Boston College 3L Asks for His Money Back; Hilarity Ensues(abovethelaw.com)
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Boston College 3L Asks for His Money Back; Hilarity Ensues
http://abovethelaw.com/2010/10/boston-college-3l-asks-for-his-money-back-hilarity-ensues/
12 comments
IMO, the best solution to resolving the tuition pricing/lending issue is to strip away bankruptcy protection from the lender's side of the student loan equation.
I worked for a bankruptcy trustee for a couple of years, and it was an enlightening experience. Generally speaking, the greater the security, the higher the dollar amount you will be loaned. An example: A bank will loan you hundreds of thousands of dollars for a home, but only $10k in credit cards. Why? Because they mortgage security is the house. The bank has something to take. With credit cards, the debtor simply has to file for bankruptcy in order escape the debt. This introduces a level of accountability on the behalf of the lender.
Rewind to student loans. There is no accountability to the lender. You cannot escape student loan debt. Period. As a student lender, rather than evaluating the risk of default, I am left to focus on the debtor's ability to service the debt. I may even loan them more money than I think they can realistically pay back. Why? Because I'm able to borrow money at such low rates that I can generate a tremendous cash churn at a rate that is many times my borrowing rate. Even if I have to write off a portion of the loan value at the end of the term (the debtor dies or flat defaults and goes to jail), I'm still ahead of the game because I've been compounding my earnings for years.
It's a sick system with no escape for student debtors. The system was created to incentivize higher education, but the unintended consequence is that an entire market has sprung forth from a custom tailored opportunity for predator lending. Big surprise.
I worked for a bankruptcy trustee for a couple of years, and it was an enlightening experience. Generally speaking, the greater the security, the higher the dollar amount you will be loaned. An example: A bank will loan you hundreds of thousands of dollars for a home, but only $10k in credit cards. Why? Because they mortgage security is the house. The bank has something to take. With credit cards, the debtor simply has to file for bankruptcy in order escape the debt. This introduces a level of accountability on the behalf of the lender.
Rewind to student loans. There is no accountability to the lender. You cannot escape student loan debt. Period. As a student lender, rather than evaluating the risk of default, I am left to focus on the debtor's ability to service the debt. I may even loan them more money than I think they can realistically pay back. Why? Because I'm able to borrow money at such low rates that I can generate a tremendous cash churn at a rate that is many times my borrowing rate. Even if I have to write off a portion of the loan value at the end of the term (the debtor dies or flat defaults and goes to jail), I'm still ahead of the game because I've been compounding my earnings for years.
It's a sick system with no escape for student debtors. The system was created to incentivize higher education, but the unintended consequence is that an entire market has sprung forth from a custom tailored opportunity for predator lending. Big surprise.
"flat defaults and goes to jail" - the following isn't a joke question: do you actually mean that people go to prison for defaulting on a loan? I thought debtors' prisons were... a concept we got past around the Victorian era?
Sorry, no. That was hyperbole. You're not in jail in a traditional sense, but there are a laundry list of bad things that will happen, making it seem like you are. I'm talking things like wage garnishment and draining bank accounts. It's difficult to live a life based on cash (as in green paper), so at some point, the banks will catch up with you and drain your accounts. It's next to impossible to lead a normal life when you can't even save up enough money to pay cash for a $5000 car. The impact of wage garnishment on employment are significant as well. How motivated would you feel to show up to work, knowing that you'll never see the majority of your wages. This drives a lot of people to do stupid things like commit fraud, which can result in jail time if you repeatedly break the law.
You literally end up on the run from your debt. That's not a life you want to live.
You literally end up on the run from your debt. That's not a life you want to live.
Interesting comment.
In regards to the MBA question - the reason as many MBA's are not affected is because of the life experience MBA candidates have before applying. A decade of life experience, in the form of an undergrad degree and some time working, means that MBA candidates have a much more realistic understanding of the benefits of further study. Add to that the fact that MBAs are generally slightly shorter, and as a group they are making wiser decisions.
In terms of the medical problems, I believe the free market will solve this problem if given a chance. The problem right now is that because such a large percentage of people do not pay for medical care out of their own pocket, they don't care about value for money. How do I know my Medical Insurance Company is not getting ripped off? Well, I don't. And infact, I'm insentivised not to care - it doesn't directly effect me.
In regards to the MBA question - the reason as many MBA's are not affected is because of the life experience MBA candidates have before applying. A decade of life experience, in the form of an undergrad degree and some time working, means that MBA candidates have a much more realistic understanding of the benefits of further study. Add to that the fact that MBAs are generally slightly shorter, and as a group they are making wiser decisions.
In terms of the medical problems, I believe the free market will solve this problem if given a chance. The problem right now is that because such a large percentage of people do not pay for medical care out of their own pocket, they don't care about value for money. How do I know my Medical Insurance Company is not getting ripped off? Well, I don't. And infact, I'm insentivised not to care - it doesn't directly effect me.
Another point: the market for MBAs is nowhere near as overly saturated as the market for lawyers.
Specific MBA concentrations, notably marketing and possibly finance, are nearing saturation though.
Specific MBA concentrations, notably marketing and possibly finance, are nearing saturation though.
When I went to law school, orentation consisted of 3 days of being repeatedly told:
1) Your degree will not get you the salaries you expect. You will be paying these loans off forever. 2) Most law school grads hate being lawyers 3) There is an extremely high level of dis-satisfaction with this degree and this career path. 4) If any of this bothers you, LEAVE NOW.
I am the only member of my class who actually listened, and left after one semester.
Nobody can blame the schools, as they seem to be very clear on these issues.
1) Your degree will not get you the salaries you expect. You will be paying these loans off forever. 2) Most law school grads hate being lawyers 3) There is an extremely high level of dis-satisfaction with this degree and this career path. 4) If any of this bothers you, LEAVE NOW.
I am the only member of my class who actually listened, and left after one semester.
Nobody can blame the schools, as they seem to be very clear on these issues.
I heard the same stuff in orientation and even as someone who was intrigued (my high school US History teacher was a former lawyer) by law school from a young age I went into it open to leave.
The first year should definitely tell you if you want to spend your life in a law related capacity. Personally I'm glad I stayed but it isn't for everyone and like the guy in the article has found it's a very difficult path to leave.
The first year should definitely tell you if you want to spend your life in a law related capacity. Personally I'm glad I stayed but it isn't for everyone and like the guy in the article has found it's a very difficult path to leave.
This article seems to reflect the "entitlement" approach to education. It's up to the person entering school to determine whether the time and debt are worth it to them when they sign up not when they fail to get a job. It is not career services' job to get you a job. They should provide the resources and training to give you a better chance. However, in the end either you made a good choice or a bad one going to school. Either you're someone who has the initiative to get a job or you aren't. Schools are in business to make money, not to get people jobs. They're going to use the same marketing tricks as everyone else.
* They're going to use the same marketing tricks as everyone else.*
Exactly. We are bombarded by claims of "give us money and good things will happen to you" every single day. The message from "society" (and colleges themselves) about the benefits of college may have somewhat nobler-than-average motivations, but in the end these claims must be scrutinized in the same way as spam about Viagra or late-night infomercials.
In the end, unfortunately the issue of whether or where to go to school is entangled with many soft issues that make it difficult to employ a strictly rational analysis. For instance, if I believe the advice that I should do what I love, it's harder to come to grips with the fact that the schooling required to do so is a bigger financial bet than I can afford to make. I don't think we need special mechanisms (like tuition refunds) for people who made this particular bad bet though.
Exactly. We are bombarded by claims of "give us money and good things will happen to you" every single day. The message from "society" (and colleges themselves) about the benefits of college may have somewhat nobler-than-average motivations, but in the end these claims must be scrutinized in the same way as spam about Viagra or late-night infomercials.
In the end, unfortunately the issue of whether or where to go to school is entangled with many soft issues that make it difficult to employ a strictly rational analysis. For instance, if I believe the advice that I should do what I love, it's harder to come to grips with the fact that the schooling required to do so is a bigger financial bet than I can afford to make. I don't think we need special mechanisms (like tuition refunds) for people who made this particular bad bet though.
"Schools are in business to make money, not to get people jobs."
And the soonest everyone realizes this, the better off they will be. The problem, as I see it, is that they present themselves as this romantic ideal of higher purpose / education.
At least ITT Tech has the decency to tell you that they're focused on getting you a job. Even though they usually don't (from what I've heard).
And the soonest everyone realizes this, the better off they will be. The problem, as I see it, is that they present themselves as this romantic ideal of higher purpose / education.
At least ITT Tech has the decency to tell you that they're focused on getting you a job. Even though they usually don't (from what I've heard).
This is stupid. 3rd year student, going to graduate soon with a law degree, can still return back to teaching if he wants afterward, doesn't have to forfeit house and home to pay back loans. He will be just fine. He made the decision to go in the first place so he must have understood what taking loans would be like.
He started in 2008--before the financial crisis. His assumptions about paying off loans didn't include a once-in-a-generation economic event.
And to be honest, you don't know if his financial problems will deteriorate to the point where he'll have to sell his home. Assuming he got a 50% stipend (he probably didn't), he still owes BC $60,000. How will he pay that back on a teacher's salary?
And to be honest, you don't know if his financial problems will deteriorate to the point where he'll have to sell his home. Assuming he got a 50% stipend (he probably didn't), he still owes BC $60,000. How will he pay that back on a teacher's salary?
In the UK, you pay back student loans at a rate dependent on your earnings, so he would have no problems paying it back, even if it took 50 years it would never become a hardship. I'm guessing the US is not so generous/socialist though.
From what I understand, there are ways you can negotiate you payments down to a minimum of 50$ a month. I'm not sure how that stuff works but there many ways of paying loans back.
I was implying he stay at law school and finish it out. Does he owe BC the money, or a bank?
Oh true, he wouldn't necessarily owe BC. Probably a bank or Sallie Mae.
Still, his degree's ROI is probably very negative right now. No harm in trying, and his letter has created a great discussion.
Still, his degree's ROI is probably very negative right now. No harm in trying, and his letter has created a great discussion.
"A lot of people will argue that this kid didn’t purchase a J.D., he purchased an education and a way of thinking, and he cannot just “return” these things in exchange for his money back. You know who will say those things? Law professors, deans, and other theorists who have idealized the process of “thinking like a lawyer.”"
You know who else will say those things? Web designers, web developers, and pretty much anyone else in a service industry. Designers/developers can only promise you a well-functioning web site, not a successful web-based business. Likewise, a school can only promise to give you decent classes, not a successful career.
Lack of success does not entitle you to a refund on work already performed on your behalf.
You know who else will say those things? Web designers, web developers, and pretty much anyone else in a service industry. Designers/developers can only promise you a well-functioning web site, not a successful web-based business. Likewise, a school can only promise to give you decent classes, not a successful career.
Lack of success does not entitle you to a refund on work already performed on your behalf.
I believe your analogy to web developers fails because the purpose of education, at least in how they describe themselves, is presented as something superior to commerce. And yet, all their actions and policies are (becoming more) commercial in nature.
When I, as a web dev, contract with a business, we're both aware of the commercial aspect of the relationship.
Schools, OTOH, present themselves as mentors. Who happen to drive you hundreds of thousands of dollars in debt in order to build a grander institution.
I think schools (esp JD school) is more similar to the methods described in "Economic Hit Men". Briefly, the World Bank would overlend money to developing countries at the behest of U.S. political and corporate interests. Those U.S. based interests would pretend like getting so much lent to countries like Indonesia and Saudi Arabia was in their best interest, when it really was done for the benefit of the US groups. Schools appear similar to that, to me.
When I, as a web dev, contract with a business, we're both aware of the commercial aspect of the relationship.
Schools, OTOH, present themselves as mentors. Who happen to drive you hundreds of thousands of dollars in debt in order to build a grander institution.
I think schools (esp JD school) is more similar to the methods described in "Economic Hit Men". Briefly, the World Bank would overlend money to developing countries at the behest of U.S. political and corporate interests. Those U.S. based interests would pretend like getting so much lent to countries like Indonesia and Saudi Arabia was in their best interest, when it really was done for the benefit of the US groups. Schools appear similar to that, to me.
While most likely in jest, this is likely going to be a problem at many institutes of higher education. College grad unemployment is just 4.4% but how many people get jobs in their field of study or even remotely taking advantage of their degree/experience in college?
As someone who is facing the same problem as this BC student it's scary to think about the decisions I made 4 years ago to get to this place. I never dreamed of being in BigLaw and have always seen myself practicing law in an alternative area but I know people who were counting on law school/college/MBA to be a generic meal ticket.
The direct link has the whole letter but the ATL writeup had interesting commentary: http://eagleionline.com/2010/10/15/open-letter-to-interim-de...
As someone who is facing the same problem as this BC student it's scary to think about the decisions I made 4 years ago to get to this place. I never dreamed of being in BigLaw and have always seen myself practicing law in an alternative area but I know people who were counting on law school/college/MBA to be a generic meal ticket.
The direct link has the whole letter but the ATL writeup had interesting commentary: http://eagleionline.com/2010/10/15/open-letter-to-interim-de...
These people are serious. They think they're entitled to a job after graduation from school. One of my younger acquaintances was asking around about how to sue his art school for not providing an education that got him a job.
Not defending anyone, but this is partly the result of everyone in my generation being told "go to college so you can get a (better) job" which of course morphs into "go to college and you'll get a (well paying) job".
And let's be honest. Every school offering professional degrees is pretty much advertising, implying, and pushing the idea that if you come to this school, you will get a degree that will get you a well paying job. My school (Waterloo) does this with their engineering program (which I am enrolled in), and so does nearly every other 'top tier' engineering, law, and medical program. Granted, none of them outright say it, or promise it, but it's so heavily implied, that you have to cut our generation a bit of slack. Not that it completely excuses us.
And let's be honest. Every school offering professional degrees is pretty much advertising, implying, and pushing the idea that if you come to this school, you will get a degree that will get you a well paying job. My school (Waterloo) does this with their engineering program (which I am enrolled in), and so does nearly every other 'top tier' engineering, law, and medical program. Granted, none of them outright say it, or promise it, but it's so heavily implied, that you have to cut our generation a bit of slack. Not that it completely excuses us.
I'm pretty skeptical of all advertising now. I learned that in college not from it failing to prepare me for work, but because that was explicitly taught in classes. If people need defenses from the colleges now then perhaps that needs to be taught in high school. I'm willing to accept that that skepticism is not a "natural skill" but then it needs to be taught to people before they can be exploited in ways that will ruin the rest of their life. Of course there's a counter incentive in that the whole consumer economy relies on a lack of that skill.
Edit: These sorts of lessons would best be taught by parents but right now many seem to have lost the same skills through marketing to their belief that their child is the best ever and that they have to do everything to make sure their child has all the advantages possible.
Edit: These sorts of lessons would best be taught by parents but right now many seem to have lost the same skills through marketing to their belief that their child is the best ever and that they have to do everything to make sure their child has all the advantages possible.
Okay, before we go any further: can we skip the comments about the responsibility behind taking loans?
It's hard to accurately calculate your degree's ROI when, between applying in 2007 and finishing in 2011, this country experiences the worst recession of the last 70 years. No one expected this job market four years ago.
It's hard to accurately calculate your degree's ROI when, between applying in 2007 and finishing in 2011, this country experiences the worst recession of the last 70 years. No one expected this job market four years ago.
tl;dr: "I was convinced to go to law school by empty promises of a fulfilling and remunerative career"
I've got no sympathy for this guy. I challenge him to come up an actual promise by the Law School that he'd have a "fulfilling and remunerative career". Oh, sure, they might have published starting salary statistics from recent years, but how is this different from any other case where you assume good times last forever? Did you found a dot com in late 1999? Did you buy a house in 2006? Did you invest in silver in early 1980? In fact, in this case, he's even better off that the people who made these other investments, because it's entirely up to him what he does with this education. John Cleese and John Chambers both have law degrees, but were never hired by a big name law firms.
I've got no sympathy for this guy. I challenge him to come up an actual promise by the Law School that he'd have a "fulfilling and remunerative career". Oh, sure, they might have published starting salary statistics from recent years, but how is this different from any other case where you assume good times last forever? Did you found a dot com in late 1999? Did you buy a house in 2006? Did you invest in silver in early 1980? In fact, in this case, he's even better off that the people who made these other investments, because it's entirely up to him what he does with this education. John Cleese and John Chambers both have law degrees, but were never hired by a big name law firms.
Yeah, but this is like asking for a refund after you've already eaten two-thirds of the meal. If you want your money back shortly after starting, fine. But this guy already received 2.5yrs of legal training. Full refund? No way.
He wants his money back because he can't find a job in his field? Has he never met a History major? Literature? Political Science? Economics? Unless the Dean got his wife pregnant, this sounds like a personal problem.
To what extent is this predicament a function of the mismatch between his understanding of the signal sent by the BC brand and BigLaw's understanding of the signal sent by the BC brand?
BigLaw in Boston actually hires quite a few BC grads.
It's ranked 15 by one of the legal journals, I forget which.
It's also very strong in IP and corporate law. It is a feeder school for many "biglaw-esque" IP law firms in Boston and NYC. It's the back up plan of many MIT engineering students who feel like they are underpaid and did not have the foresight to work on wall street during the 2000s.
It's also very strong in IP and corporate law. It is a feeder school for many "biglaw-esque" IP law firms in Boston and NYC. It's the back up plan of many MIT engineering students who feel like they are underpaid and did not have the foresight to work on wall street during the 2000s.
http://money-law.blogspot.com/2010/10/where-partners-come-fr...
It's apparently ranked #30 in terms of # of partners at BigLaw firms. It's an objective metric, but I readily admit that it's of unclear significance since it's not weighted for class size and cannot account for interest or lack thereof in BigLaw at these schools.
It's apparently ranked #30 in terms of # of partners at BigLaw firms. It's an objective metric, but I readily admit that it's of unclear significance since it's not weighted for class size and cannot account for interest or lack thereof in BigLaw at these schools.
Does anyone rank # of 1st year hires?
Good point - I guess that is the more relevant question. I'm not sure of the answer.
A lot of people will argue that this kid didn’t purchase a J.D., he purchased an education and a way of thinking, and he cannot just “return” these things in exchange for his money back. You know who will say those things? Law professors, deans, and other theorists who have idealized the process of “thinking like a lawyer.”
But this kid (and thousands out there like him) did not go to law school to gain some intangible brain stimulation. They went to law school in order to get a job. That’s the whole point of a professional school. Deans who don’t understand that point do a disservice to their students.
Now this is just sad. Is this not why the education system sucks? A part of the problem is the difference between agendas of students (even among themselves) and institutions.
But this kid (and thousands out there like him) did not go to law school to gain some intangible brain stimulation. They went to law school in order to get a job. That’s the whole point of a professional school. Deans who don’t understand that point do a disservice to their students.
Now this is just sad. Is this not why the education system sucks? A part of the problem is the difference between agendas of students (even among themselves) and institutions.
This is a major contributing factor in the deterioration of the quality of higher education. There are two ways to approach higher education. As an opportunity to gain access to resources, knowledgeable professors, and fellow students to aid in gaining knowledge. Or, as a burden of little more than money and time that one must endure in order to obtain the credentials necessary to get ahead in the job market.
The latter is a self-perpetuating cycle so long as people buy into the credentialism of a college degree, but that road is utter uncritical of the quality and so is ultimately destructive (of the quality of knowledge and experience imparted by degree programs and also of the time and money spent pursuing them).
The latter is a self-perpetuating cycle so long as people buy into the credentialism of a college degree, but that road is utter uncritical of the quality and so is ultimately destructive (of the quality of knowledge and experience imparted by degree programs and also of the time and money spent pursuing them).
It's easy to judge the author for feeling "entitled" to a high-paying post-law-school job, and - just to get this out of the way - obviously he isn't (entitled). Yes, he made his own choices, and just like he would have been screwed getting his telegraph-repairman certificate circa 1900, there's always a certain amount of risk one takes choosing a career.
That said, the way many law schools - particularly top-50 schools like BC - market themselves is indeed as pathways to high-paying Big Law jobs, and indeed is the only way they can justify the tuition. His complaint (which I obviously have no way to really evaluate) about BC Career Services being less-than-helpful is very relevant here.
All that said, the underlying problem is more complex than "BC is greedy" or "the author made a boneheaded career choice" - there's a structural shift in the market for lawyers (there were too many, market was oversaturated), and a bunch of people who made choices based on market conditions in 2007 are pretty screwed. Yes, they all bear some responsibility; what now, though - does this guy go back to teaching and have $100K+ in debt while pulling down "normal-person" wages? Law school tuition, to a large extent, reflects expected earnings. You radically change half of that equation, and things start to break (and yes, you can declare personal bankruptcy... except that student loan debt is among the most difficult to dispose of, even via bankruptcy).
Over time, I suspect (though who really knows?) that either salaries or tuitions or both will adjust, if not in nominal than in real (inflation-adjusted) terms. But what about the several "lost generations" of JD's with mountains of debt but no jobs? I don't have an easy answer - "universal JD loan amnesty" doesn't sound like a great idea either, and who would fund such a thing anyway? - but it's a problem worth considering.
This is actually somewhat similar (though of course not identical) to the structural problem confounding many health care reformers. Medicine in the US is really expensive; part (though by no means all) of the problem is that doctors, especially specialists, are paid a lot. A big part of the reason why (though maybe it's more accurate to say it's a correlation - I'm not really sure what the causal direction is) is that after a really long time in school, you graduate with ~$500K of loans, and then (in most cases) live in penury during your residency. You sort of have to be able to cash out at the end of the rainbow, otherwise it's not just unattractive but borderline impossible for anyone who isn't otherwise independently wealthy.
So what do you do? It's straightforward and simple to say, "doctors should just make less, and tuition should be correspondingly lower." But of course we're not in a giant central planning system, and even if we were, it's not like that's a switch you can flip overnight. If you suddenly started paying all doctors less, how would the class of 2010, with that half-mil in loans, make good on those? Everyone (or at least a great many people) realize that there's a structural problem, and the vague outlines of a better equilibrium... but how you get from A to B is a lot less clear.
(Disclaimers: there's all sorts of other reasons why medicine isn't really a proper perfect market, etc. It's not a perfect analogy, etc.)
Fun exercise for the reader: why are new minted MBAs not in the same boat? Anecdotally, many are, but not as many as new lawyers.