Subsidized student loans in the crosshairs. Is IBR far behind?

Amongst the hubbub the past couple of weeks over the deficit commission's report, one proposal that hasn't gotten nearly as much press is the elimination of in-school interest subsidies for federal student loans. This is obviously less attention-worthy than some of the proposals, but for starving, jobless students and graduates, it's a big deal. Bigger still, the proposal to end interest-subsidized student loans suggests that a much newer and less-established program, Income Based Repayment (IBR), could be next to fall under the ax man's gaze.

Subsidized student loans have been taken as a given by students. IBR is a much newer program that is only fully available to those folks who are coming out of school after 2008. There are a number of formulas based on your income and ability to pay, and it only applies to federal loans. Basically, it works out that if you have a really shitty salary (or none), like many law graduates since 2008, you get a monthly repayment much lower than you would be looking at under a standard repayment plan. Also, by electing IBR, your outstanding debt is forgiven after 25 years, or 10 years if you work for a state/local government or qualified public interest organization. It's an okay program, and is helpful for unemployed, debt-pwnd students coming out of school during the Great Recession.

From what I can tell, the idea behind IBR was for graduates of expensive law and other postgrad programs who wanted to "pursue the common good" in public interest, to be given a break on their monthly payments in exchange for their selfless service. In the new reality of 50%+ graduating law classes being unemployed, it's more than likely going to become a catch-all for all of us with six-figure federal debt and no way to pay it back. All the while, the government will be eating the remaining interest on the loans, and if you make it to the 10 or 25 year mark, hey, forgiven! With so many unemployed graduates, the government is likely to be left holding a much heavier bag than they figured on when they were crafting IBR. For those un-and-underemployed recent grads relying on IBR, who's to say what will happen in 10 years, to say nothing of 25, as Erskine "Bowels" and his crew look for crafty new ways to close the deficit gap?

Personally, I don't care that the government is going to be saddled with more unpaid debt. It's not like it's "real" money; they just transferred some digits from their printing presses to the law school dean's office and our tuition showed up as "paid." The school pisses it away and modifies its ledger accordingly, but we're fooling ourselves if any real value is changing hands. That's another issue, though. The federal government created this student loan mess by guaranteeing tens of thousands a year in free money to prospective law students, thereby allowing schools to uniformly jack up their prices to around $50,000 a year. I have no sympathy for the feds if they are going to whine about the unintended consequences of IBR. I do, however, worry about their willingness to repeal the program and leave all of us debtors out in the cold.

Our one saving grace may be that, on the whole, the number of unemployable debtor law students is relatively small (compared to other federal obligations). In any given year, the number of people running up red ink for the feds via subsidized, low IBR payments or total discharge should be quite low. However, experience makes me wary. So many unfortunate law students have at least six figures in debt, particularly those who entered in 2008 and after and would be eligible for IBR, in the era where law school COA is almost uniformly ~$50k a year. It's not just law students, either. Every day we see more and more unemployed undergrads with six figure debt, and soon the crop of economic refugees who went for MBAs or other advanced degrees to try and dodge the bad economy of 2008 will be emerging, jobless. There are a hell of a lot of unemployed recent grads of all degree-stripes out there with six figures of debt and nowhere to go but back to school or onto the IBR rolls. If the in-school interest subsidy is on the chopping block, how long can it be before the IBR payment subsidy and eventual discharge are also scrapped?

Sounding the alarm to deaf 0Ls, now with tuition hikes

I always get a little excited when a respectable news outlet reports on the law school scam. Even though it’s happening with increasing frequency in recent months, it’s still good to see articles like this piece from Slate. Judging by the continuing log-pile of prospective students taking the LSAT and clamoring to get into law schools, all of the warnings and media attention don't seem to be soaking in.

I talk about my own school a lot, but the facepalm-worthy news continues to roll out of that putrid money pit. Earlier this week, 1Ls were given the happy news that their tuition will be rising 13.5% next year. That seems like a relative bargain compared to the 15% increase that was announced a year ago. This is when tuition, fees, and COL at this fine public institution of legal learning are already $45,244, IN STATE.

As a four-way-tied-for-top-22 law school, Minnesota sadly is able to delude a lot of out-of-state students into thinking they’re paying for a “top 20 law school,” and I can only imagine how horrendously confiscatory their total COA will be. Tuition at the school had already doubled since 2005; factoring in this latest increase, it will have doubled and then some. So much for an affordable, public, land-grant university.

81% of clueless 0Ls would still apply to law school given horrible job outlook

From the NLJ today we have this depressing article wherein a small poll of prospective law students, taken this past summer, shows a whopping 81% of them are still content with going to law school even if there was a significant chance they would never be lawyers.

Veritas, a law school admissions consulting firm, polled 112 prospective law school applicants in June and July, and 81% said they would still apply even if "a significant number of law school graduates were unable to find jobs in their desired fields." Only 4% said they would not apply to law school under that circumstance.

At the same time, more than half the survey respondents — 63% — were concerned about finding a job after law school, and 70% said they were worried about finding a position in the field of their particular interest.

Now before someone starts sounding off about 112 fo0Ls not being a large enough sample, let's not kid ourselves. This rash denial of how bad things really are is one of the most common characteristics of all 0Ls. How else would they still be flooding into law school--in record numbers, no less--during a horrendous recession that has gutted the legal industry and left us with anemic recovery prospects? It takes a certain degree of self-delusion, right off the bat, to be a 0L in 2010. In fact, I'm a bit surprised that the 81% number wasn't higher, given the hubris and head-in-the-sand attitude displayed by many 0Ls. As we all know, unemployment and crippling debt may happen to their classmates, and is even likely to happen, but it still won't happen to THEM.

Even better, 63% of respondents are worried they'll find a job...so about half of even the 81% who said they still would have gone, are they themselves worried about unemployment. What is wrong with these people? The only conclusion I can draw is that they must be so disenchanted and burned out with the even-worse job prospects that an undergraduate degree allows these days, that they're willing to double-down and spin the wheel again for an extremely slim chance at a worthwhile payout. More insanity from the higher education casino.

But there are still more facepalms to be had from the survey data:

The grim employment news for recent law graduates does seem to be making an impression on would-be lawyers, however. In addition to worrying about landing a job, prospective students seem to understand that landing a $160,000 starting job at a major law firm is harder than ever. Only 11% of the survey respondents expected to earn more than $145,000 out of law school. Another 29% expected to earn between $100,000 and $145,000, while the remaining 44% expected to earn between $75,000 to $100,000.

Still, those expectations don't jive with reality: The latest new lawyer salary data from NALP show that 34% of reported salaries fell between $40,000 and $65,000 for the class of 2009.

Twenty-four percent of the survey respondents wanted to work as a public interest attorney, while another 21% wanted to work in for a major firm.

So a full 84% of these kids expect to make AT LEAST $75,000 right out of law school. Are these people high? Especially with only 21% of them wanting to work for a major firm (of which nowhere near 21% could possibly land the number of open positions at such firms). So 79% of these 0Ls, don't want to work at a major firm, but 84% of them think they will make AT LEAST $75,000 as their starting lawyer salary. Just shoot me.

I can't say what can account for the continued, mind-boggling resistance of 0Ls to the avalanche of stories coming out of the legal industry about how bad it is. First there were scambloggers, then mainstream websites, then legal media, and finally mainstream media outlets, have all reported, many times, on the diminishing prospects. Yet the lemmings continue on their insane death migration. There was a scamblog-esque story on the front page of USA Today a couple months ago...did you 0Ls not see that while you were eating your morning's corn flakes? It is next to impossible for any reasonably-well-informed young person not to have heard the bad news about law school.

These 0Ls, and the 45,000 of them who will show up in the Class of 2014, truly have no excuses. They know things are bad, they've heard about the systemic problems in the legal industry that makes recovery to pre-recession heights unlikely. They've seen the writing on the wall, they've seen the emperor standing naked and unclothed in the street. This boils down to pure, irrational self-confidence, helped along by a steady stream of lies from each particular school. Even in my day, before the horrible unemployment jokulhaups had truly struck, schools were quick to corral their new students in the auditorium and tell them that yes, things were bad, but that was everyone ELSE'S problem. You students at this particular Toilet of Law will be absolutely fine. Just look at our employment data! We will weather the storm.

I am running out of sympathy for these poor prospective students. Every day brings a new heap of information that should be setting off screaming red fire alarms in their minds. Yet they continue to march aimlessly forward. As this survey bears out, many if not all are aware that unemployment is three short years and -$100,000 away, but they refuse to believe it will happen to them. To their classmates, sure, but not to them. It's maddening, however, it is no reason to stop fighting the good fight. Some enlightened 0L out there has got to be listening...and if not, well, I welcome him as a reader in three years.

ABA shows up late to the party, over bloodied bodies of thousands of unemployed

So the ABA might want to “do something” about law school fraud. Way to show up tardy to the party (as usual).

Even if some eventual cap on new law schools is eventually worked out, it will come many years and many tens of thousands of students too late. Students who were suckered out of their tuition dollars during the height of the scam, as well as the even higher number of poor saps who are taking refuge in law school during the recession, will not be helped by this. There will be at least a decade’s worth of law grads who were ushered off into the meat grinder while schools were getting rich and the ABA stood idle. Ten years, approximately 40-45 thousand law grads a year...400,000 condemned souls. That's one hell of a lost generation.

As tuition increased by leaps and bounds, often doubling in the course of a five year period during the last decade, these plump leeches kept sucking and seeking out more warm bodies. As the ABA and law schools presided over a steady decline in decent, sustainable, real legal jobs, they made sure the doors to the profession were propped wide open, and then added more and more schools for good measure. When the economy was battered and ALL employment prospects went into a precipitous decline, making it even harder for underemployed JDs to ever find work in ANY field, they responded by encouraging more people to ride out the recession in law school. Then they printed out more school literature and US News magazines filled with their blatant lies about employment and salary statistics, and raised tuition another 10% per annum for good measure.

So I’m glad that someone in that cavernous, non-responsive realm of the “powers that be” is finally going to start a committee to take a look at making a recommendation that might finally be considered to be eventually enacted sometime after 2011. No one ever said they were speedy. At the very least, another 45,000 law school victims will be parted from their tuition dollars during this time and put on the conveyor belt towards eventual unemployment and inability to service their student debt. To top it all off, the ABA only proposes that schools hand out this “honest and transparent” information to students who are already admitted, i.e. those who have already invested time and money on their misguided journey into law school. They'll have thus already swallowed schools’ lies about the employment situation many times over. (“Yes, the economy is bad, but those graduates who work hard and get good grades will always do well.”) You know the drill.

Law students and recently-minted lawyers are truly assaulted on all sides in their struggle to keep their heads above water, service their massive debt, and keep food on the table. We are faced with an ignorant, uncaring, and negligent professional organization that has ceded all responsibility in defending and upholding the integrity of the legal profession. We have to deal with an even more ignorant general public who is still convinced that all lawyers “make the big bucks,” and that society always “looks out” for lawyers. We have to contend with an inept federal government that thinks more education and more students in law school is always the answer, and encourages schools to jack up their tuition in response to unlimited federal student aid. No one is asking for a pity party, but the very best that blathering commentators can ever do is claim that law students should have "done more research" or they should just "look harder" for those nonexistent jobs.

None of these problems are going to be solved overnight. Indeed, the skeptics among us will say that they are too far metastasized to ever be corrected. The fetid, fatal cancer that has been killing the legal profession for years is now moving in for the kill, and the over-saturation and perpetual decline in job prospects is but a symptom. This all may be true, and in my heart of hearts I’d agree that the horrible problems facing most law students and recent graduates are almost insurmountable. A good starting point in doing the right thing would be for the ABA to start taking its mission of promoting an honest, robust, and viable legal profession seriously. “Defending liberty, pursuing justice,” as their motto goes, cannot include sitting idly by while law schools bankrupt the profession of all credibility and debase whatever slim portion of prestige it still has by continuing to accept any student with $150,000 and a pulse. For as much as law schools like to claim that they are the gatekeepers of truth, justice, honesty, and all sorts of other feel-good buzzwords, it’s clear through their duplicity and entirely profit-driven motives that they are anything but. I don’t trust the ABA to solve the problem, as they have sat on their hands for years as the law school scam got woefully out of hand, but any step in the right direction must be better than continuing down the current path.

Career services steps up to the plate

Career Services counselors nationwide finally seem to be waking up to the reality that they have sat idly by while 50% or more of their recent classes graduated jobless. I was initially interested to see that someone in my school's office still has a pulse and is doing some flailing about to broaden the “opportunities” available to law student paupers.

While the bulk of a career services counselor’s time is spent trolling non-exclusive, publicly-available job boards and copying and pasting the postings to the school’s own job board, I was intrigued to note that my school’s office has given up on offering students a position within the law. Just look at a recent smattering of re-posted job listings from the school’s board:

Congressional campaign filed intern:

Field interns will work alongside staff on a fast-paced, high-energy campaign. Interns will be assigned leadership roles in all of the campaign’s field operations. You’ll have the opportunity to learn about field strategy development and implementation, and communicate directly with voters. As a field intern, you’ll gain valuable professional experience by working directly with staff to identify and mobilize voters to ensure victory on Election Day.

Responsibilities include, but are not limited to:

• Organizing and managing voter contact events.
• Taking an active role in volunteer recruitment, management, and retention.
• Helping maintain voter database.

Qualifications:

Ideal candidates will be hard-working and possess strong communication skills. Candidates should be outgoing, have a positive attitude, and the ability to work effectively in a fast-paced environment. Proficiency with Microsoft Office is highly desired.

Where’s the J.D. requirement? Where’s there even the requirement of ANY degree, period? Where’s the validation for my three years’ worth of invested time and $100,000 tuition? Most importantly, where’s the pay? Oh, wait, not only are law grads still being pushed into unpaid internships, but now the search for some kind of “employment” for students has become so desperate that students are encouraged to do volunteer door-knocking for political campaigns as a way of finding “work.”

Ted Brassfield: friend or foe?

Ever since unemployed 2009 law grad Ted Brassfield asked President Obama if the American Dream is dead a couple of days ago, there has been no lack of internet buzz. Brassfield himself seems to be taking full advantage of his 15 minutes, appearing on cable news shows and giving a short interview to the National Law Journal. Here in the realm of Scambloggia, the debate has veered away from whether Brassfield made good points (which I think he did), to whether he is a good representative of the struggling masses of unemployed J.D.s. Or, to put it more succinctly, whether Ted is a douche or not.

Worrying too much about whether he is a goofball or not is beside the point. Certainly, the focus of most news clips of him hasn't been on his personal life or potential failings as a lawyer. If anything, reaction has been something like, "Gee, even smart looking lawyer nerd kids are out of luck these days." For a movement that has had a hard time getting over the "cry me a river" factor from its detractors, any opportunity that arises to shine a light on unemployment and debt among law grads is a good one. Ted Brassfield is merely a vessel. He's the guy we can point out to our employed Boomer relatives on TV and say, "Look, it's not just me who's struggling! I'm not just 'whiny!'"

I don’t really care if Brassfield has an iPhone or takes vacations. The personal details of his life aren’t as important as are his 15 minutes in the spotlight as a member of the Lost Generation. Here’s a guy with a good resume: Princeton undergrad, some work history, and a top-30 law school. Most Americans would think he should be able to write his own ticket in life.

On paper, and without the (unverified) details about his vacation or cell phone purchasing habits, Brassfield's story is vintage Lost Generation. According to his interview with the NLJ, he had a lot of odd jobs, before finding something relatively stable, but he left it all for his abstract love for the law. Three years and six figures of debt later, he can't find work as a licensed attorney and does the odd contract job while looking for non-law work. As he explained to the President, any notion of getting married or starting a family has long since gone by the wayside.

Lest anyone accuse Brassfield of being your typical delusional toileteer who paid $150,000 to attend a TTT with dreams of landing a job with the feds, that's not really true. In fact, he's a lot like a lot of us scambloggers in that his alma mater is # 27-ranked Indiana University-Bloomington's Mauer School of Law. Despite Brassfield being unable to find real work as a 2009 grad, the school reported that 89.2% of their grads from the previous year were able to find employment. Brassfield must just be one of the unlucky ones. Oh, wait...he said that he does occasional contract work. THAT, sir, is employment for reporting purposes. Ted Brassfield, as far as your law school is concerned, you are "employed!"

Here's the most interesting portion of Brassfield's exchange with the NLJ:

NLJ: Why did you decide to go to law school?

TB: I had worked a variety of jobs before landing a gig as a researcher in a management consulting agency. I built myself a potentially lucrative career and had some really good prospects, but I didn't want it. I felt like life is too short not to love, or at least deeply care about, what you do. As long as I can remember, I've admired the work of attorneys who stood up for civil rights. There are opportunities as an attorney to really make a fundamental difference in people's lives. I liked the idea of the whole process of litigation, and doing it in the public interest.

NLJ: You graduated from law school in 2009. What have you been doing since then?

TB: I have paid the bills by sporadic contract work. I have tried to drum up non-legal work. I'm not yet a licensed attorney. I'm waiting on the results of the Colorado bar, where I'm originally from.

NLJ: What is your dream job?

TB: I would love to work for the federal government, and I hope that all this attention has not harmed my prospects for that. There are state attorney shops that are phenomenal and would be wonderful to work for. I'm primarily interested in the government sector. The experience I've had interning at the [U.S. Department of Housing and Urban Development] and the [Equal Employment Opportunity Commission] and the U.S. Attorney's Office here in D.C showed me that the resources the federal government can bring to bear are incredible-specifically with regard to training and support.

NLJ: How much debt do you have?

TB: I have six-figures of student loans, which were all accumulated in law school. I didn't want to work for a private firm while I was in law school. I wanted to get the experience of working at different federal agencies. I had these phenomenal practice-building experiences, but I didn't get paid for them.

Mr. Brassfield's law school experience and post-graduate hell doesn't sound the least bit unfamiliar to the Lost Generation. Whatever one might say about his attitude, appearance, personal spending habits (which mostly came from an unverified blog post, as far as I can tell), or overall level of “douchiness,” he’s still been scammed by law school. There are a lot of smug douches in law school. Yeah, their attitude can be grating, but that doesn’t make it any less unjust that they were swindled out of $100,000 and left to rot in perpetual unemployment.

Like the 40,000 other members of the class of 2009, Brassfield entered law school with dreams and interests (or at least some hope of employment), and graduated to find the rug pulled out from under him. We care not about the boring details of Ted's buying habits or vacations. We do care about the value of having someone on the news for one 24-hour cycle that can talk about student loan debt, unemployment, and the J.D. scam, and the long term feelings of hopelessness that go along with all of this. For all of these reasons, Ted Brassfield's 15 minutes of fame are A-okay with me, and I hope that enough non-lawyers, Boomers, and prospective law students see his sad tale of unemployment and begin to question their assumptions about law school.

Unemployed law grad asks Obama if American Dream is dead

Among today's big news headlines, other than the recession having been miraculously over since June 2009, was Obama's town hall meeting/gripefest/fiasco. Normally we here at ScammedHard! try and refrain from commentary on politics, but when the plight of yet another unemployed law graduate comes up in national news context, it's a great way to make more people aware of the law school scam.

According to the NYT, unemployed recent law graduate Ted Brassfield, "[a] 30-year-old law school graduate told Mr. Obama that he had hoped to pursue a career in public service — like the president — but complained that he could barely pay the interest on his student loans, let alone think of getting married or starting a family.

“I was really inspired by you and your campaign and the message you brought, and that inspiration is dying away,” he said, adding, “And I really want to know, is the American dream dead for me?”

Mr. Brassfield's employment problems and question to the President are, in a way, a lot like the problems thousands of unemployed law grads are facing. While not every older person has a stellar resume like Obama's, so many of today's unemployed grads are hearing canned responses to their woes that sound a lot like the President's. Mr. Obama told Mr. Brassfield, "Absolutely not. What we can't do, though is go back to the same old things that we were doing because we've been putting off these problems for decades...We are still the country that billions of people in the world look to and aspire to."

That doesn't sound too far from, "Gee, I know you've got it tough, young law grad, but look at all of the great opportunities you have. You have a LAW DERGEE, for Chrissakes! People would KILL to have the educational achievement you have. Do you know how much lawyers can make..."

It's all fluff! People in the world look to and aspire to us? Maybe, but that's just because they see a highly-stylized version of American life on TV! The most common line that I get from people when traveling abroad isn't about how great our economic system is, or how wonderful our rights and liberties are, it's "are American neighborhoods really like the cute ones with lawns that they have on the tele?"

The President and all of the apologists, from clueless parents, to law school administrators, and everyone else who is trying to downplay the systemic misery of this depression, just don't "get it." Yeah, they lived through the 70s oil crisis. Big deal. No one under age 80 knows what it's like to come of age and try and find a real, sustainable job in such a shitty economy. They can throw out as many platitudes and evidence of "economic warming signs" that they want, but at the end of the day, they have no idea what it feels like to be faced with the insurmountable hurdles that our generation is looking at. Even those unfortunate Boomers who have been laid off in this recession had decades of solid work experience behind them that shaped their worldview. They are floundering now because they can't cope with real poverty and feelings of uselessness, which is sad. At least they had a chance. Try spending your entire life being told that you could achieve something, that your education was the key to your success in life, and that a decent and fulfilling job was just around the corner, and then being denied that chance. Personally, I'd rather be old and laid off, than young and unable to ever get a start. At least those unemployed Boomers have their memories, rather than a lifetime of depressed earnings, delayed or never-begun family lives, crushing debt, and all of the other attendant horrors that are facing 20-somethings.

What we're seeing here, from the President on down, is a horrible generational disconnect. Obama has a good job, a decent paycheck, and relatively high job stability (at least until 2012...hoy-oh!). He's a "law school establishment" guy if there ever was one, with a host of legal industry feathers in his cap, from law review to summer associateship, to law professor. There's even that vaunted public-interest work in there. The President's life experience is, by any standard, atypical, and his resume is more sterling than practically anyone else's. However, I was still struck by the hammy, lacking-in-conviction response, that he gave to poor Mr. Brassfield. It still sounds like a clueless parent, or a dopey career counselor, all of whom are employed and unable to relate to the young unemployables, to say that "everything will be just fine, and we're just as awesome as we always were."

I could go on about the miseries that are crippling so many of our young lives and shutting us out of the ever-shrinking middle class that Obama is spending so much time talking up, but it would cover no new ground. I must, however, applaud Mr. Ted Brassfield for taking it to the President, and asking him a question worthy of any scamblogger. This man is the face of the hellish plight of the overeducated, indebted, under-employed Lost Generation. His American Dream is unlikely to ever pan out in the bountiful way that those of previous generations did. Perhaps it's time for a little further national delusion. Let's redefine the American Dream from whatever it was--2.3 kids, picket fence and a mortgage--or perhaps an Arthur Miller-esque ability to stroll out of the jungle and get rich? In the era of defining down, the new American Dream looks a lot more like $120,000 in student loan debt, underemployment at part-time, $7/hour work, no marriage, kids, or net contribution to society, and a whole heaping load of failure and despair. It's probably not what President Obama was thinking of when he claimed that the American Dream is still alive and well, but at least if we take an honest look at what this "dream" entails for today's young people, we can go on using the term rather than toss it in the dustbin of history, along with our economic robustness and high-flying sense of national achievement.