The picture conveyed by this study corresponds very well, I think, with the image most professors have of law school graduates. Most professors graduated from T14 schools (like Virginia) and most graduated in times much more like 1990 than 2012.I would add that in recent years what could be called "the one per center effect" has intensified on law school faculties, as law school faculty hiring, like legal hiring in general, has gotten increasingly competitive. In a thread earlier this week another commenter noted the sort of credential creep that has taken place in the legal profession: It's now routine for employers to feature hiring committees filled with people whose credentials at the time they graduated from law school would have absolutely precluded them from even getting a first interview at the same employer today.
This is certainly the case in law school hiring, and one consequence is that the most recent hires to law school faculties, even at quite bad schools, tend to be (I'm of course generalizing and there are exceptions) people who had what both entry level employers and law schools consider fabulous paper credentials, and who were doing OCI in the fall of their 2L year at at a top ten school (a strong plurality of them at HYS) no later than 2006 or so. In addition, America now being the country it has become, these people are increasingly likely to come from distinctly upper class backgrounds. (In this particular milieu, "upper middle class" means your father was chief of neurology at Sloan Kettering).
Almost unavoidably, such people have had shall we say a remarkably delicate set of professional experiences in comparison to those of almost all recent law school graduates.
When combined with the general cluelessness of the baby boom generation that now dominates the senior ranks of law faculties -- we grew up in a world in which you went to law school basically for free and were more or less issued a high paying job upon graduation -- this makes for social conditions within law faculty that are breeding grounds for the most virulent strains of denial.
I have heard a junior member of our faculty, upon being informed that nearly 20% of our graduates are completely unemployed nine months after graduation, remark that this must be to a significant extent by choice, since after all the national unemployment rate for all people -- let alone people with at least seven years of formal higher education -- is less than half that. This person is not an idiot, so this reaction is clearly a product of very much not wanting to understand a situation, rather than any inherent inability to comprehend it.
I've encountered another strain of denial among the parents of K-JDers who are pushing their children to enroll in law school as soon as possible, even in situations where doing so now would be a huge mistake. For example, this week I ran into a kid who took the LSAT last fall with no preparation and scored around the 77th percentile. He got into some very expensive law schools with terrible employment stats who offered him almost no "scholarship" money. In the subsequent months he had his consciousness raised and realized that (a) going to these schools for this price was a bad idea, and; (b) the LSAT is a test that can be learned, so that by actually studying for it he might well be able to raise his score into the 95th percentile or higher, and possibly save himself several hundred thousand dollars in long-term costs.
He is now studying to take the test again in the fall, but his parents are "forcing" him to make seat deposits at the schools to which he's been admitted, since he hasn't been able to make them understand why going to law school this fall, given his current and possible future options, would in all likelihood be a catastrophic mistake. (Hopefully he will have the strength of mind not to actually enroll).
On one level I can't even blame these parents, who are understandably confused why their child would prefer spending the next year working at a low-wage low-status job while studying for a test he already did "well" on (this illustrates the waste of human capital now going on -- finishing in the top quarter of the LSAT is something that maybe the top 10% or so of college graduates can do) when he has the option of going to a "good" law school this fall. (The schools to which he's been admitted are far from elite, but far from bottom feeders as well -- in other words they're the kind of law schools that 15-20 years ago were producing good career outcomes for large percentages of their graduates).
On another level this kid is actually lucky -- if had scored in the 92nd percentile he would have been admitted in December to George Washington for full boat, and three years from now he'd be graduating with $279,000 in debt (punch in $77,000 in COA here in year one and see what you get) and a $55,000 a year job. But try explaining any of this to boomer parents -- or to GW's faculty for that matter.
Law schools must be drowned in the bathtub. They are the worst kind of evil -- that which masquerades as altruism, the wolf dressed as a sheep.ReplyDelete
Until the spigot is turned off, this will not stop. And President Obama made Uncle Sam the limitless lender, so where will it stop. And now that borrowers repay not their debt, but a percentage indenture, market forces will not make it stop. Law school could be priced at $1mm per year. So long as borrowers only are on the hook for 15% of their income, the burden is shifted onto taxpayers and the diploma mills of the world still will fill their seats.
Congress, please end this madness.
In their defense, we're seeing this in many places. Baby boomers in particular have almost no valuable career advice, because the system though which they went no longer exists. They might as well be advising us to get into stage coach sales.ReplyDelete
Things will change when Boomers actually start to retire (or die, which will probably come first). But that will be in another 10, 20 years, and by that time, there will not be just a few lost years' of college grads, but an entire lost generation of college grads whose lives have been literally ruined by this mess.ReplyDelete
But at least members of this lost generation (including me) will be able to look back and say that things were better for our kids, and our grandkids. That's one small piece of satisfaction - making sure that our own offspring never make the same mistakes that we made.
I give up on this entire debate. We know law schools are scams, as are most expensive colleges. We know the system is set up incorrectly. This stuff just isn't open for reasonable people to have different opinions: it's broken, and it's that simple. And we know that the larger system that we all live in is extremely change-resistant, and while those at the top are making bank, nothing will be done to help those lower down.
"I give up on this entire debate. We know law schools are scams, as are most expensive colleges. We know the system is set up incorrectly. This stuff just isn't open for reasonable people to have different opinions: it's broken, and it's that simple. And we know that the larger system that we all live in is extremely change-resistant, and while those at the top are making bank, nothing will be done to help those lower down."ReplyDelete
When you're right, you're right. We need major reform for many institutions, including law schools. But, the price is too high, so people are too scared. We'd rather push it off into the future. By then, systems will just collapse on their own.
7:12. I agree totally, and write separately to also shame the Baby Boom generation for the hypocrites they are.ReplyDelete
In the 1960s and early '70s you protested the faults in society and promised change. History has shown that all you really wanted was to get yours. You are a spoiled, coddled, selfish generation who took what your parents paid in blood and toil to earn for you, and erected a system to monetize and extract as much property and luxury as you could take while hollowing out the system. That is a parasite's game: bleeding a host for your livelihood and ignoring the consequences. You are bad people and have shamed your parents. Oh, and your children have noticed.
Dude this blog is so spot on. I love it.ReplyDelete
I ran into a similar issue as the student you described. My mother is a solo and does closings/family law/ small crime etc. I showed my parents your blog, other scam blogs, a detailed description of law school employment stats. I guess I was too weak and did what they told me and enrolled at a terrible school in a saturated legal market.ReplyDelete
Reading this blog, though, finally gave me the ability to grow a pair of balls and drop out before second semester tuition was due. WHAT A GREAT DECISION. I have never been happier.
I try to deter everyone I know from LS unless its really T6. Two of my roommates attend schools at this level and are happy and doing well. When I visited the TTT I attended for 1/2 a semester I ran into two former high school friends who were just finishing their 1L summer. "Oh, we interned with the DA's office. It was great."
Now I see them on FB asking "Does ANYONE know anyone that is hiring for the summer?" This is as a 2L! No comments from other students at the school-they are all probably just as embarrassed. Yet, all of our non-law school friends/family members still comment- "Yo! When you find that job and make the big buck$ buy me a car!" Or "I am so proud! My law student (insert family relation here- niece, grandson, etc.) is looking for legal employment!!!"
The prestige to the "sophisticated consumer" powers on....
IBR will ruin the legal profession. How?ReplyDelete
Well, law schools now have guaranteed money. TTT students need not worry about repaying debt as the cost of school is not $70/year. Rather, it is 15% of one's income for 20 or 25 years.
Two decades from now, Uncle Sam gets stiffed, and the indenture ends, and the TTTs keep playing the same game with under/unemployed college graduates with poor alternatives.
IBR and law school pricing really only hurt the generation of upper-middle class lawyers. If a generation ago, these lawyers earned the equivalent of $65k to $115k annually, now these guys will effectively clear $50 to $100k. Not terrible, but not worth it. And these are the lucky ones!
Best blog ever.ReplyDelete
One question on your comment from yesterday regarding the study. Wouldn't the 1990 graduates be affected by the terrible market in 1993 that you described? Surely the firms didn't just stop hiring and keep all existing associates, there had to be layoffs right? Obviously one is in a better situation if one gets laid off with some experience compared to without any experience but if times were tough everywhere in 1993 it would seem difficult for them to find other jobs.
The student who is forced by clueless parents...I cannot stress enough how bad, and pervasive this issue has become for many students. I have commented before--I teach pre-law at a large public university--and have previously noted that parents are a HUGE problem. Easily, half the students who go to law school but should not are forced by their parents.ReplyDelete
How do parents force adults to do something?
1) Cut off all support, while students are struggling with a horrific job market. Many of my students can't get a job at Starbucks. Without parental support, they are homeless. This is not an exaggeration. Students are given the option of law school or homelessness.
2) Emotional cruelty. This is the generation that was raised by helicopter and bulldozer (you have an obstacle, Mommy and Daddy will bulldoze it for you) parents. They have no idea how to survive without their parents as emotional crutches. I do not blame the students any more than I would blame a victim of kidnapping for Stockholm Syndrome.
I now welcome parents during my office hours. Students are generally relieved that I will bluntly tell their parents that they are ruining their children's lives. I convince maybe 1/2 the parents that they are making a mistake, and 1/2 of them think they know more than me. And my heart breaks for those kids.
Your first comment was an instant classic. The fact is that Boomers have a warped sense of reality, due to their experience. In 1970 or 1980, you could land a sweet-ass CAREER with a BA in Art History from Cleveland State University or the University of South Dakota. For those who eschewed college, they could parlay an internship or apprenticeship into a solid career.
Now, you can have an MS in a respected field or an advanced degree in humanities known as a law degree, and end up with a ton of debt and few job prospects. Now if you intern with a respected company, that company will likely not even consider hiring your ass - even if you displayed proficiency, professionalism and aptitude. Hell, many will not even provide a reference for you - when you are applying for work.
By the way, the selfish Boomer pigs continue to hold back the younger generations - by staying in their high-paid positions until they are 75, 80 or beyond. Until these cockroaches die off, we will continue to see more young people get crushed.
Automation and outsourcing have decimated the workforce, in general. This is a global problem, as legions of highly-educated people in advanced and third world nations are unable to find employment in their respective job fields.
Bumping into my Business Organizations classmate from 1997 on a city bus somewhat recently inspires me to suggest we demand as a requirement of federal aid eligibility, that all law schools be required to perform audited surveys of graduates' employment outcomes.ReplyDelete
I graduated in 2000, and aside from OCIers (top 10-15% of the class) it was difficult to stay in touch with class mates unless you happened to seem them in court. But that of course required you to HAVE A JOB in the first place.
I sent out over 100 resumes to recognizable firms and got no interviews. I thought it was me.
I finally got a job in downtown Chicago responding to a blind ad. $36k for 2000 mininum billables. After being unemployed for 10 months I was desperate and took it.
But later when I went to my law school career services department to look for a better job, the prospects were no better. And I finally saw one or two classmates there - and I seemed to have done better then them. So I suspected - was something wrong with them? I was in the large middle of the grading bell curve - were they from the very bottom?
Now, more than 10 years out, I ran into another classmate on a city bus, and find that she - despite a very professional demeanor and attractive appearance, never became a "real' lawyer and was volunteering at a legal clinic. Worse yet, she told me her friend who went on to an LLM was jealous of HER since at least she was getting experience, albeit unpaid.
So, my conclusion is that when you are a practicing lawyer or a law professor or dean, you never see these people again because they are,like my female classmate above, living in their parents' home and not bumping into you at the alumni events that cost money, or the receptions at fancy private city clubs because they have no career (or money for tix). They are not out of sight but having careers. they are suffering and a ashamed.
Blogs like this one with LP help to show it is not the individual's fault. I guess I am drumming about transparency, so maybe this post is not new and not worthwhile. But I wanted to share this story since I am willing to bet my law school's professors and administrators still believe - as I did above - that "its just the economy" and that prior to 2008 its graduates were just fine. But they really weren't. And an audited survey of all graduates' employment outcomes would go a long way to dispel the belief that if in good times the law grad can't get a real job, that "something must be wrong with them."
#1 isn't true. A vast majority of them can join the armed forces. Three hots and a cot, not a bad way to go. Also they have the option of coming in as an officer which is a much better life than the enlisted guys have. I suppose they could also take the cop test like the poster I dub "union guy" always says.
Fair points, but tuition (across the board, not just law schools) has been creeping upwards even before the caps on federal loans were lifted. Also, before blaming Obama, don't forget that lifting the caps on student loans (and introducing IBR, 25-year payment plans, and other schemes to make tuition appear affordable) was done at the end of the Bush administration. Democrats in Congress hailed it at the time, so no one's off the hook.
Things are tough all over. Just about every legal job opening is the result of someone leaving the job. Either they left because they found the pay or work conditions to be intolerable, or they ere fired, usually fo not billing enough hours. (In the real world, success in law firms is predicated on hours billed rather than the quality of the work performed.)ReplyDelete
One will actually find very new positions being created because the demand for lawyers is decreasing. Much of our work has been taken by title insurance companies, DIY forms available online or at the courthouse, mediators, scrivener services who prepare bankruptcies and divorces, and other unlicensed individuals who are not carrying a huge student loan burden.
@8:05: Want an example of how messed up the current situation is, look to the Georgetown calculator Dr. Campos posted on early this week: http://220.127.116.11/finaid/GeorgetownLawFinancialPlanningCalculatorforProspectiveStudentsV2.htmReplyDelete
Using the Law School Transparency report indicating the average student debt for the class of 2015 will be over $210,000 (private or out of state), we see that the man in charge of the federal student loan programs, Secretary of Education Arne Duncan, would not earn enough to service this debt.
Because the Direct Loan Public Service Loan Forgiveness and Income-Based Repayment (IBR) have no income restrictions, Cabinet level “public servants” could qualify for significant level of loan forgiveness. In fact, when the salary of Cabinet officials ($199,700 per year) and the projected debt levels of the law school class of 2015 are inputted into this online calculator, it turns out they would receive a benefit of more than $29,000—completely tax free (PSLF forgiveness is tax free, IBR not so much).
A few other examples are the top professions in the legal field. Much like Duncan and all other Cabinet level officials, Attorney General Eric Holder would receive close to $30,000 in loan forgiveness. Most Supreme Court Justices would also qualify with Associate Justices ($213,900) receiving more than $7,000 in tax-free loan forgiveness. Only Chief Justice John Roberts ($223,500) would pay the loan in full.
Now using this calculator is an admittedly inexact science, but it is important to note we are talking about averages here, not outliers.
The Secretary of Education (CEO of Direct Loans, Inc.), the Attorney General, and Assoicate Justics for the US Supereme Court would all not earn enough to service the expected average debt of incoming law students, how messed up is our system?
Hey Campos, where's your god now!?ReplyDelete
Cooley's Florida campus more popular than forecast
By Karen SloanContactAll Articles
The National Law Journal
May 8, 2012
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Thomas M. Cooley Law School associate dean Jeff Martlew
Thomas M. Cooley Law School associate dean Jeff Martlew
Maybe opening another law school campus wasn't such a bad idea after all.
Thomas M. Cooley Law School launched its newest location near Tampa, Fla., on May 7 with 104 students — nearly twice as many as administrators initially expected to enroll.
"Cooley's Tampa Bay Campus enrollment exceeded our expectations," said Associate Dean Jeff Martlew. "These numbers indicate the Tampa Bay area was ready for a law school. We are pleased to open our doors with such enthusiasm from the community and the students who have selected Cooley."
Most of these government figures are getting all sorts of kickbacks or "lobbying" and their real income is much higher.
This can’t ask parents/boomers anything b/c they can’t relate is seen all over… my parents never pressured me into anything but they also couldn’t offer advice. I didn’t go to law school but I put myself through undergrad and I’m buried in debt… and of course, jobs don’t pay anything…ReplyDelete
That may be true, I am not sure on their outside income streams (or their ethics). However, I still think it is a pretty startling example that the salaries of the very top legal professions in the land (not to mention the person ultimately responsible for making all of these loans) are not sufficient to service the average debt of incoming students.
Jerry Lesh, those are some really interesting (and sobering) statistics. Keep in mind that those calculations are based on people who will both pay the full sticker cost of attendance and will debt finance the entire amount. That's probably "only" around a third of all law students. OTOH those numbers *don't* include undergraduate debt. I estimate that the current 1L class nationally is likely to have $150K of educational debt by the time it graduates, which is bad enough. And that's an average -- a very large minority will in fact have the kind of $200K+ average debt whose IBR consequences you note.ReplyDelete
One question on your comment from yesterday regarding the study. Wouldn't the 1990 graduates be affected by the terrible market in 1993 that you described? Surely the firms didn't just stop hiring and keep all existing associates, there had to be layoffs right? Obviously one is in a better situation if one gets laid off with some experience compared to without any experience but if times were tough everywhere in 1993 it would seem difficult for them to find other jobsReplyDelete
In answer to your question - it was a lot worse for those graduating in 1991-3 than for those already in employment. It was the case that the firms did layoffs - and outrageously did disguised layoffs (efficiency reviews, etc.) which were the subject after many years of a New York bar ethics opinion banning disguised layoffs. But that being the case a new first year associate is a losing proposition - second though fifth years are profitable. Thus the associates you had were better kept than adding new expensive first years. This lead to a wave of withdrawn offers as well as expected offers not materialising.
The toughest part of legal practice is getting a good start ... getting a good job or a clerkship that can lead to job on graduation or shortly thereafter. For a new JD that has been unemployed for 12+ months from graduation, even in the 90s, they were really out of the legal profession. For those hired between 1987 and 1990 the atmosphere was amazing - they got sign on bonuses - clothing bonuses to spend at say Brooks Brothers, relocation assistance - and to be a summer associate the summer of 1990 was astonishing (I was) the summer programs were so lavish. By September 1991 it had all changed, changed utterly.
There were layoffs, but they took out about 10-15%, mostly in cratering practice areas and a lot of these got rehired in lower in the food chain firms at decent paychecks fairly quickly - and anyway they typically had some warning and a chance to look. The 2Ls and 3Ls by contrast were looking at a job market where at many schools there was 1/3 of the number of firms at OCI (Georgetown screwed up because of a plot by Deans Edelman and Areen to delay OCI for firms until after public interest OCI to force more graduates in to public interest, that put OCI in October-November when firms had made all their offers anyway - that is one reason Edelman is known as Pete the Pr*ck - that and that he is a P...)
What I am saying is that had the survey been of the class of 1991 - (70%+ of whom at Georgetown sported a NOPE (Not a Penny Ever) pin when picking up their degrees) - or 1992 who were even more pissed and jobless, I think the results would have been very different.
Sorry that was in answer to Fat GuyReplyDelete
A semi-related post on another websiteReplyDelete
There was an excellent comment made on this, which, fwiw, gives some credit to Law Professors
May 9, 2012 at 3:27 am
Ms. Smith: First time commenting, but I’ve been reading your blog for awhile because of my former work, and continuing interest, in foreclosure fraud. Also working my way through your book.
Just wanted to note the 2005 Act made private student loans non-dischargeable in bankruptcy, whereas before then, the non-dischargeability provision applied only to federally-insured student loans. And that goes all the way back to the end of the Ford Administration, so that provision has been in place for a good, long while. Speaking of virtual debtors prisons, the banks have it good with federal student loans because the U.S. Dept. of Ed. is their collection agency, which can obtain a garnishment order on the borrower’s wages without ever setting foot in court. The DoE can also seize tax refunds and garnish a portion of a borrower’s monthly Social Security, too. Of course, no other type of debt has this kind of extraordinary protection.
Actually, up until 1998, when yet another “bankruptcy reform” bill was before Congress, federally-insured student loans could have been discharged through a “loophole” in the Bankruptcy Code for debtors who had successfully completed the court-ordered payment plan in a Chapter 13 bankruptcy. In fact, before the bill reached Clinton’s desk, his administration convened a group of bankruptcy judges and lawyers, as well as law professors, to study the issues involving student loans and bankruptcy and make a report with recommendations. Well, their report came back with the recommendation to allow discharging student loans. The group explained its reasoning behind this, but can’t remember all of it off the top of my head right now. Anyway, Clinton ignored the recommendation and signed the bill, which closed the “loophole.”
Given your interest in bank malfeasance and criminality, student loans would be a very ripe area of research and investigation, particularly in the late 80s-early 90s, when the banks (off the top of my head, I remember Citi played a leading role), a couple state guaranty agencies and private, fly-by-night colleges colluded in defrauding the federal student loan program so badly, they nearly brought down the entire program. I believe only a few low-level people involved on the college side ended up doing time, but what the players in the student loan field have gotten, and gotten away with, shows what kind of political power they wield.
As someone actively pursuing joining the military after law school, it's not nearly as easy as you make it sound.
The military is downsizing for the first time in a decade, and so demand is way down for incoming officers - the navy recruiter I spoke to said that several positions were no longer needed - I'm very lucky in that I have an unusual undergrad degree that they happen to need at the moment. But the military is not a magic way out for anyone steeped in student loan debt, though it is an option that could at least be explored.
Also, joining the officer program is a long process; in my case it's projected to take at least half a year. Trying to find short term work in the interim is difficult.
Have you looked at the Army? The Army is the biggest (and in some ways sucks the most of the four) but I thought the Army was still needed people.
Worst case, you can always enlist. With a degree you'll start as an E-4 and you can do ok.
I had mistakenly assumed the economy impacted lawyers of all classes more proportionately than it apparently did. Always good to learn more, thanks for your response.
One thing people don't understand about the legal industry is that to be truly successful, you must have a talent for careerism. That isn't taught in law schools.ReplyDelete
And it isn't something you pick up in a firm. On the contrary, big firm practice is all about keeping you so busy, you don't have time to figure out a plan B.
But you need to be one step ahead of whatever career ruin you will, more likely than not face, be it firm impolsion, stealth layoff, denial of tenure, in house reductions in force, partners who previous fed you work suddenly deciding to work across the street...without taking you with. All of these things happened to friends of mine. And all of them continue to happen. The people who survived were the ones who had some sort of long term plan and were constantly hustling to get there.
Being 7 years out of school, I was shocked at how utterly close my career has almost fallen to ruins. I'm lucky, though. I've got a stable government job now. But the process of point A to point Z was fraught and I don't know...I don't know if explaining to law students at the inevitability that, at least once, their careers will reach the point of almost ruin before they find a place to truly practice law as a career. And that's the case if they are lucky. Many, many fall to the wayside and never bounce back.
I guess the point is...even if you get that job, odds are you're not keeping it. So, relying on the UVA study is foolish. Instead, most law students ought to read Paul's article on Justice Kagan.
I'm aiming for the navy, because they have a program that's most in line with my career goals and desires. I'm most afraid of the physical exam, since the year long depression that was 3L year along with studying for the bar exam left me in the worst shape of my life - I've been struggling to get myself back into shape which is difficult.
As far as I have heard, the Army is the field that is actually getting downsized the most - while the Navy and Air Force are going to shrink a bit as well, they are going to have more of their forces reallocated to the Pacific over the next few years. From what the recruiters have related to me, nobody's 100% sure exactly how everything is falling out yet.
I'm sure that any branch of the military is still going to accept people, but that it's going to start changing to be more like every single other field: less people needed so competition for spots are more intense. The military isn't a fallback option any longer. That's the only point I'm trying to make.
There is a difference between being able sufficiently service loans and qualifying for IBR. Your example may say something about IBR being calculated in the wrong way but someone pulling 200k is not going to have an issue paying down a loan equivalent to the average student's law school debt. Lets not get too carried away.
I am simply using the figures that are available, which as Professor Campos points out, are likely juiced by the folks at LST. However, $210K is one estimate we have right now for the incoming class, and according to the Georgetown calculator, a hypothetical government or public service employee (e.g. Secretary Duncan) making $200K+ per year with that kind of debt lead would qualify for a "partial financial hardship" throughout loan repayment, meaning they are not sufficiently servicing their loans. And yes, as a taxpayer, I'm concerned.
Now, if those making $200K (or $100-$150K) worked in the private sector, at some point beyond the 10 year "public sevice" forgiveness window, they would eventually no longer qualify for a "partial financial hardship" even with debt loads around the $200K mark. At this point, they are sufficently servicing their debts. Of course, the interest on loans is capitalized once the borrower now longer qualifies for the PFH, so IBR usually really sucks from the borrower perspective in the long run.
Thanks for the better numbers. Those LST figures definitely seemed juiced a bit, but when I saw their revised data the same day as I saw your post on the GT calculator, I had to plug them with cabinet level/justice salaires. It just seems to be such an illustrative example.
Moving beyond these admittedly unlikely hypotheticals, I also plugged in your $150K debt figure and the average salaries of government attorneys, according to NALP: http://www.nalp.org/sept2010pubintsal.
Here are the results:
Civil Legal Services: $59,065 repaid, $153,726 forgiven
Public Defenders: $78,141 repaid, $134,651 forgiven
Local Prosecuting Attorneys: $81,730 repaid, $131,061 forgiven
Public Interest Organizations: $66,315 repaid, $146,476 forgiven
For each category, I went with the 5-year experience wage to account for the NALP data coming from 2010 and the $150K figure based on students who will (hopefully) become employed 2015. This is most likely too generous of an estimate on the wages front, but it is a quick and easy way to account for the time difference, and the numbers are still scary as hell.
Do you think people will stand for $100K+ in tax-free benefits to hundreds to thousands of government and non-profit lawyers on an annual basis ad infinitum? The schools get paid, the borrower gets extensive repayment relief, and taxpayers are left holding the bag. Maybe I'm wrong, but I just don't see it lasting much longer than the late teens or 2020.
"I have heard a junior member of our faculty, upon being informed that nearly 20% of our graduates are completely unemployed nine months after graduation, remark that this must be to a significant extent by choice..."ReplyDelete
Next time you see him, ask him his opinion of Milton Friedman. Or, for that matter, Ayn Rand. Because typically when one hears that poor people are poor by choice, the speaker believes that people are rational economic actors and therefore a poor person must have opted for poverty in return for the psychic benefits poverty entails. To which anyone who has not imbibed the kool-aid responds "huh?"
You do realize that the taxpayer isn't actually paying all of that money right?
I'm not sure what you mean by "actually paying." Presumably you mean their is not an actual transfer of funds?
I ask because in terms of "actually paying," the government does assume borrowers will repay their loans. Therefore, when a loan is forgiven, taxpayers are "actually paying" out this benefit in terms of the budget.
In the case of IBR, we recognize this benefit as such, and individuals are taxed on the forgiveness as income. In the case of PSLF, because our student loan repayment system favors public service employment, the benefit is granted free of income taxes.
I have your topic for tomorrow:
What a fucking moron.
What I mean is that it is not a direct outlay of cash from the taxpayers except for the amount of money attributable to the principal + the cost of capital (which I assure you is far less than 6.8%).
It's not accurate to say the taxpayers are "paying" for what amounts to a lost "profit" to the government. At any rate, even if you were to say that, you're failing to consider the cross subsidization from loans that people are repaying in full. Remember law school loans are only 2-4% of the total outstanding loans.
I hear what you are saying, and I agree that student loans are probably way too profitable for the government in the current environment, but your assessment on taxpayers not "paying" to forgive loans doesn't quite hold up.
The excess spread on student loans is part of the budget baseline. Wonder why it costs $6 billion for the fight on subsidized Stafford Loans they are having in Congress right now? It is the same principle. As you say, the cost of capital is nowhere near 6.8%, yet there is a budgetary "cost" associated with keeping the interest rate on this particular set of loans at 3.4% for one-year.
The same applies when loans are forgiven, they are "paid for" by taxpayers. Think of it this way--If Congress eliminated PSLF altogether, would it save the government money? Of course it would. Not that it would necessarily be good policy, but it does show there is a cost associated with providng this benefit which is borne by the taxpayers.
I see what you're getting at it but I guess I just think it's misleading to present to the public that they're incurring an out of pocket cost as a result of the govt not realizing a gain. I'd meet you halfway and concede it does represent something of a "writedown" on the govt balance sheet in terms notes payable.
If the law school bubble is to be compared to the housing bubble, then "buying" a law degree TODAY would be akin to buying a house in late 2006 when the bubble was just starting to burst. (Note that the housing bubble peaked in early 2006).
People who go to law school have to recognize the severe imbalance between the supply for lawyers and the demand at all levels of the profession. Even if all the baby boomers had to retire at age 60 to make room for the new lawyers, there would still be a severe imbalance. Law schools are producing 45,000 graduates a year. The only way to employ that number of people as lawyers would be to force all lawyers to retire by about age 42.ReplyDelete
As a baby boomer, I do not tell anyone to do go to law school. No one. It is just too hard to make a living- a very risky deal for all but a few of the people who graduate from law school each year.
The people who run the law schools should have been more responsible all along. They would have seen how hard it is for their grads to stay employed. They would have seen that getting a first job not only does not assure getting a job later. They would have seen vast unemployment and underemployment in their experienced grads.
I agree with the commentator who points out that after only 7 years of experience, his friends have lost legal jobs for any reason or no reason.
Look for work in a field where there is more job security. Being a lawyer is not it.
This comment has been removed by the author.ReplyDelete
Some thoughts about Ted Seto's comment and Loyola-LA (cross posted from the original blog):ReplyDelete
Professor Seto, As a colleague at another school, I suggest you look very closely at your own school's employment data--as well as at the way the school portrays those data to applicants. According to the data that Loyola-LA sent to the ABA (recently made public by the ABA), 129 of your 2010 graduates found only short-term jobs. Short-term does not mean judicial clerkship; clerkships count in the "long-term" category, even though they typically last only one year.
16 of these short-term positions were with the law school itself; 32 were with firms of 2-10 lawyers; 43 were in public interest; and 17 were in business and industry. These short-term positions account for more than one third of the "employed" graduates reported by Loyola-LA.
Yet on the school's website, you will find no hint that so many of these jobs are short-term; graduates are simply reported as "employed." Worse, the school's website reports salaries after silently sifting out all of these short-term jobs. The school's site, for example, reports that 104 graduates were employed by "very small" firms of 2-10 lawyers. On the next page, the site reports that these lawyers had a median salary of $60,000, with 51 out of 68 graduates reporting. What happened to the other 36 graduates "employed" in these firms? Their employment was so tenuous that NALP doesn't even count their earnings as a salary to be reported. But Loyola-LA doesn't explain that to potential students.
A reader has to have been following the job market, NALP guidelines, and associated literature very closely to understand (or even notice) that Loyola has silently brushed over outcomes for a third of its class. Incoming students wouldn't possibly follow these omissions. The data, as presented on Loyola-LA's site to applicants, are misleading.
And then there is the matter of debt to income ratio. According to ABA data (this time as reported to US News), 86% of your students graduate with law-school debt. Their average debt--for law school alone--is $132,875! Yet 6% of your 2010 graduates had no income after nine months; another 33% had short-term jobs with salaries that Loyola didn't even calculate. Even among the grads who obtained long-term jobs, the median salary in the largest group (those at firms of 2-10) was just $60,000.
For a substantial number of your graduates, the gap between income and debt appears crushing. Indeed, it is one of the highest I have seen--although I haven't finished the calculations I'm performing for all US schools.
I would think very seriously about the type of investment you are urging students to make. You may hope that the legal market will improve dramatically, but that change would have to be beyond exuberant to close this gap. As someone who has been following the forces of technology, globalization, unbundling, and other factors closely, I think any turnaround is unlikely. A turnaround of the magnitude needed to sustain an average debt of $132,875 would have to be massive.
I should have said submitted to the original blog--that blog is moderated so I don't know yet if my comment will be accepted.ReplyDelete
Seto showed up early on in this blog's history to concern-troll about what might happen to its author if his identity were revealed. His statements at TaxProf are of a piece with that.ReplyDelete
Thank you DJM, for addressing Seto. I'm a Loyola grad and Prof. Seto's various posts/articles are infuriating.ReplyDelete
He suggested for example, in a published article, that potential law students hoping to become big law partners in Los Angeles should choose his school over Vanderbilt! Can you believe that? Loyola places a pathetic 1 in 20 of its grads in biglaw where Vanderbilt places 1 in 3. We all know that if you don't get a biglaw job right out of law school, your chances of lateraling to one are near 0, especially from a "firm" that has 20 lawyers or less (where most Loyola grads end up).
As your comment makes clear, Seto's own school is one of the worst bets out there.
He is, at best, reckless, and at worst a conscious actor in the scam.
I prefer my characterization above :)
RE: lesh commentsReplyDelete
Each debt is carried on the books, probably at FV just like a mortage on the books at Countrywide. If the debt is forgiven the impact on the budget is just like money, perhaps carried elsewhere.
so much post is. All are amazing. Thanks to all.ReplyDelete
Ted Seto wrote, "The best time to buy is when everyone else is selling."ReplyDelete
This is sometimes true, but in no way is it always true. In fact, in general it is not true. If everyone is running from something, a good rule of thumb states that you should from it too. I can provide examples but I hope they are not required.
The law school industrial complex is evil. Pure evil.ReplyDelete
At least Wall Street is honest about its motives, and embarrassed when it receives government money.
Law school, on the other hand, not at all, and not at all.
What is so galling about seto's "buy the dip" advice is the borrowing of phrases from liquid markets with very good information and applying it to the life-altering decision to attend law school. Law schools, by design, prevent information regarding outcomes from reaching market participants. If purchasing a law school education fell under the definition of security in the 1934 Securities and Exchange Act, the SEC would run 95% of the law schools out of business, and have made an federal prison example of a few deans.ReplyDelete
There is another phrase from finance, "don't catch a falling knife," that I believe better applies to the current law school environment. And another "I don't ask my barber if I need a haircut," that describes the small weight one should give Seto's advice.
Even more disturbing is the fact the University of Colorado Law School is not a private business, it is part of a public university. It is not supposed to make a profit. It is not supposed to pay dividends to shareholders. The people who work for it are public employees, and not entrepreneurs. Its sole purpose is to educate young adults.ReplyDelete
Turning law school professors into salespeople, with the same ethics as a used car salesman, is something most of the professors did not sign on for.
The University's mission has becomes seriously warped.
The mission changed when students came to think of themselves as "consumers", and not just at law schools. Indeed the first push to require employment statistics was framed as publishing "consumer information". Some schools still use that phrase. If students can be cast as consumers, it is no wonder that those who run law schools can be cast as salespeople.ReplyDelete
Among Professor Seto's better statements:ReplyDelete
"I have no axe to grind here. I'm tenured at a school that is highly unlikely to go out of business before I retire. Near as I can tell, my school is likely to meet or exceed its admissions goals this year."
If one now compares Professor Merritt's (DJM here) analysis with the overall law school position and outcomes - it seems likely that discounting of tuition is the main way in which Loyala has kept its admission numbers up. That puts Loyola pretty high up on the list of law schools that are or shortly will become money pits for their associated university (Loyola Marymount.) Admittedly Southwestern looks worse and as for Abraham Lincoln - well at least it's cheap. Still Loyola has a key feature that makes it likely law school to close - it is part of a larger University and its facilities could be reused by Loyola Marymount - or could be sold or leased for a considerable amount of money.
Then Seto appears to be in his 60s .... so maybe he will retire soon.
DJM, your post did make it onto Seto's blog.ReplyDelete
No response as yet.
PS - don't the pictures of Seto and the other dweeb who's up there now say it all? Sorry to be politically incorrect, but I think all will agree it's true.
Can you e-mail Seto directly, and cc his Dean, Victor Gold?
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