Lesley Campbell graduated from Pace University School of Law in 2009, but she didn't pass the bar exam. According to the Wall Street Journal, her total student-loan debt is now nearly $300,000.
After obtaining her JD degree, Campbell took a secretarial job that paid $49,000 a year; and she filed for bankruptcy in 2014. Although she did not discharge her student loans, a bankruptcy judge did allow her to discharge a $15,000 loan she obtained from Citibank to pay for her bar review course.
A few brief comments on Ms. Campbell's case. First, people who take on $300,000 in student-loan debt to go to law school and don't pass the bar exam obviously suffer a financial catastrophe. Unless they obtain bankruptcy relief, most will never recover. In other words, for these people, going to law school destroyed their financial future instead of making it brighter.
Second, I was amazed by how much it costs just to take the bar-exam review course--$15,000! When I went to law school (a long time ago, I admit), the bar review course cost only $600, which I paid in installments with money I made working as a part-time law clerk. If I were graduating from law school today, I would be forced to take out a sizable loan just to prepare for my bar exam.
Finally, I was struck by the heartlessness of the online comments that followed the Wall Street Journal article about Ms. Campbell. One person commented that a person who would borrow $300,000 to attend law school obviously isn't smart enough to pass the bar.
As many commentators have written, a bleak job market and the skyrocketing cost of law-school tuition have combined to created a crisis in the legal profession.On average, people leave law school with $140,000 in student-loan debt only to enter an economy that only needs one lawyer for every two law-school graduates.
Greedy law schools and the American Bar Association created this crisis. The law schools set tuition levels far too high, and the ABA allowed law schools to admit far too many students. As a result, thousands of law-school graduates share Leslie Campbell's predicament-- an onerous level of student-loan debt and no law job.
The ABA and the law schools have a moral obligation to advocate for reforms in the Bankruptcy Code that will allow impoverished law-school graduates to discharge their student loans in bankruptcy. But we haven't heard a peep out of the law schools or the ABA regarding bankruptcy reform for student-loan debtors.
References
Katy Stech. Judge Says Bankrupt Law Grads Can Cancel Bar Loans. Wall Street Journal, March 25, 2016. Accessible at http://www.wsj.com/articles/judge-says-bankrupt-law-grads-can-cancel-bar-loans-1458941328
Monday, March 28, 2016
Saturday, March 26, 2016
Hillary dines with George Clooney at a California fundraising dinner. I'd rather eat a baloney sandwich with Bernie Sanders
Yeah and I'll have something to brag about
Yeah, something to brag about in you
Something to Brag About
Lyrics by Bobby Braddock
Sung by George Jones & Tammy Wynette
Sung by George Jones & Tammy Wynette
An email from the Bernie campaign alerted me to Hillary's upcoming fundraising dinner in San Francisco. George Clooney will be the star attraction at a dinner that will cost up to $350,000 a plate!
Funny I wasn't invited. I'm sure it was just an oversight. Or maybe George is still sore that we didn't invite him to our last Knights of Columbus fish fry at Our Lady of Perpetual Help.
This kind of event tells us all we need to know about Hillary Clinton, the racketeer politician who wears frumpy pantsuits and makes speeches to bankers at a quarter million dollars a pop. And she won't release the text of those speeches, even though her sycophantic friend, the New York Times, timidly suggested that she do so.
No, Hillary thinks she is going to be President because she is entitled to it, and it is simply beneath her to even respond to queries about her fundraising activities. She's cozied up to all the right people, gotten money from the likes of Goldman Sachs, and promised the insiders that they'll be taken care of if she takes over the Oval Office.
Do the Democrats in New Hampshire want her? The Democrats in Utah? The Democrats in Oklahoma, Kansas, or Nebraska? In Michigan, Alaska, Hawaii or Washington? No, they don't; and Hillary doesn't give a damn.
Because the only people Hillary answers to are arrogant rich oligarchs like George Soros, who donated $8 million to Hillary's Super Pac.
As for me, I am proud to have cast my vote for Bernie Sanders, and I'm still making modest contributions to his campaign. I would rather eat a baloney sandwich from a paper bag with Bernie than dine on caviar and filet mignon with Hillary Clinton and George Clooney.
And whether Bernie ultimately wins or loses, when this election is over, those of us who voted for him can take pride in the fact that we cast our ballots for decency. As George Jones and Tammy Wynette might have put it, "We'll have somethin' to brag about" on inauguration day even if Hillary becomes our next President.
Friday, March 25, 2016
Unemployed Lawyers with Student Loan Debt: The Law Schools Should Be Forced To Bear Part of The Cost of Law School Loans
Recently, I wrote about Anna Alaburda, who sued Thomas Jefferson School of Law, her law school alma mater. Alaburda spent $150,000 to attend TJSL. After graduating in 2008, she was unable to find a remunerative law job; and her student loan debt grew to $170,000. She claimed she was induced to enroll at Thomas Jefferson by the law school's false assertions that most of its graduates got well-paying legal jobs.
Alaburda's case went to trial, and this week a jury ruled against her. Alaburda's loss is the latest in a string of defeats by unemployed or underemployed law school graduates who sued their law schools for fraud or misrepresentation.
Some unemployed or underemployed lawyers have filed for bankruptcy to discharge their student loans, but they've had mixed success. Michael Hedlund, a graduate of Willamette Law School, succeeded in getting a partial discharge of his law-school debt, but he endured ten years of litigation before the Ninth Circuit Court of Appeals rendered a decision in his favor in 2013.
More recently, two heavily indebted law-school graduates were denied bankruptcy relief. Mark Tetzlaff, racked up thousands of dollars in debt to pursue post-secondary studies; and he eventually received an MBA and a law degree from Florida Coastal School of Law, a bottom-tier law school. Tetzlaff actually paid off his law school debt, which he was required to do in order to get Florida Coastal to release his transcripts. But he never obtained a good job as an attorney, and he was unable to pay off other student loans. When he filed for bankruptcy in 2012, he owed $260,000 in student-loan debt.
The Eighth Circuit was not sympathetic to Mr. Tetzlaff's plight and refused to discharge his student loans in a decision released last year. And the U.S. Supreme Court refused to hear his appeal.
Likewise, a bankruptcy court in California ruled against Mark Lilly in 2013. Like Mr. Tetzlaff, Mr. Lilly took on a massive amount of student-loan debt, including debt he acquired to obtain an MBA and a law degree from McGeorge School of Law in Sacramento, which is not a top-ranked law school. His request for bankruptcy relief was denied, but he never found work as a lawyer.
This is the tragic reality: the legal job market has imploded, but law schools have not reduced enrollments sufficiently in response to the shrinking demand for lawyers. Law schools continue to pump out far more attorneys than American society needs, and many law schools have lowered their admissions standards just to get students in the door. For people like Mark Tetzlaff and Mark Lilly, who graduated from mediocre law schools, there are virtually no jobs. In California, for example, there are now 2.5 law graduates for every job opening.
Thus far, law graduates have borne most of the suffering created by a shrinking job market, especially graduates who received their degrees from nonprestigious law schools like Florida Coastal, Thomas Jefferson, and McGeorge. On average, law graduates who borrow to finance their studies acquire $140,000 in student-loan debt. Graduates of Thomas Jefferson School of Law, where Anna Alaburda obtained her degree, now graduate with an average debt load of $180,000! Many simply can't find jobs that will allow them to pay off their student loans.
In my view, some of the suffering experienced by unemployed law graduates should be shifted to the law schools, which have charged students exorbitant tuition and are graduating more students than our economy can absorb. These schools purport to maintain the highest ethical standards, but in reality, many of them are making admissions decisions based on their revenue needs and not the welfare of their students.
Whether or not they are guilty of misrepresentation, as Ms. Alaburda asserted against TJSL, many law schools are certainly guilty of behaving contrary to the public interest. Surely, these schools should help their unemployed graduates pay back massive student-loan debt that was acquired to obtain degrees that are virtually worthless.
References
Hedlund v. Educ. Resources Inst., Inc., 718 F.3d 848 (9th Cir. 2013).
Lilly v. Illinois Student Assistance Comm’n, 538 B.R. 45 (Bankr. S.D. Cal. 2013).
Elizabeth Olsen. Law Student Gets Her Day in Court. New York Times, March 6, 2016. http://www.nytimes.com/2016/03/07/business/dealbook/court-to-hear-suit-accusing-law-school-of-inflating-job-data.html?smid=fb-nytimes&smtyp=cur&_r=1
Tetzlaff v. Educational Credit Management Corporation, 794 F.3d 756 (7th Cir. 2015). Accessible at http://caselaw.findlaw.com/us-7th-circuit/1708687.html
Thomas M. Cooley Law School v. Kurzon Strauss, LLP, 759 F.3d 522 (6th Cir. 2014). Accessible at http://www.ca6.uscourts.gov/opinions.pdf/14a0139p-06.pdf
Gary Warth. Jury rejects fraud claim against law school. San Diego Union-Tribune, March 24, 2016. Accessible at http://www.sandiegouniontribune.com/news/2016/mar/24/thomas-jefferson-law-school-verdict/
Joshua Wright. The Oversaturated Job Market for Lawyers Continues and On-the-Side Legal Work Grows. EMSI blog, January 10, 2014. Accessible at: http://www.economicmodeling.com/2014/01/10/the-oversatured-job-market-for-lawyers-continues/
Alaburda's case went to trial, and this week a jury ruled against her. Alaburda's loss is the latest in a string of defeats by unemployed or underemployed law school graduates who sued their law schools for fraud or misrepresentation.
Some unemployed or underemployed lawyers have filed for bankruptcy to discharge their student loans, but they've had mixed success. Michael Hedlund, a graduate of Willamette Law School, succeeded in getting a partial discharge of his law-school debt, but he endured ten years of litigation before the Ninth Circuit Court of Appeals rendered a decision in his favor in 2013.
More recently, two heavily indebted law-school graduates were denied bankruptcy relief. Mark Tetzlaff, racked up thousands of dollars in debt to pursue post-secondary studies; and he eventually received an MBA and a law degree from Florida Coastal School of Law, a bottom-tier law school. Tetzlaff actually paid off his law school debt, which he was required to do in order to get Florida Coastal to release his transcripts. But he never obtained a good job as an attorney, and he was unable to pay off other student loans. When he filed for bankruptcy in 2012, he owed $260,000 in student-loan debt.
The Eighth Circuit was not sympathetic to Mr. Tetzlaff's plight and refused to discharge his student loans in a decision released last year. And the U.S. Supreme Court refused to hear his appeal.
Likewise, a bankruptcy court in California ruled against Mark Lilly in 2013. Like Mr. Tetzlaff, Mr. Lilly took on a massive amount of student-loan debt, including debt he acquired to obtain an MBA and a law degree from McGeorge School of Law in Sacramento, which is not a top-ranked law school. His request for bankruptcy relief was denied, but he never found work as a lawyer.
This is the tragic reality: the legal job market has imploded, but law schools have not reduced enrollments sufficiently in response to the shrinking demand for lawyers. Law schools continue to pump out far more attorneys than American society needs, and many law schools have lowered their admissions standards just to get students in the door. For people like Mark Tetzlaff and Mark Lilly, who graduated from mediocre law schools, there are virtually no jobs. In California, for example, there are now 2.5 law graduates for every job opening.
Thus far, law graduates have borne most of the suffering created by a shrinking job market, especially graduates who received their degrees from nonprestigious law schools like Florida Coastal, Thomas Jefferson, and McGeorge. On average, law graduates who borrow to finance their studies acquire $140,000 in student-loan debt. Graduates of Thomas Jefferson School of Law, where Anna Alaburda obtained her degree, now graduate with an average debt load of $180,000! Many simply can't find jobs that will allow them to pay off their student loans.
In my view, some of the suffering experienced by unemployed law graduates should be shifted to the law schools, which have charged students exorbitant tuition and are graduating more students than our economy can absorb. These schools purport to maintain the highest ethical standards, but in reality, many of them are making admissions decisions based on their revenue needs and not the welfare of their students.
Whether or not they are guilty of misrepresentation, as Ms. Alaburda asserted against TJSL, many law schools are certainly guilty of behaving contrary to the public interest. Surely, these schools should help their unemployed graduates pay back massive student-loan debt that was acquired to obtain degrees that are virtually worthless.
References
Hedlund v. Educ. Resources Inst., Inc., 718 F.3d 848 (9th Cir. 2013).
Lilly v. Illinois Student Assistance Comm’n, 538 B.R. 45 (Bankr. S.D. Cal. 2013).
Elizabeth Olsen. Law Student Gets Her Day in Court. New York Times, March 6, 2016. http://www.nytimes.com/2016/03/07/business/dealbook/court-to-hear-suit-accusing-law-school-of-inflating-job-data.html?smid=fb-nytimes&smtyp=cur&_r=1
Tetzlaff v. Educational Credit Management Corporation, 794 F.3d 756 (7th Cir. 2015). Accessible at http://caselaw.findlaw.com/us-7th-circuit/1708687.html
Thomas M. Cooley Law School v. Kurzon Strauss, LLP, 759 F.3d 522 (6th Cir. 2014). Accessible at http://www.ca6.uscourts.gov/opinions.pdf/14a0139p-06.pdf
Gary Warth. Jury rejects fraud claim against law school. San Diego Union-Tribune, March 24, 2016. Accessible at http://www.sandiegouniontribune.com/news/2016/mar/24/thomas-jefferson-law-school-verdict/
Joshua Wright. The Oversaturated Job Market for Lawyers Continues and On-the-Side Legal Work Grows. EMSI blog, January 10, 2014. Accessible at: http://www.economicmodeling.com/2014/01/10/the-oversatured-job-market-for-lawyers-continues/
Monday, March 21, 2016
Student Loan Bankruptcy and Educational Credit Management Corporation: Who pays the ECMC lawyers?
I know quite a bit about the student loan crisis. After studying both governmental and nongovernmental documents, I know the student-loan default rate is much higher than the government reports. According to the Department of Eduction, the three-year default rate is about 10 percent, but the people who stop paying on their loans is at least 30 percent. And among people who attended for-profit colleges, the default rate is at least 50 percent.
I also know a lot about college borrowers who try to discharge their student loans in bankruptcy. Shedding student loans through bankruptcy is difficult, but over the past three years or so, a number of bankruptcy courts have ruled in favor of college-loan debtors, showing both compassion and common sense.
But I dont' know who pays the lawyers for the student-debt collection agencies that fight student debtors in the bankruptcy courts or how much those lawyers get paid.
In particular, who paid the lawyers for Educational Credit Management Corporation, which opposed bankruptcy relief for Janet Roth, an elderly woman with chronic health problems who was living on Social Security income of only $774 a month? And ECMC lawyers didn't just fight Ms. Roth in the bankruptcy court, it fought her all the way to the Bankruptcy Appellate Panel of the Ninth Circuit Court of Appeals. And everybody knew that Jane Roth's income was so low that she would have paid nothing on her student loans even if she lost her case.
Who paid the ECMC lawyers who appealed a bankruptcy decision in favor of George and Melanie Johnson, a couple with two school-age children who lost their home in a foreclosure proceeding?
And who ultimately paid the tab for ECMC to fight bankruptcy relief for Janice Stevenson, a woman in her 50s with a history of homelessness who was living on only at thousand dollars a month?
A New York Times article reported that ECMC has been accused of ruthless loan-collection tactics, and I would say ruthless is putting it mildly. And take my word for it, ECMC lawyers aren't working for free.
To paraphrase the great Lynyrd Skynyrd, I know a little about student loans and bankruptcy, and baby I can guess the rest. I think the taxpayers are paying ECMC's lawyers--either directly or indirectly.
In a letter issued last July, Assistant Deputy Secretary of Education Lynne Mahaffie wrote that student-loan debt collectors should take cost into account when deciding when to oppose bankruptcy discharge for distressed college-loan borrowers. But if ECMC is absorbing the cost of attorney fees to fight Jane Roth, Janice Stevenson, and Mr. and Mrs.Johnson, why would the Department of Education care what ECMC is spending in its collection efforts?
Certainly ECMC wasn't taking cost into account when it dragged Janet Roth through the federal courts for several years. There could have been no monetary gain to the taxpayers in fighting bankruptcy relief for Ms. Roth.
In the months to come, we will see if DOE really meant it when it authorized Mahaffie to say that DOE and its student-loan debt collectors would not fight bankruptcy discharge of student loans when it is not cost effective to do so.
My guess is this. ECMC will continue harassing student-loan debtors in the bankruptcy courts as long as its lawyers get paid for doing so. So if Lynn Mahaffie really meant what she said in that 2015 letter, DOE needs to change the system whereby ECMC lawyers get rich hounding people like Jane Roth, Janice Stevenson, and George and Melanie Johnson.
References
Natalie Kitroeff. Loan Monitor is Accused of Ruthless Tactics on Student Debt. New York Times, January 1, 2014. Acccessible at http://www.nytimes.com/2014/01/02/us/loan-monitor-is-accused-of-ruthless-tactics-on-student-debt.html?_r=0
Lynn Mahaffie. Undue Hardship Discharge of Title IV Loans in Bankruptcy Adversary Proceedings, July 7, 2015, GEN 15-13. Accesible at https://ifap.ed.gov/dpcletters/attachments/GEN1513.pdf
Roth v. Educational Credit Management Corporation, 490 B.R. 908 (9th Cir. BAP 2013). Accessible at http://cdn.ca9.uscourts.gov/datastore/bap/2013/04/16/RothV%20ECMC%20opinion-FINAL%20AZ-11-1233.pdf
Student Loan Bankruptcy and Educational Credit Management Corporation: Who pays the ECMC lawyers?
Say I know a little
I know a little about it
I know a little
I know a little 'bout it
I know a little 'bout love
And baby I can guess the rest.
Lynyrd Skynyrd
I Know A Little
I know quite a bit about the student loan crisis. After studying both governmental and nongovernmental documents, I know the student-loan default rate is much higher than the government reports. According to the Department of Eduction, the three-year default rate is about 10 percent, but the people who stop paying on their loans is at least 30 percent. And among people who attended for-profit colleges, the default rate is at least 50 percent.
I also know a lot about college borrowers who try to discharge their student loans in bankruptcy. Shedding student loans through bankruptcy is difficult, but over the past three years or so, a number of bankruptcy courts have ruled in favor of college-loan debtors, showing both compassion and common sense.
But I dont' know who pays the lawyers for the student-debt collection agencies that fight student debtors in the bankruptcy courts or how much those lawyers get paid.
In particular, who paid the lawyers for Educational Credit Management Corporation, which opposed bankruptcy relief for Janet Roth, an elderly woman with chronic health problems who was living on Social Security income of only $774 a month? And ECMC lawyers didn't just fight Ms. Roth in the bankruptcy court, it fought her all the way to the Bankruptcy Appellate Panel of the Ninth Circuit Court of Appeals. And everybody knew that Jane Roth's income was so low that she would have paid nothing on her student loans even if she lost her case.
Who paid the ECMC lawyers who appealed a bankruptcy decision in favor of George and Melanie Johnson, a couple with two school-age children who lost their home in a foreclosure proceeding?
And who ultimately paid the tab for ECMC to fight bankruptcy relief for Janice Stevenson, a woman in her 50s with a history of homelessness who was living on only at thousand dollars a month?
A New York Times article reported that ECMC has been accused of ruthless loan-collection tactics, and I would say ruthless is putting it mildly. And take my word for it, ECMC lawyers aren't working for free.
To paraphrase the great Lynyrd Skynyrd, I know a little about student loans and bankruptcy, and baby I can guess the rest. I think the taxpayers are paying the fees of ECMC's lawyers--either directly or indirectly.
In a letter issued last July, Assistant Deputy Secretary of Education Lynne Mahaffie wrote that student-loan debt collectors should take cost into account when deciding when to oppose bankruptcy discharge for distressed college-loan borrowers. But if ECMC is absorbing the cost of attorney fees to fight Jane Roth, Janice Stevenson, and Mr. and Mrs.Johnson, why would the Department of Education care what ECMC is spending in its collection efforts?
Certainly ECMC wasn't taking cost into account when it dragged Janet Roth through the federal courts for several years. There could have been no monetary gain to the taxpayers in fighting bankruptcy relief for Ms. Roth.
In the months to come, we will see if DOE really meant it when it authorized Mahaffie to say that DOE and its student-loan debt collectors would not fight bankruptcy discharge of student loans when it is not cost effective to do so.
My guess is this. ECMC will continue harassing student-loan debtors in the bankruptcy courts as long as its lawyers get paid for doing so. So if Lynn Mahaffie really meant what she said in that 2015 letter, DOE needs to change the system whereby ECMC lawyers get rich hounding people like Jane Roth, Janice Stevenson, and George and Melanie Johnson.
References
Natalie Kitroeff. Loan Monitor is Accused of Ruthless Tactics on Student Debt. New York Times, January 1, 2014. Acccessible at http://www.nytimes.com/2014/01/02/us/loan-monitor-is-accused-of-ruthless-tactics-on-student-debt.html?_r=0
Lynn Mahaffie. Undue Hardship Discharge of Title IV Loans in Bankruptcy Adversary Proceedings, July 7, 2015, GEN 15-13. Accesible at https://ifap.ed.gov/dpcletters/attachments/GEN1513.pdf
Roth v. Educational Credit Management Corporation, 490 B.R. 908 (9th Cir. BAP 2013). Accessible at http://cdn.ca9.uscourts.gov/datastore/bap/2013/04/16/RothV%20ECMC%20opinion-FINAL%20AZ-11-1233.pdf
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