Massive student loan time bomb

The WSJ reports today that total outstanding student loan debt has for the first time surpassed the total amount of credit card debt held by Americans. Isn't this great news! Finally people have stopped wasting their time and interest payments on meaningless consumer goods, and have started "investing in themselves" and improving their lives through education!

Americans owe some $826.5 billion in revolving credit, according to June 2010 figures from the Federal Reserve. (Most of revolving credit is credit-card debt.) Student loans outstanding today — both federal and private — total some $829.785 billion, according to Mark Kantrowitz, publisher of FinAid.org and FastWeb.com.

That is just swell, and because Americans seem to have no trouble keeping up with their crushing credit card debt payments (lol), I'm sure there will be no negative implications for this massive pile of student loan red ink. After all, the debt is disproportionately held by young people with low incomes who are having a hard time finding work. It should be no problem at all that unemployment is highest for the 18-29 year old crowd, which also is the age group most likely to have student debt.

[T]here is $605.6 billion in federal student loans outstanding and $167.8 billion in private student loans outstanding. He estimates that $300 billion in federal student loan debts have been incurred in the last four years.

$300B in the last four years? They always said that in a recession, kids would flock to all forms of higher ed to take refuge. How many millions of unemployed people are delaying the pain and making it easy for book cookers to continue claiming unemployment is lower than it is? What happens when students have racked up a B.A., J.D., M.A. and a few other degrees for good measure? We're going to have the most overeducated panhandlers in the history of the world showing up on the streets.

Student Loan Justice, a Washington State-based student loan advocacy group issued a statement on the student-loan eclipse, estimating that media coverage of credit cards exceeds coverage of student loans “by a factor of approximately 15-to-1 based on unscientific news surveys conducted since 2007.”

But student loan debt, in many ways, is different than credit-card debt. These loans typically can’t be discharged in bankruptcy. They have different repayment terms, some of which can catch some have heavy consequences for borrowers who miss payments and borrowers’ families.

No news here. The perils of student loan debt, especially the inability to get it discharged in bankruptcy, and its penchant for giving doctorates and attorneys a standard of living similar to that of Chinese coal miners, are well documented. What is the natural response to this ticking time bomb of student debt, a trend which will only accelerate given the horrible economy, lack of prospects for young people, and dump-truck loads full of readily available federal loan money?

Bob "Disgusting Shill" Herbert over at the New York Times suggests that we all need to double-down on higher education! The U.S. lags New Zealand and other developed countries in the percentage of people with college degrees! (Oh lord.) The ONLY solution is to sign up as many 18-year-olds as possible for higher education and get them on the hook for $40,000 a year in federal loans. Otherwise, we may never see the benefits of having a highly-educated populace that countries like Belarus enjoy. Says Bob:

At a time when a college education is needed more than ever to establish and maintain a middle-class standard of living, America’s young people are moving in exactly the wrong direction. A well-educated population also is crucially important if the U.S. is to succeed in an increasingly competitive global environment.

According to a new report from the College Board, the U.S. is 12th among developed nations in the percentage of 25- to 34-year-olds with college degrees. The report said, “As America’s aging and highly educated work force moves into retirement, the nation will rely on young Americans to increase our standing in the world.”

When this is the educational environment, you can say goodbye to the kind of cultural, scientific and economic achievements that combine to make a great nation. We no longer know how to put our people to work. We read less and less and write like barbarians. We’ve increasingly turned our backs on the very idea of hard-won excellence while flinging open the doors to decadence and decline. No wonder Lady Gaga and Snooki from “Jersey Shore” are cultural heroes.

Yes, Bob, the country is going to hell in a handbasket because not enough youngsters are drinking the Kool-Aid and plunking down tens of thousands of dollars for useless undergraduate degrees. This economic crisis and "failure to put people to work" is certainly the fault of a lack of education. Shunting millions more off into universities and shackling them with debt will definitely create jobs and solve all of our problems. And yes, it is definitely the fault of the Jersey Shore crew that young people today are supposedly so goddamned stupid.

I would propose that your average 18-25 year old is rightfully skeptical of higher education. On the one hand, everyone with a pulse goes to college. I don't know a single person my age who doesn't have a B.A./B.S. (Okay, maybe the guy at the gas station. Actually, he probably has a PhD.) When people graduate from college after having shelled out 25, 50, or 100 thousand dollars, only to return home, move into their parents basement, and cut lawns or work a cash register for minimum wage, I can only applaud those young people who are smart enough to avoid college. College, quite simply, is not for everyone. The value of a degree is so diluted, with so many tens of millions of students, that it imparts no particular value outside of a very narrow and elite set of advanced science, economics, or other specialized degrees from a handful of prestigious schools.

Young people taking a hard look at college and deciding to forgo the "experience" is a positive trend. If your parents are footing the bill, or if you're a genius who plans on getting a glitzy degree from a top Ivy program or MIT or something, then you probably will go. For the vast majority of us, who were told we needed to go to college to become "marketable," to learn, and to "grow," this has proved to be a pretty lie that has brought most people nothing but economic hardship, a diminished sense of self, and a lack of faith in our nation's once-vaunted educational system.

So, on this day when we toast the rise of The Student Loan as the new consumer debt god of the American people, let us also remember and salute those bright and clever youngsters who were not enticed by the fairy tales and promises of the good life, who forewent those boring lectures on aboriginal toolmaking and hegemonic heteronormativism, and are chugging along making the same hourly wages as the college crowd. That is, if they're not all unemployed like the college graduates.

Post Script:

There will always be blowback from the folks who refuse to believe that higher education isn't "worth it." It's easy to be skeptical and critical, and to lie through your teeth and put a falsely-positive spin on things, when one has no skin in the game. When one sees articles like these that draw heavily from the comments of law school staff, TTT administrators, and legal industry apologists, they cannot be taken seriously. When the stories from students and graduates in the trenches are so different and blearly compared to the upbeat forecasts offered by these shills, something is amiss. The question is, which side will prospective students believe? Tread warily.

Carrot on a stick for 3Ls

With yet another horrendous academic year approaching, there are many jobless 3Ls wandering the world in a shellshocked state. The few who landed gainful, paid employment for this summer are scrambling and praying they are one of the elect who will snag an offer. Many more are volunteering at places that are glad to take their free work, but that will never consider offering them a real, paying job, even if they had the funding. It’s a grand feeling, paying for “work clothes,” gas, parking, and lunches just to work in a back room at some shitty government office that doesn’t care about you and is just glad to cut down their workload. It’s doubly fun when your school offers to charge students tuition for these unpaid internships. Apart from these privileged pay-to-work students, maybe some lucked out and are doing 10 hours of research for a professor every week. In any case, 3Ls must be looking forward to the coming semester with dread. 3L OCI doesn’t exist, and those who didn’t snag one of the few remaining “real” jobs this past summer are out of luck. After this summer, those who don’t do the prudent thing and drop out will have to double-down and pay for the bar before they have a shot at applying for jobs after graduation.

The memories of the unemployed class of 2010 are still fresh, and all signs point to things being at least as bad for the class of 2011. Given this dark, ominous, looming storm cloud of doom that hangs over 3Ls, it’s perfectly natural for them to despair. Yet if one were to trek over to a typical career “services” office at your local law school, they would be forgiven for thinking that everything is bright and sunny in the hiring market. With more than half of their classes full of unemployed and increasingly angry students, administrators are scrambling to whip up a fresh batch of lies and tall tales from their best shit-tainted recipes. At the risk of losing out on 30-50k per student if they see the light and drop out, the schools are pulling out all the stops in order to delude as many 3Ls into thinking they can still find work in the legal world. Let's take a look at some of the most tried and and (un)true stories that career services charlatans use to bait desperate 3Ls.

Clerkships! They’ll say.
Even in the best of times, most federal judges want top 10-20% and law review, and they recruit from top schools. Don’t believe me? Do an OSCAR search with a filter that will show judges who “prefer” YOUR credentials, and see what comes up. There will be a few who “prefer” top 20%, but where does that leave the other 80% of the class? Never mind the fact that federal clerkships have always been the last resort for T14 grads who missed out on biglaw, and the application process is going to be flooded by thousands of extra first tier students who were deferred, no-offered, or just came up short at OCI. If you're one of the many T1 students with law review credentials and a presumably plum position in your class rank, you might as well go for it. I certainly know a lot of 3Ls who are on law review that didn't get any job for this summer, so they'll probably be in the clerk pipeline. Along with thousands and thousands of others. Not in the top 20% of your class, on law review, at a T1 school? Yeah, me neither. Like most legal job searches, those who apply for clerkships are taking a bucketful of darts and chucking it at the wall. For a lucky, select (and T-14-credentialed) few, one of those darts just might stick. Unfortunately, just not for the majority of hopeless 3Ls.

State court clerkships! Great, if you can get them. Most of the most populous states are under severe budget constraints and a hiring freeze. Elsewhere, they are deciding to rearrange folks and make do with less, permanently. “Target your job search to unconventional locales and places you might not have thought of. The experience may prove rewarding.” Gee, thanks, I’m sure no one else has thought of that. In smaller/less populous states, clerkships are often at-will and law clerks are often “lifers” who have made a career out of their work, and stay on year after year at the behest of a judge. If you luck out and find a state that is still hiring enough clerks right out of school, don’t worry about the competition from thousands of other desperate law grads, many of them from T-14 schools that are tantalizing these backwater judges with their credentials for the first time. Depending on how low you sink, if you pull a gig like traffic court clerk, you will enjoy lateraling to Wal-Mart after your time is up. Assuming everything goes your way, congratulations. After completing your one or two year stint as a clerk, you’ll be back on the street. Hope you saved your $40,000 salary for that time.

Join the JAG! Serve your country! This is also misguided advice for the great majority of people, and is becoming a favorite of career services shills in this bad economy. They even have a cheesy TV show and maybe a Kurt Russell movie to refer people who have never heard of JAG to. The general consensus of JAGs that I've spoken to is that this program was surprisingly selective even before the recession (like single digits). Since the recession decimated the legal industry, applications to JAG have soared and pushed the selection rate as low as 1% for some branches and boards, with most people having to sit for two or three rounds of selection boards before getting seriously considered. (For aspiring JAGs, that will push your job search out 12-18 months.) A JAG in one branch of the service told me applications were up 600% for last year.

This seems a particularly silly option to be throwing out to law students, who as a whole are known to be bookish, pasty, and often not in prime physical condition. I’m extremely supportive of anyone who can hack the military and do their very-necessary job, but having spent years around law students, I can say that the majority of them probably aren’t cut out for it. Especially at a “top” law school, most students came with lofty dreams of legal employment and “the good life,” not waking up every morning at 4:30 for a PT run. There are some good stories floating around the internet of hapless, recession-motivated law students botching JAG interviews. Long story short, if you don’t look and act the part for military service, you’re at a distinct disadvantage. Perhaps I’m wrong, and thousands more hopeless law students will heed career services and turn up for JAG boards. If so, I’m sure it will be even more of a clusterfuck and end up crushing their dreams even more.

3L OCI! This is a golden unicorn that shits rainbows if there ever was one. No one is going to hire you from 3L OCI, because it quite frankly is an urban legend. Does your school even HAVE 3L OCI? Better check on that, and make sure it’s not just a resume collect or a few token firms coming through to interview only candidates eligible for the patent bar (i.e. not you). NALP has noted that, before the crash, big firms picked up a paltry, single-digit percentage number of 3Ls anyway. Now, your chances of getting a decent firm job through 3L OCI are, for all intents and purposes, nonexistent.

What does that leave us with? Flooding shitlaw firms with resumes in those panic-filled few months before graduation? Heaven forbid you’re among the 70% of your classmates who will graduate without a job. Then, your employment prospects REALLY dry up, and if you want to continue playing the game, you’ve got to come up with a few thousand bucks for bar review. “But I can’t get an attorney job and keep applying after I’ve graduated if I’m not barred!” Isn’t that an amazing coincidence? Just as soon as you graduated after paying at least $30,000 a year for school, you need to keep paying thousands of dollars just to stay in the game, which you have an extremely low probability of winning anyway, at this point.

Soon, it's May 2011 and here we are graduating another class from a first tier toilet, 2/3 of whom have NO JOB in ANY field. That sure was exhausting. I’m glad the deans gave themselves a raise this year (not too dramatic, though, it’s a recession). Maybe one of those unemployed recent grads…the ones who aren’t working in the career services office or the library, part-time for $10/hour, can wax the dean’s boat this summer? That definitely counts as EMPLOYED for the school’s reporting to US News.

Esq Never’s advice to 3Ls rings true: drop out. For a majority, the job search will be long, hard, and tens of thousands will eventually have to find employment outside of the law that never required a J.D. Save a year’s worth of tuition, your bar expenses, and avoid the J.D. stain on your resume. If you can’t bear to sacrifice the already-sunken costs of time and money you’ve put into your degree, impress upon some rich uncle the need to put up your tuition. Your family might panic if they think your J.D. dreams are in danger of vanishing, and that sense of desperation just might work in your favor. Other than that, I dunno? Sell a kidney, start gambling hard? There’s got to be some way to come up with the cash if you’re that desperate to stay in law school. If you ask me, seeing your student loan balance a good $30k lower and not wasting another year of your life, only to emerge in an indefinite unemployment purgatory, is reward enough.

An English PhD calls law school a scam

From the world of the liberal arts, we have another outsider who can take one look at law school and tell it like it is. The author notes that during her teaching career, she counseled many an English major on their prospects and wrote plenty of letters of recommendation for aspiring J.D.s. For someone who is a creature of the higher education establishment, and saw many of her own students off to law school, I have to admire her ability to be blunt regarding graduate-level education.

“Grad school in the humanities is a scam. There are simply no jobs, tenure is disappearing, the culture of the academic humanities is pathological, and the sort of academic life grad students hope to acquire is ceasing to exist.”

No real news here. As someone who flirted with going to grad school in the humanities, I was told much of the same things. Fellow scambloggers have long since noted the similarities between the (dismal) outlook for M.A./PhD holders and J.D.s. Now, when even law schools that might have been able to place a fair number of students are revealed to be first tier toilets, law school is more like grad school than ever. A certain, select number of students will still land their respective profession’s most coveted jobs. They will almost all come from the very best institutions and be the cream of the academic crop. For J.D.s from lesser schools and outside the top quartiles of the class, their future is looking more and more like that of the typical M.A. or PhD. Except worse.

“[L]aw school is turning into grad school, only with debt. At least if you are getting a PhD in English, you can do it for free. You might live on a shoestring (I lived on $10,000/year when I was getting my PhD during the early 1990s), but your tuition is covered and you don't graduate six figures under.”

The author ends by recommending that students not go to grad school OR law school. This is someone who’s done their own trial by fire, going the grad school route and being a professor for years. For every one of these honest, no-B.S. professors, there are thousands more who play accessory to the highway robbery that is the higher ed scam. This is coming from a PhD in English! I think everyone can agree that humanities PhDs are much more of a scam than a J.D., but here we have one such PhD telling us that no, sorry, we J.D.s have it much worse.

“Will law professors act to clean up law schools' act? They should. But if the example of the academic humanities is any indicator, they won't. Lowering costs and being honest about expectations would come out of their pockets and their comforts--and that would be just too much.”

I’m glad to see that more and more informed observers of legal education are wising up to the scam. We need more brave souls like Erin O’Connor and Professor Tamanaha who can speak up about the scam and try and warn off would-be victims. To the law school apologists and prospective law students, it’s not just “a few bitter bloggers” who are publicizing the law school scam.

We Are All a Lost Generation

It’s certainly been said before: we are the lost generation.

I recently watched the Class of 2010 from our prestigious law school go off into the world unemployed and with no prospects. The grads themselves put the unemployment level at about two-thirds of the class, an unbelievably horrible statistic for a school that was reporting graduate employment in the high 90s when these students matriculated. A quick glance at the results of career services’ employment survey shows a 35% response rate. It’s amazing how closely that mirrors what the students themselves claim as far as their collective employment status. I’ve been pondering what the implications of this are for these former classmates and peers. This kind of catastrophe has never happened to many of us. Certainly, many people have overcome great obstacles, tragedies, and disasters in life. We all have our personal difficulties to surmount. However, I doubt many people have seen their future really evaporate.

What happens when you hit full stop and realize that there really is no job for you? You realize that all you have worked for over years, maybe close to a decade, is for naught. It’s one thing to be waylaid by life’s curves and detours. It’s quite another to come to the end of the journey, the culmination of your young adult life thus far, and find that the road is closed. We go to school for the first quarter of our lives so we can get a job, find a profession, in which to spend the rest of it. What happens when this long-established road to employment, to professional life, to success, becomes impassible? Who do you turn to for guidance when your parents and mentors lived through the biggest economic boom times in living memory, when jobs were plentiful and the sky, or at least the suburbs, was the limit? How do you relate to people whose only experience has taught them that the only people who can’t get a decent job are lazy, inefficient, or defective?

In days of yore, disenchanted 20-somethings could decamp to the City of Light to ponder their place in the world and get slammed with Ernest Hemingway. Sadly, this is no longer an option for most. How is an intrepid graduate going to scrounge up the dough to hit Europe, or even some more affordable third-world backwater, with 150,000 dollars in debt hanging over their head?

The tens of thousands of scammed graduates, this lost generation, will not be knocking around Europe, writing the Great American Novel, and ruminating on some grand poetry in a Parisian salon. They will be working the cash register at Walgreen’s, mowing lawns for the parks department, and hunching over a computer screen in a dank basement reviewing documents for $15/hour--if they’re lucky. At night, they will slink home and fire up the stove for a meal of delicious Ramen noodles. Occasionally, their eyes will wander to the forgotten corner of their efficiency apartment where their undergrad, masters, law, or doctorate degree sits in a dusty frame. Having thus triggered a night of uncontrollable sobbing and/or binge drinking, this overeducated, overqualified debt peon will catch a few winks of sleep before having to get up and grind it out again for $8 an hour.

Do you remember what it was like to dream big? High school graduation is, for me, only a few short years in the rear view mirror. Be it five, ten, or twenty, everyone remembers. Some of us dreamt of being big shots. Many others were just excited to get out into the world, go to college, and get a decent middle class job and live like their parents. I sure as hell didn’t expect to see scores of people go off to four-year private universities, come home, and only be able to get a job cutting grass and de-icing asphalt for the Department of Parks and Recreation.

Those of us who postponed this harsh reality and took refuge in law or grad school are only prolonging the pain. Our financial reality will be even bleaker. Many of us put off imagining what living under six figures of non-dischargeable debt while earning peanuts must be like. It’s easy to forget that the dream we’re all working for—a normal, stable job, decent salary, and ability to pay back our debts and keep a roof over our heads—has vanished for millions of young people. Reading “DEFERRED-CURRENTLY ENROLLED” on your loan statement every month is akin to taking a nice big dose of opiates. The pain is dulled, reality slips away. The realization that you have been sold down the river by higher education and your lenders is postponed.

The Boomers will cry foul. It’s your fault, we’re told. No one told you to take out 75,000 dollars in loans to study political science. You should have known a master’s degree is useless. You’re a moron for not realizing that there are not enough jobs to go around. You ought to have realized the legal economy was going to implode and there never were enough jobs for all of you. You think you have it tough, well we lived during the 70s oil crisis!

You went to college and law school in a time where a semester’s tuition put you back mere hundreds of dollars. You may have started out with nothing, but you didn’t start out 50, 100, 150 thousand dollars in the hole. And although you started out small, there were jobs for you. You were able to climb the ladder. Dramatically fewer people held college degrees when you were working your first jobs and building your careers. You had it easy, by every measure, but you didn’t bother to make things easy for us.

We did not subsidize any and all higher education. We did not give schools a free pass to raise tuition every year, for decades, in the knowledge that the money would always come in because the feds were putting up the cash. We didn’t wreck the global economy. We didn’t destroy the American manufacturing sector and outsource millions of service jobs. We didn’t approve of legal work being outsourced to non-lawyers for pennies on the dollar in India. We didn’t arrange things so that the only job you can get with a B.A. is being a barista.

But there is one thing we did do, and it’s cursed us ever since. We listened to you Boomers. We believed our teachers and parents who drilled into us the notion that higher education is the key to advancement. We believed the President when he told us that everyone should go to college. We believed you when you told us paying $40,000 a year for private college was an investment in our futures. We believed you when you said it was absolutely necessary to raise our public university tuition 15% year after year. We believed the bogus employment and salary statistics cooked up by unctuous law school deans who were eager to see Sallie Mae and federal loan dollars keep pouring in. We believed because we wanted to, but isn’t that what we are supposed to do? People are supposed to trust in their institutions: higher education, the government, the president. Their parents. Young people are supposed to be able to have faith in their elders. So yes, we believed in you, and now we’re doomed. While we figure out how to handle this student debt, forgive us if we have a hard time paying for your trillions in unfunded medical, retirement, and social security liabilities. You had the wheel; we believed you could bring us in safely. Well, now we can all go down together.

A big thanks from the Lost Generation.

Young people unable to afford a life? Convince them they never wanted it, anyway!

From the NYT we have yet another fluff piece about why young people “just can’t get it together.” This is far from the first article discussing this trend, but it takes the same track as every damn one of them. Namely, “back in the day, it was a tremendous burden to get a job at 22 and work for the rest of your life, pay a mortgage, and have a family. Now, young people have independence! They don't have to conform to these outdated indicators of success!” What a load of horse shit.

The spin-masters try and fool young people into thinking that these markers of middle-class stability aren’t “worth it.” They tell us that, rather than being achievements and signs of prosperity, owning a home, being married, and raising kids is a tremendous burden and we should all be glad that we can’t afford to live this way. I'll agree that mortgages, marriages, and children certainly are a burden. Hey, life is a burden. I don’t know about you all, but I would much rather get a decent job in my 20s, work for the same company until retirement, and be “tied down” by the privilege of being able to afford a home, than be six figures in debt and live with my mom until age 40. Those stodgy old markers of the middle class sound really, really rough, I tell ya!

Fluff pieces like this continually try to convince young people that drawing out life is great. What they fail to mention is how these generations have been utterly screwed to the point of no longer being able to AFFORD what was previously a very achievable middle-class life. For as much as they discuss (without citing any evidence of causation) how progressive social factors are to account for this, it’s clear to any 20something suffering through debt slavery and a looted economy that we’ve been sold out. It's not that 20somethings are all happily rejecting marriage and a picket fence en masse. (Some of them are, for various reasons, and more power to them.) It's that very few people in their 20s can AFFORD to live like their parents and grandparents did at the same age, thanks to educational debt and a lack of decent job options. If we hadn't jacked up the cost of higher ed and destroyed manufacturing and service jobs in this country, my guess is many millions more 20somethings would be quite pleased to be living the way previous generations did.

These articles like to present delayed parenthood), living at home for years after graduation, and shitty jobs as the benefits of an enlightened society. We've all been convinced that this “freedom” is really stupendous, as a cover-up for how much we've been screwed. Purveyors of this "more freedom" lie apparently spend little time pondering the social effects of having tens of millions of young people shut out of traditional avenues of self-improvement and socialization. Used to be that getting a job and a mortgage was a great way to impart civic responsibility and a sense of collective work ethic on people. But I'm sure these things don't matter anymore, and we're all better off for being rid of this kind of "oppressive" thought.

Maybe there are a lot of people these days who think waiting until 40 to ever afford a home, kids, a spouse, is just the bee’s knees. Maybe I’m really out of touch. I can’t be the only one who wants to get started on life, rather than spend the next 20 years in purgatory. Yes, there are more “options,” and social pressure for people who no longer want “traditional” lifestyles is alleviated. This is good; no one should feel like a pariah for foregoing a cookie-cutter lifestyle.

However, when the trappings of this lifestyle—home ownership, the ability to provide for a family (if desired), disposable income—are now out of reach to millions of young people, something is very wrong. Telling us all how better off we are to be relieved of these burdens isn’t going to work. We all know that we’ve been priced out of a decent life. Young people are saddled with six-figure debt before they have a chance. The jobs that would have helped dig us out are long gone. As much as the media tries to tell us all how great and liberating it is to live in mom’s basement until age 35, I don’t think we buy it. It’s not some great social revolution that is causing people to delay adulthood, it’s economic reality. No one can fucking afford it. Just another daily reminder of how we’ve been scammed hard.