Author Topic: Guy with $170k student loan debt sues law school  (Read 8895 times)

dude

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Guy with $170k student loan debt sues law school
« on: December 22, 2015, 08:04:43 AM »
http://finance.yahoo.com/news/guy-170-000-law-school-204811509.html

Thomas Jefferson is a 5th tier, at best, law school.  Anyone willing to pay $120k for a degree from this joke of a law school needs to have their head examined.  I know there will be a number of people who will post that are sympathetic to this guy, but I'm not one of them.  I'm tired of people blaming everyone else for their stupid decisions.  Anyone with a brain cell or two left in their head could do their due diligence to find out that a degree from this place isn't worth $20k, never mind $120k.

vivophoenix

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Re: Guy with $170k student loan debt sues law school
« Reply #1 on: December 22, 2015, 08:13:53 AM »
if its so obvious, then why hasn't the federal government realized it. and why does it have accreditation?

yes we are all adults, we took on a debt yada yada yada.

but if this is such a ponzi scheme why is it legal?

and if we allow it to be legal, do we have any onus to stop it?

dude

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Re: Guy with $170k student loan debt sues law school
« Reply #2 on: December 22, 2015, 08:23:09 AM »
Excellent points, vivo, and I agree -- the federal gravy train needs to come to an end.  But just because someone offers you a credit card at 24.99% interest even if your credit is shitty, or a mortgage on a home you can't really afford, doesn't mean you have to accept it!  There are many (legal) pitfalls to be avoided out there, and if people aren't held to account for falling into them, the moral hazard becomes too great, and we lose all touch with the risk-reward matrix that has been a hallmark of our capitalist system from the beginning.  You can't legislate away stupidity (though perhaps a more robust education system would ameliorate the condition).

vivophoenix

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Re: Guy with $170k student loan debt sues law school
« Reply #3 on: December 22, 2015, 08:35:42 AM »
Excellent points, vivo, and I agree -- the federal gravy train needs to come to an end.  But just because someone offers you a credit card at 24.99% interest even if your credit is shitty, or a mortgage on a home you can't really afford, doesn't mean you have to accept it!  There are many (legal) pitfalls to be avoided out there, and if people aren't held to account for falling into them, the moral hazard becomes too great, and we lose all touch with the risk-reward matrix that has been a hallmark of our capitalist system from the beginning.  You can't legislate away stupidity (though perhaps a more robust education system would ameliorate the condition).

then we don't we rail against bankruptcy: which allows you to wipe the slate clean of credit card debt, and mortgage debt, and car debt and other types of debt.

no one even blinks an eye at programs that allow underwater houses to be refinanced at better market rates.

 it seems  anytime someone wants to address a similar forgiveness scheme or  attempts to move some of the onus from the borrow concerning student loans then everyone wants to be the morality police.

then every student is an idiot who deserves to life in debt slavery.

why is the student loan topic so emotional?

sometimes it almost sounds bitter.

dandarc

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Re: Guy with $170k student loan debt sues law school
« Reply #4 on: December 22, 2015, 08:44:21 AM »
The guy failed the bar exam in two different states . . . that's why he's not a lawyer.  Last attempt in 2007.

Sounds like he's had a rough time - has kids, wife with cancer - certainly worthy of sympathy.  But also reads like he gave up on being a lawyer, more than anything.

dandarc

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Re: Guy with $170k student loan debt sues law school
« Reply #5 on: December 22, 2015, 08:48:03 AM »
Excellent points, vivo, and I agree -- the federal gravy train needs to come to an end.  But just because someone offers you a credit card at 24.99% interest even if your credit is shitty, or a mortgage on a home you can't really afford, doesn't mean you have to accept it!  There are many (legal) pitfalls to be avoided out there, and if people aren't held to account for falling into them, the moral hazard becomes too great, and we lose all touch with the risk-reward matrix that has been a hallmark of our capitalist system from the beginning.  You can't legislate away stupidity (though perhaps a more robust education system would ameliorate the condition).

then we don't we rail against bankruptcy: which allows you to wipe the slate clean of credit card debt, and mortgage debt, and car debt and other types of debt.

no one even blinks an eye at programs that allow underwater houses to be refinanced at better market rates.

 it seems  anytime someone wants to address a similar forgiveness scheme or  attempts to move some of the onus from the borrow concerning student loans then everyone wants to be the morality police.

then every student is an idiot who deserves to life in debt slavery.

why is the student loan topic so emotional?

sometimes it almost sounds bitter.
We have programs to forgive student debt.  If it really hasn't worked out, sign up for one of the income-based repayment options.  These reduce your payments substantially, sometimes to 0, and the debt gets forgiven eventually.

vivophoenix

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Re: Guy with $170k student loan debt sues law school
« Reply #6 on: December 22, 2015, 08:53:55 AM »
Excellent points, vivo, and I agree -- the federal gravy train needs to come to an end.  But just because someone offers you a credit card at 24.99% interest even if your credit is shitty, or a mortgage on a home you can't really afford, doesn't mean you have to accept it!  There are many (legal) pitfalls to be avoided out there, and if people aren't held to account for falling into them, the moral hazard becomes too great, and we lose all touch with the risk-reward matrix that has been a hallmark of our capitalist system from the beginning.  You can't legislate away stupidity (though perhaps a more robust education system would ameliorate the condition).

then we don't we rail against bankruptcy: which allows you to wipe the slate clean of credit card debt, and mortgage debt, and car debt and other types of debt.

no one even blinks an eye at programs that allow underwater houses to be refinanced at better market rates.

 it seems  anytime someone wants to address a similar forgiveness scheme or  attempts to move some of the onus from the borrow concerning student loans then everyone wants to be the morality police.

then every student is an idiot who deserves to life in debt slavery.

why is the student loan topic so emotional?

sometimes it almost sounds bitter.
We have programs to forgive student debt.  If it really hasn't worked out, sign up for one of the income-based repayment options.  These reduce your payments substantially, sometimes to 0, and the debt gets forgiven eventually.

we have programs to forgive federal student debt

dandarc

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Re: Guy with $170k student loan debt sues law school
« Reply #7 on: December 22, 2015, 09:11:56 AM »
Fair point - not all student loans are federal.

Proud Foot

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Re: Guy with $170k student loan debt sues law school
« Reply #8 on: December 22, 2015, 09:32:14 AM »
So he graduated undergrad with a 4.0 and "could have had pretty much any criminal-justice profession that I wanted". Why did he not find a job in criminal-justice when he couldn't pass the bar? It also seems like he did not do any research on the school other than the graduation and post graduation employment rates.

mm1970

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Re: Guy with $170k student loan debt sues law school
« Reply #9 on: December 22, 2015, 09:50:24 AM »
if its so obvious, then why hasn't the federal government realized it. and why does it have accreditation?

yes we are all adults, we took on a debt yada yada yada.

but if this is such a ponzi scheme why is it legal?

and if we allow it to be legal, do we have any onus to stop it?

Excellent points, and I'm going to quote the article:

Quote
"Moffatt is one of 12 former TJSL students now suing the law school, which they claim intentionally inflated postgraduation employment figures and salaries in order to lure applicants.

Four former students filed a lawsuit against the school in 2011, and Clark is one of another eight plaintiffs who filed separate suits against the school in 2014. The case filed in 2011 is scheduled to go to trial in early 2016.

The school is accused of reporting postgraduation employment figures that topped 90% in 2010 but neglecting to disclose that the figures included part-time work, such as pool cleaner and Victoria's Secret sales clerk, the Associated Press reported this month, citing the suit and an attorney for the graduates."

One of the things I've thought about in the last few years of skyrocketing college costs, is that there needs to be a calculation that makes sense on how much to borrow.

For example - pick a major, a school, and a job. 
Electrical engineering, Cal Poly, EE/ circuit design
Penn State, Materials science, electronics
Carnegie Mellon, computer science, programming
UCLA, English, teaching
Oregon state, accounting, accountant
UF, marketing, administrate assistant
U of Nebraska, pharmacy, pharmacist

Figure out the cost of the four/five years of school.
Find the average starting salary of graduates of that school for that major
Find the % of employment in the field from that school

Multiply #2 and #3 and don't borrow more than 2x that?

In any event, if you have a school like this one that inflates the starting salaries and employment - where do you go for real information? 

I remember when I gradated in the early 90's, our school proudly sent out a letter about the employment of our 24-person class.  Average staring salary of $40k, "X" # of people going on to further education at the following schools, and "Y" number of people doing "other, including military service" (yeah, there were 2 of us in that category.  Other because an Ensign/ 2nd Lt got paid under $20k and they didn't want us bringing down the average).

I did find this though, which maybe would have been helpful:

http://grad-schools.usnews.rankingsandreviews.com/best-graduate-schools/top-law-schools/thomas-jefferson-school-of-law-03181

For fun I also picked Yale (top school) and George Mason (had a roommate attending that school).  Summary: (Law school is 3 years)

TJSL:
Cost: $44,900 per year
% employed at graduation: 18.1%
Median private starting salary: $50k
Employment * salary = $9050
That pays for 1/5 of a year of law school
Analysis: not worth it

George Mason:
Cost: $25,351 per year
% employed at graduation: 59.6%
Median private starting salary: $80k
Employment * salary = $47,680
That pays for 1.9 years of law school
Analysis: perhaps worth it

Yale:
Cost: $56,200 per year
% employed at graduation: 88.2%
Median private starting salary: $160k
Employment * salary = $141,120
That pays for 2.5 years of law school
Analysis: probably worth it

Depending on cost of living also - this is simply tuition.  The amount borrowed will also include housing/ food.

MgoSam

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Re: Guy with $170k student loan debt sues law school
« Reply #10 on: December 22, 2015, 10:39:53 AM »
I'm not sympathetic for the following reasons

1. He didn't pass the bar exam. While some of the blame could be assigned to the school, he states that he was a great student in his undergraduate, if that's the case then I believe that with enough studying, he should be able to pass the bar even with a bad education in law.
2. Employment rates are subject to manipulation, I believe that as a 4.0 undergrad, he should have known better.
3. There's little reason to go to an unknown law school in SD if you aren't going to live in the area. Unless you are going to a top school or graduate top of your class, it's extremely hard to get a job in a different area than the school you went into. I didn't go to law school, but wanted to and so I did my own research and got advice and this is one of the things I found out.

I am sympathetic for the following reasons

1. I am personally against for-profit schools, I have yet to see a for-profit school that wasn't a complete sham. They focus on hiring salesmen to pitch the school, fire them if they don't get enough "students," and essentially use a shit-ton of money on advertising that other schools pump back into academics and other things.
2. While he should know that job placement numbers are likely fibs, the school themselves lied. I'm not really a fan of saying, "oh well, you should have known it was a lie...so the liar is ok."
3. He's got a wife with cancer, that just sucks. I could argue that he could have done things differently, but this is a situation I would personally hate to be in and I dislike passing judgments.

sneeds

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Re: Guy with $170k student loan debt sues law school
« Reply #11 on: December 22, 2015, 11:52:38 AM »
I don't feel too sorry for the guy. I lived in San Diego for a long time as a young adult and knew several people who were attending TJSL at the time. Most readily admitted that it was a second or third rate law school. A few that I can think of never passed the bar exam but from what I witnessed, it seemed that was mostly due to their own inability to put in enough hours studying for it, not due to the school's lack of preparing students.  Most the friends and acquaintances I knew who graduated from the school went on to pass the bar exam (many on their first try) and work as attorneys today. Studying for the bar exam really needs to be your full time job and sole focus for a few months after graduating from law school. The friends I knew who passed it put in 10 or more hours a day, every day, studying. The ones who didn't pass seemed to take a much more casual approach to "studying" materials while laying out at the beach. They also seemed to go out partying several nights a week.

What was shocking to me at the time was witnessing the amount of debt so many of the students took on, often to support their partying and fun lifestyle in San Diego. There was quite a range. I knew many people attending that school who came out with around $100k in debt (still a lot!) and many others who came out with closer to $300k in debt (!) because they took out huge student loans every school year to cover their cost of living. Many lived in high-cost areas of San Diego (near the beach or the downtown/Gaslamp district), went out partying all the time at expensive night clubs, were constantly buying rounds of drinks for strangers, etc. etc. etc.

I think a lot of this guy's financial problems are probably a result of the choices he made, not the school's inability to prepare students to become attorneys.

Vanguards and Lentils

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Re: Guy with $170k student loan debt sues law school
« Reply #12 on: December 22, 2015, 11:52:52 AM »
I'm curious whether his loan is eligible for loan forgiveness by taking a public service job, and how hard those kinds of jobs are to get. Depending on these, it sounds like a no-brainer to me - pay only 10% of your discretionary salary, the amount ABOVE the poverty line (so possibly much less than 10%) for 10 years and go scot-free.  He'd get benefits and could save some of his remaining money through a 403b/457.

mm1970

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Re: Guy with $170k student loan debt sues law school
« Reply #13 on: December 22, 2015, 01:52:11 PM »
I don't feel too sorry for the guy. I lived in San Diego for a long time as a young adult and knew several people who were attending TJSL at the time. Most readily admitted that it was a second or third rate law school. A few that I can think of never passed the bar exam but from what I witnessed, it seemed that was mostly due to their own inability to put in enough hours studying for it, not due to the school's lack of preparing students.  Most the friends and acquaintances I knew who graduated from the school went on to pass the bar exam (many on their first try) and work as attorneys today. Studying for the bar exam really needs to be your full time job and sole focus for a few months after graduating from law school. The friends I knew who passed it put in 10 or more hours a day, every day, studying. The ones who didn't pass seemed to take a much more casual approach to "studying" materials while laying out at the beach. They also seemed to go out partying several nights a week.

What was shocking to me at the time was witnessing the amount of debt so many of the students took on, often to support their partying and fun lifestyle in San Diego. There was quite a range. I knew many people attending that school who came out with around $100k in debt (still a lot!) and many others who came out with closer to $300k in debt (!) because they took out huge student loans every school year to cover their cost of living. Many lived in high-cost areas of San Diego (near the beach or the downtown/Gaslamp district), went out partying all the time at expensive night clubs, were constantly buying rounds of drinks for strangers, etc. etc. etc.

I think a lot of this guy's financial problems are probably a result of the choices he made, not the school's inability to prepare students to become attorneys.

Well, plus having two children and a wife with terminal cancer.

sneeds

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Re: Guy with $170k student loan debt sues law school
« Reply #14 on: December 22, 2015, 05:54:10 PM »
Quote
Well, plus having two children and a wife with terminal cancer.

Judging by the age of the children pictured, he obviously didn't have those kids yet when he failed to pass the bar exam or get a job in the legal profession in 2006. The article doesn't state how long his wife has been terminally ill but that also probably happened more recently. I don't deny that he's in a rough situation right now. I just don't believe that the school is to blame for the fact that he was unable to pass the bar exam or get a job in the legal profession at any point during the past decade. 

human

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Re: Guy with $170k student loan debt sues law school
« Reply #15 on: December 22, 2015, 06:21:32 PM »
If you offer a service (in this case law school) and lie about the outcome (employment rate) there should be some kind of ramifications. Otherwise companies/organisations like volkswagen would always get away with their lies. It will be interesting to see how the lawsuit goes.

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Re: Guy with $170k student loan debt sues law school
« Reply #16 on: December 22, 2015, 10:59:37 PM »
I know this kind of deception is what got Everest college shut down in Ontario(all of canada?). The official statement was that the education met the requirements set out by the government, but they didn't pass administrative and advertising standards.

MgoSam

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Re: Guy with $170k student loan debt sues law school
« Reply #17 on: December 22, 2015, 11:52:32 PM »
Quote
Well, plus having two children and a wife with terminal cancer.

Judging by the age of the children pictured, he obviously didn't have those kids yet when he failed to pass the bar exam or get a job in the legal profession in 2006. The article doesn't state how long his wife has been terminally ill but that also probably happened more recently. I don't deny that he's in a rough situation right now. I just don't believe that the school is to blame for the fact that he was unable to pass the bar exam or get a job in the legal profession at any point during the past decade.

Also, at the risk of sounding insensitive (and being insensitive, I suppose), that's also not on the school.

Having children is not a decision that should be taken lightly, it can be a huge burden on people that don't have financial stability, and they can make it harder to accomplish goals. Obviously I don't know his circumstances, but I know that if I had a dream of working in criminal justice, I would be doing everything in my power to reach this goal and postponing all things that would prevent or hinder this goal. It is his right, of course, to have children, but it shouldn't be used an excuse to avoid responsibility for his own life.

dude

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Re: Guy with $170k student loan debt sues law school
« Reply #18 on: December 23, 2015, 08:23:23 AM »
While I don't really support this lawsuit on the merits, if it succeeds in getting these sham for-profit places shut down, then some good may come of it.

And vivo, with bankruptcy and mortgage refi's -- I think there is some distinction.  With bk, the debtor pays some price -- whether it be liquidated assets or bad credit, there is at least some pain.  And as for mortgage refi's, if those refi's don't work out, the lender at least gets the collateral (i.e., the house).  But just letting someone walk away from a $120k obligation scot-free strikes me as counter-productive.

That said, I think it's utter bullshit that student loans can't be discharged in bankruptcy, though I think they deserve some kind of special treatment, since the value of an education doesn't go away, and there would be some strong incentive for gaming the system.

dandarc

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Re: Guy with $170k student loan debt sues law school
« Reply #19 on: December 23, 2015, 08:30:27 AM »
That said, I think it's utter bullshit that student loans can't be discharged in bankruptcy, though I think they deserve some kind of special treatment, since the value of an education doesn't go away, and there would be some strong incentive for gaming the system.
Yep - the problem with student loans is that the loan is usually made to a person who is by any standards bankrupt.  Students generally don't have much in the way of assets, and often not even a job of any kind, and yet we're loaning them 10s and even 100s of thousands of dollars.

Maybe a waiting period is in order?  Student loans could be discharged in bankruptcy, but only after 20 years or something?

FIREby35

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Re: Guy with $170k student loan debt sues law school
« Reply #20 on: December 26, 2015, 08:14:22 AM »
if its so obvious, then why hasn't the federal government realized it. and why does it have accreditation?

yes we are all adults, we took on a debt yada yada yada.

but if this is such a ponzi scheme why is it legal?

and if we allow it to be legal, do we have any onus to stop it?

Excellent points, and I'm going to quote the article:

Quote
"Moffatt is one of 12 former TJSL students now suing the law school, which they claim intentionally inflated postgraduation employment figures and salaries in order to lure applicants.

Four former students filed a lawsuit against the school in 2011, and Clark is one of another eight plaintiffs who filed separate suits against the school in 2014. The case filed in 2011 is scheduled to go to trial in early 2016.

The school is accused of reporting postgraduation employment figures that topped 90% in 2010 but neglecting to disclose that the figures included part-time work, such as pool cleaner and Victoria's Secret sales clerk, the Associated Press reported this month, citing the suit and an attorney for the graduates."

One of the things I've thought about in the last few years of skyrocketing college costs, is that there needs to be a calculation that makes sense on how much to borrow.

For example - pick a major, a school, and a job. 
Electrical engineering, Cal Poly, EE/ circuit design
Penn State, Materials science, electronics
Carnegie Mellon, computer science, programming
UCLA, English, teaching
Oregon state, accounting, accountant
UF, marketing, administrate assistant
U of Nebraska, pharmacy, pharmacist

Figure out the cost of the four/five years of school.
Find the average starting salary of graduates of that school for that major
Find the % of employment in the field from that school

Multiply #2 and #3 and don't borrow more than 2x that?

In any event, if you have a school like this one that inflates the starting salaries and employment - where do you go for real information? 

I remember when I gradated in the early 90's, our school proudly sent out a letter about the employment of our 24-person class.  Average staring salary of $40k, "X" # of people going on to further education at the following schools, and "Y" number of people doing "other, including military service" (yeah, there were 2 of us in that category.  Other because an Ensign/ 2nd Lt got paid under $20k and they didn't want us bringing down the average).

I did find this though, which maybe would have been helpful:

http://grad-schools.usnews.rankingsandreviews.com/best-graduate-schools/top-law-schools/thomas-jefferson-school-of-law-03181

For fun I also picked Yale (top school) and George Mason (had a roommate attending that school).  Summary: (Law school is 3 years)

TJSL:
Cost: $44,900 per year
% employed at graduation: 18.1%
Median private starting salary: $50k
Employment * salary = $9050
That pays for 1/5 of a year of law school
Analysis: not worth it

George Mason:
Cost: $25,351 per year
% employed at graduation: 59.6%
Median private starting salary: $80k
Employment * salary = $47,680
That pays for 1.9 years of law school
Analysis: perhaps worth it

Yale:
Cost: $56,200 per year
% employed at graduation: 88.2%
Median private starting salary: $160k
Employment * salary = $141,120
That pays for 2.5 years of law school
Analysis: probably worth it

Depending on cost of living also - this is simply tuition.  The amount borrowed will also include housing/ food.

They actually do rank the top "Value" law school. See: http://www.nxtbook.com/nxtbooks/cypress/nationaljurist-bts2015/#/26

I went to a school highly placed on the value list -thank god. Cheap school, great local job prospects and, as a result, a prospering family. There is always the pull of a school in a cool location (San Diego) or the prestigious (and expensive) school.  But it is possible to ignore the siren song and make the right decision.

As to this law school decision (and not the cancer and personal life choices), he made a really bad decision and it is haunting him. All the information was out there. It is a rough world out there. I hope he makes a better plan for himself than Uber driver - I'm sure there is something. He still had a degree from North Texas and, allegedly, a 4.0 GPA.


khizr

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Re: Guy with $170k student loan debt sues law school
« Reply #21 on: December 26, 2015, 08:30:17 AM »
Excellent points, vivo, and I agree -- the federal gravy train needs to come to an end.  But just because someone offers you a credit card at 24.99% interest even if your credit is shitty, or a mortgage on a home you can't really afford, doesn't mean you have to accept it!  There are many (legal) pitfalls to be avoided out there, and if people aren't held to account for falling into them, the moral hazard becomes too great, and we lose all touch with the risk-reward matrix that has been a hallmark of our capitalist system from the beginning.  You can't legislate away stupidity (though perhaps a more robust education system would ameliorate the condition).
Ever since Reagan there has been talk of limiting Federal aid to students and I really think this needs to happen soon. Imagine if we capped federal aid at 10k a year + tie it to CPI going forward. That is still high but it might help...

Thanks, Ben


Cassie

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Re: Guy with $170k student loan debt sues law school
« Reply #22 on: December 26, 2015, 11:04:21 AM »
Some public institutions also inflate their employment numbers by counting any job and prospective students think that is the number of people that are employed in their profession. This kind of crap needs to stop and it is worse at private colleges but public ones lie too. I hope they win and maybe it will force colleges to tell the truth.

markbike528CBX

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Re: Guy with $170k student loan debt sues law school
« Reply #23 on: December 26, 2015, 11:06:15 AM »
giggles... If he wins then by definition, it IS a bad law school.

Lawyers suing lawyers, hilarious.

gimp

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Re: Guy with $170k student loan debt sues law school
« Reply #24 on: December 26, 2015, 08:44:56 PM »
Excellent points, vivo, and I agree -- the federal gravy train needs to come to an end.  But just because someone offers you a credit card at 24.99% interest even if your credit is shitty, or a mortgage on a home you can't really afford, doesn't mean you have to accept it!  There are many (legal) pitfalls to be avoided out there, and if people aren't held to account for falling into them, the moral hazard becomes too great, and we lose all touch with the risk-reward matrix that has been a hallmark of our capitalist system from the beginning.  You can't legislate away stupidity (though perhaps a more robust education system would ameliorate the condition).
Ever since Reagan there has been talk of limiting Federal aid to students and I really think this needs to happen soon. Imagine if we capped federal aid at 10k a year + tie it to CPI going forward. That is still high but it might help...

Thanks, Ben

I would do it differently.

First, cap the amount that schools can charge if they wish to receive federal aid. Let's say: if any school's tuition + room and board + all other fees + course textbooks and materials exceed a number (eg, $60,000) they will not receive a single cent in federal aid (starting at a certain date.)

Not a cap of how much aid, but rather, absolutely none whatsoever, no loans to students, no grants, nothing, if the school's costs are above a certain amount. And some text about trying to get around that amount with sneaky accounting etc. Make it explicit to take into account semesters vs quarters, summer half-semesters, coop programs, etc etc etc etc.

This forces schools to limit their costs.

Next, add other requirements under the same strategy. For example, a minimum of x% of tuition must go to compensation for professors. Just like health insurance companies now have to spend 80% or 90% of premiums on actual health, colleges should spend at least 50% or 70% or whatever on paying the professors who teach. This limits the amount of administrative bloat that is overwhelming schools, and hopefully gets them to use fewer adjuncts and grad kids and pay more full-time professors. Or for another example, all costs for room and board must actually go towards room and board (including expansion of it, but not including paying other parts of the college.) Or for another example, nobody above freshman year can be forced to remain on campus. That sort of thing.

It's a free country - private schools can do whatever the hell they want. But if they want to suckle at the government teat, they should stop transferring wealth from the students' next 10 years into the pockets of useless administrative bullshit staff. If they want to do it, they get no more government support.

SwordGuy

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Re: Guy with $170k student loan debt sues law school
« Reply #25 on: December 26, 2015, 11:44:55 PM »
it seems  anytime someone wants to address a similar forgiveness scheme or  attempts to move some of the onus from the borrow concerning student loans then everyone wants to be the morality police.

then every student is an idiot who deserves to life in debt slavery.

why is the student loan topic so emotional?

sometimes it almost sounds bitter.

I remember when the student loan system was put into place.

There were gobs of students declaring bankruptcy right after graduation so they could wipe out the debt and walk away with a fully paid-for education.

And the taxpayers got stuck with the bill.

That's why there is so much bitterness.

Those of us who have been around awhile remember the taxpayers getting royally screwed on this topic and are damned unwilling to put up with it again.

Tabaxus

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Re: Guy with $170k student loan debt sues law school
« Reply #26 on: December 29, 2015, 12:57:08 PM »

I remember when the student loan system was put into place.

There were gobs of students declaring bankruptcy right after graduation so they could wipe out the debt and walk away with a fully paid-for education.

And the taxpayers got stuck with the bill.

That's why there is so much bitterness.

Those of us who have been around awhile remember the taxpayers getting royally screwed on this topic and are damned unwilling to put up with it again.
So just make it that student loan debt can't be discharged for at least ten or twenty years after graduation. If you get to that point and you haven't paid it down / paid it off then most likely there is some sort of hardship at play and bankruptcy should be an option for someone.

Under current law, if there is a hardship at play, you can prove that hardship and get the student loans discharged.  Maybe the standard of hardship should go down after X years.  But frankly, loans get forgiven after 25 years of IBR under current law already, so why should there be anything else?  There is already 10-year IBR forgiveness for people doing public service work, so I certainly don't think the spigot should open after just 10 years. 

I have some sympathy for people who get stuck with really bad loans from undergrad.  17/18-year-olds who have been led to the slaughter and may not have the resources available to make a better choice.  But law school applicants?  Give me a freaking break.

Tabaxus

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Re: Guy with $170k student loan debt sues law school
« Reply #27 on: December 29, 2015, 02:14:50 PM »
Under current law, if there is a hardship at play, you can prove that hardship and get the student loans discharged.  Maybe the standard of hardship should go down after X years.  But frankly, loans get forgiven after 25 years of IBR under current law already, so why should there be anything else?  There is already 10-year IBR forgiveness for people doing public service work, so I certainly don't think the spigot should open after just 10 years. 

I have some sympathy for people who get stuck with really bad loans from undergrad.  17/18-year-olds who have been led to the slaughter and may not have the resources available to make a better choice.  But law school applicants?  Give me a freaking break.
The key word there being "IBR." There are a lot of assumptions at place assuming someone will setup the IBR, do everything necessary for the number of years required, and save up enough to cover the taxes on the loan forgiveness at the end. I'd have to do some digging around to see who is the most likely to use IBR, but I seem to recall that most private for-profit schools are generally the biggest originators of student loan debt and the most likely to result in students having a poor job outlook when done.

If people can't get themselves on IBR, that's no one's problem but their own.  Information about IBR is widely available. 

I am inclined to agree with people that believe there should be different BK discharge rules for private loans, though.  Those aren't IBR-eligible as far as I know, but more importantly, private lenders are capable of pricing default risk into the package.  But it can't be retroactive.  Less restrictive discharge rules will mean higher interest rates, and there shouldn't be a retroactive "gotcha" for lenders that priced loans under the non-discharge regime. 

Cathy

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Re: Guy with $170k student loan debt sues law school
« Reply #28 on: December 29, 2015, 02:44:53 PM »
The current discharge standards for student loans are commonly stated to be too onerous but it's not clear to me whether that is the case.

As correctly stated by Tabaxus above, student loans actually can be discharged in bankruptcy upon a showing of "undue hardship on the debtor and the debtors dependents". 11 USC 523(a)(8). The popular news media and other dubious sources would have you believe that this is an impossibly tough burden to meet, but a review of the case law suggests that it is feasible for some people, especially by Mustachian standards. For example, in Hedlund v. Educational Resources Institute, 718 F 3d 848 (9th Cir 2013), rev'g 68 BR 901, 2012 US Dist LEXIS 31965 (D OR Mar 5, 2012), the Ninth Circuit reinstated an order discharging $52,920 in law school debt on the basis of Mr. Hedlund's alleged undue hardship.

After Mr. Hedlund finished law school, he proceeded to fail the bar exam twice. He then bought a brand new car and several new cell phones and made some large charitable contributions. He also married somebody who only works one day per week for $8.50 per hour (which is relevant because he is presumably subsidising her with money that could otherwise be used to pay the debt) and they had a child together. During all this, he only ever made a single $954.72 voluntary payment on his student loans (although he did make a generous offer to his creditors to settle the entire debt for a $5,000 payment!). Based on those facts, the Ninth Circuit upheld findings that "Hedlund's failure to pass [the bar exam] was not 'within his control'" and that "Hedlund and his family 'have always lived frugally'" and allowed the discharge. Hedlund, 718 F 3d at 825, 853, respectively.

To be fair to the Court, the Ninth Circuit was constrained by a deferential standard of appellate review (and I am not suggesting that the Ninth Circuit erred). The Court could not make its own independent evaluation of the situation. But it's still apparent that student loans are far from nondischargeable in practice, especially in the more extreme cases that we frequently hear about in the news media. These debts are harder to discharge than some other debts, perhaps even significantly harder to discharge, but they are not nondischargeable.
« Last Edit: December 29, 2015, 02:47:42 PM by Cathy »

obstinate

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Re: Guy with $170k student loan debt sues law school
« Reply #29 on: December 30, 2015, 05:46:36 AM »
I actually like this. It's true that students entering law school should be more accountable for themselves. But on the other hand, law schools, especially the shitty one referred to in this article, should stop peddling crap. If there was a car with the same quality as this law school (exploded 90% of the time within a year), we would have no problem with someone suing them. Moreso if they lied and said their cars were high quality.

dude

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Re: Guy with $170k student loan debt sues law school
« Reply #30 on: December 30, 2015, 05:55:12 AM »
Check out where this dude's alma mater sits on the "10 Law Schools With Most Indebted Students" list:

http://www.abajournal.com/news/article/which_law_schools_have_the_most_indebted_grads/?utm_source=internal&utm_medium=navigation&utm_campaign=most_read