JD Unemployment Reaches New High (15%)

[Saddle Up]

I wonder what the real default rate is when all these people are factored in to the total. 50%? A lot of this debt is never, ever getting paid off.

Maybe this has been addressed on TLS but I have yet to see it mentioned. What exactly happens to those who fail to make tuition payments? Are these people riddled with nasty collection calls or worse? Does anyone know firsthand?

As a side question what about those who were offered a good job but cannot pass the bar, wouldn’t this add fuel to the notion that law school is a scam when it fact that’s not always the case?

[starry eyed]

I wonder what the real default rate is when all these people are factored in to the total. 50%? A lot of this debt is never, ever getting paid off.

Maybe this has been addressed on TLS but I have yet to see it mentioned. What exactly happens to those who fail to make tuition payments? Are these people riddled with nasty collection calls or worse? Does anyone know firsthand?

As a side question what about those who were offered a good job but cannot pass the bar, wouldn’t this add fuel to the notion that law school is a scam when it fact that’s not always the case?

don't you just never get a tax refund again?

i think pretty much everyone passes the bar by their 5th try

[Johann]

Before PAYE and IBR were as open as they were, I clerked at a shitlaw firm. The attorney there didn't make loan payments and was just planning on defaulting. She told me her sister had completely defaulted on her law school debt with little to no consequences. Bought a condo in the city without much hassle. She said loan collectors would bug her sister and they would probably take a third of the balance to settle it in full. This is why the government came out with PAYE. There is really nothing you can do to people not paying their debt who don't have the money without a debtor's prison. The government realized they were about to lose a shitload of money because everyone was defaulting within the first couple years of graduation. The government sold that debt for a major loss. Now at least the government locks up a percentage of your earnings for 20 years hoping that at some point you start making a lot more money.

Ultimately, I've heard the number thrown around by multiple but not a ton (5-10) older lawyers through the grapevine that defaulted debt was sold to a collections agency and they would happily settle for 1/3 of the total balance.

[Tiago Splitter]

Maybe this has been addressed on TLS but I have yet to see it mentioned. What exactly happens to those who fail to make tuition payments? Are these people riddled with nasty collection calls or worse? Does anyone know firsthand?

The school gets the money up front so they take on zero risk. If you don't pay tuition you don't get to go to school. After graduating these days everyone just goes on PAYE, and whether the loans are public or private the government provides a guarantee so there's little incentive for lenders to push hard to collect from the borrower.

As a side question what about those who were offered a good job but cannot pass the bar, wouldn’t this add fuel to the notion that law school is a scam when it fact that’s not always the case?

The people who can't pass a bar exam disproportionately come from the schools that place terribly. There isn't much overlap between people who get good jobs and people who fail the bar.

[A. Nony Mouse]

I wonder what the real default rate is when all these people are factored in to the total. 50%? A lot of this debt is never, ever getting paid off.

Maybe this has been addressed on TLS but I have yet to see it mentioned. What exactly happens to those who fail to make tuition payments? Are these people riddled with nasty collection calls or worse? Does anyone know firsthand?

As a side question what about those who were offered a good job but cannot pass the bar, wouldn’t this add fuel to the notion that law school is a scam when it fact that’s not always the case?

These days, with PAYE, there shouldn't be anyone "defaulting" - you just sign on for PAYE and don't pay anything when you can't afford it (it still counts as a "payment" under the income-based plan).

I think Johann is right about the settling for 1/3 thing - Elie Mystal on ATL did this, I think.

Defaulting (as in never paying/doing anything to get on PAYE) will disqualify you for certain federal government jobs. Of course, if you had one of those on the horizon you probably aren't going to default, so I doubt that's much of an issue in practice.

[BruceWayne]

I think people are exaggerating the no consequences to default thing. if they're Fed loans and you default your wages can be garnished. Also good luck getting a mortvae or a nicer apartment with these new harsh credit checks. You'll also be buying your car from one of those Buy here pay here dealers with 20% interest. But no obviously you won't go to jail.

[AReasonableMan]

Before PAYE and IBR were as open as they were, I clerked at a shitlaw firm. The attorney there didn't make loan payments and was just planning on defaulting. She told me her sister had completely defaulted on her law school debt with little to no consequences. Bought a condo in the city without much hassle. She said loan collectors would bug her sister and they would probably take a third of the balance to settle it in full. This is why the government came out with PAYE. There is really nothing you can do to people not paying their debt who don't have the money without a debtor's prison. The government realized they were about to lose a shitload of money because everyone was defaulting within the first couple years of graduation. The government sold that debt for a major loss. Now at least the government locks up a percentage of your earnings for 20 years hoping that at some point you start making a lot more money.

Ultimately, I've heard the number thrown around by multiple but not a ton (5-10) older lawyers through the grapevine that defaulted debt was sold to a collections agency and they would happily settle for 1/3 of the total balance.

I don't understand. Couldn't they have attached a lien to the condo under the fraudulent conveyance doctrine? How's this any different than a mortgage on the condo?

[BruceWayne]

Fraudulent conveyance? You don't have to file bankruptcy when you default. Actually it doesn't help because student loans aren't discharged in bankruptcy. The problem with defaulting is that it's a Credit score death sentence and they can eventually garnish your wages.

[Johann]

I dont know the specifics. It was a sister of the girl I worked with. According to her, she bought a $200k ish property in roughly 2009. I estimate she graduated from law school in 2005ish and by the time of the condo in 2009 had already defaulted on her loans. I don't know if her loans were through government or private lenders. But whoever they were through she had defaulted on the loans, the original lender sold the loan to a collections agency and she never paid the collections agency despite thinking they would take 30 cents on the dollar - she still considered that a rip. I have no idea what this person is up to today.

Getting money out of people once you have a judgment is a shitton of work. Getting a judgment is a whole other task in itself.

[Saddle Up]

Does the15% unemployment stat bypass those who have school funded jobs? Unfortunately, like a number of schools my LS has a SFJ program and I hear that these participants are desperately looking for permanent work. (Sorry if this was addressed earlier, did not read the whole thread).

BTW: As a side note, my sis (1st year JA) was just here (I live at home and everyone seems to be mesmerized by basketball games) . She said PAYE has an income cap on who can partake (she can’t). She said she thought PAYE was a good cushion. Given her extreme workload I thought biz was good but for whatever reason she said it's tough out there.

[Tiago Splitter]

You only get the benefit of PAYE if your payment under the program (10% of your discretionary income) is less than what you'd pay under a standard ten year repayment plan. So if you're in biglaw and your PAYE payment is $1500 but your ten year payment would be $2000, you're only required to pay $1500. But if you managed to graduate with less debt and your ten year payment is only $1200, you just pay the $1200.

But no, there is no income cap, and if your income drops and makes you eligible for PAYE you can get on it later.

[JCougar]

I wonder what the real default rate is when all these people are factored in to the total. 50%? A lot of this debt is never, ever getting paid off.

Maybe this has been addressed on TLS but I have yet to see it mentioned. What exactly happens to those who fail to make tuition payments? Are these people riddled with nasty collection calls or worse? Does anyone know firsthand?

You can basically go on PAYE or IBR and make $0 payments for 20-25 years. I've been doing this for the last year and not using deferments. There's no limit as to how many $0 payments you can make if you actually get on those plans and never make above poverty-level wages--which, if you try to support a family as a doc review attorney, you probably never will. Your loan debt might balloon to like $600-700K by that time, though. You run out of deferments after like 3 years or so, so you're better off just getting on these plans as soon as you can, and getting your forgiveness clock ticking.

Like I said, I've met countless attorneys with grey hair that have been practicing for 20-30 years and they still have loan debt. Some that I work with have more than when they started because they haven't even been able to make interest payments. If you took out loans a while ago, you weren't eligible for all these repayment plans. And this was when law school was much cheaper and the job market for lawyers was better. The pay for shitlaw jobs really hasn't increased at all over the last 20 years or so because of massive labor saturation and lots of more conservative rulings and laws passed to make it harder to sue anyone at all. Also, insurance companies are cracking down. And a lot of stuff is governed by arbitration agreements and mediation right now, which means less work for attorneys.

Anyhow, my guess is that in 10-20 years, this loan debt business is going to start wreaking all sorts of havoc on the federal budget, and they're going to have to do something to forgive it. Then they're going to have to raise taxes on rich people like the Biglaw lawyers who "made it" just to cover the cost of all this nonsense. So people who stick around in Biglaw will basically be paying off their own loans and everybody else's. More fun for them, I guess.

[JCougar]

The people who can't pass a bar exam disproportionately come from the schools that place terribly. There isn't much overlap between people who get good jobs and people who fail the bar.

Yeah, I was gonna say this too. The only employers that hire you before you pass the bar are employers that have pretty elite standards for school rank and GPA. It does happen that Biglaw attorneys fail the bar the first time if they are goofing off thinking that they have everything wrapped up. But my guess is that after failing it once, they get on the beam pretty quick, and almost all will end up passing if they take the bar at least halfway seriously.

[Paul Campos]

Couple of things:

(1) Per the latest numbers only 34% of federal educational loans are in full repayment. This means their balances are up to date and they're being paid off in full, on either the 10 or 25 year plans. The rest are either in deferment, IBR of some type, or default. Given that there's $1.2 trillion in student loan debt out there, and that number is expected to double in the next ten years, this is going to be a big political issue, especially if the GOP takes the presidency next year.

(2) Nobody really knows what the legal situation is per retroactive changes to the various IBR/PSLF programs. There are a bunch of arguments but basically no precedent, so if Congress/POTUS attempts to change things retroactively it's going to be very messy. (Of course they can do whatever they want to the programs prospectively.

(3) Another thing that's up in the air is how this stuff is all going to play out in the context of divorce/marital property law. That's also likely to prove very messy over the next decade or two.

[BiglawAssociate]

Couple of things:

(1) Per the latest numbers only 34% of federal educational loans are in full repayment. This means their balances are up to date and they're being paid off in full, on either the 10 or 25 year plans. The rest are either in deferment, IBR of some type, or default. Given that there's $1.2 trillion in student loan debt out there, and that number is expected to double in the next ten years, this is going to be a big political issue, especially if the GOP takes the presidency next year.

(2) Nobody really knows what the legal situation is per retroactive changes to the various IBR/PSLF programs. There are a bunch of arguments but basically no precedent, so if Congress/POTUS attempts to change things retroactively it's going to be very messy. (Of course they can do whatever they want to the programs prospectively.

(3) Another thing that's up in the air is how this stuff is all going to play out in the context of divorce/marital property law. That's also likely to prove very messy over the next decade or two.

LOL But dat "prestige" of getting a degree...

[bearsfan23]

Couple of things:

(1) Per the latest numbers only 34% of federal educational loans are in full repayment. This means their balances are up to date and they're being paid off in full, on either the 10 or 25 year plans. The rest are either in deferment, IBR of some type, or default. Given that there's $1.2 trillion in student loan debt out there, and that number is expected to double in the next ten years, this is going to be a big political issue, especially if the GOP takes the presidency next year.

(2) Nobody really knows what the legal situation is per retroactive changes to the various IBR/PSLF programs. There are a bunch of arguments but basically no precedent, so if Congress/POTUS attempts to change things retroactively it's going to be very messy. (Of course they can do whatever they want to the programs prospectively.

(3) Another thing that's up in the air is how this stuff is all going to play out in the context of divorce/marital property law. That's also likely to prove very messy over the next decade or two.

I completely agree with all these points, but what I'll never understand is how everyone on this board somehow thinks this is a law school issue. This is an issue for higher education at ALL levels.

People criticize law students for taking on debt, but at least there are BigLaw jobs that pay well. That isn't true in other forms of higher education. I mean, here at Chicago, getting a Masters in social work costs $150k, and virtually zero entry level social workers make more than $50k.

In terms of student loans/debt payments, law students are probably on the middle of the "fucked" scale.

[AReasonableMan]

Wouldn't the PAYE system incentivize sketchy ma and pa law firms to start paying people off the books? Way back when I had odd jobs in cash businesses, there weren't any records kept and many of my coworkers also collected food stamps and welfare. Wouldn't PAYE give similar incentives

It's a law school issue because law school is more expensive than other graduate programs. It often subsidizes other graduate school programs. Additionally, in other professions there is more of an incentive to take the full ride. With law there is the knowledge you may be sacrificing x percentage chance of getting a big law position, clerkship, etc.

[Tiago Splitter]

Wouldn't the PAYE system incentivize sketchy ma and pa law firms to start paying people off the books? Way back when I had odd jobs in cash businesses, there weren't any records kept and many of my coworkers also collected food stamps and welfare. Wouldn't PAYE give similar incentives

There are lots of reasons why people want to be paid under the table, FICA/FUTA/income taxes chief among them. But employers have a much tougher time taking deductions for salaries they don't report. PAYE doesn't change that.

[JCougar]

The hardest part about applying for secretary positions with a JD from a Top 20 school is convincing HR that you are serious, and you are not just doing so out of cynical anger at the entry-level legal job market. I got a call from a place where I applied to be a secretary yesterday, and it was more of a screener to see if I was really actually serious about wanting this secretary job. It pays about $40K, which is more money than about half the class from my school is making right now. Plus, it is a government job, which means loan forgiveness and good healthcare, which is way more than most others can say.

The tone of the person that called me was more one of offense--they fully expected me to be some punk kid applying as a joke of sorts. I could tell that they didn't even want to make this call, but some other manager probably told them they had to. I really had to try hard to explain to this lady that $40K is a fantastic salary for a new lawyer, and that no--this absolutely wasn't a joke, and I would even work there for $30K if it meant proper healthcare. See, I don't make above the Medicaid income line where Obamacare kicks in--and I also live where state Republicans refused to close the Medicaid gap to spite Obama. Since I don't have kids, I don't qualify for Medicaid here no matter how little I make. So I'm SOL on healthcare. The only bright side is that if I get sick enough, maybe it will create a sympathetic enough case for the bankruptcy judge to flush my student loan debt down the toilet along with my medical bills under the "extreme hardship" exception to student loan debt discharge.

I don't think I have a good chance at getting this job, though. The harder and harder I tried to explain it to this HR lady--that yes, if you went to a law school ranked in the top 10% of all law schools in the nation (but one that falls short of the top 5%), that $30K/year with government benefits would be an unbelievable windfall for most of us--the more angry she became with me and the more convinced she was that this was some sort of joke.

This sort of predicament perfectly exemplifies the disconnect between the public's (and 0Ls', for that mater) perception of the average career option for a JD grad--and the harsh, depressing, and hopeless realities most of us face. That gulf may as well be the Grand Canyon, and contained within this wide abyss exists the difficulty in getting just any old non-law job if you strike out at OCI.

God help me when I apply at that factory where that guy I represented as a volunteer was working. He had GED and three DWIs, but he was making $20/hour, which is more than most lawyers I know. I told him he shouldn't take his job for granted, and that I would be applying soon. He didn't take me seriously, so I'll be excited to see his face if/when I show up at his building with a lunch pail and a pair of work boots--boots that I picked up second-hand at the Salvation Army, of course, because God knows I don't have enough money to buy new ones. But on top of that, whatever stuff he's putting together on the assembly line is very likely more interesting than most legal work anyhow. And you can cuss and swear at work and come in hungover and it doesn't matter. How lucky some of us have it.

[starry eyed]

Is this JCougar's thread for periodic sad updates now? Jesus man, just fucking save up some money, hang a shingle, hustle, do dui cases, wills, elder law, etc. Have you seen Better Call Saul?

I used to like you, but this is getting pathetic. Do you get off on people feeling sorry for you?

[sparty99]

Is this JCougar's thread for periodic sad updates now? Jesus man, just fucking save up some money, hang a shingle, hustle, do dui cases, wills, elder law, etc. Have you seen Better Call Saul?

I used to like you, but this is getting pathetic. Do you get off on people feeling sorry for you?

The dude is a loser. He graduated from Wash U which is a higher ranked school than mine. He also finished a year before me. However, in the 12 months that I finished law school, I've passed two state bars all while working.

I've had interviews for prosecutor jobs, state attorney gigs that required 2 years experience, and small law firms. I was bottom of the barrel at my law school. I don't know what the fuck this dudes problem. Yes, it is bad. But if you are 2 years post graduation then clearly JCougar seems to be the problem.

[TheSpanishMain]

Cougar, what's your debt load, if any? I'm not going anywhere with this, I'm just curious.

[FSK]

Is this JCougar's thread for periodic sad updates now? Jesus man, just fucking save up some money, hang a shingle, hustle, do dui cases, wills, elder law, etc. Have you seen Better Call Saul?

I used to like you, but this is getting pathetic. Do you get off on people feeling sorry for you?

The dude is a loser. He graduated from Wash U which is a higher ranked school than mine. He also finished a year before me. However, in the 12 months that I finished law school, I've passed two state bars all while working.

I've had interviews for prosecutor jobs, state attorney gigs that required 2 years experience, and small law firms. I was bottom of the barrel at my law school. I don't know what the fuck this dudes problem. Yes, it is bad. But if you are 2 years post graduation then clearly JCougar seems to be the problem.

Congratulations on PULLING UP YOUR BOOTSTRAPS. Give the dude a break.

[Moneytrees]

Is this JCougar's thread for periodic sad updates now? Jesus man, just fucking save up some money, hang a shingle, hustle, do dui cases, wills, elder law, etc. Have you seen Better Call Saul?

I used to like you, but this is getting pathetic. Do you get off on people feeling sorry for you?

The dude is a loser. He graduated from Wash U which is a higher ranked school than mine. He also finished a year before me. However, in the 12 months that I finished law school, I've passed two state bars all while working.

I've had interviews for prosecutor jobs, state attorney gigs that required 2 years experience, and small law firms. I was bottom of the barrel at my law school. I don't know what the fuck this dudes problem. Yes, it is bad. But if you are 2 years post graduation then clearly JCougar seems to be the problem.

Congratulations on PULLING UP YOUR BOOTSTRAPS. Give the dude a break.

The sob story is getting a little out of hand. There are plenty of non-big law jobs in major markets that pay more than 40k.

[BiglawAssociate]

Is this JCougar's thread for periodic sad updates now? Jesus man, just fucking save up some money, hang a shingle, hustle, do dui cases, wills, elder law, etc. Have you seen Better Call Saul?

I used to like you, but this is getting pathetic. Do you get off on people feeling sorry for you?

The dude is a loser. He graduated from Wash U which is a higher ranked school than mine. He also finished a year before me. However, in the 12 months that I finished law school, I've passed two state bars all while working.

I've had interviews for prosecutor jobs, state attorney gigs that required 2 years experience, and small law firms. I was bottom of the barrel at my law school. I don't know what the fuck this dudes problem. Yes, it is bad. But if you are 2 years post graduation then clearly JCougar seems to be the problem.

Congratulations on PULLING UP YOUR BOOTSTRAPS. Give the dude a break.

The sob story is getting a little out of hand. There are plenty of non-big law jobs in major markets that pay more than 40k.

For reals - I mean PI and state/city gov pay at least what, 55k? ALL DAT MONEY after spending 200k on a law degree.

You guys are kind of harsh - there are lots of unemployed grads a couple years out. Seriously though, consider looking outside of the profession. Janitors in NYC make more than 55k and work better hours. You better fucking love the law if you want to work 10 hours a day in PI but live worse than a welfare mom.