An eye-opening look at the cost of getting a law degree blames student loans for the ability of law schools to charge about $50,000 per year, when you include living and other expenses along with tuition. David Segal wrote in The New York Times yesterday that when combined with the prestige race pumped up by U.S. News & World Report's rankings, student loans have allowed law schools to disregard affordability.
The focus of the article, however, was the accreditation standards imposed by the American Bar Association. Segal writes that the standards have pretty much guaranteed that graduating lawyers have no choice but to charge high fees for their services.
If you've ever wanted to sue someone, you already know that unless you're after a minimum of $25,000, you should abandon the idea. It's just not worth it after you calculate what your lawyer will get.
The ABA's stranglehold on legal services prevents the U.S. from having categories of legal professionals who can charge less than lawyers who've passed the bar. In Britain there are other less expensive alternatives like legal executives who can appear before courts and represent clients in different sorts of matters. Without having done any exhaustive research on the subject, it sounds like they are something like the legal version of physician assistants.
The bottom line is that although we all joke about lawyers and lament that there are too many of them, consumers could definitely benefit from access to less expensive legal help. Instead, anyone who dispenses legal advice without having gone to an ABA-accredited school (except in a few states like Tennessee) is breaking--you guessed it--the law.
Showing posts with label student loans. Show all posts
Showing posts with label student loans. Show all posts
Monday, December 19, 2011
Tuesday, December 13, 2011
Their stories: Slaves to Student Loans
They tell their stories with anguish, with anger, with hopelessness and with numbers. They are the victims of a student loan system designed to guarantee big profits to lenders for years to come while enslaving borrowers with outrageous terms of repayment.
You can see their pictures and read their words at a new Occupy Student Debt website. There's the 27-year old woman with $100,000 in debt who can't find a job paying more than about $12/hour. She wants to send her useless diploma to Sallie Mae.
There's the widow who went back to school at the age of 48 to get a Master's Degree and the chance at a better job as a school teacher. She's now 55. She figures that she'll be 77 before she pays off her loan.
There's the 63-year old father of 3, a physician no less, who even pre-paid tuition to lock in lower rates. But college for 2 of his children ended up costing more anyway, and he's now stuck with $42,000 in loans that carry interest rates of more than 8%, with payments in the early years going only for interest, not to pay down principle. He compares that to the terms of his home mortgage and home equity loan, both with interest rates under 4% and terms that make prepayment a smart idea.
These stories show how the banks succeeded in getting the U.S. Congress to make student loans immensely profitable for lenders and uniquely onerous for borrowers.
With interest rates so low now, refinancing a home mortgage, for example, can save a home owner lots of money, as long as they have a good enough credit rating to convince a bank to do the refinancing. You can also declare bankruptcy if you fall behind. You'll lose most of what you own, but at least you'll be able to start fresh.
But no, there are no opportunities to refinance a student loan at lower rates. Lenders have no reason to offer them. Nor can you go bankrupt. The law doesn't allow it. There is no escape.
Read their stories. 400 of them so far. Each one proof that our elected representatives care much more about banking industry campaign contributions than the plight of their constituents.
You can see their pictures and read their words at a new Occupy Student Debt website. There's the 27-year old woman with $100,000 in debt who can't find a job paying more than about $12/hour. She wants to send her useless diploma to Sallie Mae.
There's the widow who went back to school at the age of 48 to get a Master's Degree and the chance at a better job as a school teacher. She's now 55. She figures that she'll be 77 before she pays off her loan.
There's the 63-year old father of 3, a physician no less, who even pre-paid tuition to lock in lower rates. But college for 2 of his children ended up costing more anyway, and he's now stuck with $42,000 in loans that carry interest rates of more than 8%, with payments in the early years going only for interest, not to pay down principle. He compares that to the terms of his home mortgage and home equity loan, both with interest rates under 4% and terms that make prepayment a smart idea.
These stories show how the banks succeeded in getting the U.S. Congress to make student loans immensely profitable for lenders and uniquely onerous for borrowers.
With interest rates so low now, refinancing a home mortgage, for example, can save a home owner lots of money, as long as they have a good enough credit rating to convince a bank to do the refinancing. You can also declare bankruptcy if you fall behind. You'll lose most of what you own, but at least you'll be able to start fresh.
But no, there are no opportunities to refinance a student loan at lower rates. Lenders have no reason to offer them. Nor can you go bankrupt. The law doesn't allow it. There is no escape.
Read their stories. 400 of them so far. Each one proof that our elected representatives care much more about banking industry campaign contributions than the plight of their constituents.
Monday, December 5, 2011
College Presidents' Pay Up Despite Economy
Thanks to the Chronicle of Higher Education, we have just learned that the pay of private college presidents continued up in 2009 despite the economy. As reported in The New York Times, 36 presidents had an average increase of 2.2 percent. Most interesting to me is the chart showing their compensation as a percentage of university expenditures, ranging from 1% to a high of 3.5% for a school I'd never heard of: Mountain State University in West Virginia.
This president, Charles H. Polk, pulled in $1, 843, 746 in 2009.
In defense of his and other million dollar plus pay packages, David L. Warren, president of the National Association of Independent Colleges and Universities, told The Times: "There is just a small pool of candidates who possess the skill set that is required and are willing to take on the stressful 24/7 nature of the position."
The Times reporter didn't bother to quote anyone critical of these pay scales, much less anyone from the Occupy movement.
So Mountain State must be an excellent school, right? Wrong. Instead, the school may lose its accreditation early in 2012. A show-cause order by the Higher Learning Commission cited problems of monitoring of student progress, governance, and--get ready for it-- availability of resources. Seems to me that with a performance like that, everybody at Mountain State should be questioning his "skill set."
The other interesting chart shows the presidents' compensation as a multiple of average pay for professors--not adjuncts, of course, but the full-time profs. That ranges from a high of 16.1 for Stevenson University in Maryland to a low of about twice for the president of Wabash College in Indiana. Five other presidents earned at least 10 times as much as their full professors.
Stevenson has been undergoing rapid expansion in the last several years so that may be why its board of trustees thinks president Kevin J. Manning deserves to be paid so much more than the professors, a rich package worth $1,493,655. If I were a student there with student loans, I'd sure want to ask them.
This president, Charles H. Polk, pulled in $1, 843, 746 in 2009.
In defense of his and other million dollar plus pay packages, David L. Warren, president of the National Association of Independent Colleges and Universities, told The Times: "There is just a small pool of candidates who possess the skill set that is required and are willing to take on the stressful 24/7 nature of the position."
The Times reporter didn't bother to quote anyone critical of these pay scales, much less anyone from the Occupy movement.
So Mountain State must be an excellent school, right? Wrong. Instead, the school may lose its accreditation early in 2012. A show-cause order by the Higher Learning Commission cited problems of monitoring of student progress, governance, and--get ready for it-- availability of resources. Seems to me that with a performance like that, everybody at Mountain State should be questioning his "skill set."
The other interesting chart shows the presidents' compensation as a multiple of average pay for professors--not adjuncts, of course, but the full-time profs. That ranges from a high of 16.1 for Stevenson University in Maryland to a low of about twice for the president of Wabash College in Indiana. Five other presidents earned at least 10 times as much as their full professors.
Stevenson has been undergoing rapid expansion in the last several years so that may be why its board of trustees thinks president Kevin J. Manning deserves to be paid so much more than the professors, a rich package worth $1,493,655. If I were a student there with student loans, I'd sure want to ask them.
Wednesday, November 30, 2011
Student Loans Enable Sky-High Tuitions
A few years ago, the chiropractor who was working on my back confided in me that she'd never be able to own a home because she had racked up a massive amount of student debt. She explained that she had taken out student loans to pay for chiropractic school expecting a big payoff, but then health insurance companies had essentially stopped paying for chiropractic visits. So she had gone back to school to become a licensed acupuncturist. That additional skill had not paid off either.
Now she had debt approaching $100,000 and saw no possibility of ever paying it off.
So I naively suggested that she declare bankruptcy to get out from under. I was incredulous when she told me that bankruptcy was not allowed under the laws regulating student loans.
But I quickly learned she was right.
Now, as Occupy Wall Street has morphed on campuses into the Occupy Student Debt Campaign, students facing a bleak job future are demanding relief from tuition increases. Meanwhile, an on-line effort to start a boycott of making debt payments has begun, and everyone involved in higher education is talking about ways to contain costs and give graduates some measure of relief from their debts--although not through bankruptcy.
Left out of this discussion is the elephant in the room: the role that the student loan program itself has played as colleges and universities ratcheted up the price of tuition by 50 percent in the past decade. Patrick M. Callan, president of the Higher Education Policy Institute, indirectly pointed it out recently when he said that huge federal funding increases in Pell grants under Presidents Clinton, Bush and Obama had "been absorbed by tuition increases."
He went on: "And with all that we've invested, we have a less affordable system than we had a decade ago. We're on a national treadmill."
Imagine how different the situation would have been if prospective college students and their parents had had to pay tuition out of current income or from loans whose repayment was not deferred until after graduation. Top administrators at colleges and universities wouldn't have been able to raise their salaries to astronomic heights. They couldn't have engaged in a luxuries arms race with other institutions, building campuses gilded with state-of-the art fitness centers, elaborate theaters and stadiums, ski areas, golf courses, arboretums and dorms that, in the case of Princeton, have been described as "a billionaire's mansion in the form of a dorm."
They were able to raise their prices knowing that students would simply borrow more to compensate. No one questioned whether the pay the students should expect after graduation had gone up enough to cover the added amounts. It's not substantially different from giving new home buyers mortgages that could never be supported by their income, except that with student loans the banks don't even have to repossess anything. In fact, they face virtually no risks. Thanks to laws passed by Congress, student debtors become indentured servants, obligated to a lifetime of payments--or maybe 20 years of them under new proposals--since they can't relieve themselves of the debt by going bankrupt. Worse still, students who miss payments can easily end up in a cycle of punitive fees that makes their debt balloon even bigger.
The high pay of university administrators and the luxury facilities, of course, have little or nothing to do with education. Most colleges and universities save on the actual cost of teaching by making heavy use of adjunct professors instead of hiring more full-time. As one myself, I can tell you that they haven't invested those tuition increases in higher adjunct pay although adjuncts teach so many of the required courses at the core of a college education. In fact, anyone who wants to live on the pay of an adjunct becomes an itinerant, driving from one campus to another trying to cobble together a big enough load to make a meager income.
Seen from this perspective, student loans have enabled spending sprees by the administrators of our colleges and universities who didn't have to worry--until very recently--about making their schools unaffordable.
Now, with so much money sunk into facilities, administrations have little room to maneuver. Perhaps it's time to take a hard look at cutting those top salaries, as some have done, at eliminating top-heavy staffs, and pulling back to a focus on the core mission of education. In 2008, 23 university presidents earned more than $1 million. The NY Times reported that the median pay for presidents of the 419 private colleges and universities surveyed by the Chronicle of Higher Education was $358,746, a 6.5 percent increase over 2007. Over the five years previous years, the median presidential pay grew by 14 percent, and that is adjusted for inflation.
And lest you think this applies only to private institutions, consider that the median total compensation for public college presidents in 2009-10 was $375,442, according to the Chronicle of Higher Education. E. Gordon Gee, the president of football power house, Ohio State, topped the list, earning more than $1.3-million in total compensation.
Not incidentally, sports programs at public and private schools more often lose money than make it. Overall, only 12% of college athletic programs are profitable, according to the NCAA. Even most football programs--57%--lose money.
Funneling more money into loan programs won't help stop spiraling tuition prices. Unfortunately, that will just continue to enable the spending sprees that have created the crisis we're in. NYU professor Andrew Ross, who has started the campaign for a boycott of loan payments, is, among other things, calling for private and for-profit colleges to open their books so the public can see just where all that tuition is going. The books of public colleges should be open, and citizens should demand to know which aspects of spending have priority.
Ross has also recognized, as he told the NYU student newspaper blog, "that my own salary is debt-financed. … There’s an element of complicity. It’s an incredible burden for faculty to bear.”
Now we need to hear that same sentiment coming from university presidents, along with some serious rethinking of spending priorities. When we do, we might begin getting back to a realistic balance between the cost of a higher education and the income students can expect after graduation.
Now she had debt approaching $100,000 and saw no possibility of ever paying it off.
So I naively suggested that she declare bankruptcy to get out from under. I was incredulous when she told me that bankruptcy was not allowed under the laws regulating student loans.
But I quickly learned she was right.
Now, as Occupy Wall Street has morphed on campuses into the Occupy Student Debt Campaign, students facing a bleak job future are demanding relief from tuition increases. Meanwhile, an on-line effort to start a boycott of making debt payments has begun, and everyone involved in higher education is talking about ways to contain costs and give graduates some measure of relief from their debts--although not through bankruptcy.
Left out of this discussion is the elephant in the room: the role that the student loan program itself has played as colleges and universities ratcheted up the price of tuition by 50 percent in the past decade. Patrick M. Callan, president of the Higher Education Policy Institute, indirectly pointed it out recently when he said that huge federal funding increases in Pell grants under Presidents Clinton, Bush and Obama had "been absorbed by tuition increases."
He went on: "And with all that we've invested, we have a less affordable system than we had a decade ago. We're on a national treadmill."
Imagine how different the situation would have been if prospective college students and their parents had had to pay tuition out of current income or from loans whose repayment was not deferred until after graduation. Top administrators at colleges and universities wouldn't have been able to raise their salaries to astronomic heights. They couldn't have engaged in a luxuries arms race with other institutions, building campuses gilded with state-of-the art fitness centers, elaborate theaters and stadiums, ski areas, golf courses, arboretums and dorms that, in the case of Princeton, have been described as "a billionaire's mansion in the form of a dorm."
They were able to raise their prices knowing that students would simply borrow more to compensate. No one questioned whether the pay the students should expect after graduation had gone up enough to cover the added amounts. It's not substantially different from giving new home buyers mortgages that could never be supported by their income, except that with student loans the banks don't even have to repossess anything. In fact, they face virtually no risks. Thanks to laws passed by Congress, student debtors become indentured servants, obligated to a lifetime of payments--or maybe 20 years of them under new proposals--since they can't relieve themselves of the debt by going bankrupt. Worse still, students who miss payments can easily end up in a cycle of punitive fees that makes their debt balloon even bigger.
The high pay of university administrators and the luxury facilities, of course, have little or nothing to do with education. Most colleges and universities save on the actual cost of teaching by making heavy use of adjunct professors instead of hiring more full-time. As one myself, I can tell you that they haven't invested those tuition increases in higher adjunct pay although adjuncts teach so many of the required courses at the core of a college education. In fact, anyone who wants to live on the pay of an adjunct becomes an itinerant, driving from one campus to another trying to cobble together a big enough load to make a meager income.
Seen from this perspective, student loans have enabled spending sprees by the administrators of our colleges and universities who didn't have to worry--until very recently--about making their schools unaffordable.
Now, with so much money sunk into facilities, administrations have little room to maneuver. Perhaps it's time to take a hard look at cutting those top salaries, as some have done, at eliminating top-heavy staffs, and pulling back to a focus on the core mission of education. In 2008, 23 university presidents earned more than $1 million. The NY Times reported that the median pay for presidents of the 419 private colleges and universities surveyed by the Chronicle of Higher Education was $358,746, a 6.5 percent increase over 2007. Over the five years previous years, the median presidential pay grew by 14 percent, and that is adjusted for inflation.
And lest you think this applies only to private institutions, consider that the median total compensation for public college presidents in 2009-10 was $375,442, according to the Chronicle of Higher Education. E. Gordon Gee, the president of football power house, Ohio State, topped the list, earning more than $1.3-million in total compensation.
Not incidentally, sports programs at public and private schools more often lose money than make it. Overall, only 12% of college athletic programs are profitable, according to the NCAA. Even most football programs--57%--lose money.
Funneling more money into loan programs won't help stop spiraling tuition prices. Unfortunately, that will just continue to enable the spending sprees that have created the crisis we're in. NYU professor Andrew Ross, who has started the campaign for a boycott of loan payments, is, among other things, calling for private and for-profit colleges to open their books so the public can see just where all that tuition is going. The books of public colleges should be open, and citizens should demand to know which aspects of spending have priority.
Ross has also recognized, as he told the NYU student newspaper blog, "that my own salary is debt-financed. … There’s an element of complicity. It’s an incredible burden for faculty to bear.”
Now we need to hear that same sentiment coming from university presidents, along with some serious rethinking of spending priorities. When we do, we might begin getting back to a realistic balance between the cost of a higher education and the income students can expect after graduation.
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