tag:blogger.com,1999:blog-5164886390834386622.post6050494924137289843..comments2023-10-30T08:41:06.178-07:00Comments on Inside the Law School Scam: Getting law school costs under controlLawProfhttp://www.blogger.com/profile/05174586969709793419noreply@blogger.comBlogger46125tag:blogger.com,1999:blog-5164886390834386622.post-63647039991910661932011-08-17T21:45:11.375-07:002011-08-17T21:45:11.375-07:00Be careful 9:09, you need a job too and you don...Be careful 9:09, you need a job too and you don't want to get fired.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5164886390834386622.post-74846810693364858562011-08-17T21:09:58.454-07:002011-08-17T21:09:58.454-07:00The budget point is a great one. I'm in my 4t...The budget point is a great one. I'm in my 4th year of teaching (still paying off my $150k+ of loans too) and I made the mistake of asking about the budget. The deans (plural, we've got more administrators than we know what to do with) seemed pretty peeved that I had the balls to ask about the budget. I thought I was part of faculty governance, but it's apparently not my place to get involved in things that matter to my students.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5164886390834386622.post-61844513932179460682011-08-17T15:42:07.038-07:002011-08-17T15:42:07.038-07:00@ 11:14: "Then in 2005 this was extended to c...@ 11:14: "Then in 2005 this was extended to completely private loans made for the purpose of tuition . . ."<br /><br />Yes. And that was the particular issue that the argument was about, so thank you for clearing that up for 10:38, who, it seems, is the target of his/her own idiocy in this case.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5164886390834386622.post-5526509338972923102011-08-17T12:37:19.162-07:002011-08-17T12:37:19.162-07:00It was a private loan. Private lender turned it o...It was a private loan. Private lender turned it over to their insurer, who turned it over to a collections agency. collections agency offered 65%, I countered with 50%, offering the facts in a favorable light to my friend (no assets, no steady employment, no family money, ect.). Settled on 51%, cash. Friend is now making payments to a relative who loaned against their 401K. It isn't a rose garden, but I suppose it could be worse. <br /><br />Also, I stressed the fact that the Bankers and Professors who made money on the student loans are all in the Hamptons, while us slaves (both the person at the collections agency, my friend, and I) argue over the table scraps.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5164886390834386622.post-87183101318214117602011-08-17T11:50:28.507-07:002011-08-17T11:50:28.507-07:00Wow really? You settled a student loan for 51%? Di...Wow really? You settled a student loan for 51%? Did you settle it with the originator or sallie mae? Can you please tell us more about how that process evolved and how someone can try to replicate it?! That would be a very helpful post for a lot of your readers.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5164886390834386622.post-44544814563653698102011-08-17T11:47:26.450-07:002011-08-17T11:47:26.450-07:00BL1Y. You are incorrect. Call a bank, and ask for...BL1Y. You are incorrect. Call a bank, and ask for an unsecured loan for 100K. They will laugh at you. I tried to roll over a friends defaulted student loan with just the type of loan you propose. the max unsecured loan, with sterling credit (800 credit score), was about 10,000 at 15-19% interest, and a max repayment of 5 years. <br /><br />As a note, the creditor accepted 51% of the debt as a settlement. A student lender accepting 51% on a loan that will follow you to the grave says a great deal about the state of the student loan market. I would buy credit default swaps. . . if I wasn't paying every penny to my student lenders.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5164886390834386622.post-32944735733106652862011-08-17T11:42:47.058-07:002011-08-17T11:42:47.058-07:00And, if I can get a bank to give me $100,000 in lo...And, if I can get a bank to give me $100,000 in loans at 2.75% interest with a government guarantee, then without the guarantee it's pretty likely I can get the loans, but just at a higher rate, maybe around 5-6%. . . . It's not that hard to get a credit card with a limit of $10-20k.<br /><br />----------------<br /><br />I hope you mean with your working parents cosigning the loan, because if you think your average unemployed 21 year old can get a $20,000 credit card and/or $200,000 in completely unsecured (no govt. guarantee, dischargeable in bkr, no cosigner, no assets backing it) loans at 6% you are an unabashed idiot. You couldn't get that loan at 30% and the only credit cards you could get are starter ones with $500 to $1,000 credit limit. I've never seen so much mental masturbation by an ignoramous in my life.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5164886390834386622.post-90354827950002981612011-08-17T11:34:19.920-07:002011-08-17T11:34:19.920-07:00If the government stops guaranteeing loans, banks ...If the government stops guaranteeing loans, banks will start asking your parents to stand in.<br /><br />And, if I can get a bank to give me $100,000 in loans at 2.75% interest with a government guarantee, then without the guarantee it's pretty likely I can get the loans, but just at a higher rate, maybe around 5-6%.<br /><br />It's not that hard to get a credit card with a limit of $10-20k. Not much more difficult to get a second or third card in that amount.<br /><br />Maybe a few people will get denied because they're too bad of credit risks (parents have terrible credit, no collateral, and you're applying to Cooley), but for the vast majority of people, getting the government out of the student loan business just means law school becomes thousands or tens of thousands of dollars more expensive as interest rates rise.BL1Yhttp://www.constitutionaldaily.comnoreply@blogger.comtag:blogger.com,1999:blog-5164886390834386622.post-53522946635540623612011-08-17T11:14:02.056-07:002011-08-17T11:14:02.056-07:00P.S. It might be most correct to say that student ...P.S. It might be most correct to say that student loan dischargeability has evolved over time. In the 80s, you could get them discharged after five years. Then this was raised to seven years. Then in 1998 Bill Clinton passed a law saying you couldn't discharge them no matter how long you waited. Then in 2005 this was extended to completely private loans made for the purpose of tuition . . .<br /><br />Any way, if you want to pick one person to blame I would say Bill Clinton or perhaps the judge in Brunner, but I would say that GWB's change in 2005 was relatively minor in the scheme of things.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5164886390834386622.post-91403074458572501862011-08-17T11:07:34.058-07:002011-08-17T11:07:34.058-07:00Sorry again. I just reread my comments and I was n...Sorry again. I just reread my comments and I was needlessly rude.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5164886390834386622.post-40975393844268609362011-08-17T10:56:36.239-07:002011-08-17T10:56:36.239-07:00Sorry for getting angry, but I live in the real wo...Sorry for getting angry, but I live in the real world of finance and I see businesses go under because they can't get loans, and when someone claim that a 21 year old could borrow $200,000 for law school without a government guaranty or bankruptcy protection I have to LMAO.<br /><br />This is fundamentally the problem with lawyers - they're too impressed with their own thoughts and THEY DO NOT EXPERIMENT by testing their hypothesis in the real world. They remind me of ancient greek philosophers who would proclaim rules of biology and physics - rules that later turned out to be laughably wrong - all because they were too impressed with themselves to actually test what they proposed.<br /><br />This issue is especially troublesome in the phenomenon of having a 23 year old 2L "peer review" the work of a professor. Seriously what the h*ll f*ck?!?! Other disciplines would laugh their a** off at that. If I want to submit my paper to a finance journal, I HAVE TO PAY MONEY to have one of their seasoned and educated staff peer review my paper and approve/disprove it. But re: law reviews all you have to do is convince some 23 year old that you're right. <br /><br />/rant offAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-5164886390834386622.post-61455752072030177072011-08-17T10:55:11.438-07:002011-08-17T10:55:11.438-07:00BL1Y,
Please continue to leave comments. I don&...BL1Y, <br /><br />Please continue to leave comments. I don't think I agree with you about the likely outcome of a change in the bankruptcy rules, but I do appreciate what you've said here and think you make an important point. Part of the cruelty of the current situation is that law students are able to make just enough money to pay back the loans at the expense of everything else a middle class lifestyle is thought to entail, the very things they thought law school would be a means to provide. If there was mass default left and right, that might prompt somebody to do something to solve the problem. But because there isn't, because it is the students, and not the banks, taking the brunt of this, nobody has to be bothered to do anything.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5164886390834386622.post-13353256826307799822011-08-17T10:48:52.267-07:002011-08-17T10:48:52.267-07:00BL1Y wrote: "Banks will continue to give loan...BL1Y wrote: "Banks will continue to give loans for law students because it is highly profitable, with or without the government."<br /><br />------------------<br /><br />BL1Y you are one of the most ignorant mental masturbatory fools I have ever encountered. You would make a great law professor but your mental masturbation has nothing to do with what goes on in the real world.<br /><br />Today people with solid established businesses, with a history of revenue and profit can't get unsecured loans (unsecured meaning no government guaranty, dischargeable in bankruptcy and not secured by an asset). You actually think some 21 year old kid could get a $200,000 loan to attend a low ranked law school? <br /><br />Are you out of your mind? <br /><br />Seriously BL1Y, your comments are obnoxiously ignorant and they cause people to waste time having to correct them.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5164886390834386622.post-38544462541117233912011-08-17T10:40:19.933-07:002011-08-17T10:40:19.933-07:00BL1Y wrote: I'm unable to find the law school ...BL1Y wrote: I'm unable to find the law school loan default rate, but the rate across all programs is 6.9%, and that's higher than usual due to the recession. In 2009, the rate was only 4.6%.<br /><br />------------------------<br /><br />You're really irresponsible with your comments because you don't know what you are talking about. Default is a legal term of art and its definition is not limited to some narrow DOE definition. In finance, when a borrower has to restructure their repayment terms on account of lack of income (i.e. what students do when they defer or go on IBR) that is absolutely a default. But it's not under the DOE rules.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5164886390834386622.post-86857697797675555252011-08-17T10:38:16.310-07:002011-08-17T10:38:16.310-07:004:45 you're an idiot. The wikipedia article yo...4:45 you're an idiot. The wikipedia article you linked says:<br /><br />"BAPCPA amended § 523(a)(8) to broaden the types of educational ("student") loans that cannot be discharged in bankruptcy absent proof of “undue hardship.” The nature of the lender is no longer relevant. Thus, even loans from “for-profit” or “non-governmental” entities are not dischargeable."<br /><br />That is a minor change. Not that wikipedia is a source any way, but student loans haven't been dischargeable since the 1980s.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5164886390834386622.post-20211863758070212632011-08-17T10:14:46.990-07:002011-08-17T10:14:46.990-07:00"That link shows a 20% default rate over a pe..."That link shows a 20% default rate over a period of 15 years." <br /><br />Because they cannot be discharged and default risks criminal punishment. <br /><br />"who makes the most use of the rankings, namely law firms."<br /><br />Harvard, Yale, etc make the most out of it. There are clearly some who stand to lose a lot if the rankings go by the wayside. <br /><br />And let's forget all of the profs who bemoan rankings, but love to cite how often their paper was downloaded by ssrn. The whole culture of law schools is about ranking (what else explains multiple submissions?)Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5164886390834386622.post-485528230649776812011-08-17T09:53:10.135-07:002011-08-17T09:53:10.135-07:00I think bankruptcy protection is not a practical s...I think bankruptcy protection is not a practical solution because it requires the help of Congress.<br /><br />I think the best silver-bullet type solution therefore would be very strict regulation of employment and salary statistics with independent auditing. If we could somehow force the schools to come clean about each and every 40K job, each and every temp doc reviewer and starbucks barista, then everything else would fall into place behind it.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5164886390834386622.post-18406538472147664792011-08-17T09:41:00.974-07:002011-08-17T09:41:00.974-07:00Is it right to assume that default rates would rem...Is it right to assume that default rates would remain the same if the debts became dischargeable? I think we might see an increase. I suppose that would depend on the debt-to-income threshold set by the bankruptcy statute. I think if the same people who qualify today for IBR would qualify for bankruptcy, many would probably take it, whereas today they are able to pay and not default.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5164886390834386622.post-79496052636813165572011-08-17T08:31:16.860-07:002011-08-17T08:31:16.860-07:00A considered discussion regarding how to wean the ...A considered discussion regarding how to wean the legal profession off of their journalistic dependence would be welcome. The legal industry is hurting right now from the LSAT taker to most senior partners and baffling thing to me is that these wounds are self-inflicted, and yet we can't seem to be able to help ourselves. This is often described as a collective action problem with law firms making bad decisions to game the Vault and AmLaw rankings, and law schools making bad decisions to game the USNWR rankings. <br /><br />To try to identify the core problem, I think that it is valuable to look to who makes the most use of the rankings, namely law firms. Many in firm management, believe that these rankings will build credibility with clients and prospective hires and support otherwise unsubstantiated claims of greatness. The de-equitization of partners and hiring decisions dependent on school rankings reflect efforts to manipulate or utilize rankings crafted by journalists. I find it amazing that an industry selling professional services is so willing to give so much power to outsiders who often lack even a basic understanding of the nature of the services rendered. <br /><br />Law schools likewise play into this problem, but I suspect their core motivation is to help their graduates find employment. Administrations are under great pressure both internally and externally to game the rankings to boost employment numbers and increase alumni support. I will admit that even a decade after earning my JD, I care about my school's ranking because it directly affects my ability to find work due to broad over-reliance on these rankings. When my school hired a new dean one of my principal hopes was that the new dean would game the system more effectively than the former dean. I am part of the problem despite the fact that I know it is a problem.<br /><br />So, what are the options for finding a way out of this feedback loop? We all know that academics have been griping about the rankings since they began, but as this blog points out, no one listens to legal scholars, so bitching alone won't work. Cooley took it upon itself to introduce a new ranking system with comical results. That said, creating additional rankings may be able to reduce the potency of the USNWR rankings through dilution. <br /><br />If I am correct and this is driven by firms believing that these rankings matter to clients, a dose of reality may be helpful; clients don't give a crap about rankings. RankingAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-5164886390834386622.post-73758127406876269112011-08-17T07:45:49.212-07:002011-08-17T07:45:49.212-07:00"Banks will continue to give loans for law st..."Banks will continue to give loans for law students because it is highly profitable"<br /><br />NO; it is because these student loans are non-dischargeable and backed the Gov.<br /><br />The Gov should be out of the student loan industry, and the these loans should be like all others: private and eligible for modification during bankruptcy.<br /><br />"Eliminating the government from the picture won't stop many people from getting loans."<br /><br />Perhaps, but it will stop the funding for people that want to attend Cooley et al. What loan officer would approve a 150K loan to attend a TTT?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5164886390834386622.post-60775157730182331282011-08-17T07:15:15.162-07:002011-08-17T07:15:15.162-07:00That link shows a 20% default rate over a period o...That link shows a 20% default rate over a period of 15 years. Since loans don't tend to go much beyond 20 years, and if you haven't defaulted by 15, you're not likely to default at all, I think we can assume 20% is pretty close to the final default rate.<br /><br />From a lender's point of view, let's say I'm making 10 loans for $100,000. I expect over the life of the loan, to collect, on average $60,000 in interest for loans paid back in full. So, for my $1,000,000 I'm putting up, the 8 paid in full get me back $800,000 in principal, and another $480,000 in interest. My $1M investment has netted a profit of $280,000. 28% over 15-20 years? Not bad. But, we also get money from the people who defaulted. If you default in Year 1, I'm getting back squat. But, if you default in Year 10, you've paid back a significant portion of your loan before defaulting. If over that time you've paid back $50,000 in combined interest and principal, now I've banked a $330k profit, and got a 33% return on my investment. That's some serious cheddar.<br /><br />Banks will continue to give loans for law students because it is highly profitable, with or without the government. The problem for law grads is that it sucks to pay $10k a year when you're earning $40k. To the bank though, their returns are no less just because it hurts you more to pay.<br /><br />Eliminating the government from the picture won't stop many people from getting loans. What it will do is increase your interest rates and make law school even more expensive.BL1Yhttp://www.constitutionaldaily.comnoreply@blogger.comtag:blogger.com,1999:blog-5164886390834386622.post-87470320857679941142011-08-17T06:35:14.291-07:002011-08-17T06:35:14.291-07:00^That's totally true.
"Government Vastly...^That's totally true.<br /><br />"Government Vastly Undercounts Defaults"<br /><br />http://chronicle.com/article/Many-More-Students-Are/66223/<br /><br />------<br /><br />I agree with many earlier posts: NO MORE Government-sponsored student loans for everyone.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5164886390834386622.post-39813076217890829852011-08-17T06:29:19.740-07:002011-08-17T06:29:19.740-07:00^That 6.9% or so default rate is for only the firs...^That 6.9% or so default rate is for only the first year or so after repayment was due, not the entire life of the loan.<br /><br />https://philebersole.wordpress.com/2010/08/05/the-student-loan-train-wreck/Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5164886390834386622.post-71504300376878392552011-08-17T05:18:37.710-07:002011-08-17T05:18:37.710-07:00I'm unable to find the law school loan default...I'm unable to find the law school loan default rate, but the rate across all programs is 6.9%, and that's higher than usual due to the recession. In 2009, the rate was only 4.6%.<br /><br />I don't know what an acceptable default rate is for banks, but considering loans tend to have a 50-100% profit margin, even a 6.9% default rate isn't that bad. Even without federal guarantees, lenders will probably still give law school loans, simply because it's profitable for them.<br /><br />The expense of law school isn't a problem because so many students are unable to pay their loans. The vast majority do pay them (and some of them unable to pay have guarantors, so the bank still gets its money). Even in 2010, the median salary for a law school grad was over $45,000, even after discounting all of the big law jobs.<br /><br />The problem with the expense of law school is that while you can pay your loans on a $45k salary, your life is going to royally suck for the next 10-20 years, as the bank eats $10k a year of your post tax income. You're unable to take out a mortgage, go on vacation, buy a new car, and can't start a family if you want to be responsible about it. But, you do still pay your loans, and that's all the bank cares about when lending.BL1Yhttp://www.constitutionaldaily.comnoreply@blogger.comtag:blogger.com,1999:blog-5164886390834386622.post-18627013178955169882011-08-17T04:45:13.289-07:002011-08-17T04:45:13.289-07:00Bankruptcy Abuse and Consumer Protection Act (2005...Bankruptcy Abuse and Consumer Protection Act (2005):<br /><br />http://en.wikipedia.org/wiki/Bankruptcy_Abuse_Prevention_and_Consumer_Protection_Act.<br /><br />One thing I really gotta say is that, despite the fact that I don't trust LawProf, no one can fault him for not brining the academics to the table; the percentage of comments left on these scamblogs by sanctimonious c***s is way, way up.Anonymousnoreply@blogger.com