efficient for the government to simply give money to these institutions themselves (a good deal less money of course, subject to all sorts of appropriate restrictions on what the institutions can spend it on) than to "give" it to Cameron and Abigail first, so they can spend the rest of their lives in debt servitude.  But that would be socialism and make the ghosts of Ronald Reagan and J.P. Morgan and John Calvin very sad so we can't do that.

Right now Sen. Dick Durbin of Illinois is trying to do something about this.  He isn't hearing from many law grads, and given his general remarks on the topic, he like almost everyone else of his generation needs to be brought up to speed on what's been happening to legal education and the legal profession in the years since he went to law school and began his own career.

People can go here to tell him their stories. Please do.


  1. Why couldn't your law school friend pay an extra $200 toward his student loan principal per month and pay off his loans after 20 years.

  2. What about IBR, LawProf? I never see that possibility addressed in your posts.

  3. There is a difference between not being able to pay off your loans in 20 years of practice and not trying to. Your friend sounds like he is in the latter category.

    And what sort of pension does this government lawyer have to look forward to? Not enough to retire on?

  4. 6:32- if you have never seen lp reference ibr, you haven't read his blog very long.

  5. Obviously everyone is making out on this arrangement. Congress, for not subsidizing or "socializing" American education. Banks, for running their models and realizing that even on minuscule interest payments they're coming out in the black on these educational loans. The law schools, for getting $150k of free money from each student. Why wouldn't all of these entities try their hardest to keep the house of cards from collapsing? Our entire economy is built on this financial magic, and the law school scam is but a subset.

  6. Durbin is not hearing from law grads because Durbin is only focusing on private student loans. Durbin fails to realize that the vast majority of student loan debt is federal student loan debt. Somehow, he believes in the paradigm that federal loans are good and private loans are bad. I am am sure he avoids the federal loan topic because the federal government is broke and he does not want to bring up yet another government fuckup in an election year. At the same time, I am sure he wants to appear as though he is doing something about the inevitable problem which is why he is pushing for private student loan discharge. I think Hansen Clarke's legislation addresses the problems in a much better manner.

    When Durbin wants to talk about the predatory nature of all student loans, maybe some of the pussy law students/lawyers will speak up. I watched his hearing in March and the question was asked about re: why he was not addressing the problems with federal loans. Durbin pretended like he did not hear the question. Whatevs.

    I did, however, call his office and let him know about my situation, as well as my observations mentioned above. I also thanked his staff for their efforts.

    As for me, I am going to use my deferment and forbearance options. By the time they are both up, I think forgiveness will come. I am done paying these fucking loans.

  7. 6:32:

    IBR is a crock of shit. IBR is not a solution, at all.

  8. What GS grade is this guy?

  9. IBR is probably the only option for a heck of a lot of law grads. The tax penalty at the end sucks, but for somebody owing $150K at 8% and making $40K, there is no other option besides IBR. It's either that, or leave the country.

  10. 6:58:

    Which is why IBR is a last resort prior to default or leaving the country. However, it is still not a solution. Ever tried to apply year in and year out while dealing with an incompetent student loan company who has a vested interest in the borrower defaulting because they make more money that way? How about applying for IBR while married and living in a CP state? Texas and CA are both CP states which make up 65 million people. Don't get me started on filing separately while married or a pre-nup. These options are nightmares for the borrower. How about trying to borrow money for a mortgage, CC, or car loan while on IBR? Do you think, with tightening credit standards, a bank is gonna lend to someone whose student loan debt is GROWING while they are on/in IBR. Tax debt after the person is near retirement?

    Again, IBR should only be used if the borrower is staring default square in the face. Of course, they better hope they never make or inherit money during those 25 years while on it.

  11. That freaking Madoff should have been executed. My only relief for me is that his one sone killed him-self, but I doubt a man with Madoff's mind cares much about that.

  12. LawProf's friend must have very poor money management skills.

  13. The following comments above are why we can't have nice things.

    WHO CARES whether anecdotal example A, whose details have probably been modified, has properly budgeted his money, or plays the lotto, or buys a latte?

    The issue isn't the individual facts, but the structural ones. Borrowing X amount of dollars (150-225k) on a Y projected salary (35k-80k) doesn't make sense.

    When the law schools calculated salary, they projected an income stream for all students that was based on what the top 10-15% of their graduates were making. Plus, these loans are non-dischargeable, so no one bothered to see if they could be repaid. It's like Countrywide's NINJA loans, but without bankruptcy protection.

    One of the major hurdles for reform (and maybe THE hurdle) is that we can't get past the individual circumstances.

    Folks, a whole generation is in debt servitude, and the preceding generation (Gen. X) isn't doing much better. It's not because they didn't clip coupons or network.

  14. 7:27:

    Bravo. At Easter dinner last week, I heard few baby boomer relatives complaining about how some members of their generation had 36 billion in student loan debt. I told them it was nothing compared to the amount of debt the Gen Xers and Yers held (near 650 billion).

    These two generations are debt slaves and I do not think it was the result of abusing the system.

  15. Even a man with a serious lack of judgment such as Madoff, knew better than to go ahead and finish law school at a TTT.

  16. And actually that 36 billion number for the boomers is probably mostly attributable to assuming student loan debt for Gen Xers and Gen Yers.

  17. You have to last 20 years in IBR before you can pay off your loans. During that time, the loan balance is actually growing because interest can accumulate (but I don't think it is capitalizing) faster than the monthly payments after three years in the program. This situation especially affects law grads who are more likely to have over 6 figures in law debt. I don't think the program was designed with law grads or other high debt grad students in mind and it shows.

    Now, who wants to take bets that IBR will still around in 20 years, when the political climate of this country demands additional cuts to the budget without touching the Holy Trinity of defense, Medicaid/Medicare, and Social Security? And I would bet that less than 33% of 18-25 year olds know about IBR. It should make it very easy for Republicans to do away with the program when they eventually storm back into office or for Democrats to sell it away for more benefits for the voting boomers.

  18. 7:48:

    Not sure what you mean by "assuming" since a parent or other person cannot assume the debt when said debt is student loans. Your assumptive comment aside....if you mean, co-signing for Xers and Yers, you would be wrong. The 36 billion, which is included in the 1 trillion amount of total student loan debt does not take into account parental co-signers. The 36 billion is attributed to unemployed Boomers going back to school in order to get more edumacation.

  19. Bored 3l:

    It is capitalizing under IBR. Capitalizing like a byatch.

  20. "It's like Countrywide's NINJA loans, but without bankruptcy protection."

    Exactly, 7:27. Exactly.

  21. Just a reminder that all of this (interest rate rises, lack of subsidy on federal loans, etc) is completely unnecessary. The popular perception agrees with 6:45 that "the government is broke" but at the federal level that's a meaningless statement.

    The government has the power to create as much money as it needs, by fiat. We happen to choose to sell government loans instead of creating new money ex nihilo, but that's a political choice, and even there those loans are paying nil interest.

    There is no reason we should make students wear a hair shirt for twenty-five years while paying the feds 7% interest. Government finances are not the problem. The problem is a lack of political will, plus a public that's been brainwashed into thinking we're still on a gold standard, that such a thing would be desirable, and that they have no right to demand more from their government rather than giving all the value in our country to the banks and their ilk.

  22. @7:55 (7:48 here) I was a little sloppy with my language, but I'm not trying to be confrontational. I'm simply guessing that some percentage of that 36 billion is attributable to boomers directly taking out student loans to finance a dependent's education. This is different than co-signing where the parent and student both sign the loan. There are student loans where only the parent is responsible for repayment. I'm guessing this type of loan accounts for a significant amount of the 36 billion. But whatever the number, at the end of the day it's chump change compared to the debt slavery of our generation.

  23. I don't believe Durbin and others are not up to speed. This information is readily available to them.

  24. I've said it before and I'll say it again, the solution is simple.

    Step One: Make student loans fully dischargeable in bankruptcy.

    Step Two: Get the government out the loan issuing business.

    The market will take care of the resk.

  25. 8:31:

    Easier said then done. Too many companies as well as the government are making too much money on these loans. Your way would be too logical and easy.

    Better yet, eliminate all capitalized interest, fix the interest rates for all loans at 2%, and allow no interest accrual during bouts of unemployment or financial know, the way the loans were when our parents had them back in good old 1965.

  26. Can somebody please explain to me why interest rates on law school student loans are now 7 or 8 percent when they used to be 1.9%?

  27. I had lunch with a colleague who practices bankruptcy law. He told me that he is targeting recent college and law school grads who have massive student loan debt. His strategy is to put them in perpetual Chapter 13. As a result of the US Supreme Court decision of 2 years ago, you could propose to pay pennies on the dollar to Sallie Mae for 5 years (better rate than IBR) and if Sallie Mae contacts you, you can hit them with a stay violation sanction. When you are done with the first Chapter 13, refile (rinse and repeat). You can keep doing this for the rest of your life and keep Sallie Mae in check forever. I thought my colleague's idea was brilliant. He figures these kids' credit is screwed anyway so filing for bankruptcy shouldn't hurt them more (ask Donald Trump if his multiple Chapter 11 filings for his hotels and casinos has hurt his businesses).

  28. @9:09: Because you earn more money charging 7% than charging 2%. :-D

  29. "Cameron" and "Abigail"

    You wag !

  30. 9:21:

    Are these Sallie Mae private student loans or Sallie Mae federal student loans? Does it matter or does filing ch 13 stop federal and private student loans?

  31. There is no need to even file for bankruptcy at all.

    Stop paying and just wait for your creditors to start harrassing you for payments. It is easy to catch them on FCRA and FDCPA violations, plus whatever your state laws are which mimic the FDCPA. Fair Debt Collection Practices Act.

    Sue them when you have a violation. Then negotiate an out of court resolution with them.

    Insert boilerplate language in the settlement agreement.

    1) Parties release all claims against each other (this gets rid of the debt)

    2) non-disparagement clause (they cannot report anything negative to credit bureaus)

    This works. It is the guerilla method of dealing with your creditors.

  32. 9:52:

    This may work for anything but student loans. Explain to me how a third party collection agency can waive a federal student loan debt as part of an agreement when there are technical FDCPA violations that are only related to collection of the debt?

    Show me your authority, please. Not trying to be obtuse but I don't see how any agency would waive a full public (federal) debt of say 100K for a small private violation of the FDCPA (which most are). Again, show me the money....ummm, I mean the law. Or past case. Statute (not just the FDCPA).

  33. Madoff was a sociopath and, for a sociopath, had perfectly fine judgment. He lived the good life and had great prestige during his prime years, for the possible risk of jail during his declining years.

    His problem was that his family lived in his society and were sensitive to social norms. They had a conscience. His son's suicide was a tragic result.

    Did he have good judgment or bad judgment? There are always variables that people don't consider. Consequences occur; his family's destruction was one.

  34. These complaints about "tone" say a lot. They probably come from one person. I would love to know the identity of this author (I have my own short list of likely suspects).

    Complaints about "tone" say that the anonymous shill author, most likely a legal "academic," has no substantive rebuttal to the flames of truth that LawProf brings each and every day.

    There's also probably a bit of envy that a single blog post by LawProf gets exponentially more readership than a Law Review article by ToneProf.

  35. I am sorry, but your friend is one of the reasons why student loan bankruptcy discharge has been eliminated for people that really need it.

    I have been slaving away on the document review circuit for the last few years, working 80 hour weeks as a click monkey, not gaining any legal experience, just to pay back the money I legally borrowed. How is it fair that someone in a similar position to me who decided to forego paying back their loans and took a position that offered better experience and a better quality of life will ultimately get their debt wiped away by someone like Durbin?

    I have no problem with people being able to discharge their debts who really can't find or work or are living in poverty, but people like this clown don't get my sympathy.

  36. @9:57 am

    Sue the debt collector and the original creditor in the same lawsuit. Quite often the debt is reported to credit bureaus by both, which is itself a violation.

    Name all of the parties so that everyone has to be part of the settlement agreement.

    My jurisdiction requires ADR. They have to come to the table to negotiate.

  37. Lazy Bones
    Lazy Bones!
    Can't pay off those student loans!

    Lazy Bones,
    You're dead in the water
    and you'll never get married
    or have a son
    or a daughter.

    You know what Lazy Bones?
    You're a *#ick,
    and I'm sick
    of you!

    As a matter of fact,
    you stink
    like poo!

    So go and watch a diry flick
    and deadbeat your debtor's

  38. It's harmful to this "movement", if I can call it that, to sympathetically cite examples of people who do not actually deserve any sympathy. Sorry, but if your friend hasn't paid off his $55k in loans by now while being continuously employed in decent jobs, he never will, and it's got nothing to do with the legal market. $55k is about what I've paid off on my loans in the 3-4 years since I graduated, and I probably make about what he does (while supporting a family and without spousal income). It's like when Elie Mystal claims to be a victim of this scam when he actually got a Biglaw job but quit without even paying down his loans.

    I say this as a huge fan of the blog, but reading your friend's story, my thought was, "Why should I feel sorry for him?"

  39. "But that would be socialism and make the ghosts of Ronald Reagan and J.P. Morgan and John Calvin very sad so we can't do that."

    Also, this snark is totally unwarranted. It isn't the "free market" that allowed lenders to give $200,000 to people with no hope of paying it back. It's meddlesome government rules such as "no discharge in bankruptcy" and government backstopping of loans that made it happen.

  40. 10:45:

    I get all that. You are not answering my question(s). Again, why would a third party collection agency settle a 100K student loan debt over a small 1k (or even 5K) FDCPA violation, which, as most FDCPA violations go, are technical anyway. The collection agency, as a rule, is subject to the FDCPA, not the assignor. In this case, the assignor is the federal government. Why (and how) would the collection agency, who is liable for the FDCPA violation(s) be able (or willing) to toss in release of such a substantial federal debt if they don't get permission first from their assignor.

    The other huge questions is does this third party collection agency have that sort of power to settle a student loan debt without the authority from their assignor as a result of their screw up. (Hint: they don't.)

    Whether a jurisdiction requires ADR or not is irrelevant. A settlement by way of ADR is as binding as a court settlement. Many times, a court settlement is more binding than ADR because the parties are more willing to follow it. ADR is largely a pain in the ass anyway.

  41. @MC:

    The point is not that you feel sorry for the person in Campos' example.

    The point is that you become alarmed that someone - who had time with one of the top global law firms and who is now a federal government attorney or some sort - hasn't repaid his loans from however many years ago, because you also realize that a quarter-million law graduates in the last decade who have twice or three times his taxpayer-financed debt with none of his opportunities.

    IBR amounts to allowing America's student debtors a generous rollover of their debt, with an escape hatch for people who can make 120 payments at the IBR/10-year standard repayment rate while employed in the public interest. You don't need to feel sorry for anybody but yourself to see that this bubble's popping will necessarily drain resources from something else in the government that's actually valuable to you in everyday life.

  42. @MC 10:59

    It isn't the "free market" that allowed lenders to give $200,000 to people with no hope of paying it back. It's meddlesome government rules such as "no discharge in bankruptcy" and government backstopping of loans that made it happen.

    ...wait what? What exactly would bankruptcy law be without the government???

    Absent the government, your debts are dischargeable sometime between when Fat Tony busts your kneecaps and when he fits you with cement shoes. There really isn't a "free market" alternative here, because debt markets do not function without proper regulation.

    Of course specific rules and regulatory decisions were misguided. But you replace bad policy with *good* policy, not with torching the statehouse... and good policy would be more funding for public universities, which was Campos' point here.

    [In a market with inflexible supply (of which "decent legal education" is a prime example) any subsidy given to the consumer will be captured by producers as rent, so in this case the solution is to provide direct subsidy to producers conditioned on lowering prices, i.e. a "public law school option". If you define the problem as "law school costs too much" anyway; if you define it as "we produce too many lawyers" then you need to actively shut some schools down -- which wouldn't be a bad idea either of course...]

  43. Original creditors are not subject to FDCPA claims. The idea that a student loan company will release a six figure debt in lieu of paying a $1,000 fine is ludicrous and will never happen. I like the Chapter 13 idea, especially in light of the Espinosa decision (where student loans were discharged).

  44. 10:59 It's the greater fear of socialism which allows these half-assed measures to attempt to bring the "free market" into things like education and health care. See for-profit colleges as another example. We could directly subsidize higher education to eliminate the need for student debt, guaranteeing access for all who meet certain admission standards, and control costs, etc. But that would be too "socialist," so instead we get a monstrous hybrid "solution" that still serves the people in power (here it is university admins and tenured profs) at the expense of the powerless students.

  45. "It's the greater fear of socialism which allows these half-assed measures to attempt to bring the "free market" into things like education and health care. "

    It is not the fear of socialism - the vast majority of Americans support public funding of education, especially k-12 and all the changes came far before the TEa PArty arrived - the problem is that people care more about not paying taxes than anything else. Also, the sector of the economy that would/should support these "socialist" policies are the ones who gain the most from the current funding regime; Academia. This si not a political issue, its a greed issue.

  46. Higher education should be fee for service. Here's your tuition bill. If you'd like to attend, please pay it.

    If the price was too high to fill seats, then people would not go. Student lending would develop on its own as some people would opt to be indentured to attend higher ed.

    The current system is crazy. Higher ed contributes little in terms of value added (when compared to primary and secondary school) for most jobs. It is fantastically expensive. Many employers use it as a way to quickly screen or differentiate among a large pool of potential applicants. Conventional wisdom then convinced most people that they needed it to be in the game. That set off an arms race for credentials that have little to do with most jobs.

    Then the subsidies became popular. Then the subsidies became entitlements. Then educational prices adjusted to capture the subsidies and entitlements. Then it became necessary to borrow to get in the game. And here we are.

    The system is broken. It doesn't need more money or a government bailout or more help. It needs less.

    There will always be a demand by some for education. And it will be done in an efficient way if we permit the adjustment.

  47. Most people support many "socialist" government programs when presented to them in a vacuum. But the problem is that we need to compromise to get anything done. And the compromise usually results in a bastard system that ideas because of partisan divisions because people retch at anything that smells of government intervention.

    I really don't care how the problem of high tuition and oversupply is solved, but I'm not a religious man and I really don't have faith that the "free market" will somehow sort everything out if given enough time.

  48. *results in a bastard system that exists because of partisan divisions

  49. Just to clarify, my friend has had quite low-paying government/public interest jobs for all of his career except for the brief time he spent at a big firm. His current job is in state government and while it's the best-paying job he's had since the early 90s by far his salary is still a good ways from getting out of five figures. Like many people he's had to deal with financial challenges that have had nothing to do with an extravagant lifestyle, which he has never lived.

    He's an example of someone who has in many ways had a successful legal career in the sense that he's done socially valuable work for many years, but he's made very little money in comparison to the public's vague notion of lawyers making big salaries. And of course if he were graduating today his debt would be four times larger (twice as large in constant dollar terms).

  50. Sometimes I wonder if LawProf reads all the comments and thinks to himself, "Jesus, what a bunch of fucking idiots."

    I know I do.

  51. @12:50 That's ironic.

  52. 12:50:

    Nobody cares what you think, fucko.

  53. Protip for 12:50: All blog commentary is filled with some idiocy, some intelligence and mostly meh. Just like real life.

    Guess what category you fill.

  54. @Law Prof-- but what did he order for dinner on Friday? Did he get the chicken or the steak?

    (Sorry, couldn't resist. I was the earlier posted at 7:27)

    This Country has a problem with admitting that there are structural challenges in the economy. It would be admitting that the game is rigged.

    So instead of having a discussion over whether it's right to allow Countrywide to loan six figures to someone without two years of documented paychecks, we have Rick Santelli saying "Why don't you put up a website to have people vote on the Internet as a referendum to see if we really want to subsidize the losers' mortgages?"

    This is where the law school scam discussion is. We can't admit that "the system" is letting people go unemployed for two years, or that "the system" results in debts that will never get paid down.

    Here's an anecdote-- it's my own. My wife and I are both attorneys. Her student loans were capitalized with interest. After paying the loans religiously, after eight years we just got one of them down to what she originally borrowed. And we clip coupons, pack lunches, drive used cars, and rent. We're also extremely lucky and grateful to be where we are-- employed and paying down our loans.

    Here's another concept that people have touched on-- IBR is not guaranteed to be around forever, and it results in serious compounding of interest. The scheme is INTENDED to benefit the banks, not the borrowers. The hope is that (i) there won't be mass defaults right now, (ii) the government can inflate the currency up to the point that everyone earns out of the IBR limits, and (iii) all that compound interest will get paid out. Everbody should be EXTREMELY cautious of IBR.

  55. 12:13 Best. Comment. Ever.

  56. I am a scamblogger and I think the law school scam is evil and corrosive, but I think you should tell your friend to pay his loans.

    I graduated 10 years ago with $132,000 in debt and after never having earned more than 60k a year, I still managed somehow to pay off half my loan balance. It wasn't easy and it involved (and still involves) a ton of sacrifice. No vacations, no eating out, no fancy latest gadgets. Graduates that have the means and ability to make good on their obligations and yet refuse to do so, either because they are too lazy, or somehow believe they will be able to freeride their way into discharge are just as bad as the law school shysters and banks IMO.

  57. 1:29:

    Good thing it is just your opinion and not reality. Some of us did not, nor will we, make 60K a year, consistently over the same time period. I have sacrificed as well, paid my loans diligently, and still I have yet to put a dent in what I actually borrowed, so hey, lucky you.

    Oh, and 1:21: while you may think 12:13's comment was the best comment ever, keep in mind that higher ed in this country looked that way to the masses prior to 1965. It was a rich man's gig. Student loans opened the door for the masses. Over time, the government fucked that up too and made them predatory. I don't think the solution is as simple as 12:13 suggests.

  58. Critical-thinking 1LApril 13, 2012 at 1:42 PM

    What options are there for a 1L considering dropping out with 45k in debt? Does a year of law school with B grades and the experience of an unpaid summer job amount to any sort of qualification?
    I'd love to hear the options

  59. I wasn't referring to you, I was referring to people who have the means and ability to pay, yet refuse to do so. Elie Mystal is a perfect example of this.

  60. @1:42 p.m.:

    You can be unqualified to practice law with x in debt, or you can be qualified to practice law with 3x in debt.

    If you don't mind working for about what you could make right now with your BA/BS, but with three times the debt, then you're a natural. Otherwise, drop out.

  61. Critical-thinking 1L:

    The options for a 1L who owes 45k in debt and drops out of law school are considerably better than graduate of law school:

    1. If you are 45k in debt your first year, you will finish your JD with over 165k of debt, and more likely 180k of debt. Interest is already accruing on that 45k of debt, meaning that it will probably hit 60k by the time you graduate. It will be much easier to pay off the loan balance if you begin repayment now, instead of waiting 2 more years and adding another 100k to your principal.

    2. A law school graduate will have to put "JD" on his resume (if for no other reason than to explain the 3 year gap in employment). This will inevitably lead to employers asking "why aren't you working as an attorney?" Or, if you explain that there aren't any attorney jobs, your employer will just think that you want whatever job you're applying for as a temporary gig until you get hired as an attorney.

    3. The salary that the average attorney makes isn't significantly greater than somebody who has a BA in a social science, and in many cases the salary is worse (especially if you factor in hours worked). If you're working a job that doesn't require a JD, nobody is going to pay you more for having a JD. The difference is that your JD will confer 165k or more of debt. Consequently, your 45k starting salary won't go nearly as far because of your loans.

  62. Critical-thinking 1L:

    Here's an anecdote from one of my many unemployed law school classmates. The year was 2004, and the legal field was booming. My classmate took the LSAT with his friend from undergrad and he did well (mid 160s). The friend did not. The friend lamented that he didn't score high enough to attend law school. Consequently, my classmate enrolled in law school and his friend who didn't get into law school took a job with a real-estate company called Co-star.

    As my classmate racked up 60k of debt his 1L year, another 60k of debt his 2L year, another 60k of debt his 3L year, and 15k of debt to take the bar exam, his friend went from making 38k a year to 51k a year and bought a small house and a new car. After taking, and passing the bar exam, my classmate floundered without a permanent job for over 2 years. He got a few part time gigs doing doc review and tried to start his own solo shop, and his income was below 10k for both years.

    To make a long story short, after 2 years of unemployment he was pretty desperate, so the friend who works at Costar let my classmate "rent" a room in his house for $100 bucks a month. My classmate is approaching 300k in ballooning student loan debt and his life is effectively over. He graduated from at Top 50 law school and hopes to get a job at Starbucks so he can get health insurance.

  63. Not sure what the point is, but here's an anecdote from my legal career, which I'm largely happy with thanks in part to parents who helped me pay off loans.

    Anyway, about six years into my career I found myself defending lots of stockbrokers. Disgruntled customers sue the firm and the individual broker. In preparing for the hearing, I gotta learn all about the broker, so I'm going through his personnel file which includes his resume and job application. I remind you, I was happy with my career at this point, doing work I liked, making high five figures. Not bad, eh? Anyway, I get to the guy's resume and I see he dropped out of a TTT law school that I would never have even considered, got this job at this securities firm and went on to make $450,000 in his second year there.

    It was food for thought.

  64. Is OP's point that his friend who has not paid off his loan is like Madoff? The Madoff analogy is unclear here, and is generally overused. The Madoff analogy is fhe new Hitler analogy -- if you find yourself comparing your opponent to Hitler, it probably means you have already lost the argument.

  65. Professor Campos:

    I don't know.

    A lot of your commenters seem so detatched and like they are viewing things through a telescope, or through layers of gauze on a wound.

    Or through many veils that have to be lifted away, one by one, until the real ugliness is right before them.

    Which they don't want to face.

    Armchair and smug academics and others

  66. "There is a difference between not being able to pay off your loans in 20 years of practice and not trying to. Your friend sounds like he is in the latter category."

    That's the case for me. I had over 100K in total debt. Paid like mad on the private debt until I completely had it paid off. Paid like crazy on my mortgage so I could shorten the term and take advantage of historic lows by way of a refinance.

    The other, public loan, though, is a different story. I consolidated at under 3%, and now I'm under 2% after making the first 48 consecutive payments on time. So I can handle letting that one sit for a while at that rate---instead, I pay down the mortgage, and I save and pay cash for cars. Virtually anything else I would borrow would be at a higher rate.

    I learned my lesson well. The scam isn't just law school---it's anything you can't afford without financing.

    So with the possible exception of another home one day if my family outgrows this one, (and barring catastrophic injury/illness) I'm committed to not paying the banks another dime in interest. I won't even carry a monthly balance on my credit card.

    Smart people realize this. If you drive used cars, you can pay cash for your next used car. If you do this enough, you can buy a new car with cash. If you're willing to drive that new car for 10-12 years instead of 4 or 5, you can do it again. Over a lifetime, you'll get 2 or maybe 3 of those cars virtually for free by using the money you'd otherwise have paid the bank in interest.

    Work for yourself and your family, not for the bank.

  67. 3:38,

    Deciding whether or not to finance a purchase isn't nearly that simple. Pay down your mortgage or contribute to your 401(k)? With the tax incentive it's far better to contribute to the 401(k).

  68. @3:38PM

    I bet you pull into the same parking spot at work everyday, and probably back in.

    You pull out when you are about to come once a week, and run out to your tidy cheapskate compost pile and fertilize the top soil for next year's bumper organic vegetable garden's top soil.

    All is well in your little, steady and planned regular income world, and you save every receipt for every time you fill the gas tank in your fuel saving shity little used imported car.

    You wear sensible shoes, purchased on sale even though they are a bit uncomfortable, and you go to church and pray to the tin god of all effortless and morally neutral and weak minded academic cheapskates, and count the days left in your sensible world until you can finally draw a pension and retire in a sensible America that will probably not exist in that day.

    And you don't give a flyin fuck about student loan debtor's do you?

    Ahhh...just kidding.

    Have fun with your cars and car loans.

  69. @3:38

    It is easy to be smug and condescending when you have a good job with benefits. Many people don't have jobs. There aren't enough jobs.

    Have you been paying attention?

  70. @5:02- -- and you have found a better way?

  71. I can't find the comment now but someone mentioned Elie Mystal from ATL. He is paying his loans, not sure why you think he isn't. He has explained his story. I don't think it is relevant to this thread so I'm not going to link it.

    Lawprof: I don't know how to explain it, but reading this post scared me. I am a person who law has worked out for, I graduated in the early 80s and my loans were small. Reading how bad things are now makes me feel energized to try to change them. Reading about a person who is still paying loans 20 years after he graduated, just flat out scares me. Your friend has done good work for society and he still has loans.

    What is going to happen to all these current students in 20 years? I can't really imagine it. But I feel scared.

  72. @3:38

    We used to say "don't break your arm patting yourself on the back."

  73. 6:25 AM, I agree... Why not???

    One of my good friends graduated in 1997 and last year December 2011 she made her last student loan payment. She and her husband threw a party and were so happy that none of them have any more loans to pay....

    Another friend stayed in a dumpy basement apartment off Campus while her friends leased condos & Apts..No one wanted to visit her in that place but she stuck it out.. She paid a whopping $110 a month for the "dump".

    She never went anywhere for Spring break.. Today she has paid off her student loans...

    It can be done...

  74. @6:38

    What jobs did these people have? How much were they making?

    I worked my way through law school. I lived in a basement apartment too. I got a biglaw job with little debt. I had no trouble paying my loans.

    But I have friends who lived almost as cheaply as I did. But they didn't get jobs, they struggle. One friend got out of debt because someone hit her car and she was injured and received a large insurance payout. They are all trying to do their best, but they simply don't have the money to cover their debts. They are struggling constantly for years.

  75. A bit surprised by the response to my post. I don't think I did a very good job communicating my position.

    Wasn't trying to be smug or consdescending at all. I dodged a bullet. I'm aware of that.

    I'm finding more and more wisdom every day in my parents' and grandparents' way of living, where they were reluctant to finance anything.

    I took a tremendous risk with law school, bigger than I realized at the time.

    And 5:02, it would be almost impossible to be further off than your post with your description of me, but it was amusing to read.

  76. @6:38:

    I lived with my parents when I went to law school, only financing tuition and books. I received entrance to numerous schools but only made my decision based upon cost (not rank). I still owe 100K because of sporadic employment and a divorce. I have lived way below my means since graduating and watched my debts.

    Where do I fit in your world?

  77. All the government needs to do is impose caps on tuition increases by schools where students are receiving federal monies (read virtually all schools - for profit or otherwise). The government can effectively mandate that if a school jacks up its tuition more than say 3% in a year, then no student will be eligible to receive student loans. The school would essentially have two options: conform their tuition increases or go bankrupt. It's such an easy fix that it will never be implemented because there are too many people gorging at the federal trough. The government makes money off us, the bankers make money off us, the schools obviously make money off us, slack professors make money doing very little work for their 6-figure salaries, the big law firms get a steady supply of indentured servants with a yes sir, no sir, anything you say sir mentality in order to service their outrageous student loans in an economy where lawyers have been pumped out like widgets for at least the past 20 years. The high cost of law school then imposes barriers to entry for the average law graduate, which makes it nearly impossible to compete with the big boys. Anyone that has tried to open their own practice with any hope of success likely realizes it's not an easy task after paying their monthly loan payment, mortgage payment, living expenses, etc. As above, look who stands to benefit -- Everyone except the hapless law student/graduate and the general public that is unwittingly funding this scheme. One might ask "why" this is happening and "why" something hasn't been done by the ABA (or anyone for that matter) to resolve this problem. My conclusion, after thinking about this for some time, is that the powers that be want to keep people in debt, which reduces an individual's capacity to compete with mega-corp. Add in a high regulatory environment and it is virtually impossible for Mom & Pop to even get into a competing business, aside from some Main Street retail operation. When the dollar tanks and everyone under the age of 40 owes close to $500,000 in student loan debt, with no ability to purchase a house, they will bend over backwards to accept a new currency standard if it gives them more power to pay off their loans. Not to get all New World Order on you, but people need to start questioning why the bums in Congress et al. aren't addressing these issues, but are focusing on some stupid, insignificant issue de jour. It's all bread & circuses. Watch some football, keep the population stupid and dumbed down. Sorry for the long rant.

  78. @7:20 So what are you trying to say exactly? I'm still not getting it. If your point is to just avoid borrowing money, I mean that is great advice, but how do you expect student to go to law school that cost 6 figures? Do you advise them to not go? Do you think only people whose parents can pay cash for their law school should go? This is a real question and I am seriously interested in your answer.

    What is your position on the law student loan debacle?

  79. 7:45 PM... You did / are doing the right thing... If many more people would move in with their parents or some relative and do chores to help out in that household, it will be a win,win situation for all around. If you live in an area with a great bus/train service USE that..

    I have a friend in New York who walks to the train station but when it is too cold she takes the bus to the station.. She does not own a car so she does not need to spend money on any of the expenses that anauto brings. She shares an apartment with her sister and cousin.

  80. @8:08,

    At this point, knowing market realities, I would advise most not to go at all. For those that do go, I would advise minimizing debt as much as is reasonably possible. By reasonably, I would exclude full scholarships to the bottom 100 to 125 schools, which at this point should be avoided as a general rule. There may be exceptions for those going to join a family firm or the like, but it's a bad idea for most everyone else.

    For those remaining, if they can attend a reasonably priced school (either a state school or other top tier school with scholarship), it's one thing. Otherwise, avoid law school. Do not take on the levels of debt. It just isn't worth it.

    This is a bubble. The bank would not have lended me $125K to buy a fully loaded Jaguar XJ at age 22, right? But I could've borrowed $150K for law school at 22, and upon graduation three years later, with even a modest salary, banks were offering my wife and I the opportunity to borrow nearly three quarters of a million dollars to buy a house. We didn't, of course, but that was a bubble, too.

    Somewhere in the last 15 years we lost our collective minds when it comes to debt....which is silly. I'm far from wealthy, but if you look at the quality of life for the *average* American today, it would blow away what most of the "one-percenters" enjoyed just 25 years ago. Smartphones, the internet, overall quality of clothing, dining options, etc. But for some reason that isn't enough for so many people, and in chasing "more" so many of us gamble away a perfectly decent standard of living.

  81. This comment has been removed by the author.

  82. One of the problems that will have to be faced is the "irresponsible poster child" and the "fortunate son/daughter." That is to say outliers being used to demonstrate the norm. 

I graduated law school in 1992 - having worked my way through because I was not able to get student loans (and yes I had help from my parents) - but my roommate had worked as a New York cabbie and a limo driver to get through CUNY-Baruch and then worked his way through law school borrowing a lot - I think it was $100k - and he has finally paid of his student loans. A partner of mine has also finally paid off his loans.

    But that was class of 1992 - upon which a huge legal recession did fall - but we also paid about $12k, $14k and $17k tuition - so you could earn it working part-time with the right job and as a summer associate. I think that for most of my class with student loans in 1992 most will have paid them off unless some sort of major financial catastrophe befell them.

But for later graduates things got a lot tougher. First their tuition and living costs (rents, etc.) were higher. Second, they were I think a fairly free spending group, suckered by the soaring BigLaw associate pay of the mid 90's and early noughties into thinking they would make huge salary forever, instead of the typical 2-3 years.

    In any event the point I am trying to make is that there are two groups of outliers in the law graduates of the last 15 years or so - the fortunate ones for whom everything worked out - and also the totally irresponsible who are as much the author of their problems as the law school bubble. The difficulty is the journalists tend to gravitate toward comparing the outliers – it makes for a better story - while ignoring the mass of recent law graduates. The result is a risk of giving the public the impression that there outliers are representative of the whole.

    I would also add that some of the most prominent scambloggers are outliers - individuals who were extraordinarily irresponsible, and there is a real risk that they will be used as exemplars for a class they are, in fact, quite atypical of.

  83. "some of the most prominent scambloggers are outliers - individuals who were extraordinarily irresponsible"

    Other than JD Painter and maybe Kimber Russell, who the hell are you talking about? AFAIK, Nando, subprime, Matt L., Frank, the BDSL guy, etc. did nothing "extraordinarily irresponsible" unless by "extraordinarily irresponsible" you mean behavior typical of 80% of law students and recent graduates.

  84. Speaking for the class of 2011, from a law school in the T50-ish, most of us never got a whiff of these "big salaries" you've described. We borrowed our cost of attendance, and we planned on being able to enter the market at or around the median starting salary for our institutions. With 90%+ employment and a median starting salary of $90,000+, you'd have to think that, because it's not like your school would ever make hugely important omissions or cultivate ignorance about its students' employment outcomes.

    Your point about journalists using outliers is a fair one. However, past a certain point, all irresponsibility is equal. A law graduate may have clipped coupons and served lattes during law school, but the irresponsibility that's fucking most of us now is the choice to attend a non-HYS law school. If you were virtuous and owe only $90,000 instead of $150,000, but are as unemployed as the spendthrift who owes $150,000, how much less fucked are you as a result of your frugality during law school?

  85. @8:17pm

    The fact that you can name two scam bloggers that you regard as irresponsible sort of makes my point -


  86. Some of these comments are sad. Why are we so eager to judge and condemn the circumstances and "responsibility" or lack thereof, of individual debtors? To avoid confronting the real, systemic problem of massive student loan debt that thousands of others face? I understand that if you are making 0 dollars, there is a temptation to think that if you were making 55,000 dollars you would be "rich" and have amazing amounts of money to pay off all your loans in 2 years just by living "frugally," and that you may not want to have any sympathy for anyone who has a job at all. But please look at whether there is a real, systemic societal problem here, rather than just having an emotional knee-jerk reaction. Yes, someone with no job is much worse off than someone with a job, but in a system where even someone with a job making good money has to struggle valiantly to get ahead of the interest on loans, there is a problem. When loans sit around at the same amount for decades, despite thousands of dollars in payments made, that is a problem. The problem is not that some guy with a government job buys a latte every day or lives alone instead of with his parents at 40 years old. In any normal career path, one can expect to be able to afford lattes and living in a real adult apartment, I don't think those are crazy profligate luxuries.


    Fast forward to 19:20 where they discuss the student loan bubble.

  88. grist for discussion.

    if you are in foxx's voting district, kindly inform her that she is an out of touch moron.

  89. If you people dont' like America then you should leave to Russia or Chavez. Love it or leave it. Oh never mind this is lame trolling.

  90. MacK - so 2 of a group of 15-20 makes a rule? If that's the case, wouldn't the schools just set up straw man blogs of wildly irresponsible behavior and debunk the whole "movement?"

    Point is that the overwhelming majority of the student loan problem is NOT due to irresponsible decision-making, so to pretend that it is is to inject a needless red herring. No one is mistaking anything because there are a few loud idiots out there who made horrible choices.

    It's quite common today for graduates to go to good schools and/or do extremely well, wind up $200k+ in student loan debt, and not have a chance at a reasonable salary to justify the expense. Outliers my ass-crack. It's now routine that middle-class kids show up with 100k from undergrad and incur 100k+ in law school.

    For those who fully cross-subsidize the remainder, it's even higher. For those who receive scholarships or come from wealth, it's lower. But when the media finds a kid with $200k in student loan debt, they haven't plucked the black rose in the field; go to the local law school and yell a common name and you'll find multiple people with $200k+ in student loan debt.

    At my law school, there's about ten 3Ls who have really positive outcomes lined up, and probably 150+ who are facing highly negative outcomes ($200k+ in debt and <40k in salary).

  91. West-

    That someone can be in law school and not have wondered about the misuse of the the cliché "the exception that proves the rule" always surprises me (I am easily surprised it seems - especially by the guy who went into a xenophobic and racist rant yesterday.) But for your edification and to prevent the teeth gritting annoyance that the misuse of this cliché causes I will explain. (yes West, feel free to be offended.)

    You may have wondered why the “Aberdeen Proving Grounds” are so called (actually you probably never heard of them and wondered, hah!) In oldish English (150 years) proving meant testing. In mathematics you test a mathematical rule by looking for a situation where it is wrong – find an exception, rule collapses. Meaning of cliché, look for an exception to DISprove a rule. Test for ignorance value, huge.

    The problem is that JDPainterguy is currently ecstatic that when journalist were writing about the law-student-loan-problem he was the person that NPR/NYT/WPost interviewed. Everyone else needed to do a headslap that they were being compared with this dipshit. Journalists can usually be bought with alcoholic beverages, but when it comes to what gets published by editors, remember the old aphorism "when a dog bites a man, that is not news, because it happens so often. But if a man bites a dog, that is news." A conventional straight A student goes to law school and has a crappy (but not fatal) life because of student loan debt is not a story - a jackass like JDPainterguy is a story because - well he is an extreme example of irresponsibility.

    Smart children like you (who still don’t understand the "exception that proves the rule" cliché) may say, but those nice journalists would understand the rhetorical question that "so 2 of a group of 15-20 makes a rule? If that's the case, wouldn't the schools just set up straw man blogs of wildly irresponsible behavior and debunk the whole "movement?"

    I have a sad tale to tell you - the jounos, they will go with "man bites dog" every time – they don’t give a flying f*ck for your rhetorical question. There is more interest in a story debunking than a story telling the truth. The irresponsibility of the likes of JDPainter guy is much more interesting than the earnest responsibility of the straight A student who is SOL and holding on by the remaining keratin in his/her fingernails.

    The outliers are a problem, their prominence is a problem - their obvious idiocy is a problem and - in the case of JDPainterguy their utter narcissism means that they are interjecting themselves into the debate as the exemplar of the law-graduate who cannot repay their loans.

    So – is your ass-crack is what you were thinking with when you posted:

    "it's quite common today for graduates to go to good schools and/or do extremely well, wind up $200k+ in student loan debt, and not have a chance at a reasonable salary to justify the expense. Outliers my ass-crack. It's now routine that middle-class kids show up with 100k from undergrad and incur 100k+ in law school."

    That was my entire point, that outliers were giving the impression that kids in the class you just described were there because of irresponsibility - rather than because they actually did what they system says they should do. My concern was that people in that category would be lumped with the irresponsible screamers.

    And you are as I did suggest, an idiot. (Holy crap a law school let you in!!! That in itself illustrates the problem)

  92. @4:06 PM

    "Why are we so eager to judge and condemn the circumstances and "responsibility" or lack thereof, of individual debtors? "

    Because perhaps society would for now like "[t]o avoid confronting the real, systemic problem of massive student loan debt that thousands of others face."

    The issue I am trying to point out, having read recent articles in mainstream media, is that outliers are being presented as typical - JDPainterguy is presented (and presents himself) as typical of the recent JD in trouble with debt. If that becomes the public perception, then any effort at reform (which requires political support) is doomed. There are some astonishingly irresponsible law school debtors out there who are atypical of the mass, but who are being presented as typical. That is a problem.....

  93. Mack wtf you're talking to the ADD crowd on the internet not NY Times readers.

  94. And MacK you have come up with two people-- actually someone else came up with the two-- after you suggested that "some of the most prominent scambloggers" were people who had acted irresponsibly. Does JD Painter qualify as a prominent scamblogger? You made it sound as if there were more than just two. You may be right in your point that journalists are sometime focusing on the wrong people, but that is different than suggesting that a good percentage --not one or two--of scambloggers were extraordinarily irresponsible.

  95. I NEVER said I am a poster person for anything.

    My problem has more to do with Student Loan Debt now than it does The Law School Scam.

    But still, I add what I can to the Scamblogs based on my experiences.

    For the love of Pete: Read my novel!

  96. The thing is, people who really don't want to acknowledge the problem are going to be able to pick holes in anyone's finances. Some people won't admit that 100k in student debt at 7 percent interest is bad until everyone who has this debt lives with his/her parents, doesn't drive a car, and never buys lunch or a latte or new clothes or takes a vacation anywhere. And even presented with someone who is living like that, some people will still say "well, maybe you should live exclusively on ramen, then. Pay what you owe!" Catering to those people is not going to work. Most people understand that someone with a professional degree that they went to school for 7 years to obtain, and some years of experience, should be able to feel entitled to a middle class lifestyle. This person should feel entitled to someday be able to afford a house/condo, car, and yes, even a sandwich at the deli every day. I think if any of us had known that having those things would mean living with our parents until age 40, we would never have gone into this profession, and THAT is the point.

  97. Is really not a different cost structure for college if you go private and go for full price (top ranked school you can get into. Main difference is that a college degree is a versatile degree. Law school not so much if you are in the majority who cannot get work as a lawyer.

    Sort of a universal problem of educational inflation brought about by government policies.

    Anyone smart today does not go to law school. Too much risk and too costly.

    Sorry I did it. My law school tuition is fully paid and has been for a long time, but that does not change how hard it is to get and hold a job in the legal profession.

    Go for job security. Go for life style. Go to where you can get to work easily, and live comfortably without tons and tons of money.

    Surely there are some services that people will always need and some places where the cost of living is reasonable, free of crime, nice homes and a great place to live. Look for that.

    You do not want to be in a profession where there are a few hundred applicants for each job and many jobs, especially at the entry level, only last for a few years.

  98. So a guy who dropped out of a T15-T20 school started a thread on TLS about dropping out. Read it and see what you think. I think we are fighting a losing battle with trying to convince people to not go to law school.

  99. @12:20 I understand the frustration of dealing with the TLS crowd (I've had a fair bit of experience). That said, I don't think they are indicative of the broader trend. The substantial year-over-year declines in LSAT's administered are a much better indication of the contributions of blogs like this one; lots of young people are choosing to forego law school entirely by not even taking the LSAT, which is great.

    Don't forget however, that I suspect word has also gotten out to the many who are still sitting in for the exam, and I believe that they (at least some of them) are going to be much more selective in thinking about the admissions process (ie: what sorts of law schools they are willing to go to and at what price). We will have to wait for the admissions cycle to wrap up before we really get a sense of it, but it will be interesting to watch out how matriculation numbers this year compare with those in prior years. Greater students may choose not to go at all once the actual realities of six-figures in debt start to sink in, especially if they deem the funding they receive as inadequate to justify the investment (I know a lot of kids who apply just to see whether or not
    they get $$ at a school).

    Anyway, I guess what I'm saying is, don't dismay! The word is definitely getting out there.

  100. This post is so depressing, and so is this site. Why not post POSITIVE law school stories, like those chronicled in movies like Erin Brocovich, A Few Good Men or To Kill a Mockingbird?

    Your problem is that you're just a depressed loser. 99% of lawyers are living awesome lives.

  101. umm... 70% of statistics are made up on the spot.

    but why don't you do a little empirical study, 2:59.

    go find 100 lawyers and ask them if they would say they're living "awesome lives." you won't even need to talk to 5 lawyers, i bet, before your 99% statistic would be debunked.

    YOUR problem is you're an uninformed, bloviating nitwit. and atticus finch was a FICTIONAL CHARACTER.

    99% of fictional lawyers live awesome lives.

  102. Oh god...I just made the mistake of reading some stuff on TLS and it was all kids talking about how borrowing 100k is fine, because "you can easily pay that off in 10 years on a small firm 50k a year salary."

  103. 2:59:

    Eric Brockovich was not a lawyer, you dumbfuck.

  104. "It would be far more efficient for the government to simply give money to these institutions themselves (a good deal less money of course, subject to all sorts of appropriate restrictions on what the institutions can spend it on) than to "give" it to Cameron and Abigail first, so they can spend the rest of their lives in debt servitude."

    Exactly! And that is how the system worked before the right wingers replaced subsidized tuition at state run universities with our current system of student loans. It was a crackpot idea when Milton Friedman proposed it in the 1950s, and it remains a crackpot idea today.

    If a rich kid wants to go to a private law school on his own dime so he can make a lot of money at Craven, Swine and Less, that's his own business. No public good is being served by having newly minted lawyers working to make the wealthy even wealthier. The public should not be expected to finance this.

    However, public prosecutors, public defenders, government attorneys, and even private practitioners doing Mickey Mouse divorces are actually benefitting society. However the salaries earned by these lawyers does not justify the expense of going to law school. That's why we need public law schools with subsidized tuition. It's a public good where the taxpayer should be picking up a large part of the expense.

    Better yet, we should adopt a European model where higher education is free, but competition is tough for the few limited spots. We really should not be creating more lawyers than the economy can absorb.


    By the way, the problem with the perpetual Chapter 13 idea is that under Chapter 13, a debtor is required to pay his entire disposable income into the plan, and disposable income can be a pretty large chunk of someone's paycheck. Under state law, the amount subject to garnishment may be considerably less. For example, under Colorado law, creditors can get 25% of the paycheck above 30 x the weekly minimum wage.

  105. Ah, Europe where education is free!

  106. 12:20 PM Students should be given the facts...but not harassed...Sure there are some people who have NO business going to ANY law school..But many wonderful and absolutely first class Lawyers will never be created if you try to run everyone off....


    It was a casual and friendly conversation, but.........he said, in a half joking manner:

    "The A students end up teaching, and,

    the B students end up working for the C students."

    Just figured I would share that with all of the highly sophisticated 20 something year old consumers of law school industrisal educational product.

    I will add to this post and explain about how the conversation came about later this week.

    Stay tuned.............

  108. Any law graduate going to law school only to come out with $200K+ in debt is just asking for pain and heartache. So the 1L with $45K in debt would be best to just get out now. And this is coming from the law graduate who initially had $120K in debt. To pay down that debt you absolutely must pay way more than the minimum monthly loan payment. There are many online sites with loan calculators I found helpful and recommend to be used to determine both when the loans will be paid off and how much more a month will get that loan paid off faster. As someone mentioned on this blog, there are many sacrifices which are made when paying back student loans,and as each year passes it will get harder and harder to want to make those sacrifices.

  109. I don't understand why High Plains Lawyer confuses Milton Friedman with right wingers and blames government policy on him, as if he continues to control everything from beyond the grave.

    If the U.S. really did follow his recommendations, then drugs would be legal, and all the needless violence and killings from drug wars (most noticeably in Mexico but let's not forget U.S. inner cities, Colombia, etc.) would never have happened. But, that debate is probably for a different blog.

    I'm not sure I understand the European model. Hopefully, it's not based on Greece or Spain, but if it is free and competition is tough for a few limited spots, it seems to me that it would increase and reinforce class privilege, not promote the public good. How would people be chosen for these limited spots? The logical answer appears to be either through connections or an exam like a SAT, which only the rich can afford tutoring for.

  110. I think a big part of the solution is to convince people not to go to law school. I think this is happening slowly. I think people are asking questions about debt and repayment that they weren't asking before.

    Still, how NYLS and the ilk can charge as much or more than Columbia, still boggles my mind. I just don't know how to reach the people who want to go to this school at sticker. Maybe the law suits will help scare some people away.

    When I got from this blog to TLS I have culture shock. Reading about the reality of the situation and then seeing a forum of excited puppies leaping at the chance to take on hundreds of t thousands in debt, just creates a huge disconnect.


  112. "I don't understand why High Plains Lawyer confuses Milton Friedman with right wingers and blames government policy on him, as if he continues to control everything from beyond the grave."

    Most of the problems with higher education in general and law school education in particular have their origins in the late 1970s and early 1980s. When I went to law school, in this time frame, these ideas had not yet caught on and were still in their infancy.

    And yes, Milton Friedman was alive and kicking during this time. He had an influential television series "Free to Choose," which promoted student loans as a means of shifting the costs of education from the government to the students. We can see the results of this cost shifting in the horrendous amount of student loan debt. It's really a shame that this idea was not strangled in the crib.

    All in all, it was good for me because most of my educational expenses were funded by the State of Colorado, which supported higher education at the time. Plus, my law degree did have some value for about 20 years. It has never been easy, however.

    I cannot imagine getting a worthless degree however, and ending up with hundreds of thousands of dollars in debt in the process of obtaining that worthless degree.

    I saw this blog post which discusses the right wing's attidude about creating a well educated proletariat:

    In particular there is this quote from one of Ronald Reagan's cronies which should just send chills down the spine of anyone who has invested a fortune in a law degree:

    “We are in danger of producing an educated proletariat. That’s dynamite! We have to be selective about who we allow to through higher education. If not, we will have a large number of highly trained and unemployed people.”



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