Thursday, October 4, 2012

Denial

A commenter asked yesterday:

Law prof, in your experience are most law faculty evil opportunists, frightened cogs, or just clueless navel gazers? If I had to venture a guess, I'd say:

1. Evil Opportunists: approximately 20%, mostly at the administration level.

2. Frightened Cogs: approximately 10%, these are the faculty who recognize the problem but don't want to rock the boat too much.

3. Clueless Navel Gazers: approximately 98%, I know this double counts, but it approximates my experience in law school.
This generated a bunch of good comments.  It was pointed out that the fact that the large majority of law faculty, and the overwhelming majority of more recent hires, come from a few elite schools, and in particular HYS.  In addition most law faculty these days spent little or (increasingly) no time in the practice of law.

Both these factors naturally make it harder for law faculty to appreciate the depth of the employment crisis faced by their graduates, especially if they teach at any of the 198 ABA law schools not named Yale, Harvard, or Stanford.

Another commenter pointed out that the employment crisis has been around for quite a long time outside the T-14, and that what has changed the most in the last few years is that significant percentages of the classes at even top ten schools are struggling. Indeed I suspect that the HYS/No real practice experience distortion factor is much higher at elite and sub-elite schools, because these faculties in particular are now so dominated by people of this type, and because faculty at these schools are still semi-understandably surprised to discover how many of their students and graduates are getting into dire straits.

By contrast, anybody who teaches outside the top dozen schools or so would have to be willfully blind not to see by this point that a whole lot of the school's recent graduates are having severe difficulties.  But unfortunately a lot of people are quite capable of being willfully blind when it's in their self-interest to be so, and it's certainly in the short-term self-interest of legal academics to close their eyes to the severity of the situation.

Here are what in my view are likely to be the most powerful factors, beyond their own increasingly narrow educational and professional pedigrees, that keep law faculty outside of HYS from understanding the extent of the problem:

(1) The cemetery effect.  Law faculty are far more likely to have contact with successful students and graduates than unsuccessful ones.  This is a powerful source of cognitive distortion: people are very prone to base their reasoning on personal anecdotal experience, especially when doing so bolsters rather than threatens their sense of professional and personal identity.

(2)  Pure wishful thinking.  Law school employment and salary statistics are still vague enough to create endless opportunities for rationalization.  We can pretend that lots of our graduates are getting good non-legal job which their law degrees helped them get. We can pretend that bad outcomes nine months after graduation mean relatively little in the context of -- increasingly fictional -- multi-decade legal careers.  We can and do fail to understand basic statistical concepts such as the difference between correlation and causation, and basic economic concepts such as net present value.

(3) Class bias. This is different from, though obviously related to, narrow academic and professional experiences.  As American society gets more economically and educationally stratified, new law faculty hires tend increasingly to be people from highly privileged backgrounds.  It's inevitable that such people are going to have more difficulty grasping concepts such as "not being able to pay your bills" as anything other than pure abstractions.  This, I believe, is having a real effect on the ability of legal academics, especially younger legal academics, to genuinely understand what it means to have $200,000 in non-dischargeable educational debt, no decent job prospects, and no bail out option in the form of one call to Dad, who could stop it all.


All of which is to say that, while plunging enrollment and declining revenues are slowly doing their work as the most effective forms of reality therapy, it's not surprising that plenty of law faculty remain in various stages of denial.


99 comments:

  1. To what extent does the fact that tuition has been rising so very rapidly over the past few years play into this? Someone who graduated from GLS back in 2008 would have paid 12k less per year than someone from the same school in 2012, so even a *new prof of modest background* could find themselves failing to grasp what the problem is... less than 100,000 in education debt versus 150,000 is a BIG difference.

    ReplyDelete
    Replies
    1. I think your math is off (95K then would be 131K now + the interest that accrues on the additional $12K) but I agree with the general idea.
      It's difficult for me to wrap my head around it and I graduated in 2009 although it's likely I would have decided against law school if it cost what it did today.

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  2. The whole country is in denial. As if 15 t of debt will never come due. It will. And it won't be pretty.

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  3. I don't understand why you keep harping on the fact that debt is not dischargable in bankruptcy. As President Obama proudly said in his acceptance speech, we have IBR which ensures that no one is unduely burdened by educational debt. The worst that can happen is that you pay 10% of you income for 20 years and then the debt is forgiven. I have not heard anyone, not republicans, not democrats, argue this program should be shut down, in fact it was started by a republican president and made more generous by a democratic one. The only issue is the possibility of a tax bill when the loan is forgiven. However, it seems highly likely that congress will pass a law to forgive the tax bill if its an issue 10 to 20 years from now when large amounts of debt is being forgiven.
    You can argue that law schools are ripping off the government, but I don't think you can argue they are harming their students. And, here's a solution for any lawyer who can't get a job. Just go back to school. The government will loan you your living expenses, which you won't have to pay back due to IBR.

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    Replies
    1. The budget voted out of the House last year, which originated in the committee chaired by Paul Ryan, eliminated IBR.

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    2. We should start addressing this troll as Assistant Vice Dean of Enrollment Management.

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    3. It is also critical to note that IBR DOES NOT apply to private and institutional loans. I graduated in 2010 and roughly half of my very substantial debt from law school is in institutional loans (from the law school itself - which should be a topic in and of itself). It's great that I can get a lower payment on half my loans via IBR but I am still in a very challenging position. Without even getting into the fact that IBR may or may not survive.

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    4. I thought LP said that almost all educational loans were originated by the govt. You might just be an outlier.

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    5. Yes, private loans are a bit of an outlier, but a lot of people have them. The fact, though, that they are not originated by the government or backed by the government should weigh in favor of allowing them to be discharged in bankruptcy just like any other debt you take to start a business. There is no moral or logical justification for providing private lenders the artificial protection of a borrower who does not have the basic right to bankruptcy protection. If anything, the lack of bankruptcy protection for borrowers is a moral hazard, and that's assuming that the current "undue hardship" test, as it is applied, is even constitutional. There should be a lot of doubt about that.

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    6. Prior to 2010 a large percentage of educational debt was private because the government guaranteed private educational loans. Now such loans aren't guaranteed which means that going forward almost all educational loans will be public. But since this change just took effect most recent grads with heavy debt loads have significant private debt.

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    7. @LawProf thanks for clarifying. I am the poster for @9:26 AM. For what it's worth, I graduated from a "T14" and have been unable to find paying work as an attorney. I have returned to the profession I was in prior to law school and am happy to be working. However, I am extremely disappointed that I have been unable to leverage my law degree. I appreciate all your work on this site. It is important information.

      Delete
    8. LawProf, love the blog, but you need a to make a slight correction on that statement.

      No PRIVATE LOANs were ever guaranteed by the government.

      Under the FFELP program PRIVATE LENDERS like Sallie Mae originated and serviced Federal Student Loans that were all ultimately backed/guaranteed by the Government. They were basically working on behalf of the federal loan program, until the Direct Loans program took over everything in 2010.

      Prior to then Sallie Mae, Citi, PNC, Wells, Wachovia all used to have education financing divisions. They have all been eliminated, or turned into loan servicing on federal contracts only.

      Just want to clarify that FFELP Stafford and Plus loans are not PRIVATE loans just because they were originated by corporations instead of the Federal Direct Loan Program.

      No PRIVATE LOANS were ever guaranteed for credit approval by the government (Like Stafford). But the bankruptcy protections were extended to PSL's because at the time it was too hard to price the product, and everyone wanted it. (and lobbying)

      As stated on this blog before, the whole problem would be solved if....

      1. Allow loans to be dis-chargeable in Bankruptcy.

      2. Price loans to accurately account for risk of default (Law loans would be north of 19%)

      3. Allow loans to be denied based on academic performance, choice of major and what school being attended.

      4. Deeper Underwriting also provides lower rates to viable majors, because they offer less risk.

      5. Deeper underwriting can also build a more reasonable repayment plan after graduation and job placement (AKA get a rate reduction because risk profile has reduced)

      6. After all of that, what ever loans default become a business loss for the entities that lent the money, rather than the tax payer.

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    9. Thanks. Are the loans that were originated by Sallie Mae, CITI etc., under the FFELP program prior to the 2010 changes IBR-eligible? That seems to be the crucial distinction between "public" and "private" in this context as a practical matter.

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    10. I am not 10:16, but to my understanding and experience, the answer to your question is yes. As long as a graduate consolidates all the loans that were originated through the FFELP program through the Dept. of Ed. Direct Loan program, those loans consolidated now become IBR-eligible. Only those loans that are ineligible to be consolidated (those from private banks that are not guaranteed by the Feds) cannot be part of the program.

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    11. LawProf:

      Assuming I understand the question, yes.

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    12. I am the original poster, and I agree with 10:32.

      If one has FFELP Federal Loans, move them to the Direct Loans consolidation, THEN become qualified for IBR based on income.

      If looking for a private loan consolidation only Wells Fargo and Credit Unions will do them, check out the Credit Unions for a square deal:

      http://www.custudentloans.org/our-loans/cugrad-private-student-loan-consolidation/

      Only catch, you must be currently employed.

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    13. Thanks. I hear all the time from people who say they have lots of non-IBR eligible law school debt, which surprises me if the only such debt is made up of truly private loans that were never backed by the government.

      It wouldn't surprise me if people are confused about what is and isn't eligible though. I doubt the lenders are inclined to give debtors accurate information.

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    14. 10:35 also was not 10:16. I should know.

      And on the subject of private loans and bankruptcy protection, I don't quite see the practical difference between a bank loan to start a company (which the nascent company then uses to pay for services, rather than goods, which services cannot be seized and liquidated for cents on the dollar in bankruptcy) and student loans.

      Law students, to my mind (and for bankruptcy purposes), are just future business owners whose start up capital pays for services exclusively, not a combination thereof.

      Looked at in that way, how do you justify such strict bankruptcy rules with regards to private lending? I don't think it's logically feasible.

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    15. As has been repeatedly pointed out here (do you actually do your reading):

      1) IBR is a yearly item; it can be changed or deleted every year. Relying on this for 30 years is risky.

      3) IF you make it through the multi-decade process (and not counting the cost over the years of dealing with this unsecured debt), you owe taxes on the amount forgiven. Try paying a tax bill on an extra $100K of taxable 'income'.

      Delete
    16. "I doubt the lenders are inclined to give debtors accurate information."

      These are the most incompetent employees you can find anywhere. I can't tell you the number of times they've given me wrong information.

      My loans were given to ACS to manage. To cut a very long story short, ACS

      (1) submitted an application to my lender, Access Group, for a modified payment plan that I was not eligible for,

      (2) had it denied by Access Group,

      (3) informed me of the denial,

      (4) informed me further that there was this other modified payment play I was eligible for,

      (5) then informed me that because of the denial of the application for the first plan, I was now delinquent and would not be approved for this second plan,

      (6) and then realized that Access Group didn't even offer the first plan at all, though they used to.

      They never explained how they submitted an application for a plan that didn't exist.

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    17. 10:32 here again (really should sign up for a screen name),

      Definitely. The banks probably are somewhat actively limiting information for IBR. Letting go of accounts that are accruing somewhere around 6.8% interest is not something they would normally be inclined to do. Although they have already made a decent killing considering all the interest that has already been paid by the Feds for subsidized Staffords and fees for unsubsidized and subsidized (kind of assuming their are fees). Not to mention the fact the banks are essentially getting the money they loaned in the first place for free. They really are socialized institutions.

      I was one of those unquestioning goofballs that now has a pretty significant amount of debt though I by no means led an extravagant lifestyle. Out of around 160k in student loans, 35k is of the type that is truly private. For many law students, the bar exam period loan that you take out right at the end is usually a significant chunk. For me, at that point my head was spinning with all that was coming to bear, and getting that damn private loan was the only way I knew I would be okay for the next few months. Not that I'm a victim of that circumstance, just that I'm sure it is a common occurrence for many law students, and may be one instance of a common non IBR-eligible loan.

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    18. For sure @10:46, over the last 2 years I have probably spent a total of 30-40 hours on the phone with the Dept. of Ed. Direct Loan program to get everything accurate. Changing from filing taxes Married but Filing Separately to Married Filing Jointly was a huge headache.

      What is amazing about that process, and something I don't think gets pointed out enough, is that as a middle income (81k household income) with no children, I ended up saving less in taxes (mortgage interest deduction, property taxes deduction, student loan interest deduction) than my IBR payment increased even though neither of us had received wage increases from the previous year. Long story short, the government has dis-incentivized me or people like me, from getting married or owning a home (and that's after Congress made the change from making Married Filing Jointly borrowers even more punished by not combining debt for IBR purposes). I've linked to this page before, but it's worth mentioning again:

      http://blog.psjd.org/2010/02/10/ccraas-income-based-repayment-program-tax-consequences-for-married-couples/

      Not very good public policy.

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    19. It's common on the internet for people to simply assume two things about IBR which at this point are nowhere near clear to me.

      1. IBR can be canceled by the congress for people currently on it anytime it wants

      is this really true? I am not an expert in this area but if a borrower signs a loan document containing certain repayment terms can the gov really change those terms after the loan is made? suppose it decided budget was really tight and it modified the loan terms to make all the debt due tomorrow? how is this any different from changing the interest rate or principal after the loan is made? it seems fundamentally different from, say, changing social security-something where the only governing law is the federal law, and no contractual relationship exists between the person and the government. as far as i know the few supreme court precedents on when retroactive law canceling is and is not unconstitutional as a taking are hardly clear on this.


      2. debt forgiven under IBR will be taxable, and taxable as ordinary income all in the one year it is forgiven.

      It's way more complicated than that and I would ask you to point this out as uncommon good news on your site.

      a) again per 1 above we don't know what the law will look like down the road.
      b) even according to current law when people are in public interest work and get the quicker loan forgiveness under IBR DOES NOT have their debt forgiveness included at all the IRS explains this a http://www.irs.gov/publications/p4681/ch01.html#en_US_2011_publink1000244078
      c) also under current law, people who are insolvent (defined as a negative net worth-or most people coming out of law school) when their debt is forgiven do not have the amount of debt forgiveness greater than the amount of insolvency (the difference between assets and liabilities) included in income for ANY kind of loan forgiveness-even non educational loan forgiveness like a mortgage modification the IRS explains this at http://www.irs.gov/publications/p4681/ch01.html#en_US_2011_publink1000244078
      d) HOWEVER there is also state income tax-and some states might have additions to income for certain income excluded under the federal rules.


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    20. 11:06:

      No, it's horrible public policy, or just a complete lack of it.

      Just to be clear, Access Group and ACS are private lenders, at least they are for me. Direct Loans has't really crashed and burned the same hilarious way that ACS did (as described above). The people on the other end of the phone don't go out of their way to be complete assholes. They don't care at all, but I count that as a blessing. They did, however, still fail to record my income adjustment last year when I went from complete unemployment to contract work for quite a while. They don't really have a plan. I've taken to writing them long self-certifying letters updating my income in addition to filing their bullshit form, plus calling to check up on them to be safe.

      This whole thing is a half-measure. There is no way this issue is going to go away. Whether because of a huge tax bill in the future, or because Romney and Ryan decide they want to end this program to pay for who knows and they immediately start sending me bills for like $1500 a month instead of the current $60, or it becomes completely abused by people who never intend to pay off their loans, it's just a disaster. I don't know what the exit plan is. IBR, as far as I know, is a purchase and sale (to the government) of the loans. So, given that people don't actually have enough money ever to pay the loans, how do you unwind that? Remove the limit on garnishment? That won't work. Garnishment until people die won't work. They'll still never get anywhere close to full payment. You're still going to take huge losses.

      Delete
    21. 11:44: IBR isn't part of the terms of a loan. It's a form of "soft default" which the government makes available to people as an alternative to fulfilling the terms of their loans. Modifying IBR isn't the same thing as modifying loan terms after the fact.

      Delete
    22. @9:26, @9:50 here. I would love to be wrong on this one but my institutional loans (aka my private loans) are NOT eligible for consolidation with my other loans (my Sallie Mae loans) through direct loan consolidation. Again, about half of my total law school debt is held in loans by the University I attended. I cannot use IBR to pay off this debt. @LawProf you should look into how many schools do this by the way. My University not only got the original tuition money but is now receiving the interest on the loans I used to pay the tuition. Again I am class of 2010 and I know there have been some changes since I graduated so that most students now graduate with all of their loans eligible for IBR.

      Not that I even want to have to use IBR, but it would take some stress off to have it as a fallback. Of course, I'd prefer to pay off my debt but it is an overwhelming amount at the moment.

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    23. lawprof-

      im not sure that IBR is not part of the loan terms. the loan terms are ccontianed in the master promissory note the person signs. unless you have a copy of one of those for the various direct (and old style FFEL federallly backed but not private) loans, you really can't tell.

      Delete
  4. Probably not PosnerOctober 4, 2012 at 9:12 AM

    I do not believe the IBR program is in the best interests of our country, and would advocate gradually ending it. Under the IBR program, the federal government first loans money that goes to schools that cannot place their students in jobs that justify the volume of the loan. It then forgives these loans. It thus socializes loses while allowing schools to privatize the gains.

    While this mitigates the harm done to individual students, it is unjustifiable that taxpayer revenues should be used to increase the wealth of schools when they are not producing a product worth its cost.

    A far better solution, imo, is to refuse to allow federal loans to be used at schools with dismissal job placement rates. Additional direct support to schools might also be needed to counter the impact of falling state budgets for education in some areas.

    ReplyDelete
    Replies
    1. I'm on IBR by necessity, but I entirely agree with you. It's getting to the point that IBR is becoming part of the plan from the beginning, too, which is to say that students are going to college or law school without any intention of paying back their loans. It's a disaster. You might as well just restore bankruptcy protection directly instead of going this route, which amounts to the same thing, just 20 years removed.

      Delete
    2. How is it even remotely the same?

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    3. You seem to have an opinion, so why don't you just tap it out and hit "Publish"?

      Delete
    4. Not an opinion, it's factually not even remotely the same (except maybe in JDP's case).

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    5. Insofar as it is designed to effect a discharge of student loan debt without full payment, "remotely" is probably an overreach.

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    6. Comparing the amount repaid under both scenarios is the whole point and that amount is vastly different.

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  5. no bail out option in the form of one call to Dad, who could stop it all.

    Pulp - Common People

    William Shatner - Common People

    'cos when you're laid in bed at night watching roaches climb the wall
    If you call your Dad he could stop it all.
    You'll never live like common people
    You'll never do what common people do
    You'll never fail like common people
    You'll never watch your life slide out of view, and dance and drink and screw
    Because there's nothing else to do


    Top Five favorite songs.

    ReplyDelete
    Replies
    1. Shit, I missed the reference to pop culture.

      Delete
    2. I missed it too.

      Delete
  6. Did Ryan's budget completely eliminate IBR or just repeal the expansion from 15% of discretionary income per the Bush Admin to 10% of discretionary income per Obama?

    http://www.aplu.org/page.aspx?pid=2079

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    Replies
    1. I don't know, but if he completely repeals it, it's going to be a laughingstock because you're immediately going to burden the federal government with a lot of wage garnishment proceedings to manage. It would be a logistical nightmare. I know I'd be bankrupt (though not able to declare it) in about 4 minutes.

      Delete
    2. "...immediately going to burden the federal government with a lot of wage garnishment proceedings to manage"


      I don't think there's much in the way of proceedings. Haven't looked at it in a while, but the "procedure" is a 30-day advance garnishment notice letter to the debtor, then instructions to the debtor's employer to start garnishing 15% and sending it to Unca Sugar.

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    3. Eliminating IBR would be a great short-term method of putting downward pressure on law school tuition. A few NYT stories about law grads being smacked with wage garnishment by the feds (and all the fun consequences that follow) would do wonders to scare away prospective attendees.

      It makes for a great story: High-and-mighty Georgetown law grad forced to live in the underground cash economy like some dead-beat dad. Middle America would eat up that sort of narrative.

      Delete
  7. Poster Nummah Nineteen say...October 4, 2012 at 9:49 AM

    @ 8:58 a.m. :

    "FIRST!".

    ReplyDelete
  8. Restoring bankruptcy protection for past, present, and future student loans solves the problem. A simple capitalist solution.

    ReplyDelete
    Replies
    1. Yes, this really does make a lot of the problem go away.

      I would also like lenders to be on the hook so they take the financial bath rather than having the losses socialized.

      Delete
    2. Here's another simple solution: don't borrow money, blow it on yourself, and then expect someone else to pay your debt.

      Friggin' deadbeats.

      Delete
  9. @ 9:04, "debt is not dischargable [sic] in bankruptcy…
    … no one is unduely [sic] burdened by educational debt. …
    … is that you pay 10% of you [sic] income for 20 years …
    … highly likely that congress will pass a law to forgive the tax bill if its [sic] an issue …"

    Seems as if 9:04 was also not "unduely" burdened by his/her educational experience.

    ReplyDelete
    Replies
    1. Yes. Illiterates should not be allowed into law school.

      Delete
  10. I definitely have seen people on TLS planing to use IBR from day one.

    ReplyDelete
    Replies
    1. What on earth are they thinking?

      Delete
  11. My 80k in private student loans cannot be IBR'ed. Every month 30% of my gross income goes to private loans, 20% goes to federal loans, 25% goes to federal taxes, 5% goes to state taxes. And, somehow, I get by on the remaining 20%. I rent a room, drive a beater, eat cheap, don't vacation and pray things will get better soon. Law school was a life destroying mistake for me. So, yeah, I would love some bankruptcy protection.

    ReplyDelete
    Replies
    1. And I would love it if you paid your debts.

      Delete
  12. 29th!!!!!!!!!!!! Again.

    ReplyDelete
  13. "Thanks. Are the loans that were originated by Sallie Mae, CITI etc., under the FFELP program prior to the 2010 changes IBR-eligible? That seems to be the crucial distinction between "public" and "private" in this context as a practical matter."

    Lawprof: The answer to your question is yes. FFELP loans have all the "privileges" of Direct Loans save for one exception: FFELP loans do not allow a person to enter into PSLF. To do so, a person in the FFELP program must consolidate their loans into the Direct Loan program. A person doing this loses any interest rate benefit they once had in the FFELP program. The current rate for Direct loan consolidation is 7.5%, depsite interest rates on conventional mortgages being lower. Just another way to screw over the borrower. Of course, an interest rate becomes largely irrelevant when you consider that my payment is roughly 1/3 what it was at my old job, I can keep my AGI low by maxing out my above the line deductions AND, under PSLF, the whole thing is forgiven in ten years with no tax liability.

    I know these things because I just moved my FFELP loans over to Direct Loans.

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  14. I don't have a huge amount in private loans compared to my (huge) amount in government loans, but I really wish, if we're going to be touting IBR as a solution, that my private loan payments would at least be considered in the calculation of how much I can afford to pay under IBR. As it is now, I can't swing the IBR payment AND pay my private loans at the same time. So I'm stuck for now on the 30-year plan. (I'm hoping to erase my credit card debt soon and then maybe I'll be able to scrape together enough to pay all my loans at once, but it's kind of a dream.) It doesn't seem fair to just pretend that the federal loan is the only debt people have, not to mention having an arbitrary number that everyone everywhere in the country can supposedly afford, regardless of cost of living. At least factoring in the cost of private debt would help a little.

    ReplyDelete
    Replies
    1. "I really wish, if we're going to be touting IBR as a solution, that my private loan payments would at least be considered in the calculation of how much I can afford to pay under IBR."

      This is a great point.

      Delete
  15. Probably not Posner made a great point--IBR is just another case of privatizing the profits while socializing the losses. Not too different from the bank bailouts and home mortgage assistance programs.

    I think IBR and HAMP (or HEMP or HUMP or whatever they call the underwater-mortgage bailouts now) are particularly similar in that they both keep the price of a product (either a JD or a home) artificially inflated and prevent a true market equilibrium from being reached. They do this by distorting the risks and benefits of borrowing money for the product. Get the government out of the student loan business, or at least do some intelligent underwriting of student loans, as others have suggested; also allow student loans to be dischargable in BK. Similarly, let people default on underwater mortgages that will never recover their value, let them declare BK if they have to, and move on.

    ReplyDelete
  16. @9:58AM

    I wouldn't be surprised if you were Alan Collinge.

    But here is a good link, and the comments are pretty interesting too. Nothing new, just said in a different way.

    It talks about possible student loan riots and civil unrest, and about how the US Treasury is pretty much broke.

    http://www.economicpolicyjournal.com/2012/10/first-indication-that-treasury-is.html

    ReplyDelete
    Replies
    1. JD Painterguy

      aka John Koch

      October 4, 2012 11:46 AM

      @9:58AM

      I wouldn't be surprised if you were Alan Collinge.

      But here is a good link, and the comments are pretty interesting too. Nothing new, just said in a different way.

      It talks about possible student loan riots and civil unrest, and about how the US Treasury is pretty much broke.

      http://www.economicpolicyjournal.com/2012/10/first-indication-that-treasury-is.html

      Delete
    2. AMENDMENT TO THE ANTI-PAINTER POLICY:

      Append his real name, John Koch, to everything you re-post.

      ********************

      Sooner or later, this clown's real name will bring up hundreds of insane rants when employers Google him.

      Kock, cock, painter, whatever, you need to realize that nothing on the internet goes away, ever.

      In ten years, twenty years, thirty years, when life has settled down and you have found your way again, do you really want this to be the legacy that your kids and grandkids find when they search for you?

      Delete
    3. Since you are the only person following this pathetic anti-Painter policy, you need not announce it to anyone.

      Delete
  17. The Federal government charges students uniform interest rates no matter how likely they are to default.

    If the government ran its student loan programs the way banks do, Ivy Leaguers would probably get a steep discount, those at state universities would pay a bit more, and many at community colleges and for-profit schools would be deemed subprime borrowers.

    No college degree guarantees one will be able to afford to pay off their student loans, but Ivy League borrowers rarely default on their debt: Just 1% of Harvard University students defaulted within three years of their loans coming due in 2009, according to Department of Education data released last week; and at the higher end, just under 3% of Columbia University alumni defaulted. Compare that with for-profit schools such as the University of Phoenix, where 26% of students defaulted in that same time period -- nearly twice the national average.

    http://www.marketwatch.com/story/should-student-loans-be-cheaper-at-harvard-2012-10-02

    ReplyDelete
  18. I read somewhere that the default rate on student loans for law schools is 40%.

    If these law school loans were not backed by taxpayers, and if they were dischargable in BK, I imagine most of them would not be made. In such a world, HYS law students would get decent interest rates, law student loans for state universities would be underwritten based on individual characteristics (e.g. grades, LSAT), and the entire bottom half of law schools simply wouldn't get student loans. And that is how it should be.

    ReplyDelete
    Replies
    1. BamBam,

      Where did you read this?

      Delete
    2. Except that minorities would be over-represented among those who could no longer finance law school...and they would scream bloody murder about denial of access.

      Delete
    3. Charge the little palsgraves ten times as much and use the proceeds to support greater representation of underrepresented populations.

      Delete
  19. if you can find a private lender who gives you money not backed by taxpayers, i think it would be fair to allow loans to be dischargable by bankruptcy.

    if you borrow from the taxpayer, no discharge. that applies to any taxpayer backed loan for any reason. taxpayers are tired of bailouts.

    ReplyDelete
  20. @12:03PM

    Then why do the HYS people show up here to complain about how hard life is? Is it all narcissism?

    Remember, the original scamblogs were about 3rd and 4th tier reality, and Lawprof very early on distinguished between the TTT and TTTT bloggers and the others.

    Factually though, LawProf and perhaps DJM are Tier 1 or 2, and will by necessity have to field and navigate the woes of all of their little lord fauntleroy compatriots, peers, comrades, and maybe even their probably very annoying and sometimes narcissistic and vainglorious buddies from the upper 2 tiers from the firmament of legal status or whatever the hell it is, who are looking for a shoulder to cry on.

    But anyway, and if, as you say the HYS people do a good job at paying their debt off clean, then the HYS people really shouldn't in good conscience be commenting about any kind of a law school scam.

    But still I wonder about your assertions, and I think the US Dept. of Ed ought to have all the data needed to verify your claims.

    And is there a place to get at such data? And from the US Dept. of ED? After all, it should be public info?

    Right?

    Look, so far I have joined a circus of anon industry shill overpaid academic clowns that have their heads in the sand about a huge SL debt problem, and I think I have been the best clown of all so far.

    But if people finally want to come clean and say who they really are and what their MO is, and no longer as Anon, then I promise to be serious and sober.

    And if I can say anything at all positive, I would just like to add that life is long, and life is beautiful and hopeful, and there are ways to control and fix any bad situation.

    And that is a matter of faith in God.

    And as far as bubbles go, from whatever source, they absolutely can be controlled, and I will let this video say all the rest :)


    http://www.youtube.com/watch?v=ZIYUZrYzTfc&feature=related

    ReplyDelete
    Replies
    1. John Koch, aka JD Painter:

      JD PainterguyOctober 4, 2012 1:13 PM

      @12:03PM

      Then why do the HYS people show up here to complain about how hard life is? Is it all narcissism?

      Remember, the original scamblogs were about 3rd and 4th tier reality, and Lawprof very early on distinguished between the TTT and TTTT bloggers and the others.

      Factually though, LawProf and perhaps DJM are Tier 1 or 2, and will by necessity have to field and navigate the woes of all of their little lord fauntleroy compatriots, peers, comrades, and maybe even their probably very annoying and sometimes narcissistic and vainglorious buddies from the upper 2 tiers from the firmament of legal status or whatever the hell it is, who are looking for a shoulder to cry on.

      But anyway, and if, as you say the HYS people do a good job at paying their debt off clean, then the HYS people really shouldn't in good conscience be commenting about any kind of a law school scam.

      But still I wonder about your assertions, and I think the US Dept. of Ed ought to have all the data needed to verify your claims.

      And is there a place to get at such data? And from the US Dept. of ED? After all, it should be public info?

      Right?

      Look, so far I have joined a circus of anon industry shill overpaid academic clowns that have their heads in the sand about a huge SL debt problem, and I think I have been the best clown of all so far.

      But if people finally want to come clean and say who they really are and what their MO is, and no longer as Anon, then I promise to be serious and sober.

      And if I can say anything at all positive, I would just like to add that life is long, and life is beautiful and hopeful, and there are ways to control and fix any bad situation.

      And that is a matter of faith in God.

      And as far as bubbles go, from whatever source, they absolutely can be controlled, and I will let this video say all the rest :)


      http://www.youtube.com/watch?v=ZIYUZrYzTfc&feature=related

      Delete
  21. @12:39 PM--that is from the Wikipedia page on "Law school" and the 40% figure is attributed to the National Law Journal. I've tried to find the original document but haven't so far. So take it for what it's worth (like anything else).

    @12:49 PM--Im sick of bailouts too but what is the alternative? Almost all of these broke JD's who owe 100K or 200K or more in student loans will never pay back more than a small portion of what they owe. And a lot of that debt did not go to pay for law school--much of it is ridiculously inflated late fees, interest, collection fees, etc. (JD Painter's tale is enlightening on this.) Yes, these people made a mistake but the loans never should have been made in the first place, and it should not cripple them for the rest of their lives. If they could one day marry, buy homes, have kids, save for retirement etc. it would benefit the economy greatly.

    At least with BK a court decides what is a reasonable amount to repay, and orders garnishment. If someone just gives up and ignores their debt then nothing at all is repaid.

    Since taxpayers will have to eat the loss anyway, it is a bailout with or without the BK option. They are just figures on the govt ledger book that get shifted around from one column to the other. Kind of like the "trust fund" for Social Security that was in a "lock box."

    ReplyDelete
    Replies
    1. It really won't benefit the economy greatly because it's such a small percentage of people.

      Delete
    2. Is there a less politically sympathetic group of people than lawyers/law grads who borrowed a pile of cash and can't repay it? Regular/normal people DESPISE attorneys.

      Delete
  22. The faculty could care less UNTIL it affects them!

    ReplyDelete
  23. @1:35 PM you're right, if we just count JD's. But if you include all of the people with student loans they can't repay--the BA's in Art and English and xxx Studies, the ripoff MBA's from online schools, the massage therapy school grads, the culinary school grads who are minimum wage line cooks, etc--it adds up to a lot more.

    ReplyDelete
    Replies
    1. No it doesn't.

      Delete
    2. As a percentage it's still not that large of a group. It's not to say there shouldn't be changes, but not for that reason.

      Delete
  24. to bam bam

    if you borrow from the taxpayer you need to pay the tax payer something. restructuring debt is ok, but forgiveness should not be an option.

    everyone considering borrowing money from the taxpayer should be forced to read painer's dribble and realize that might be theor future. if they dont want to end up like painter, and who would, the taxpayer is going to be on the hook. sorry, but their is some collateral damage.

    but bottom line is get govt out of the student loan business and let the private industry take over.

    ReplyDelete
    Replies
    1. This is fine, but you're playing fast and loose with the concepts here: "if you borrow from the taxpayer you need to pay the tax payer something. restructuring debt is ok, but forgiveness should not be an option."

      To the extent you don't pay restructuring, as you refer to it, is forgiveness unless there are the credit consequences of bankruptcy attached to it.

      And, in any case, I would venture to say that quite a lot of the debt currently on the taxpayers' shoulders through IBR was in fact private money borrowed from private companies. You will recall, I'm sure, that so called "federal" loans were never (until 2010) actually taxpayer dollars. The federal government merely provided the private lenders - like Sallie Mae - guarantees of repayment in the event of default, as well, of course, in billions of dollars in subsidies.

      You can let the private industry take over if you really think they can do a better job of it, but so far our only experience with private lending has been one of corporate welfare, which continues today in the form of the bankruptcy rules that take away all the risk from those lenders. It's the biggest sweetheart deal in finance.

      Delete
    2. It's less the bankruptcy rules that make it a good deal and more the govt guarantee.

      Delete
    3. No, that's wrong. The government guarantee applied to so-called "federal" loans, which are now made directly from by the government.

      Private loans are unsecured and not backed by a government guarantee.

      Delete
    4. So how exactly is that a good deal? There's no guarantee you'll get your money back, just that they can't ditch the debt.

      Delete
    5. Over 50 years, they do get their money back but the debt is never paid off.

      Delete
    6. Maybe, maybe not. Except for the bankruptcy factor isn't no different than other debts, you still have to track the person down and get the money. (this comment only applies to private lenders and not the govt which can very easily get your money)

      Delete
  25. In talk about bankruptcy for student loans, are people talking about Chapter 7 or Chapter 13?

    ReplyDelete
  26. Actually to cowardly anon and hiding painter Peater @2:44pm:

    My FULL Name is John David Mountain Koch, and I was named for the late Dr. John Mountain who, along with a young, Yale educated in hospital administration, John Gallagher (The North Shore University Hospital system health care founder) saved my father's legs from a double amputation by another MD Chief of Orthopedics, and Dr. Mountain almost lost his license to practice Medicine from that.

    Dr. John Mountain was a true Miracle worker and his portrait is now hanging in the Emergency Room of North Shore Hospital in Manhasset, NY.

    I pray that the spirit and memory of Dr. John Mountain can save America from the evils of the current day student lending crisis.

    In fact, I am sure that Sol Wachtler is well familiar with who Dr. Mountain was.

    Dr. John Mountain was also a very good friend of Mrs. Lorinda DeRoulet, and also a very good friend of Kenneth Langone, the founder of Home Depot.

    You can repeat my posts all you want, and I am sure you are out to destroy me.

    In fact, I will repeat this post three times, because I am absolutely worthless and destroyed by student loan debt and I have nothing left to lose, although I am sure you have a lot to lose if you ever say who the fuck you are, you anon piece of shit coward, be you man or woman.

    Send me an email and maybe we can talk.

    Until then you remain a piece of garbage in my mind.

    And now I will repost all of this 3X and I sure as hell do not want to continue to drop names and embarrass Touro law school any more than I have.

    All of this is like family dirty laundry, and I hope the rest of the USA is having fun reading all of this.

    Oh, I gots lots more :)

    If you want my street address I can give it, but I'm afraid that some of my anon commenters might come here and try to shoot me, and so I wont.

    ReplyDelete
    Replies
    1. JD PainterguyOctober 4, 2012 3:51 PM

      Actually to cowardly anon and hiding painter Peater @2:44pm:

      My FULL Name is John David Mountain Koch, and I was named for the late Dr. John Mountain who, along with a young, Yale educated in hospital administration, John Gallagher (The North Shore University Hospital system health care founder) saved my father's legs from a double amputation by another MD Chief of Orthopedics, and Dr. Mountain almost lost his license to practice Medicine from that.

      Dr. John Mountain was a true Miracle worker and his portrait is now hanging in the Emergency Room of North Shore Hospital in Manhasset, NY.

      I pray that the spirit and memory of Dr. John Mountain can save America from the evils of the current day student lending crisis.

      In fact, I am sure that Sol Wachtler is well familiar with who Dr. Mountain was.

      Dr. John Mountain was also a very good friend of Mrs. Lorinda DeRoulet, and also a very good friend of Kenneth Langone, the founder of Home Depot.

      You can repeat my posts all you want, and I am sure you are out to destroy me.

      In fact, I will repeat this post three times, because I am absolutely worthless and destroyed by student loan debt and I have nothing left to lose, although I am sure you have a lot to lose if you ever say who the fuck you are, you anon piece of shit coward, be you man or woman.

      Send me an email and maybe we can talk.

      Until then you remain a piece of garbage in my mind.

      And now I will repost all of this 3X and I sure as hell do not want to continue to drop names and embarrass Touro law school any more than I have.

      All of this is like family dirty laundry, and I hope the rest of the USA is having fun reading all of this.

      Oh, I gots lots more :)

      If you want my street address I can give it, but I'm afraid that some of my anon commenters might come here and try to shoot me, and so I wont.

      Delete
  27. Actually to cowardly anon and hiding painter Peater @2:44pm:

    My FULL Name is John David Mountain Koch, and I was named for the late Dr. John Mountain who, along with a young, Yale educated in hospital administration, John Gallagher (The North Shore University Hospital system health care founder) saved my father's legs from a double amputation by another MD Chief of Orthopedics, and Dr. Mountain almost lost his license to practice Medicine from that.

    Dr. John Mountain was a true Miracle worker and his portrait is now hanging in the Emergency Room of North Shore Hospital in Manhasset, NY.

    I pray that the spirit and memory of Dr. John Mountain can save America from the evils of the current day student lending crisis.

    In fact, I am sure that Sol Wachtler is well familiar with who Dr. Mountain was.

    Dr. John Mountain was also a very good friend of Mrs. Lorinda DeRoulet, and also a very good friend of Kenneth Langone, the founder of Home Depot.

    You can repeat my posts all you want, and I am sure you are out to destroy me.

    In fact, I will repeat this post three times, because I am absolutely worthless and destroyed by student loan debt and I have nothing left to lose, although I am sure you have a lot to lose if you ever say who the fuck you are, you anon piece of shit coward, be you man or woman.

    Send me an email and maybe we can talk.

    Until then you remain a piece of garbage in my mind.

    And now I will repost all of this 3X and I sure as hell do not want to continue to drop names and embarrass Touro law school any more than I have.

    All of this is like family dirty laundry, and I hope the rest of the USA is having fun reading all of this.

    Oh, I gots lots more :)

    If you want my street address I can give it, but I'm afraid that some of my anon commenters might come here and try to shoot me, and so I wont.

    ReplyDelete
  28. Actually to cowardly anon and hiding painter Peater @2:44pm:

    My FULL Name is John David Mountain Koch, and I was named for the late Dr. John Mountain who, along with a young, Yale educated in hospital administration, John Gallagher (The North Shore University Hospital system health care founder) saved my father's legs from a double amputation by another MD Chief of Orthopedics, and Dr. Mountain almost lost his license to practice Medicine from that.

    Dr. John Mountain was a true Miracle worker and his portrait is now hanging in the Emergency Room of North Shore Hospital in Manhasset, NY.

    I pray that the spirit and memory of Dr. John Mountain can save America from the evils of the current day student lending crisis.

    In fact, I am sure that Sol Wachtler is well familiar with who Dr. Mountain was.

    Dr. John Mountain was also a very good friend of Mrs. Lorinda DeRoulet, and also a very good friend of Kenneth Langone, the founder of Home Depot.

    You can repeat my posts all you want, and I am sure you are out to destroy me.

    In fact, I will repeat this post three times, because I am absolutely worthless and destroyed by student loan debt and I have nothing left to lose, although I am sure you have a lot to lose if you ever say who the fuck you are, you anon piece of shit coward, be you man or woman.

    Send me an email and maybe we can talk.

    Until then you remain a piece of garbage in my mind.

    And now I will repost all of this 3X and I sure as hell do not want to continue to drop names and embarrass Touro law school any more than I have.

    All of this is like family dirty laundry, and I hope the rest of the USA is having fun reading all of this.

    Oh, I gots lots more :)

    If you want my street address I can give it, but I'm afraid that some of my anon commenters might come here and try to shoot me, and so I wont.

    ReplyDelete
    Replies
    1. 1. "Cowardly" because I - we - use "Anon"? No, smart. Because when you use your real name, you permanently scar your reputation. Exhibit 1: You.

      2. John David "Mountain" Koch? Funny, my full name is Henry James "Girth" Carter.

      3. Quit the paranoia. Nobody is out to destroy you. Just to strongly discourage you from hijacking the most significant blog on this important issue. This doesn't just affect you, so stop pretending that it does and that you're the star.

      4. Stop trying to get people to "out" themselves. We know how damaging it can be, and we have no desire to join you in the internet gallery of fools, along with the girls who took "sexy" pics of themselves that are now on porn sites, or the guy who thought the net would be a cool forum for a racist rant.

      5. You hide behind the idea that it is you who is in danger from us, yet you are the one who is constantly asking for IDs, emails, and personal info from your critics. It is us who should be frightened of you stalking us, not the other way around.

      In fact, we just want you to stop. Go away. Shut up. Leave. Whatever words you understand.

      This isn't the Painter Show. You think it's cool that you're the center of attention, but like the asshole kid at a party, everyone is looking at you and thingking "what a cunt!" and not "what an amazing kid!"

      So stop being such a cunt, fuck off, and let us focus on the issues instead of focusing on your paranoia and retardedness.

      Delete
    2. You're every bit as much a distraction.

      Delete
  29. And cut that 'mullet', Painter. It's not a country music video from the early 1990s.

    ReplyDelete
  30. Most law professors has a distorted sense of merit. Under their sense of merit those who have succeeded in the legal professions deserve their success because they are the best and the brightest. This is defined as, generally, Top 10% of class, Order of the Coif, Editor of primary law review, federal appellate clerkship in the DC, 2nd, 4th, 5th, 7th, or 9th circuit, tenure track teaching position at top 15 law school. The more your background deviates from this profile, the closer you are to being the worse and the dullest.

    The pedagogy of most law schools (theoretical, no instruction in practical application, forced grade curve) necessarily requires that acquire an apprenticeship with a large law firm of 3 to 5 years. Never mind that most of the students will never work at such a place (and cannot get those positions due to the law of supply and demand).

    Moreover, when law professors are pressed by their students, alumni, judges, law firms outside the Am Law 250 to align the curriculum to instruct those who desire the skills to hit the ground running (applied procedure, law office management, contract drafting) they contend that there are not a "trade" school. Thus, it is not their role to to prepare their students for the bar or legal practice. These tasks have been outsourced to BAR/BRI and the student's first (and increasingly hard to find) legal employer.

    Unskilled, inexperienced, lacking capacity to serve actual clients, the law graduate must the cram the law during bar review (where she learns the real law for the first time) and learn by doing on the job (which means use form books, guess, stumble and fumble, use your first clients as guinea pigs). Some turn to CLEs when forced to by the bar association.

    A brave few may turn to the private sector/corporate world. Unless they possesswith undergraduate backgrounds in business, economics, or related fields they are told that they have no marketable skills. Having been told, by their professors, that law is not a business necessarily they are incapable to communicating to nonlegal employers that they can work in business.

    Some turn to graduate business school to get MBAs. Most will be denied admission because they lack the standard 5 years of employment experience.

    This is a sad state of affairs. But, the typical law professor, benefits from the situation. Never subjected to the heat that flows from dashed dreams and destroyed lives, the typical law professor can never see the light of truth. Unshackled by the truth, he or she is free to disseminate lies, misrepresentations, and skewed statistics published in slick marketing brochures to lure more naive undergraduates who will learn, only through harsh school of hard knocks, that they have been bamboozled by the most skilled of confidence men. The law scam will not end unless the proletariat harmed by the aristocracy force change.

    Thanks to LAWPROF and his supporters and friends, that change is coming.

    ReplyDelete
  31. Above was written, "I read somewhere that the default rate on student loans for law schools is 40%."


    This is off by about an order of magnitude. If you google around a bit you can find default rates on all student loans in a spreadsheet from the feds, listed on a school-by-school basis. It's kind of cumbersome but from that you can pluck out the law school rates.

    (Alternatively, I've posted links to it here at least twice, but those area on prior posts and I have a tough time finding old).

    Anyway, the upshot was for most schools it was less than 3 percent.

    ReplyDelete
  32. "Pure wishful thinking"

    Yes, it is all too easy for the faculty to delude itself into believing that the missing 50% of employment survey respondents are somehow magically making non-legal use of that highly "versatile" law degree.

    These are the same people who believe that their childhood pet "Fido" is still happily living at that "farm" upstate.

    Or Germans living just over the hill from those smoky camps...

    ReplyDelete
  33. The last time I checked even Cooley's official default rate is below 5%. What is closely held information is what percentage of law school graduates use IBR. If the UN&WR was a real publication and not a rag, it would attempt to force law schools to disclose this information. Bar pass rates and the percentage of students who can't service their loans through regular loan payments efficiently sum up the economic prospects for many law school graduates.

    ReplyDelete
  34. Somehow it strikes me that blaming the law school professors for this mess is akin to blaming a criminal law attorney for the acts of his clients.

    Say some lucky lawyer manages to get a job at a law school as a professor. Does that make him an active part of the scam? If that new law professor were to quit his job, would the problem go away? Or would some other lucky lawyer just get his job? How does a law professor make the situation better by quitting his job?

    This approach of blaming the law professors really does nothing to solve the problem, but only serves to prolong it. It allows the people who are in a position to fix the problem to ignore the real problem, which is systemic. Turning law professors into scapegoats accomplishes nothing.

    High Plains Lawyer

    ReplyDelete
    Replies
    1. @ 3:47 Law school policies are dictated by tenured law school faculty. They, by faculty vote, determine the policies, the selection of the dean, the hiring and firing of staff, course offerings new faculty, academic policies, admission standards. No one is suggesting that they quick their jobs and allow their successors to perpetuate the policies. Complaints are naturally directed to the management and senior executives.

      The criminal defense attorney is hired to defend against specific charges levied against his client. He or she is not there to perpetuate the crime as such. Thus, the comparison and metaphor you offer is inapplicable.

      You call the airing of grievances "scapegoating." I think that it is more accurate to state that the aggrieved parties are 1) stating the problem; 2) demanding solutions to the problem 3) offering suggestions for the elimination of the problem; 3) developing evidence as to various causes of the problem.

      Your premises seems to to be that it is improper to request those in the system change the system. Under your thinking those can fix the problem cannot be named, identified, or asked to change the system. @3;47 it is clear that the blaming as you put it as 1) increased transparency 2) draw attention to the mess and 3) start the process of reform.

      Delete
  35. Anyone who thinks community college is an option read this:
    http://www.latimes.com/news/local/la-me-college-one-class-20121004,0,4815212.story

    ReplyDelete
  36. @11:37 PM--that brings up the interesting question of what exactly constitutes "defaul." Maybe the 40% figure that was quoted inlcudes forebearance and IBR, which IMO should be default, since the borrower has failed to follow the original repayment terms of the loan. We know the fed. govt. is goosing the definition of "default" to hide the actual number of law school grads who cannot pay back their loans.

    ReplyDelete

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