. Forum

[noodle64322]

If you REALLY want to fix the cost of law school, end eligibility for student loans for law students. Cold turkey.

Yeah, there probably won't be any class or racial fallout from that...

Eventually warm, fuzzy politics has to give way to economic reality. We have an Econ 101-level problem in the law school market--we heavily subsidized a good and now produce it in a giant surplus. Schools have no incentive to reduce tuition because taxpayers are eventually footing the bill for people who shouldn't have a legal education (people who can't get into another better than a TTT). Students have much less incentive to be concerned about whether they're making a good investment given IBR/PAYE, which creates a moral hazard problem--private gains for those who succeed and socialized losses.

You can't just make everyone able to afford something via subsidy. Schools can charge basically anything they want because they know the federal government won't turn down anyone for eligibility and will just pick up the tab for those who fail. In an effort to remedy the unequal sharing of virtue, subsidies are fast creating equal sharing of misery.

Still, there are many T14 students that would never be able to attend, without loans. Basically, this would entail a "rich-get-richer/poor-get-poorer" world, since most of us would not be able to invent something/sell a website/make it to hollywood, or whatever else one might do, to end their poverty.

There may not be a perfect solution, but there are several that are better than the loans-for-all policy that create your problem, and not quite as restrictive as the "go to law school if you can afford it" approach.

[ookoshi]

If you remove government backing from student loans and make them dischargable, banks will lend them to qualified people who go to schools with good economic prospects. Their actuaries have an incentive to nail down the numbers as accurately as possible. Want a loan to go to a T-14? No problem. Want the same loan to go to a TTTT? Nope. They will also cap the loan amount based on the average expected salary, not BigLaw, so schools will either have to limit tuition prices or lose attendance.

[20141023]

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[Monochromatic Oeuvre]

If you REALLY want to fix the cost of law school, end eligibility for student loans for law students. Cold turkey.

Yeah, there probably won't be any class or racial fallout from that...

Eventually warm, fuzzy politics has to give way to economic reality. We have an Econ 101-level problem in the law school market--we heavily subsidized a good and now produce it in a giant surplus. Schools have no incentive to reduce tuition because taxpayers are eventually footing the bill for people who shouldn't have a legal education (people who can't get into another better than a TTT). Students have much less incentive to be concerned about whether they're making a good investment given IBR/PAYE, which creates a moral hazard problem--private gains for those who succeed and socialized losses.

You can't just make everyone able to afford something via subsidy. Schools can charge basically anything they want because they know the federal government won't turn down anyone for eligibility and will just pick up the tab for those who fail. In an effort to remedy the unequal sharing of virtue, subsidies are fast creating equal sharing of misery.

Still, there are many T14 students that would never be able to attend, without loans. Basically, this would entail a "rich-get-richer/poor-get-poorer" world, since most of us would not be able to invent something/sell a website/make it to hollywood, or whatever else one might do, to end their poverty.

There may not be a perfect solution, but there are several that are better than the loans-for-all policy that create your problem, and not quite as restrictive as the "go to law school if you can afford it" approach.

The T14 kids would still get loans, because a school's job prospects would be something a private lender could take into account. The ones who wouldn't get loans would be everyone else. No, they wouldn't be able to go to law school, but that is the whole point of bringing the market back to equilibrium.

[Big Dog]

The Dean should be embarrassed because he's a moron.

There is absolutely no connection between what his law school charges and what students may or may not earn part-time. Zero.

[Big Dog]

Still, there are many T14 students that would never be able to attend, without loans.

So what? (They could take their T14 stats and attend a lower-ranked school at low/no cost.) Win-win.

[Monochromatic Oeuvre]

Or... if you change the accreditation standards to consider outcomes of schools, you could remove government funding from places with 30% employment rates, which would be even more ideal (and realistic). There is no way that government funding is going to go away completely.

The problem is that the centralized accredation standards are more subject to rent-seeking, corruption, lack of synchronicity between students nad the ABA, and Hayek's information problem than would be true with private lenders. Even if the ABA came up with stricter accrediation standards, you would still have an artificial surplus because the ABA has no incentive to regulate down to equilibrium. Lots of people will still be on IBR/PAYE who had no business go to law school in the first place.

[Big Dog]

Lots of people will still be on IBR/PAYE who had no business go to law school in the first place.

Exactly. And the ONLY way to reduce that number is to eliminate IBR/PAYE (and the loan guarantee).

[Another]

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[20141023]

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[guano]

You can't just make everyone able to afford something via subsidy.

Seems to work perfectly fine in Europe

[NoodleyOne]

Still, there are many T14 students that would never be able to attend, without loans.

So what? (They could take their T14 stats and attend a lower-ranked school at low/no cost.) Win-win.

And then the elite jobs that can only be accessed with a T13 degree will be limited to those who can afford to pay for law school out of pocket, thereby severely limiting law school as a possibility for upward social mobility and reinforcing a class based elite in this country (moreso than it already is).

If you rich fucks want to be lining up against the wall within 20 years, I say go for it.

[laxbrah420]

Wipe out half the schools.

Supply and demand is pretty credited dude

[Monochromatic Oeuvre]

Still, there are many T14 students that would never be able to attend, without loans.

So what? (They could take their T14 stats and attend a lower-ranked school at low/no cost.) Win-win.

And then the elite jobs that can only be accessed with a T13 degree will be limited to those who can afford to pay for law school out of pocket, thereby severely limiting law school as a possibility for upward social mobility and reinforcing a class based elite in this country (moreso than it already is).

If you rich fucks want to be lining up against the wall within 20 years, I say go for it.

We've deviated from what a free-market alternative would be here. Lenders would still be giving loans to students attending schools who mostly produce profitable grads. It's the TTT/TTTTs that would be cut out. Law school can't be a tool for upward mobility for those whom employers simply don't want to hire.

[JamMasterJ]

The people who can benefit the most from the repeal of the 20 hour rule are people who can hold jobs that pay significantly better than $10 an hour.

Just because the majority of law students wouldn't benefit from eliminating that rule doesn't mean it's a good rule. If that rule didn't exist, nothing is forcing you to work more than 20 hours a week, or even work at all. If you think that dedicating 100% of your time into maximizing your grades and class rank is the best use of your time, you're still free to spend it that way.

"20k a year won't make a difference" is not an argument that the rule is a good rule.

In addition, every dollar you don't borrow is two that you don't have to pay back. Reducing your debt by 20k a year is nothing to sneeze at.

At the end of the day, half the class is going to be below median at a mid-tier school. Those people would be infinitely better off working off debt as long as they still do well enough to get their JD.

I don't think anyone has yet argued that the rule is a good rule.

not working 20hrs is a great principle, but a terrible rule.

[Stinson]

Still, there are many T14 students that would never be able to attend, without loans.

So what? (They could take their T14 stats and attend a lower-ranked school at low/no cost.) Win-win.

And then the elite jobs that can only be accessed with a T13 degree will be limited to those who can afford to pay for law school out of pocket, thereby severely limiting law school as a possibility for upward social mobility and reinforcing a class based elite in this country (moreso than it already is).

If you rich fucks want to be lining up against the wall within 20 years, I say go for it.

As someone from a not-rich family (and I mean actually not-rich, not the "200K doesn't go that far in Manhattan" not-rich trope that frequents these boards) who has used law school as a vehicle of upward mobility, I care about this a lot. But I think you could still get loans to attend a T-14 because the lenders know you will likely pay it back.

It's true that T-14's on average admit mostly wealthy students, but that's because the LSAT, for numerous reasons, is in most cases a proxy for socioeconomic status. I don't think private lenders would change the socioeconomic picture at top schools much. But it would stop troll schools who offer nothing in the way of upward mobility to the vast majority of their students from dangling illusory mobility in front of students - through misleading statistics, outright lies, and the good old "All lawyers are rich!" meme - to put them into crippling debt on the government's dime.

[Big Dog]

And then the elite jobs that can only be accessed with a T13 degree will be limited to those who can afford to pay for law school out of pocket, thereby severely limiting law school as a possibility for upward social mobility and reinforcing a class based elite in this country (moreso than it already is).

As someone who grew up poor, on the other side of the tracks, I'm ok with that. From a public policy perspective, it makes little/no sense to me to maintain a federal program to be spending hundred of millions of dollars on the rare chance that a poor student will attend a T13 and even rarer chance that said person will score an "elite job". To me, the public policy implications of the unintended consequences -- too many students borrowing hundreds of thousands to attend a TTT, only to graduate jobless -- is just too great and well offsets the rarity of the elite job pursuer.

[sinfiery]

And then the elite jobs that can only be accessed with a T13 degree will be limited to those who can afford to pay for law school out of pocket, thereby severely limiting law school as a possibility for upward social mobility and reinforcing a class based elite in this country (moreso than it already is).

As someone who grew up poor, on the other side of the tracks, I'm ok with that. From a public policy perspective, it makes little/no sense to me to maintain a federal program to be spending hundred of millions of dollars on the rare chance that a poor student will attend a T13 and even rarer chance that said person will score an "elite job". To me, the public policy implications of the unintended consequences -- too many students borrowing hundreds of thousands to attend a TTT, only to graduate jobless -- is just too great and well offsets the rarity of the elite job pursuer.

Similar position but hell no, I'm not okay with that.

We need more data being shoveled down prospective students throats by the ABA before they accept an admissions offer. People aren't stupid, just ignorant...I hope.

[Monochromatic Oeuvre]

And then the elite jobs that can only be accessed with a T13 degree will be limited to those who can afford to pay for law school out of pocket, thereby severely limiting law school as a possibility for upward social mobility and reinforcing a class based elite in this country (moreso than it already is).

As someone who grew up poor, on the other side of the tracks, I'm ok with that. From a public policy perspective, it makes little/no sense to me to maintain a federal program to be spending hundred of millions of dollars on the rare chance that a poor student will attend a T13 and even rarer chance that said person will score an "elite job". To me, the public policy implications of the unintended consequences -- too many students borrowing hundreds of thousands to attend a TTT, only to graduate jobless -- is just too great and well offsets the rarity of the elite job pursuer.

Similar position but hell no, I'm not okay with that.

We need more data being shoveled down prospective students throats by the ABA before they accept an admissions offer. People aren't stupid, just ignorant...I hope.

A. Anyone who legitimately can't score a 150 on the LSAT is probably stupid, sadly.

B. Everyone is in agreement that loans should be available for those with a decent chance of actually paying them back. The government just needs to stop misaligning the incentives for snake oil salesman to function. The private market would do this in about two seconds, but the government can never peg loans to placement because it would be considered "picking winners and losers." Get the government out of the process and loans will begin to actually approximate the risk involved in going to a particular law school.

[sinfiery]

To assume that banks won't take into account personal assets in contemplating who to give loans to is ridiculous. Sure, TTTs won't exist but at the same time you will see a proliferation of t30 schools better able to supply their grads with jobs that are dominated by the wealthy as on paper, a risky lender buying a house is always a better bet than giving money to a small business owner for a great idea whilst he is renting land.

Admissions will take on a biased approach after the truly elite.schools towards one that gets students who they know can pay to attend. Softs become even more important and.become more and more wealth indicators than ever. Millions of inconsistencies come up that effect the poor at the margins and boost the wealthy at the margins...


If you scored a 150 on the LSAT and saw the proper data from a reputable source, I think you could deduce LS at a TTT was a bad idea.

[Monochromatic Oeuvre]

Wouldn't anyone with "personal assets" be bypassing the loan process entirely?

I guess I don't understand why a school whose applications are need-blind would take richer applicants over poorer ones. The poor who are going to T14 schools would still get good loans, because they'd still be a low risk to pay them back.

[sinfiery]

Wouldn't anyone with "personal assets" be bypassing the loan process entirely?

I guess I don't understand why a school whose applications are need-blind would take richer applicants over poorer ones. The poor who are going to T14 schools would still get good loans, because they'd still be a low risk to pay them back.

No. That assumes a black and white view of finance which is far from how decisions are made in regards to who qualifies and who doesn't.

There is already debate about sticker at GULC. A couple years of UT getting screwed by banks unwilling to finance some students loans at sticker and they start adjusting. Or maybe Alabama. Or Emory. Law school should be an option even when it is somewhat of a risk to those with no assets to put up as collateral. That doesn't mean to the extent of Cooley but banks aren't going.to give a kid.with no assets a 100k loan for U Iowa when I think that's a fine investment worth the risk.for.the student/society,.but not one for a bank wanting to make money.



Sure, the TTTs get crushed first but there are repercussions that harm the poor and help the rich at the margins. I firmly believe we can get the same benefit without the cost

[Monochromatic Oeuvre]

Law school should be an option even when it is somewhat of a risk to those with no assets to put up as collateral.

It would be still be an option if the school gives the student a decent chance to pay back the loan. Even CCN are "risks," but lenders would finance them because most graduates could pay them back at a decent clip. If the school is likely to keep a student buried in debt, then yeah, it should probably close.

banks aren't going.to give a kid.with no assets a 100k loan for U Iowa when I think that's a fine investment worth the risk.for.the student/society,.but not one for a bank wanting to make money.

Maybe banks would make that loan, or maybe they wouldn't. It would depend on whether a student could pay back 100k from Iowa, which, because loan profitability would be directly tied to good placement, the market would quickly determine. If the bank can't make money, then the students can't pay back the debt, so it wouldn't be a "fine investment."

And again, I still don't see how it affects a need-blind admissions policy one bit, other than forcing schools who aren't putting grads in high-paying jobs to close, which is the whole point of stopping the subsidies.

I agree there could be subsidies for PI and other things where the positions creates positive externalities and the position is therefore "worth" more than its salary, I just think there shouldn't be any subsidies to the huge percentage of law school applicants who will never become lawyers.

[sinfiery]

You need to understand how absolutely terrible the data is for law school salaries. Literally the only thing TLS (filled with people who.are very dedicated to finding this info) relies on is.the lockstep biglaw salary and federal clerkships that could ideally get said lockstep salary.

Then we assume very little after 5 years of wages (banks will assume 10 year repayment plans) for which again no data exists.

There is no data for midlaw salaries, solos, by region, business, 2 years out, 5,7,10, 20..

Basically everything.that the "market" would need to make their loans nonrisky does not exist past 13 schools. So they will not take a blind risk and those with collateral will gain at the points where insufficient data.causes the market to be inherently conservative and thus they will be the only ones.able to get funding to attend what very well could be a decent LS such as BU or UT.

if the data existed and was widely available and this still happened, sure, let the markets do it. But first, let's get that data made/become widely available to all applicants and see what happens.


And of course PI, non profits, govt work, etc.



As for the need blind admissions, the schools will get rid of need blind admissions once problems with financing occur. Which will happen at the margins of schools that quite possibly could be worth attending.

[beepboopbeep]

You need to understand how absolutely terrible the data is for law school salaries. Literally the only thing TLS (filled with people who.are very dedicated to finding this info) relies on is.the lockstep biglaw salary and federal clerkships that could ideally get said lockstep salary.

Then we assume very little after 5 years of wages (banks will assume 10 year repayment plans) for which again no data exists.

There is no data for midlaw salaries, solos, by region, business, 2 years out, 5,7,10, 20..

Basically everything.that the "market" would need to make their loans nonrisky does not exist past 13 schools. So they will not take a blind risk and those with collateral will gain at the points where insufficient data.causes the market to be inherently conservative and thus they will be the only ones.able to get funding to attend what very well could be a decent LS such as BU or UT.

if the data existed and was widely available and this still happened, sure, let the markets do it. But first, let's get that data made/become widely available to all applicants and see what happens.


And of course PI, non profits, govt work, etc.

Do loan servicers have data on which schools their loans are coming from? Because there's no one with better data on who actually pays back their loans than them, and a lot of these companies are the same ones that would pick up the gov's slack if federal lending dropped off.

I do think the argument on shutting off the federal loan spigot forgets that making loans dischargeable means fewer people will be forced to stick with law to pay them off. Risk profiles and rates will go up across the board. Those wealthy enough to have significant collateral will either be wealthy enough to pay cash or borrow against those assets directly. It's not so much that schools will only let in wealthy people - more like, they'll notice that admitted students from x and y elite universities give them a better yield (because their students are wealthier and more likely to be able to afford high tuition), so other factors will become a proxy for SES.