The States finally step in

Loans 'Designed to Fail': States Say Navient Preyed on Students

From the outset, the lender knew that many borrowers would be unable to repay, government lawyers say, but it still made the loans, ensnaring students in debt traps that have dogged them for more than a decade.

While these risky loans were a bad deal for students, they were a boon for Sallie Mae. The private loans were — as Sallie Mae itself put it — a "baited hook" that the lender used to reel in more federally guaranteed loans, according to an internal strategy memo cited in the Illinois lawsuit.

Here's hoping the states have better luck than borrowers have to date.

Some lighTTT reading

Some Predict Tuition Increases Under Hillary Clinton's College Plan

WASHINGTON — Hillary Clinton’s plan to allow most Americans to attend public universities at no cost could have the perverse effect of driving tuition higher as the federal government chased a tuition target that universities would simply raise at taxpayers’ expense, some experts warn.

Good article, with lots of relevant links. One of the experts quoted believes that the Federal Government will still get a good return on its investment.

Lender wants to roll your student loans into your mortgage

From realtor.com:

The BurkeyLoan, developed by financial company Burkey Capital, is expected to hit the market this fall with a seductive and unique sales pitch: to help college grads become homeowners by rolling their student debt into a 30-year fixed mortgage.

OK, not YOUR loan:

The target borrower will be the crème de la crème of college grads (think doctors or lawyers instead of store managers). They'll be in the top 20% or so of earning households, have stellar credit, and have at least three to four years of work experience where they raked in at least $150,000 a year, according to the company.

They'll also need to work in fields, such as medicine, where if they lost their jobs, they could easily find another.

Ahahahahahahahaaaaaaaaa. With that qualification you'll need to be a Supreme Court clerk.

Not to be outdone by Burkey loans, the gummint will start to make Turkey Loans™ to 145-LSAT types who seen loyers on TV and want to matriculate at the local toilet 'cause they good at arguing. Granted, these TLs will be non-dischargeable and haunt you like a ghost for 25 years, but try explaining the distinction to a water head who will never pass the bar, anyway.

Borrrrrrrrrrriiiiiiinnnnnnnnnggggggggggg

I made the mistake of ambling over to the ABA Journal to peruse Law school financing system in need of ‘serious re-engineering,’ task force says. Like many media websites, it ranks articles by views, comments, and e-mail forwards. So, what is this presTTTigious "profession" focused on this summer weekend?

As we can see, the Cooley suit and the law school financing reform article didn't interest readers as much as treadmill desks. The ranking changes in real time and both articles fell off the page while I was typing this.

I confidently predict that a Stetson associate dean scraping gum off her shoe would garner more interest from ABA Journal readers than a judge agreeing law school is a total scam. Especially if she was blowing a prospect at the time.

P.S.: Ignore the $15/hr contract article, #8. That's just a figure some scambloggers fabricated before being caught and excoriated by sharp-eyed law academics. Lawyers really make tons of money, as well-documented by a pair of Seton Hall and Rutgers professors. Big pimpin'.

Read this inspiraTTTional sTTTory

From http://host.madison.com/wsj/news/local/crime_and_courts/alleged-robber-with-bucky-badger-hat-needed-money-for-debt/article_90e71ea0-61ab-11e2-9390-001a4bcf887a.html

"A man who wore a three-dimensional Bucky Badger hat when he allegedly robbed an East Side credit union last week told police that he wants to go to prison and needed the money because he has $250,000 in student debt.

An online UW-Madison directory lists Hubatch as a lead custodian at Union South on the UW-Madison campus. University spokesman John Lucas said Hubatch is not a current student but earned a bachelor's in English in 1998 and a law degree in 2004."

Some of you whiners claim your JD weighs you down like a millstone. What you need to do is follow the lead of this "slightly autistic" University of Wisconsin JD and take the bull by the horns mop by the handle. Does this guy sit on his couch all day playing Call of Duty? No! He cleans the damn couch and probably Scotchguards that sucker, too. Thanks to his JD and hard work, he's not just a janitor, he's the LEAD f*cking janitor.

PresTTTige: he haz it.

Now, how to handle his $250K student debt? Some people would IBR it and live happily ever after on a custodian's wages; however, a 49-year-old guy with untreated medical issues will never see the light at the end of the tunnel. Instead, he now gets three hots and a cot, and free medical care, too. Plus, what are his creditors going to do, levy on his prison commissary account?

This is exactly the kind of real-world problem solving you learn in law school. The ABA and UW must both be so proud. As for Hubatch, he may become the best jailhouse lawyer there ever was.

Be on Tee Vee

From a JDU post:

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Volunteer needed for CBS Evening News segment

I'm working with a producer at the CBS Evening News to put together a segment on the employment and debt crisis among recent law school grads. We need someone who:

1. Is a recent law school grad
2. Has a large amount of law school debt (at least six figures)
3. Is either unemployed or seriously underemployed
4. Is struggling economically as a result
5. Is articulate, and comfortable with the idea of being on camera

Ideally, this person will have gone to law school for reasons that would resonate sympathetically with a general audience, i.e., not because he or she was confident a law degree was going to make them rich. Also, this person should have relied on misleading employment statistics when deciding to go to law school and to incur large amounts of debt in order to do so. Having a family (spouse, and or child/children) is also a plus. It would be helpful if the person was either fairly close to the New York City area, or in the Denver metro area.

If you would like to participate, please email me ASAP at paul.campos@colorado.edu. Thanks in advance.

Be handsome. Be attractive. And, don't be unaTTTractive

Hartford Business Journal, which normally doesn't attract much attention outside its locale, recently got plenty with an article about lawyer debt reaching an all-time high.

From 2001 to 2010, the average amount borrowed annually by law students for their three-year degrees increased 50 percent, according to the American Bar Association. This past academic year, law students borrowed an average of $68,827 for public educations and $106,249 for private educations.

That would be on top of any undergrad debt.

Law school debt increases the cost of legal services. As lawyers repay loans, firms must compensate to meet their loan and cost-of-living demands. Law school debt essentially means a lawyer must make $200,000 or more above what the holder of a bachelor’s degree will make over a lifetime, to have the investment break even.

Other than the numbers themselves, there is little new, here. The piece shills for T2 UConn as a cost-effective public law school whose in-state tuition is half the price of the private Connecticut schools. My guess is most of its students didn't cross-shop Yale. I'm also guessing that Connecticut taxpayers don't mind subsidizing a law school in the supersaturated New England market.

The $200,000 number was pulled out of someone's ass; it omits both opportunity cost and the time value of money. It's possible to lose that much in salary alone during the three years of school. Speaking of salary,

“You end up being a little less selective,” said Jonathan Shapiro, partner at Middletown’s Shapiro Law Offices LLC and vice-chairman of the CBA Young Lawyers Section. “You end up going down a path that you might not have wanted to.”

Hellooooooooooo, shitlaw! Turns out Shapiro is a UConn grad who made biglaw and then landed on both feet at mommy and daddy's firm.

As the media is wont to do, it takes a solid story then throws a curveball by including an atypical subject who overshadows it. The NY Times did this with the groundbreaking Is Law School a Losing Game? by profiling a clueless Thomas Jefferson School of Law graduate. Here, HBJ featured a photogenic blonde UConn alumnus who got a job with Day Pitney the same way we all do, by inviting a partner to lunch. I was dumbfounded when I read this and I suspect that the article wouldn't have received much attention at all but for her.

One of Day Pitney's predecessors was Pitney Hardin, an NJ biglaw that might as well have been Cravath in being a reach for me. And, most other applicants.

Here's the takeaway. Want a soft-IP biglaw job? Just send an e-mail. Oh, and make sure you're attractive. And, very important, don't be unattractive. The clip below is tongue-in-cheek and set in a different context, but also 100% accurate.

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Blogger had a system error and deleted my original post. J-Dog had left the comment below by then. I'm wondering what the scale is, myself. Also, you younger guys should invite Ms. Cantor to lunch.

The whole "invite a partner out to lunch" and get a job offer a week later cracked me up.

Maybe there's a scale based on how attractive you are, competence factors being equal, for what you have to buy a partner to get a job offer:

Attractive ur minority: soda
Attractive female: lunch
Attractive male: dinner
Average ur minority: pro sports tickets
Average female: round of golf, elite course
Average male: furniture
Ugly ur minority: high-class electronic gadgets
Ugly female: nice car (> Honda)
Ugly male: vacation home