If I just can't find work, and I need money to (eat, not sleep in gutter,etc) does it make sense to stay in school longer until I line something up?Meanwhile in Las Vegas (if this were a novel the location would be a very heavy-handed piece of symbolism indeed):
It would defer student loans and keep finaid coming in to keep the bills paid.
President Barack Obama will urge Congress to prevent student loan interest rates from doubling when he speaks at UNLV on Thursday, as part of his broader push to get Congress to act on his policies.
According to a White House briefing, Obama will direct his administration to “improve students’ information about repayment options, and access to repayment options that can help them make their payments.”
Under current law, 7.4 million students will have their interest rates double on July 1. The White House said this would be the equivalent of a $1,000 tax increase. It’s part of his broader effort to get Congress to pass reforms that he said would create jobs.
One federal program Obama will emphasize is an income-based repayment, which caps borrowers’ monthly payments based on their ability to pay.
The social network is (rapidly?) chipping away at juvenile and to a lesser extent parental ignorance regarding the law school trap. A law professor writes:
There's a flip side to this however. The newest big threat to reform efforts is the attempt to make IBR a substitute for restoring some sort of sanity to the price of higher education in general, and law school in particular. President Obama's speech today is premised on the idea that a very large percentage of people with federal educational debt are only vaguely aware, or not aware at all, that IBR exists. (I'm continually taken aback by how many 0Ls and 1Ls still know nothing about IBR). But that too is no doubt changing rapidly.I was told by a prof at a mid-range school that their discount rate across the class is way up (tuition is coming down) and despite this they will still get a much smaller class than desired.It’s not just that applicant numbers are down (we knew that), but also that students are refusing to pay full fare.This rapid shift is the result of the internet, I’m convinced. My teenage children get ALL their information online. With the scam blogs, your blog, Above the Law, all relentlessly putting out the same message—college age kids now KNOW that law school is a risky bet. You can even see the change on TLS over the past year. A year ago posters regularly called the scambloggers losers, but now the scamblog message is common wisdom on TLS. That doesn’t mean there won’t be kids who continue to go to law school—they will in droves no matter how ill-advised—for all the reasons you say on your blog. But even they will demand a reduced price.
This is an especially bad problem when it comes to law schools because, as in so many other ways, when it comes to debt law school is a particularly extreme example of what's wrong with higher education in America. Average educational debt among the 15% of adult Americans (40% of adults under 30) with such debt is "only" around $23,300, with 10% owing more than $54,000 and about three per cent owing more than $100,000.
What this means is that the typical person going into IBR is going to be somebody who owes $40,000, makes $30,000, and is paying $165 per month in IBR rather than the $450 or $275 they would owe on a ten-year or 20-year repayment plan.
People who graduated from law school this year, on the other hand, probably owed an average of $125,000 to $130,000 in educational debt (a number that will likely rise to around $150,000 for the graduating class of 2014, given the rapid rise in tuition that is already baked into their particular cake).
The document reviewer making $30,000, in other words, is going to be paying $165 per month on what would be a $1750 or $1100 dollar monthly payment per ten and 25-year repayment schedules. As Bored Law Student noted in a comment a couple of days ago, IBR simply wasn't designed for this sort of extraordinary scenario -- extraordinary, that is, in the context of higher education in America, but completely ordinary in the context of legal education today.
There's a real danger that, until the federal government wakes up to what's happening in our little corner of the world, law schools in the next few years will increasingly fill their classrooms with people who, as the social network alerts them to the existence of IBR, will choose to incur $150,000 or $200,000 or more in debt simply to eat and not sleep in a gutter. (Contrary to assertions of various Horatio Algers in the linked TLS thread, there is no longer any "welfare" in America, beyond food stamps, for non-disabled people who aren't the primary caretakers of small children.) A disturbing number of 0Ls on TLS who are told in no uncertain terms that taking out big debt to go to the average law school is a terrible idea are now replying that "there's IBR if you're stuck with a $50,000 job and high debt." Among other things these people don't realize that there's a good chance that their law degree will make it much more difficult for them to get any job, let alone one that pays $50,000.
Speaking of novels:
A sovereign fell, bright and new, on the soft pile of the tablecloth. —Three, Mr Deasy said, turning his little savingsbox about in his hand. These are handy things to have. See. This is for sovereigns. This is for shillings. Sixpences, halfcrowns. And here crowns. See.
He shot from it two crowns and two shillings.
—Three twelve, he said. I think you'll find that's right.
—Thank you, sir, Stephen said, gathering the money together with shy haste and putting it all in a pocket of his trousers.
—No thanks at all, Mr Deasy said. You have earned it.
Stephen's hand, free again, went back to the hollow shells. Symbols too of beauty and of power. A lump in my pocket: symbols soiled by greed and misery.
—Don't carry it like that, Mr Deasy said. You'll pull it out somewhere and lose it. You just buy one of these machines. You'll find them very handy.
—Mine would be often empty, Stephen said.
The same room and hour, the same wisdom: and I the same. Three times now. Three nooses round me here. Well? I can break them in this instant if I will.
—Because you don't save, Mr Deasy said, pointing his finger. You don't know yet what money is. Money is power. When you have lived as long as I have. I know, I know. If youth but knew. But what does Shakespeare say? Put but money in thy purse.
—Iago, Stephen murmured.
He lifted his gaze from the idle shells to the old man's stare.
—He knew what money was, Mr Deasy said. He made money. A poet, yes, but an Englishman too. Do you know what is the pride of the English? Do you know what is the proudest word you will ever hear from an Englishman's mouth?
The seas' ruler. His seacold eyes looked on the empty bay: it seems history is to blame: on me and on my words, unhating.
—That on his empire, Stephen said, the sun never sets.
—Ba! Mr Deasy cried. That's not English. A French Celt said that. He tapped his savingsbox against his thumbnail.
—I will tell you, he said solemnly, what is his proudest boast. I paid my way.
Good man, good man.
—I paid my way. I never borrowed a shilling in my life. Can you feel that? I owe nothing. Can you?
Mulligan, nine pounds, three pairs of socks, one pair brogues, ties. Curran, ten guineas. McCann, one guinea. Fred Ryan, two shillings. Temple, two lunches. Russell, one guinea, Cousins, ten shillings, Bob Reynolds, half a guinea, Koehler, three guineas, Mrs MacKernan, five weeks' board. The lump I have is useless.
—For the moment, no, Stephen answered.
Mr Deasy laughed with rich delight, putting back his savingsbox.
—I knew you couldn't, he said joyously. But one day you must feel it. We are a generous people but we must also be just.
—I fear those big words, Stephen said, which make us so unhappy.
Lots of words, especially around the James Joyce part.ReplyDelete
I didn't read them all. But it doesn't matter, because I still give it an A.
I too fear the IBR law school soup kitchen.
This is not what student loans are supposed to be. Anytime you set up a system that can be gamed so that the borrower can repay significantly less than the amount borrowed with little in the way of consequence (ie., ruined future credit), we run the risk of abuse.
Income-based repayment is one of those traps designed by the government to give the impression that they are helping the borrower. Government "help" at its best.ReplyDelete
Let me list the problems:
1. The income forgiven is taxable. Who wants a tax bill in their late 50s or 60s on half a million?
2. What happens if the borrower loses their job while on the program? Are they kicked out of it and does the whole debt become due? Are they stuck in the 10 year program? How is a job loss explained in the middle of the year to your servicer when tax returns are only filed once a year?
3. The federal government is nearly broke. Plus, they have a history of changing the rules in the middle of the game. Who is to say that a future president will not cancel the program and make said cancellation retroactive? President Clinton retroactively removed BK protections on student loans in the late 90s.
4. What happens if the borrower gets a good job ten years into the program? Are they kicked out of the program? Do they have to pay more? All answers point to yes. A person who actually earns more money later in their career may actually wind up paying more in the IBR program.
5. It is hard to see 25 years into the future. Can anyone do it? I cannot.
6. If the borrower is on IBR and the debt is growing, how are they going to explain that to a mortgage broker? The MB will see that debt and probably run away....the same with a student-debtor who applies for a credit card or car loan.
7. It is hard to find answers to many of these questions. The DOE website is not clear. The people there are completely incapable of answering questions. Many student loan servicers don't have answers either.
The reason why many people are not on IBR is because their student loan servicer does not advertise it. I wonder why????
1. Waive all capitalized interest (you know, the result of the crappy deferment and forbearance programs).
2. Allow borrowers to refinance their loans at current interest rates.....like those rates that exist now.
3. In lieu of #2, cap all loans at 1 or 2 percent. Use the money made to fund Pell.
4. Restore truth in lending requirements, BK protections, and statute of limitations. That way a borrower knows what they are signing for rather than finding out AFTER they signed their promissory note.
Like the Ulysses quote - my father used to love to quote when going swimming "Ah the Sea, the Sea the scrotum tightening sea" before plunging in - I think it may be engraved near the Forty Foot to this day.ReplyDelete
The problem with IBR is that it is a confession of the failure of law school education and represents a double loss for the United States (and the taxpayer.) A large proportion of law students have high GPAs and high LSAT scores, and completed college in 4 years or less i.e., they were (I know I have doubts about this form time to time) likely to be high earners working in the US economy had they not gone to law school. The income levels that would leave that JD on IBR is probably lower than they would have been making after 3 years working instead of going to law school - and their income is permanently deflated thereafter.
This represents a loss to the US economy in multiple ways: (a) it loses 3 years of the productivity of a well educated and hard working mid-20s person; (b) the government loses all the lovely tax over 3 years; (c) under IBR the taxpayer ends up picking up the tab; (d) the new JD has lower earnings and productivity than might have been the case has they not gone to law school; (e) the government loses the tax on the higher earnings that the new underemployed lawyer would have accrued had they not gone to law school.
I know this is an issue I keep harping on - but it is not morons going to law schools, it is graduates who are quite often academic stars, or at least at the upper 10-20% of the new college graduates. Having 30,000 too many of these kids going to law school every year represents a huge deadweight loss to the US economy, a long term decrease in tax revenues and through IBR a huge burden on the taxpayer.
#2 above you just tell them you lost your job and they adjust your payments.
#3 is a fair point.
#4 why shouldn't someone pay back the money they borrowed if they can afford to? IBR is a break for people that can't afford their payments, not a freebie for everyone.
#5 is kind of like #3.
#6 Home loan probably. People can get credit cards and car loans without a problem.
^I meant home loan probably not.ReplyDelete
Prof. Campos thank you for yet another brilliant post. Usually, when I decide to post on this blog, I like to tell kids to drop out of school and get a cop or fireman job, but today, in light of your post, I would like to comment in a different direction.ReplyDelete
There are quite a few trolls and deluded boomers that post statements on this blog such as "get a job bum," "deadbeat," "no one will have sympathy for you," etc. (These comments reflects a much wider social point of view, as I am sure you know).
Now, your post today conclusively demonstrates that these “paragons” of financial integrity/stability and responsibility do not care either about fiscal integrity/stability or responsibility. They just want to see the younger generation suffer for the sake of suffering. Irrespective of the moral and intellectual constitution of these naïve kids, if you care about your money, and if you truly care about taxes going up, why would you loan money out to said kids knowing- fucking knowing- that you are going to have to pay their bill WITH INTEREST?
I will tell you why: i) you think you and yours will not fall prey to this scheme because you and yours are “special” and ii) paying the higher taxes is a small price to pay when you get your rocks off by seeing an army of young people suffer.
As an employed person with no student loan debt, people ask me why I care so much about this issue. I try to tell them that a horde of indebted people fucks everyone because said horde operates as a wage depressor for 99.99% of the population. I tell them it’s a moral travesty. I tell them it’s a scam that offends me. I tell them a whole host of other crap, but nothing seems to sway their opinion.
However, I was never fully convinced that malice was firmly mixed in with the mass delusion until I found out about IBR.
I don't mean this comment as an attack on the right, because I think both parties are equally beholden to special interests/big banks and equally responsible for this mess that is current higher education, however...ReplyDelete
I understand that Republicans won't agree to stop interest rates from doubling unless it is paid for. Why does this need to be paid for? This isn't government spending, this is government lending. If the government is relying on student loan interest as a form of revenue, how is that not a tax on the young? How can the Republicans, who are against any tax increases on anyone in any amount ever, be for doubling student loan rates? Where is Grover Norquist when you need him?
Good comment, though one positive note is that it appears that the LSAT scorers in the 160-169 range have been the first to abandon the Law School sinking ship. At least those are the numbers I recall from a few weeks ago discussing which subset of students have stopped applying to law school even after taking the LSAT.
Fully agree. I'd like to add in simpler terms, if one is a greedy person, then for the sake of GREED alone, they should be opposed to the current law school (and higher education) system.
Because the only ones profiting from it are the 0.1% who either receive the government money, or those who collect on the debtor payments.
Whereas if these kids could spend their money on natural economic activity, far more than 0.1% of the population would benefit from the cash circulation.
Regarding the still somewhat anecdotal (although growing) evidence of schools’ accepting the reality of smaller entering classes and students demanding tuition cuts, I wonder if LawProf can comment (from his own observations at CU and from talks with his network of law professors at other schools) about the apparently growing trend of 1Ls dropping out after receiving second (or, in some cases, first) semester grades. A friend attends a mid-range Tier One school. He said that in his section of 75 students about 15 left after receiving poor fall semester grades – and that it’s anticipated that many others will depart after receiving their spring semester marks.ReplyDelete
As discussed previously on this blog, this trend may be showing up in the apparent lowering of historically high transfer standards at many T14s as these schools fight for full-tuition payers looking to “move up.” Of course, if schools across the board experience high 1L drop-out rates these spots will be difficult to fill; even after all the reshuffling, holes in 2L (and later 3L) classes will remain. It’s one thing for clueless 0Ls to blindly enter the legal academy and quite another if street smart 1Ls recognize that whatever their chances of landing a real law job they are likely gone forever with low grades. Better to cut your losses and move on.
Can LawProf comment on his observations at CU and discussions he may have had with faculty at other schools about this apparently growing drop-out trend?
My responses in caps:
#2 above you just tell them you lost your job and they adjust your payments. NO. THEY LOOK AT A TAX RETURN...FILED ONLY ONCE A YEAR. IT IS A BEAR TO TRY TO PROVE YOU LOST YOUR INCOME. THE PAPER PUSHERS USUALLY ONLY TRUST A TAX FORM.
#3 is a fair point.
#4 why shouldn't someone pay back the money they borrowed if they can afford to? IBR is a break for people that can't afford their payments, not a freebie for everyone. REALLY? SO IF I AM MAKING PAYMENTS FOR 16 YEARS AND COME INTO A GREAT JOB, I AM RESPONSIBLE FOR THE NASTY BEAST THAT HAS ACCRUED DURING THOSE 16 YEARS? ANOTHER QUESTION: WHAT HAPPENS IF I GET A GREAT JOB DURING YEAR 19, AM I RESPONSIBLE FOR 10 YEARS AFTER THAT DATE BECAUSE I NO LONGER NEED IBR? WHAT IF I INHERENT MONEY IN YEAR 15?
#5 is kind of like #3. NOT REALLY.
#6 Home loan probably. People can get credit cards and car loans without a problem. NOT WHEN THAT BEAST SHOWS HALF A MILLION IN ACCRUED INTEREST. PLUS, NOT GETTING A HOME LOAN BECAUSE OF IBR MEANS....YOU GOT IT...GOING TO LAW SCHOOLS MEANS MOST PEOPLE WHO BORROW WILL NEVER OWN A HOME.
Married in a CP state? Spouse's income is counted as well.
I'd rather ruin the law school model and keep the legal profession, than to have law schools bring down the whole dang system. What do you think happens to the practice when you have overcrowding, inadequate training, and heavily indebted and indentured attorneys? Well, I'll tell you:
1. Declining professionalism in a cutthroat profession. It's getting worse than ever, not that it was sunshine and rainbows before.
2. Malpractice and poorly represented clients who end up with a negative and jaded view of the system and of lawyers. The system requires that people at least feel the process was fair even if they are unhappy with the outcome in their particular case.
3. Unethical and immoral conduct. There will be even more co-mingling (ie. stealing of client funds), tax evasion, soliciting, and substance abuse with increasingly desperate and indebted attorneys. These have system-wide negative effects and devastating personal effects on attorneys. Practice long enough and you'll know at least one lawyer who gets jammed up over drugs or theft of funds.
Professor, if you need any more evidence of the head-up-their-asses attitude of the law schools, I just received this from my alma mater [UCLA]:ReplyDelete
I am writing with more impressive news about our luminous faculty. Fred R. Shapiro and Michelle Pearse have just published “The Most-Cited Law Review Articles of All Time,” 110 Michigan Law Review 1483 (June 2012). I am very pleased to report that UCLA School of Law placed fourth among law schools in terms of the number of faculty who held appointments at the school when they produced recent works that ranked among the most cited. Only Yale, Harvard and Chicago were ahead of us. And, we also were fourth among law schools in terms of the number of current faculty members whose recent articles were among the most cited. Here, we were behind only Yale, Harvard and Stanford. This is good company indeed!***
Somehow there was not a word re how the grads were going re gaining employment.
^^^^ Should be "doing" re gaining employment.ReplyDelete
An edit function, PLEASE!
Life's what you make of it...I made the law school mistake.ReplyDelete
But be happy if/when you can.
For James, it was sex and farts.
So find your fart in life.
@ 9:33 a.m. -- anyone who has any experience with legal malpractice cases or bar discipline cases will tell you that this is already the state of the legal profession, and not just in "shitlaw."ReplyDelete
A cake of new, clean soap arises, diffusing light and perfume. THE SOAP: We're a capital couple, Bloom and I; He brightens the earth, I polish the sky...ReplyDelete
I used to read, before I started law school and big law. I mean, I still read. I just don't ready anything for "fun".
The Republicans will save us from IBR, because there is no one else who can. Why hasn't their hatred of academics and governmental (non-military) corpulence brought the stench to their noses yet?
I have to agree with you. The law is not just a business, although Economists (and The Economist) would like to pretend that it is (but since in my professional experience you can get even a famous economist to say anything for a fee maybe they think lawyers should be like them.) Rather lawyers are supposed to serve an important role in the social contract - we are supposed to be the people who ensure that the rules are kept, we owe a duty to our clients over and above collecting a fee, we are supposed to resign the client rather than do the unethical or even the plain wrong - and it is important that lawyers serve that role.
Unbridled competition, lawyer overpopulation is drastically undermining ethical standard in the profession. Many lawyers are unable to say no to a client, even in large firms, because they are under such billing pressure and such pressure to rainmaker or retain clients. It is having a detrimental impact on the profession. What is also having a negative impact is the poor ethics of law schools. How can law schools expect to train ethical lawyers when the Deans persist in such dishonesty?
A last question - how many law schools have Honor Codes - and how many Deans are failing that honour code in their recruitment tactics? To take an example, here are key excerpts from Georgetown's honour code:
As a Jesuit, Catholic university, committed to the education of the whole person, Georgetown expects all members of the academic community, students and faculty, to strive for excellence in scholarship and in character.
E. Submitting False Data
The submission of false data is academic fraud. False data are data that have been fabricated, altered, or contrived in such a way as to be deliberately misleading.
Are Georgetown's employment statistics data that has been contrived in such a way as to be deliberately misleading? Why don't we have a little fun here and help Professor Campos - if you are a law student submit the relevant sections from your honour code that deceptive reporting of employment data would violate - and the sentence that says that the Honor code applies to faculty/administration too.
And by the way, when it is done - lets send the results to the law firms suing the law schools - it may in fact be helpful to their cases.
See my edit below my comment regarding a home loan. You're wrong about a car loan. They may require a higher downpayment but you'll still be able to get a car loan. Honestly I don't see why you would want one because the rates are very high, but yes, you could get one.
Regarding #4, yes, if you can afford to pay it back you should have to. I think you misunderstand how public benefits work.
This system will go on, without much change, for a long time.ReplyDelete
Leaving America seems to be the only logical way out of the student loan trap.
If one stays in the US, and is on IBR or ICR, there will be, as one commenter correctly stated, the tax bill on half a million dollars or more due to inflated interest, when one is near or at retirement age.
And that is why IBR is sometimes called a scam as well.
how hard is it to moved to canada and become a citizen? that's probably the only place one can easily go.ReplyDelete
Anyone with at least one Jewish grandparent is eligible to emigrate to Israel.ReplyDelete
There are a fair amount of opportunities for English-speakers, guaranteed high-quality healthcare at a low cost, good looking women, and a great scene in Tel Aviv.
Just one way to say goodbye to law scam drudgery....
While of course someone who wants to 'escape' overseas could try to sever all ties with the US but this has serious downsides in terms of being able to someday return to the States, etc.ReplyDelete
Something else to consider about becoming an ex-pat:
When living abroad, the first 85K of income is excluded from your AGI (foreign income exclusion). This means that an American citizen who lives abroad and learns 90K has a US tax liability of 5K (and likely less than that, given the Foreign Tax Credit).
I've tried hard to find what number is used for IBR calculations - whether it's AGI or MAGI (that is, Modified AGI). This is quite significant because if AGI is used for IBR purposes, it would be possible to make a decent salary abroad and still have a low AGI for US tax purposes and, by extension, still qualify for IBR.
"Regarding #4, yes, if you can afford to pay it back you should have to. I think you misunderstand how public benefits work.ReplyDelete
You are not understanding me. If I am on IBR for 15 years and not able to make even the interest accrual payment while on IBR. The loan capitalizes quarterly. So...during the 16th year, the loan is much more larger (due to capitalization of unpaid interest) than it would have been if I had never entered IBR. I will end up paying significantly more than what I borrowed if I have a greater gain in income during year 16.
Additionally, hypothetically speaking, the IBR system works by looking at the loan under a ten year repayment program. If, after putting the borrower's income through a magical formula, the borrower is not able to make that ten year payment, they are given a reduced amount....HOWEVER the interest still accrues regardless of ability to pay.
So...what happens if during my last year of IBR, I inherit money, or get a great job...am I on the hook for ten more additional years and/or until the debt is paid off?
I know lawyers are not good at math but in looking at the numbers in an excel spreadsheet, if any of my proposed hypotheticals happens, the borrower will pay significantly more than they would have under a standard ten year repayment program (interest on interest) for money THEY DID NOT BORROW.
Don't forget the tax bill.
So....I do understand how public benefits work. They do not take into consideration commonalities because they are not thorough and/or do not look at the big picture. Kinda like or politicians. I am not sure you get it.
@11:36: I can say with about 85-95%% certainty that it is pure AGI, not MAGI, meaning the abroad thing would not work. I am not 100% on this, however.ReplyDelete
In case folks thought the well-intended, but misguided student loan efforts were limited to Obama and the Ds, here is one from Sens. Tom Coburn and Richard Burr:ReplyDelete
This proposal makes imminent sense for the Stafford programs, particularly those for undergraduates. However, imagine what the law schools of the world would do with this relatively cheap form of no-credit check financing! PLUS loans would be 4.59 percent, as would Stafford Loans (both subsidized and unsubsidized). It sounds good in theory (and is probably a very good idea for loan programs with capped limits, such as Stafford), but will be added fuel for the law school bubble when combined with unlimited PLUS.
"The document reviewer making $30,000, in other words, is going to be paying $165 per month on what would be a $1750 or $1100 dollar monthly payment per ten and 25-year repayment schedules."ReplyDelete
This is an incredibly helpful example of the realities of IBR, and also a perfect example of why it is not going to last.
I'm thinking that IBR is the lender equivalent of the "extend and pretend" shenanigans the Banks are doing with real estate.
The hope behind is that IBR is that inflation will pull IBR many of the participants out of the program (meaning that they will earn too much to continue qualifying).
When that happens, the IBR'er must now face a huge chunk of capitolized interest.
If that doesn't happen and the perception is that lawyers are using IBR to avoid their huge loans, look for Romney/McConnell/Boehner & co. to cut or limit the use of IBR.
I understand you perfectly. The scenario you described where you're effectively kicked off IBR due to obtaining a higher paying job is unlikely because the interest capitalizes and increases the principal balance. This, in turn, will affect the calculation of whether or not you qualify for IBR.
I think you've conflated AGI and MAGI in terms of which figure includes foreign income and which doesn't - but your conclusion (that the earning 85K abroad and still qualifying for IBR)is still right.ReplyDelete
Another option to consider:
A low, IBR-qualifying salary is still a very high standard of living in many parts of the world. 30-40K in most countries (including Israel as the above posted mentioned) - can provide a very good life. An American citizen residing abroad needn't necessarily work for a foreign employer - all that is required is freelancing for US clients while you're enjoying a low cost of living in Thailand, Central America, Prague, Budapest, etc.
Above comment refers to @11:44ReplyDelete
**The 2nd 11:44 posterReplyDelete
IBR debt relief is NOT taxes in reality since if you qualify to max it out the full run, (over two decades) then you will be poor enough to be insolvent and no taxes on debt relieft in bankruptcy or insolvency. Even if not fully insolevent, you will still barely get taxed at all.ReplyDelete
If you make $100K of course, but then you don't need the plan anyways huh?
IBR IS THE LAST REFUGE OF LAW SCHOOL SCOUNDRELSReplyDelete
I was in the GW admissions/financial aid office a few weeks ago and saw that among the stacks of glossy marketing materials were information packets on...Income-Based Repayment (IBR).
There were also glossy marketing materials dedicated to the various inane 'legal niche' specialty programs (though I didn't see any 'international environmental law program' info ;) )
In all seriousness, we need to begin generating a internet marketing strategy for letting fiscal conservatives know about IBR. IBR seems to be last refuge of these law school scoundrels.
Getting conservatives to raise a big stink about the absurdity of IBR would serve the law school reform movement well (even though, myself included, many of us find working with the Republicans less than desirable).ReplyDelete
LOL @ 12:08.ReplyDelete
"IBR as the last refuge of the law school scoundrels".
Way to stay classy GW - using IBR pamphlets are part of your 'always be closing' strategy.
"The hope behind is that IBR is that inflation will pull IBR many of the participants out of the program (meaning that they will earn too much to continue qualifying). "ReplyDelete
If that is the hope, then it truly is a foolish one, because inflation is wealth transfer from the poor to rich, and in the case of the $30k/yr document reviewer, more inflation will only make it harder for him/her to pay, as the salary will either stagnate or drop (or the job will be lost) while the price of a lot of ordinary goods will rise, meaning he will have less room to pay off loans.
To see how inflation robs the poor, consider that in 1969, minimum wage was $1.60, which adjusted for inflation means that today's minimum wage should be $10.00. Yet it is lower than that, on average $7.50 or thereabouts, while the salaries of the 0.01% have skyrocketed, as the excess printed money finds its way to them.
Re: posting honor codes and seeing if law schools and professors disobey. Here are relevant portions of Duke's "Community Standard":ReplyDelete
The Duke Community Standard
As a part of Duke University, in addition to our Honor Code, we expect our law students to follow the Duke Community Standard, which recognizes that this is a community of scholars and learners, committed to the principles of honesty, trustworthiness, fairness, and respect for others. Students share with faculty and staff the responsibility for promoting a climate of integrity. As citizens of this community, students are expected to adhere to these fundamental values at all times, in both their academic and non-academic endeavors. When you sign the Law School Honor Code, you also affirm your commitment to uphold the values of the Community Standard: you will not lie, cheat, or steal, nor accept the
actions of those who do; you will conduct yourself responsibly and honorably in all of your activities as a Duke student. ... One guiding principle of legal ethics is to hew closely to the rules governing lawyer conduct, avoiding even the appearance of impropriety. That principle should guide your conduct as a law student, as well.
"you will not lie, cheat, or steal, nor accept the
actions of those who do" - listen up Duke law students - you are on the hook for your school's lies as well.
I've been thinking for a while about how ridiculously stringent and unrealistic law school honor codes are compared to the real world. So I can't research online during a take-home exam (pick your own violation), because that's cheating. Yet I know people who used their connections with professors to get better grades, got biglaw jobs over far more qualified candidates due to nepotism, etc. The whole system is rigged, the one percent are cheating with every move they make. The rules are simply arbitrary obstacles in place to crush the 99 percent in order to favor the one percent.
Oh man, NALP 2011 numbers are in. Less than half the nationwide class got jobs as lawyers, and only around 15% got obs that have salaries that justify the cost. We got reamed.ReplyDelete
And another fun fact from those numbers: If you went to law school, you're twice as likely to be unemployed than someone who didn't!ReplyDelete
RE: IBR and suddenly making much more money or getting an inheritance and having to pay the ballooning student loan due to capitalized interest, etc, at full repaymentReplyDelete
I guess one point to investigate is whether IBR is "recursively" calculated based on the huge debt incurred due to being kicked out of IBR. In that case, you would be qualified for IBR due to the debt of being kicked out of IBR making your higher income effectively low enough to qualify for IBR in a bizarre, recursive, way.
But the other point though is that there must be some situations where, ironically, you are better keeping your low income job than getting higher paying job if you then get kicked out of IBR. If so, its messed up to have a system that incentivizes this bizarre choice.
In situations like that, I might consider either keeping the low paying job or getting the higher paying job and asking if I could just have the excess anonymously donated upfront to charity rather than have it go to capitalized interest FOR MONEY THAT I DID NOT ORIGINALLY BORROW.
Welfare might be gone, but it is incredibly easy to get permanent disability (even for anxiety disorders and stress).ReplyDelete
Not sure what you're talking about. As the debt capitalizes the monthly payment you're supposed to be making increases allowing you to stay in IBR even if your wages are increasing. For example, let's say you had capitalized principal of $200K and somehow found your way into a job that paid $150K you'd still be eligible for IBR.
"Yet I know people who used their connections with professors to get better grades, got biglaw jobs over far more qualified candidates due to nepotism, etc."ReplyDelete
^exactly... and its so visible and odvious yet people purposely turn a blind eye in hopes that they will get their slice of the american pie.
Guess what? you're not getting shit. Pay back your loans. Have debt over your head for the rest of your adult life. welcome to the real world.
@1:04 I thought it said only 65% got jobs for which bar passage was required.ReplyDelete
For those who are wondering about living outside the US you have to take account of a lot - AMT, the treatment of foreign taxes (Foreign Tax Credit), housing cost (you can subtract it for income purposes), etc. The accounting is a nightmare.ReplyDelete
They reported that fewer than half found jobs in private practice.ReplyDelete
@ 1:47: "As the debt capitalizes the monthly payment you're supposed to be making increases allowing you to stay in IBR even if your wages are increasing. For example, let's say you had capitalized principal of $200K and somehow found your way into a job that paid $150K you'd still be eligible for IBR"ReplyDelete
Is that really how it works?
If so, it's only a matter of time before some red-state dipstick makes an issue of this. Expecting this program to last the full 20 years necessary for loan forgiveness is as much as a gamble as the rest of the law school scam.
Remember that the amount you pay is also going to go up as your income increases. I would imagine it's more likely they will fine tune the program and increase the percentage of your income that is payable under IBR as your income increases.
30K is a lot from doc review. I only made 24k last year, and I worked my ass off trying to string together reviews.ReplyDelete
Growing up during the 1970's and while the Cold War was still on, I used to hear tales about how afraid the people were in Communist Russia, and about how they had no freedom to voice their opinions, to travel, to pursue a chosen career etc. My grammar school teachers used to talk about that as well.ReplyDelete
The Olymic Games were very, very different than they are now, in that it was really a grudge match between the US and the USSR.
The Russian athletes were said to be de facto professionals in that they were entirely supported by their government, while the American athletes were said to be true amateurs.
In any event, athletes like Bruce Jenner and others sort of vindicated our American Way of Life, and when the US Hockey Team won in 1980 it shook the very foundations of the world and vindicated the American way of life.
Today, the Cold War is over, and I might suggest that the tables have turned in that now many American citizens that live in fear of their own government.
For as sure as God made little green apples with worms in them people are going to start being incarcerated for American Student Loan Debt.
When a person owes six figure debt to a government for an entire life, with no legal rights or remedy for that debt, that government absolutely owns that person, and it is frightening.
Tell me that isn't a form of slavery.
What will complete the slavery analogy is when Sl debtors are placed in a debtor's prison owned by a private corporation that is publicly traded, such as this:
I heard an academic say on a radio show not to long ago that the collapse of the Soviet Union enabled American Capitalism to become, in so many words, tyrannical, simply because there are no longer any competing ideologies in the world to keep it in check.
Except for China maybe. And speakign of that, why is America now allowing Chinese banks to set up shop in the US?
In any event, i will see you at the labor camp comrade!
The foregoing is all satire BTW.
Moderate-income, self-employed expats who play by the rules get hosed by the IRS. That income tax exclusion? The important words are "income tax." You still have to pay the ~15% Social Security, etc., tax, from the first dollar that you make. And there is no credit against those taxes for any social charges you pay in your country of residence. I live in Western Europe and although my income is modest middle-class at best, I'm paying 30% in social charge-type taxes (~15% to USA and the same to my new country) right off the top.ReplyDelete
I paid off my law school loans before moving and now I feel like a complete sucker. I'm not sure that expatriating is a real solution for new LS grads, at least if you intend to stay on the radar and continue to pay your taxes.
If you are going to be in a completely hopeless situation (say over $100K debt and no chance of making more than $50K), is there any reason not to fully max your loans? Why not go for $200K debt or whatever is the absolute max you can get? You're never paying them back regardless.ReplyDelete
Bill Cosby Commencement Speech. God Bless him.ReplyDelete
A good transition for me, and I am done with blogs, and now want to live out the rest of my mortal, indebted days with Faith and hope, no matter where or how I may end up punished for my debt in this world.
You need a better specialist accountant - most wester European countries have agreements with the US on social charges, e.g., the UK and US - but they are very puzzling and hard to follow
"Welfare might be gone, but it is incredibly easy to get permanent disability (even for anxiety disorders and stress)."
SSDI/SSI lawyer here (who was once on SSI himself) It's only easy to get if you have (a) a supportive doctor (b) your doctor has bothered to write extensive treatment notes, and (c) you've managed to avoid many of the things (e.g. perscription abuse, weed etc.) that will reduce your credibility in front of the SSA or an ALJ. I'm happy to answer any questions.
I think these should start appearing on LS, job fair BBs, reddit, etc, etc...ReplyDelete
To all you kids who believe you will never go to debtor's prison over your student loans, consider this:ReplyDelete
If you bet a homeowner wouldn't be tear gassed and shot at by police for owing money to his mortgage lender, you would lose that bet.
IBR is the biggest scam ever. Unless you earn poverty levels of income, the repayment plans that IBR requires generally have paid off the loan before any forgiveness kicks in. IBR simply does not help the vast majority of struggling grads, as it was designed as a safety net for truly low income public service workers a long time ago.ReplyDelete
IBR also is problematic because upon the loan forgiveness you are required to pay a tax on the forgiven debt. On $250,000 forgiven debt )a very realistic number after 10 - 20 years not paying(, you are talking about some serious coin you will owe the IRS. I'd rather owe a bank than the IRS.ReplyDelete
Remember when Leiter threatened to have you fired if this blog wasn't shut down? lmao.ReplyDelete
"If you make $100K of course, but then you don't need the plan anyways huh?"ReplyDelete
Well these folks need something too. Yes I recognize the $100K+ earning crowd can't complain too much. But as IBR repayment doesn't do much for them, I recommend a low fixed to zero interest rate for all student loans.
As such earner I find $30-$40K or more a year is taken from the check in taxes or medical insurance costs and I'm not able to qualify for student loan tax interest deduction or other lower income tax deductions/credits (even in years of having a rather severe case of negative net worth).
I was an ex-pat for many years - Turbo tax served me just fine - no accounting nightmare
3:28 raises a good pointReplyDelete
1. Is interest capitalized on ibr- because I read on TLS that it isn't.ReplyDelete
2. I just read a thread on TLS where a girl is deciding between about $75,000 in debt ( though that may be low!) from wash university in st Louis. She has a total scholarship of $120,000. And $275,000 sticker at northwestern. (Considering to ethics, I think it is unethical for either of these schools to charge so much). Even so, how can she be considering actually going to one of these schools- oh and she doesn't want to work in the Midwest...
My stomach is hurting from anxiety just reading her post- yet she seems unaware of the danger she faces. And this even with the nalp data today.
I know we are seeing some effect- but it is just too little of an impact and too slow.
Regarding 3:28 and 12:11, that's why part of me wonders if it's worth it to drop out. I wasted 50k on 1L, but I have no hope of ever earning more than 50k in the future (in fact, my job for four years prior to law school made less than 20k). So, if I'm going to rely on IBR anyway, might as well waste some more fake money if I'll never pay back the vast majority of it.ReplyDelete
I think it is a mistake to continue to dig yourself a bigger hole to get out of. You maybe in better shape in 5 or 10 years. You don't need the stress of an additional $100,000 of debt. Don't do it!!Delete
@12:47, that's the thing, I don't think I'll ever be in better shape. I look at my friends who graduated college around the same time as myself and all of us are going nowhere. Mostly working retail. Who would hire me for anything better several years from now when the only work experience I've had is as a shop assistant and my only degree is in the humanities?ReplyDelete
You don't know what you will be doing in 5 years. But if you take out another 100,000 in loans, I know you will regret it.Delete
Does the government ever stop you from taking out loans? Can you just go to law school then business school then medical school? Live the student life forever and just keep amassing debt that you'll never pay off.ReplyDelete
Yes if you are a qualified Grad Student. Grad plus has no cap and no time limit to graduate to my knowledge.
Undergrad to law to phd to MBA to divinity to med to dentistry
"It is not your job to take taxpayers money and waste it trying to make those who should be held responsible feel good by allowing them not to feel responsible."ReplyDelete
I have no idea what the above means, but I'll take it to mean I should just stay in law school because another 100k shouldn't hurt as long as I can rely on IBR.ReplyDelete
If you have to stay in school go back and get a nursing degree. Or some kind of medical related thing.Delete
If I could enroll in nursing school tomorrow, I would. But I'd have to take a year off to apply, and with no parents to live with in the meantime, I have nowhere I can go. No savings, no job prospects (though I am still looking) ... it's stay in school or end up on the streetsReplyDelete
"Yes if you are a qualified Grad Student. Grad plus has no cap and no time limit to graduate to my knowledge.ReplyDelete
Undergrad to law to phd to MBA to divinity to med to dentistry"
Not a bad life!
"You don't know what you will be doing in 5 years. But if you take out another 100,000 in loans, I know you will regret it."ReplyDelete
No you don't. A lot of people with bottom feeder law school degrees are never gonna be able to pay back their loans. Those people won't regret taking out some more $$$ they are never gonna pay back.
2:07: My cousin started out working retail when he was a kid. Graduated high school and continued working. While I went off to college and law school he was promoted to assistant manager of a big box store. Eventually lateraled to another big box company and was made manager. They paid for him to attend college and he got his B.A. After a few years they transferred him to Asst. Manager of a distribution center. After a few more years he made manager. They are paying for him to get his MBA. He's 30 and has a comfortable middle-class life with NO STUDENT LOAN DEBT. He can take care of his wife and his kid and like the Ulysses quote said- he doesn't owe anybody.ReplyDelete
My point is that trying to "jump the line" by getting shinier and shinier degrees is no longer a viable option for many people. It only leads to more debt and more dependence on the system, as you now want to get another degree just to keep eating off the government dole. My cousin worked hard, kept his head down and eventually did pretty well. Although there was no 160K job waiting for him at some predefined point in his life he wound up okay. There's no shame in retail.
There's no shame, but I need to make a living wage to pay for rent, food, transportation, etc. The only way I was making it doing retail was by living with my mom. Now that option is off the table. Besides, I think there's a huge difference between working in a bigbox store and working in Victoria's Secret.ReplyDelete
"Besides, I think there's a huge difference between working in a bigbox store and working in Victoria's Secret."ReplyDelete
What do you mean by this?
Being the manager of a VS means supervising far fewer people, less responsibility, for lower pay, and less mobility. I know it's not a great job to have because there was an insane amount of turnover.ReplyDelete
Lawprof: I put this comment on your post that dealt with another TLS thread - the one about going to Colorado. But I am going to put it here because people don't seem to go back and read the old posts. Sorry to duplicate.ReplyDelete
Lawprof: I'm giving up on trying to warn people.
On TLS a recent post stated that "$270, 000 in non-dischargeable debt is not a death sentence or anything close to it for most people. And IBR obviates most of that concern entirely."
That poster justifies his statement with the idea that most law students are upper-middle class who can just move in with their parents until they get back on track. Note: the writer of that quote is a very respected TLS poster, not a random troll.
( Not sure that is a reasonable assumption. I thought many people were going to law school because there are no other jobs. )
The quote is from a thread about repaying $210,000 in debt, it started out with a foolish question but ended up in a debate. I think the debate shows how entrenched OLs and law students are in justifying going to law school.
You might be interested in reading this thread:
My honest feeling is that IBR is going to be a huge block in any effort for reform. I think it will take a number of people who went to top schools and who are unemployed or struggling to come forward. Until that happens, people are not going to understand the day to day cost.
I'm lucky - I have no debt. I'm going to live with my Mom in our apartment in the city and work at a biglaw firm in the fall. I would never have taken on the debt of these people, and I can live rent free in Manhattan! I know how expensive NYC is to live in.
I think these students are making a huge mistake. But there seems to be no way to reach them. So I am going to stop wasting my time. Hopefully we will get better weather so I can enjoy my summer instead of posting online.
JUNE 9, 2012 12:04 PM
Home Loans are tied up to a base rate plus a floating element thereof. So, if the base rate varies the floating interest rate also varies.ReplyDelete
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