Suicide and Student Loans: Is There a Link?

Death rates among white, middle-aged Americans have gone up significantly in recent years. According Anne Case and Angus Deaton, two Princeton economists, death rates for people in the 45 to 54 age group began rising in 1999. For middle-aged white people with a high school diploma or less, the mortality rate rose 22 percent between 1999 and 2013.

Why are relatively young white Americans dying at a higher rate than they did 15 years ago? Case and Deaton say most of the rising mortality rate can be attributed to suicide or deaths related to alcohol or drug abuse.People in this age group are experiencing a lot of stress, including economic stress; and they are turning to alcohol and drugs to deal with it. “What we see here is a group that’s in quite a lot of distress,” said Ms. Case in a Wall Street Journal interview.

As Case and Deaton said in their report:

Although the epidemic of pain, suicide, and drug overdoses preceded the financial crisis, ties to economic insecurity are possible. After the productivity slowdown in the early 1970s, and with widening income inequality, many of the baby-boom generation are the first to find, in midlife, that they will not be better off than were their parents. Growth in real median earnings has been slow for this group, especially those with only a high school education. 

As everyone knows, Americans' accumulated student-loan debt has been going up steadily for the past 20 years. Could there be a  link between student-loan debt and rising mortality rates among middle-aged white Americans?

Deaton and Case did not examine student-loan indebtedness in their study, and any attempt to link student loans to rising death rates would be speculative. Moreover, Case and Deaton found that middle-aged people with college degrees had not experienced higher mortality rates.

Nevertheless, suicide rates for the Baby Boomer generation have gone up dramatically in recent years. According to a report by Katherine Hempstead and Julie Phillips, the suicide rate  for people in the 40-64 age group has gone up 40 percent since 2007.

Hempstead and Philips suggest that economic problems may have contributed to the rising suicide rate among Baby Boomers, and that "adverse effects of economic difficulties on psychological well-being may have been greater for those who did not anticipate them; this may well have been the case for those who were educated and wealthier . . . ."

One thing is certain: Our federal government has constructed a student-loan scheme so heartless that it almost seems to have been designed to plunge millions of Americans into long-term clinical depression.  So isn't it reasonable to conclude there is a connection between crushing student loans and rising suicide rates among middle-aged people?

Let's examine some of the evidence pointing to growing stress among student-loan debtors:

• As the New York Times recently pointed out, ten million people are in default on their student loans or delinquent on their loan payments.

• According to a recent report by the Brookings Institution, loan balances for a significant number of student-loan debtors actually went up after they entered the repayment phase  of their loans. Why? Because a lot of people have obtained economic-hardship deferments that exempt them from making loan payments due to dire economic circumstances.  But because they are not paying down accruing interest, their loan balances are getting larger, making them more difficult to pay off.

• The percentage of elderly Americans with unpaid student-loan debt is going up. According to a report from the General Accounting Office, the percentage of people in the 65 through 74 age group with outstanding student loans grew from 1 percent in 2004 to 4 percent in 2010, a four-fold increase   And the amount of student-loan debt owed by elderly people is growing as well.  In fact, the amount of debt held by elderly Americans grew six fold between 2005 and 2013--from $2.8 billion in 2005 to $18.2 billion.

• The federal government is  garnishing more and more Social Security checks to collect on unpaid student loans.   In 2002, only 31,000 people had Social Security benefits garnished because they had defaulted on their student loans. That number ballooned five fold in just 11 years. In 2013, 155,000 Americans saw their Social Security checks reduced due to unpaid student-loans.

Let's consider that last bullet from a more personal perspective. According to a story posed on Market Watch, the U.S. government is garnishing the Social Security checks of Naomia Davis, an 80 year old woman who is suffering from advanced Alzheimer's Disease. Ms. Davis's only income is her $894 Social Security check, and the feds take $134 of it to pay down on an old student loan.

In short, it is reasonable to conclude that crushing student-loan debt contributes to depression and even suicide among Baby Boomers who are struggling to pay off college loans they took out when they were young.  The student loan crisis is not only eroding Americans' sense of economic well being; it may be literally killing them.

References

Jillian Berman. When your Social Security check disappears because of an old student loan. MarketWatch, June 25, 2015.  Accessible at: http://www.marketwatch.com/story/when-your-social-security-check-disappears-because-of-an-old-student-loan-2015-06-25

Anne  Case and Angus Deaton. Rising morbidity and mortality in midlife among white
non-Hispanic Americans in the 21st century.  Accessible at: http://www.pnas.org/content/early/2015/10/29/1518393112.full.pdf

Editorial. Death Among MiddleAged Whites. New York Times, November 5, 2015.

Editorial. Why Student Debtors Go Unrescued. New York Times, October 7, 2015. Accessible at: http://www.nytimes.com/2015/10/07/opinion/why-student-debtors-go-unrescued.html?_r=0

General Accounting Office. Older Americans: Inability to Repay Student Loans May Affect Financial Security of a Small Percentage of Borrowers. GAO-14-866T. Washington, DC: General Accounting Office. http://www.gao.gov/products/GAO-14-866T

Katherine A. Hempstead and Julie A. Phillips. Rising Suicide Among Adults Aged
40–64 Years: The Role of Job and Financial Circumstances.  American Journal of Preventive Medicine 84(5):491-500 (2015). Accessible at: http://www.ajpmonline.org/article/S0749-3797(14)00662-X/pdf

Jason Iuliano. An Empirical Assessment of Student Loan Discharge and the Undue Hardship Standard. American Bankruptcy Law Journal 86 (2012), 495.

Gina Kolata. Deaths Rates Rising Middle-Aged White Americans, Study Finds. NewYork Times, November 3, 2015. Accessibe at: http://www.nytimes.com/2015/11/03/health/death-rates-rising-for-middle-aged-white-americans-study-finds.html

Betsy McKay. The Death Rate Is Rising for Midle-Aged Whites. Wall Street Journal, November 3, 2015. Accessible at: http://www.wsj.com/articles/the-death-rate-is-rising-for-middle-aged-whites-1446499495

If you have to enroll in a 25-year income-based repayment plan to pay for your college education, you attended the wrong college

In his 2012 book entitled Don't Go To Law School Unless), Paul Campos made a statement that startled me by its intense clarity. "The truth is," Campos wrote, "that people who are likely to end up in [income-based repayment plans] if they go to law school should not go at all" (48). 

And of course Campos is right. But isn't the same observation true about undergraduate education as well? A person who must enter a 25 year income-based repayment plan to pay for a college degree either enrolled in the wrong college or chose the wrong academic major--and probably both.

For example, Ron Lieber of the New York Times wrote a story about five years ago that featured Cortney Munna, who borrowed almost $100,000 to get a degree in women's studies and religious studies at New York University, one of the most expensive universities in the world.. At the time of Lieber's story, Munna was working for a photographer for $22 an hour and enrolled in night school in order to defer her loan payments. 

As Lieber pointed out, going back to college simply to postpone student-loan payments on the degree one already has is not a good long-term option because interest continues to accrue on the debt.

I wonder how Ms. Munna is doing today. I think the chances are very good that she is in a 25-year income-based repayment plan

Campos said in his book that "there's a good argument to be made that law schools [that] promote IBR[income-based repayment plans] are participating in  a fraud on the public." (50) Again, I think Campos is right.

 Most people who enter into 25-year income-based repayment plans won't make payments large enough to cover accruing interest and also pay down the principal on their loans. In other words, most people in IBRs will see their loans negatively amortize. This means the taxpayer will be left holding the bag when the loan-repayment term ends and the unpaid portion of the loan is forgiven.

To return to Ms. Munna's story, shouldn't NYU bear some responsibility for allowing her to borrow so much money for a degree that is not likely to lead to a job that will allow her to pay back the debt?

Of course, universities are not in the habit of admitting that some of their degree programs are overpriced. But maybe it is a habit they should acquire.  How many private universities could look their students in the eye and say their degrees in women's studies, religious studies, sociology, urban studies etc. etc. etc. are worth going $100,00 into debt? Not many.

References

Paul Campos. Don't Go To Law School (Unless). Self-published, 2012.

Ron Lieber. Placing the Blame as Students Are Buried in Debt. New York Times, May28, 2010. Accessible at http://www.nytimes.com/2010/05/29/your-money/student-loans/29money.html

Income-Based Repayment Plans are a fraud on college students: Reflections on Paul Campos' analysis of IBRs

Don't Go To Law School (Unless), Paul Campos' excellent book on the economics of legal education, was published in 2012, and I am embarrassed to say I did not read it until this week. Campos delivered a devastating critique of American law schools, which have charged insanely high tuition for turning out more lawyers than the nation needs. No one should make a decision to go to law school without reading Campos' book, along with the recent report on law-school admissions standards put out by the public interest group Law School Transparency.

Even people who don't plan to go to law school should read Campos' book, because his indictment of legal education also applies to higher education in general. All over the United States, colleges have jacked up their tuition, forcing their students to borrow more and more money. It is now apparent that millions of students are saddled with unmanageable student-loan debt.

To keep the gravy train rolling, higher education's insiders now back long-term income-based repayment plans (IBRs) that lower borrowers' monthly loan payments but extend the repayment time to as long as 25 years. Policy think tanks like the Brookings Institution, the Obama administration, and the New York Times have all backed IBRs.

Let's look at what Paul Campos had to say about IBRs in Don't Go To Law School (Unless).  (Campos also criticizes public service loan forgiveness plans (PSLFs), but I will not comment on PSLFs in this essay).

"The truth is," Campos wrote, "that people who are likely to end up in IBR . . . if they go to law school should not go at all" (48).  People who participate in these long-term repayment plans will generally be making payments so low that they don't cover accumulated interest, which means that many debtors will never pay off their loans. Moreover, Campos notes, under current IRS regulations, any debt that is forgiven at the end of a long-term repayment plan is considered taxable income.

Campos trenchantly pointed out that IBRs are simply a way to prop up the law schools' broken business model:

When law schools push the supposed benefits of IBR . . . to prospective students, what they're really doing is advertising that they're operating under a business model that doesn't work unless it is subsidized heavily at both ends by the American taxpayer. Law school is subsidized on the front end by federal educational loans, which allow students to borrow money they won't be able to pay back, and by IBR  . . on the back end, which allows graduates to have the "privilege" of being in debt servitude to the U.S. government for ten or, more likely, twenty-five years, with the added bonus of being hit by a huge tax bill at the end of it all. (51)

Indeed, Camps suggests that law schools that push the benefits of IBRs are engaging in unethical behavior. "Given that the American taxpayer will be left holding the bag for all the unpaid debt accrued by law graduates in these programs, there's a good argument to be made that law schools who promote IBR are participating in a fraud on the public" (50) (my emphasis).

Every criticism Campos raised about IBRs as a means of financing legal education applies to higher education in general. Twenty-five year repayment plans (or even the less onerous 20-year repayment plan developed by the Obama administration) force students to pay a percentage of their income to the federal government for the majority of their working lives.

These long-term repayment plans demonstrate the intellectual vacuity of our higher education community. In their desperate effort to maintain the status quo, colleges and universities are throwing their students under the bus.  Rather than change their business model, they raise their tuition rates every year and soothingly assure their students not to worry---they will have 25 years instead of 10 to pay off their student loans.

American universities are using IBRs to throw their students under the bus.

References

Paul Campos. Don't Go To Law School (Unless) (published by the author, 2012).

"Press on, Press on, boys!" Alan DiCara: Welcome to the fight!

Press on, Press on, boys!

                                         George Washington, December 26, 1776

 A few years ago, I read David Hackett Fischer's Washington's Crossing, the story of  General George Washington's famous Delaware Valley campaign in December 1776. I found myself wondering why anyone stayed in Washington's army during that bleak winter and why anyone would get in a boat to cross the Delaware River to face the Hessians, the British Empire's hired killers. The weather was bitter cold, and some of Washington's men died from exposure.

But somehow, a few brave men stuck it out with George Washington, and the Continental Army won an important victory that heartened a new nation in its struggle for independence.

I would not compare the battle for student-loan reform to Washington's crossing of the Delaware, but I am surprised how few people have raised their voices in protest at the ruthless exploitation of college students by the higher education industry--exploitation made possible by a corrupt and mismanaged federal student loan program.

Thus, I was heartened to hear from Alan DiCara of Winsted, Connecticut, who has launched his own blog about the student-loan crisis called Student Loan Action Group. Welcome to the fight, Alan.

 I encourage my readers to check out Alan's web site at: http://studentloanactiongroup.blogspot.com/

And, as General Washington said to his troops on December 26, 1776: "Press on, Press on, boys!"

"Press on, Press on, boys!"

References

David Hackett Fischer. Washington's Crossing. New York: Oxford University Press, 2004.

Does South Dakota need a law school? Probably not.

Among Alaska's many admirable distinctions is the fact that the state does not have a public law school. Alaskans apparently decided that the United States has enough law schools (203) and that Alaskans who want to become lawyers can enroll in a law school out of state.

But every other state has at least one law school, including the states of North Dakota and South Dakota.  Unfortunately, neither state has been particularly good at attracting high-quality students. According to a recently report prepared by Law School Transparency, 25 percent of the students admitted to the 2014 class of students at both states' law schools were so low as to put them at "extreme risk" of failing the bar exam.

Wouldn't it make sense for North Dakota and South Dakota to close their law schools and send their best students to study at an out-of-state law school like Alaska does?  And wouldn't it make sense for Ohio to close Ohio Northern Law School and for Illinois to close the law school at Southern Illinois University, two law schools with high percentages of students with abysmally low LSAT scores?

And let me raise another question. In the dawning years of the 21st century, do we really need historically black law schools like Texas Southern and the law school at Louisiana's Southern University? Both law schools had 2014 classes with high numbers of students with extremely low LSAT scores.

Texas Southern's law school is just down the street from the University of Houston School of Law, and Southern's law school is just a few miles from LSU's law school. Why are the states of Texas and Louisiana maintaining two public law schools in the same city?

Unfortunately, law schools serve other functions besides training lawyers. Universities want the prestige attached to having a law school along with the high tuition rates they can charge for offering relatively cheap educational experiences. Historically black colleges and universities have a great deal of political clout, and closing a historically black law school would raise a howl of protest.

But our nation's refusal to face the crisis in legal education is going to have catastrophic consequences. Thousands of people are graduating from law school with massive debt and no job, and the quality of our lawyers is deteriorating as law schools lower admission standards to attract students.

As a person who practiced law in Alaska for nine years, I can attest that lack of a law school created no hardship for Alaskans.  During the 1980s, when I was a lawyer in Anchorage, the city had one lawyer for every 200 residents. Somehow, the state muddled along without a law school and seems to have suffered no ill consequences.

And I will end this blog on a somber note.  Seattle University School of Law recently announced plans to open a satellite-branch law-school campus in Anchorage, and the University of Alaska at Anchorage has entered into some kind of partnership with Willamette University College of Law and Washington Univesity School of Law.

Poor Alaska: No law school!

References

Law School Transparency. 2015 State of Legal Education. Accessible at: http://lawschooltransparency.com/reform/projects/investigations/2015/

Seattle University School of Law reaches agreement to house satellie law campus at Alaska Pacific University, June 17, 2014. Accessible at: https://www.alaskapacific.edu/seattle-university-school-of-law-reaches-agreement-to-house-satellite-law-campus-at-alaska-pacific-university/

Anything to make a buck: Many law schools should be closed

Law School Transparency, a public interest organization, issued a report containing some alarming information about law school enrollments. Anyone thinking about going to law school needs to read this report, including the information it contains about individual law schools.

LST reports that law-school enrollments have declined 28 percent since 2010, which has caused a budget crunch for law schools because they are heavily dependent on tuition money to keep their doors open.

As a result of declining law-school applications, many law schools have lowered their admission standards to attract more students, particularly students with low LSAT scores. As LST points out, LSAT scores are the best predictor of whether law graduates will pass or fail their bar exams. Thus, declining LSAT scores for American law students promises to bring a higher failure rate on bar exams.  Obviously, a student who borrows a significant amount of money to attend law school and then fails the bar exam will experience a financial catastrophe because that student cannot practice law.

LST broke down LSAT scores into categories that measure the risk of failing the bar exam, and it identified law schools that are admitting a significant number of students with LSAT scores so low that they run a high risk of failing the bar exam after graduating from law school.

The picture LST paints is not pretty.

In 2010, 30 law schools admitted at least 25 percent of  their students with LSAT scores so low that those students ran a significant risk of failing the bar. By 2014, the number of law schools admitting high-risk students had more than doubled--from 30 to 74 in just four years.

In 2014, 37 schools "admitted classes consisting of at least 50% at risk students . . ." In other words, based on their LSAT scores, at least 50 percent of the students at 37 law schools were at risk of failing the bar exam once they graduated.

LST went on to report:

Every for-profit law school enrolled classes consisting of at least 50% at-risk students. The Infilaw-owned schools [Florida Coastal School of Law, Charlotte School of Law and Arizona Summit Law School] enrolled classes consisting of between 75% and 100% at-risk students. For-profit school graduates have lower bar passage rates, worse job rates, and more debt. For-profit schools also graduate a higher percentage of students with debt and receive more total federal student loans on a per-school basis than public or private schools.

(emphasis added)

"Based on available salary data from serious risk schools," LST observed,  "graduates from these programs cannot service their debts without generous federal hardship programs." Moreover, "[e]ven top earners at the more affordable schools face economic difficulty; the rest range from economic difficulty to catastrophe."

What, in a nutshell, is the LST report telling us? Less prestigious law schools, including the for-profit law schools, have lowered their admission standards in an effort to counteract declining enrollments. On average, tuition at many of these schools is almost as high as the tuition rates at more elite schools, so students who attend many of these lower-tier law schools are borrowing almost as much money as students who take out loans to attend a Harvard or a Stanford.

I have three comments to make about LST's report:

1)  Given the imploding demand for new attorneys, it is utter madness for the government to continue propping up for-profit law schools with federal student-loan money. Many people attending these schools will face a grim financial future when they graduate: poor job prospects and crushing student debts.

2) Based on a review of LST's report, it's not only the for-profits who are admitting students with low LSAT scores. A number or public universities have low admissions standards. According to LST's data, one out of four students at several public law schools have LSAT scores so low that they are at "extreme risk" of failing the bar exam.  These schools include: Southern University, Texas Southern University, Ohio Northern University, University of North Dakota and the University of South Dakota.

3) Law schools that are admitting students with low LSAT scores are not only doing their students a disservice. They are also lowering the overall quality of the nation's legal community. Many of these students will fail the bar, but many marginal ones will pass it. This country doesn't need an oversupply of minimally qualified attorneys.

In short, this state of affairs cannot continue.  Law schools with low admission standards need to be closed, and the students who accumulated massive amounts of debt to attend them should have their loans forgiven.

References

Law School Transparency. 2015 State of Legal Education. Accessible at: http://lawschooltransparency.com/reform/projects/investigations/2015/

American Law Schools Have Embraced Greed And Have Become Poor Models for the Ethical Practice of Law

Many years ago when I was a practicing lawyer, my senior law partner made an observation I never forgot. Law graduates become the kind of attorney they will always be, he remarked, based on their first law job.

And based on my experience, my law partner's assessment is 100 percent accurate. Young people who graduate from law school and begin working for an ethical law firm are molded into ethical lawyers and remain ethical lawyers all their lives. Fledgling attorneys who join firms with sloppy ethics or an undue focus on making money become ethically sloppy themselves, and the slipshod ethical standards of their first employer shape their entire careers.

But of course attorneys' ethical values are being shaped even before they take their first law jobs. Law students first begin developing their ethical standards while in law school. In their classroom interactions and their examinations, they learn the value of honesty and fair dealing.

And if this is true, then it is important for law students to attend law schools that model the highest ethical standards. For if law students see their law schools make decisions based on greed and self-promotion, it seems likely that the students themselves will adopt similar attitudes about the legal  profession.

And this brings me to an editorial in today's Sunday Times entitled "The Law School Debt Crisis." In 2012, the Times reported, the average law graduate accumulated $140,000 in debt; and yet newly minted attorneys are entering a job market in which 43 percent of them cannot find long-term, full time jobs in the legal field.

Simply put, the market for lawyers is flooded. Many sensible young people have analyzed their job prospects if they go to law school and have decided to choose other professions. In fact, as Steven J. Harper reported in a New Times op ed essay a few months ago, law-school enrollment has slipped from 52,000 in 2010 to 38,000 last year.

But the drop in law-school enrollments has not kept pace with the slump in demand for lawyers. Most law schools depend on tuition money for the vast majority of their income; they simply must attract students to maintain their revenue streams. Consequently, they have lowered admissions standards to keep heir enrollments up. In 2014, the Times pointed out, test scores on the common portion of the LSAT were the lowest they have been in 25 years.

In sum, this is the state of the legal field. Law schools all over the United States hiked their tuition in response to a change in federal law that allowed students to borrow the full amount of their graduate education. And law schools also admitted more students to boost revenues. When the market for lawyers crashed, law schools did not reduce their fees or cut their enrollments sufficiently. The result, to use the Times' language, is a "death spiral" in the legal job market with unemployed or under-employed attorneys carrying mountains of student-load debt that they can't pay off.

Ironically, the glut in lawyers is occurring at the same time distressed student-loan debtors are filing for bankruptcy without the aid of  attorneys. When these overburdened student-loan borrowers file adversary proceedings to discharge their student loans through bankruptcy, they are opposed by loan collection companies that have plenty of high-paid legal talent.

How can this disaster be turned around? The Times recommends expanding the Obama administration's so-called gainful employment rules that tie an institution's eligibility for federal student-aid money to its success in preparing graduates for good jobs. Currently the rule only applies to for-profit law schools, but the Times urges the rule be amended to cover nonprofit law schools as well.

The Times also thinks a cap should be placed on the amount of federal student loans a student can obtain. A cap in federal loan money, the Times believes, would drive tuition down.

 I support both these ideas, but I would go further. I would shut off federal student-aid money to all for-profit schools, including for-profit law schools, which charge extraordinarily high tuition and have lousy records for placing their graduates in good jobs that require law degrees.

For the American people, the stakes are high. Our society is based on the rule of law, and our law schools must produce graduates who are intelligent and have the highest ethical standards. But American law schools have set a poor ethical example for their students. They have bloated their student rolls and raised their tuition for the sole purpose of sucking up student-loan money and enhancing their revenues.

Our justice system will break down completely if our nation's lawyers adopt the ethical standards of the law schools they attended and begin thinking of their profession solely as a way to get rich.

References

Editorial. The Law School Debt Crisis. New York Times, October 25, 2015. Accessible at: http://www.nytimes.com/2015/10/25/opinion/sunday/the-law-school-debt-crisis.html

Steven J. Harper. Too Many Law Students, Too Few Legal Jobs. New York Times, August 25, 2015.  Accessible at: http://www.nytimes.com/2015/08/25/opinion/too-many-law-students-too-few-legal-jobs.html

Elizabeth Olsen. Burdened With Debt, Law School Graduates Struggle In Job Market. New York Times, April 26, 2015. Accessible at: http://www.nytimes.com/2015/04/27/business/dealbook/burdened-with-debt-law-school-graduates-struggle-in-job-market.html