- Quickdraw McLaw
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Student loans have been back in the headlines recently with Senator Elizabeth Warren proposing cancelling student loan debt. Today, the director of the Consumer Financial Protection Bureau said the Department of Education is getting in the way of efforts to police the student loan industry. Obviously, student loans have an impact on most lawyers entering the profession today. What are your thoughts and tips on dealing with student loans (other than don’t take them, since it’s too late for that). Should you pay them off quickly, slowly, consolidate them? Should they be dischargeable in bankruptcy?
any news anything worthwhile at the civil bench bar meeting?
Graduated in 09 with 84k in loans. I aggressively paid them off over the next five years. It is nice not having student loan debt but I'd be in a better financial position if I had invested in the stock market or real estate.
Personal history aside, the government needs to do something about student loan debt. Massive amounts of student loan defaults will be bad for the economy and, at this point, the defaults seem inevitable.
"the government needs to do something about student loan debt"
Yes, stop guarantying it! Private banks are a much more efficient vehicle for assessing debt risk. Let banks bear the risk; that is their business and they have the expertise in that field. And this would have the added benefit of bringing the spiraling cost of college tuition back into some semblance of reality.
Regarding "defaults", how is Warren's plan anything other than just a massive default?
8:53 here. I am not opposed to having private banks make student loans, but claiming that private banks are more efficient at assessing debt risk ignores that fact that the world economy was knocked on its ass about a decade ago because banks sucked at assessing mortgage risk. I am highly suspicious of the let-the-free-market-decide philosophy when it comes to issues of national significance because we just saw how bad things can get when the government take a laissez faire approach.
Getting the government out of the loan business would have zero impact on the cost of tuition. None.
The most basic laws of economics say different, 12:13.
Graduated in '10 with around $80k in student loans. After throwing every spare dollar I had at them, I'm pleased to say that now I only have $95k in student loans.
How did your debt increase by $15k in 9 years? Please explain.
I'm assuming he/she means that he/she had no spare dollars to throw at them and deferred them.
Warren wants to treat the symptoms of the problem without addressing the root cause. Independent of whether we think discharging all the debt is or is not a good idea (it isn't), if the federal government continues to guaranty these loans, we will soon find ourselves in the same mess we are in now.
Now, discharging all the student loan debt would be the single greatest taxpayer ass-fuck of all time! Other than those few individuals legitimately mired in their student debt, who would benefit from this type of welfare? Certainly not the taxpaying public.
Yes, there are those for whom massive student debt is a bigger problem. There are those who borrowed and didn't graduate. There are those who borrowed to obtain degrees which had no marketable value. But for the majority of borrowers, the problem is really one of choice. Most borrowers can pay back their loans but choose instead to use their earnings for other things. The populist Warren wants us to believe that these borrowers are all victims and that she alone will be the one to save them. The majority of educational debtors are not victims. Instead, they've created their situation by their own choices. And that is objectively true whether they choose to accept it or not.
I agree with 9:07AM. We are becoming a society in which individuals demand their rights and that they be protected with Safetyism from others who disagree with their views and values. We are not teaching the younger generations anything about personally responsibility. We are screwed!
The root problem is the ever increasing high tuition rates. How can schools charge so much? Because financing (student loans) are so easy to obtain. I am not smart enough to have "the" answer, but a starting point might be capping loan amounts by the degree earned and requiring course completion within a specific time frame ( 4yr undergrad, 3 yr law school). $35k a year for a BA is unsustainable.
Institutions of higher ed that take federal student loan dollars need to have some skin in the game. They should be liable for a portion of every default. I recently had a law clerk working form me who failed the bar multiple times, not for a lack of trying. He had graduated from a 4th tier law school that did not care one whit about the future of their students or whether the students would be able to pass the bar and practice law. So many of these 4th tier schools sell pipe dreams for federal loan money, crushing their students and ruining their students lives.
This whole national topic of loan forgiveness is pandering for votes. Look, I took out loans just like everyone else. It was an investment in my future. And that investment paid off many times over compared to my earning capacity otherwise. But if I had failed at my job and couldn't make it as an attorney, I wouldn't have whined that the system failed me because they forced me to take money that I didn't have in order to get an education. I took the money willingly and knew I would have to pay it back. If I was stupid and invested $$$ in a law school education and hated the law, shame on me. not shame on the people who forced me to take their good money. I was an adult and made my own decision and can face the consequences without anyone feeling sorry for me. I have made other bad business decisions and taken it in the shorts. I didn't expect anyone to save me from my decision
The discussion of discharge is just a subset of the same argument to me. And it may be dressed up nicely in some argument or other, but it is politicking and pandering for votes. That is what it boils down to.
Thank you for being honest, 9:14
This view is myopic. Just because you recognize that you have responsibilities and freedom in this transaction doesn't mean that others (ie, schools and lenders) don't also have responsibilities. Markets only operate efficiently as to loans when both parties face risk and must act accordingly. Law schools face no risk at all. They can charge any amount they wish and the federal government will literally write them a check for each student that signs up.
Further, an institution of higher education, lead by people in their 50's and 60's with advanced degrees, and who enters into thousands of these transactions each year, is a tad more experienced and sophisticated than a 22 year old who has never gone down this path.
Case and point: The federal government continues to allow law schools like Thomas Jefferson School of Law in San Diego to take $49,000 per student in annual tuition even though there's almost no chance that money ever gets paid back. No private bank would ever make that loan. TJSL's employment rate is something like 28%. So yes, the students who go to TJSL knowingly take out these loans, but the school itself continues to take federal loan money knowing full well that most of its graduates will never, ever be able to pay that back.
Does anyone really think this is a good system?
"No private bank would ever make that loan."
EXACTLY! So if a private bank, with its experience and expertise in the business of lending, would not make the loan, then why should the American taxpayer?
Government should not be in this business at all unless it is willing to act responsibly and deny credit to those who are not credit-worthy. Bankers would be fired for making the loans which the government cluelessly makes every day.
Then let's be talking about the government not guaranteeing loans, not about forgiving or discharging the loans.
I think all the comments are correct. Their is blame everywhere, but mostly the institutions that created this mess. The federal government got into this game to help students get loans, but then made the BK laws such you cannot discharge student loans. The system is rigged against the individual who got duped into going to college and law school thinking that they would be able to pay off their loans. I believe we should all take responsibility for our own choices, but we need to somehow join together and vote those idiots out of office who created this mess.
"system is rigged against the individual who got duped into going to college"
That's bullshit. There are almost no actual victims in this mess (except perhaps the taxpaying public). Are you implying that if they're that stupid to get "duped", then they shouldn't have been going to college in the first place?
None of this changes the fact (that although I agree with the substance of the comments about personal responsibility) that the blanket availability of students loans vastly in excess of tuition and books, has caused the cost of tuition to skyrocket in the last 30 years. SKYROCKET!!
@ 9:25, who forced those students to take the money? They attended those schools because they couldn't get into any other school. So they were willing to pay a premium just to have a law school education that wouldn't be afforded to them by a good school.
9:25 Here.
I'm not disagreeing with you as to their culpability and responsibility. I just don't think they are the solely responsible actor here. Why are you giving a pass to sophisticated institutions who take federal money knowing it will never be repaid?
And your argument could apply to any debt, including far less responsible debt, like consumer debt. Yet we allow those debts to be discharged because we recognize (1) that both parties in a transaction bear risk and responsibility; and (2) it's not good for the economy to put individuals into permanent financial paralysis with debt that cannot be repaid. So why shouldn't this debt be dischargable? And why shouldn't a school like Thomas Jefferson be forced to indemnify at least a portion of the loans they are facilitating and taking federal dollars on?
I'm a consumer bankruptcy attorney here in Las Vegas.
The majority of my clients are individuals who have made financial decisions that have not turned out the way they thought they would. Of those who are in the position due to their decisions, some are just bad judgment, some were naive decisions, some were just reckless. Those that are working a shit job making $35k/year and who have $75k of student loans from their undergraduate degree in humanities, language (spanish/french), history, underwater welding, whatever, are never going to be able to pay back their student loans. Every other debt they have, including past due income taxes with the IRS (after giving the IRS 3 years to try to collect it) is dischargeable in their bankruptcy.
Why are their student loans not dischargeable?
Before 2005, private student loans, given to students by private banks, were dischargeable – these were risk underwritten loans, that carry 2-5% higher interest rates than the federal loans did, yet they are still not dischargeable after 2005.
~30 years ago if someone had been paying their student loans for 7 years, they could discharge the loans in bankruptcy. Making them non-dischargeable yet requiring no risk underwriting whatsoever means that students, who have no concept of the future hardships to pay back $100k in undergrad loans will cause them, can borrow that much to get a humanities degree, or an art history degree. WTF are they going to do that will let them pay that amount back? Nothing.
If the federal government is going to back a loan, it should do more to determine the validity and value of the education the person is getting. If it's elementary education, then the student should be allowed less in student loans than someone who is doing an engineering degree, and someone doing pre-law would get more student loan funds than someone taking art history. That SHOULD cause colleges and universities to push down the cost of degree plans for degrees that lead to lower paying jobs so that it costs more for an engineering degree than it does for an art-history degree because one is worth more, economically, than the other. Combine that with additional risk underwriting based on the student's grades; loan them less money if they earn lower grades so that they take longer to finish school and have more time to study for, and handle the case load, that they appear to be able to handle. (Although that may lead to more grade inflation by schools wanting more money…)
Honestly, the whole system is F'd up. Setting various traunches of funds for students to access once they hit milestones (degree of study, grade point, etc) may alleviate some of it. Mandating full-time students to do work-study in their department if they need more funds, etc. Once they graduate, set their student loan payments equal to 10% of their take-home pay. If they have been paying faithfully but haven't paid off 1/6th of their loans in 5 years, take the shortage for that 1/6th principal out of the funds allotted to the university where they got their degree so that it gives the university incentive to better manage the quality of their students, the quality of their students' education and charge less for their program for the degrees that aren't generating enough post-graduation earnings to pay for the amount borrowed.
Cynical me says that none of this will work though because the present goal of 'higher' education is to charge as much as possible regardless of the outcome of the quality of the education so that the university can pay the esteemed faculty outrageous salaries.
"the present goal of 'higher' education is to charge as much as possible regardless of the outcome of the quality of the education so that the university can pay the esteemed faculty outrageous salaries."
You mean like the Dean of UNLV's law school making $400k a year? There's no way he makes anything close to that without unconditional, unlimited federal student loan dollars arriving each semester like manna from heaven.
@10:33 – EXACTLY. Yes. That is a perfect example.
The Dean of UNLV's Law School only makes $400k? I mean that is a good clip, but I would have thought he would have made more. That's good for UNLV that his rate is not that high. It is clearly then a stepping stone Dean position, since I believe other schools will pay more for that position. But then again, what do I know?
Educational debt is a real crisis which is not being given enough attention in Washington. The political system is so broken and polarized that real issues like this one are not even discussed.
For what it's worth, those who advocate for removal of the federal guaranty are right. It is unsustainable. Elizabeth Warren's plan to forgive all the federally guaranteed debt might actually get some traction if she were also to propose a concomitant end to the federal guaranty. That would be good legislation – both sides give something up to get something in return. It won't happen as long as the Republican blowhards on the right and the socialist Democrat weirdos on the left continue to command the discussion.
"Weirdos to the left of me, blowhards to the right, here I am, stuck in the middle with you."
But getting rid of the government guaranty won't solve the root cause of the problem – the cost of higher education. We've become a country where a degree is set as a requirement for most any job outside of trades, food service and retail. Go abroad and you won't find anyone demanding a college degree for a secretary, for example, unless it's a high level job like a legal secretary (and maybe not even then). But the cost of attending university outside of the USA is also MUCH cheaper.
Or is the government guarantee the root problem? If tuition wasn't guaranteed, loans would presumably be more expensive. Which means fewer people could afford tuition. Which means tuition rates would have to come down, not keep going up, if the universities don't want to shrivel up and blow away.
Sort of like mortgage interest rates. When rates go down, house prices go up. When rates go up, house prices go down.
Amazing! 12:38 obviously took a very basic economics course at some point in his/her life. 12:17 obviously did not.
Except that the liberal academes, who ideologically and financially support Warren and her ilk with everything they have, will NEVER allow her to support a tit for tat legislation that makes sense. Votes are one thing, campaign dollars are another.
She is not advocating getting rid of all student loan debt. Here is her calculator. https://elizabethwarren.com/debt/
Elizabeth Warren owns a calculator?
As for the individual who is now saddled with a bunch of debt, there really aren't that many options for dealing with it.
1. Aggressively pay it off. Don't buy a house or a fancy car, or anything else that kills your ability to pay it off. Lifestyle creep is the plague. And no, you don't "deserve" it or "need" it because you are a lawyer now. You need to pay off your loans.
2. Try to find some kind of loan forgiveness program for public interest law, or something like that. (Is that still a thing?)
3. Pay as little as you can, defer, etc., and become an activist for loan forgiveness and/or dischargability, and hope it doesn't take too long to happen. If it does, reap the windfall. If it doesn't… well, bummer.
4. Pay as little as you can, buy your car, buy your house, etc., juggle it all, live paycheck to paycheck, and resign yourself to the fact that you're just like the majority of people in America, lawyers and non-lawyers alike.
5. I hate the now-trite advice of "start a side-hustle," but it really is something to consider. The problem with any profession is that you are basically renting out your brain. And you only have one brain to rent out at any given time (until you make partner that is). By contrast, if you sell a product of any kind, you can sell lots of product simultaneously (or nearly so).
6. Marry someone rich.
7. Disappear to another country.
8. Once you have a clue what you're doing practicing law, take a gamble and go solo and/or start a small firm with like minded people. Now you're free to make as much money as you can hunt down and kill. If you're aggressive about it, good at marketing, have connections, and a bit of luck, you can make lots more money much faster than working for someone else. Then see #1.
9. Consolidate your loans or refinance if it makes sense to do so. At least explore your options. If you can get a significantly better interest rate, for example. But be EXTREMELY careful to look out for fees and other bullshit that will basically destroy any savings.
10. Take out more loans, go back to school and get another degree. Repeat until death.
Student loans are another instance of government intervention in the economy that screwed over generations.
Non-dischargable student loans should be abolished. Existing loans should be subject to discharge in a Chp 13 after a 10 year plan paying 10% of gross income of borrower to student loan lender.
All the "personal responsibility" blowhards seem to forget that bursting bubbles hurt everyone. Lots of "responsible" homeowners got hosed when the subprime mortgage bubble burst. When the student loan bubble bursts, and it will, it will effect the entire economy.
So your premise is that personal responsibility is a bad thing? Good thinking. In the mean time I'll keep not having debt and saving my money. The last bubble burst made me money. I was able to buy two nice rental homes at a deep discount. They are now cash-flowing very very nicely, thank you. How? I had paid my student loans and saved some money.
That kind of thinking will keep you broke and reliant on the gub'mint, 11:14.
Those homeowners were NOT responsible borrowers! They knew their income and their expenses and signed on the dotted line anyway overextending themselves. Yes, the banks should not have offered the loans but IMO the ultimate responsibility was on the borrower. It's bullshit that the government is even involved in private loans. If you can't afford something, then don't buy it. If you can't afford tuition find a less expensive school or cash flow it even if it takes twice as long.
" Yes, the banks should not have offered the loans but IMO the ultimate responsibility was on the borrower."
That is not how free markets work. It is disturbing to see so many educated people giving a pass to banks and universities, both sophisticated, while reigning judgment down upon regular, middle class folk. I think I understand this "personal responsibility"-of-the-individual-only thing, which is all over this thread:
*Some people struggle to see the world from any perspective but their own. They project their own biography onto every situation and public policy issue. "I paid off my loans and so everyone else can too!"
*Some people have a lizard/reptile brained, vengeance approach to any public policy issue which may extend mercy to individuals. This is particularly true of those who consume a steady diet of conservative broadcast media. This mentality persists even where taking a less stringent approach leads to better outcomes.
*Some people, especially professors and administrators, have a very real financial stake in maintaining the status quo. If that federal money dries up, administrator positions will be eliminated (ie, layoffs), deans will take pay cuts as will professors.
11:14 here. The top two missed the point completely. The point wasn't that people don't need to be responsible; it was that you are willing to cut off your nose to spite your face. People on here are willing to cause an economic crash and recession just so they can feed their egos about how superior they are.
Let me add another wrinkle regarding the coming crisis. I graduated in 2011 and most of my loans were around 7%. I refinanced with Citibank, because they judged me to be a safe credit risk. My interest rates dropped by almost half. Over time, more credit worthy borrowers will refinance out of the federal loans, leaving the federal government with a portfolio of pure shit. Do you really want to wast tax dollars chasing down money that doesn't and will never exist? Do you want to keep these people from rebuilding their lives?
Another thing that would help tremendously is the price point of university. Obviously a degree in Art History is not equal to or the same Chemical Engineering, or Math. I believe the flat fee cost of tuition also adversely affects students. If universities allowed students to pay different prices for their degrees it would also change how student take courses and also make it maybe more affordable for those getting degrees in jobs that dont pay as much
From The Nevada Independent: "On Thursday, however, the money committees pared the school safety budget by $30 million, or more than half."
WHY ARE WE CONSTANTLY PUTTING SCHOOLS AT THE BOTTOM OF NEVADA'S PRIORITY LIST?
In my opinion, The Governor is trying to accommodate all the different needs of Nevada: The GLBTQ community, the illegal immigrant community, the healthcare for all Nevadans, and the cuts have to come from somewhere (i.e., marijuana sales, schools, etc.) Do the schools, DMV, government, social security really run efficiently? We parents constantly donate and see less and less from teachers. Be part of the solution, get involved by voting out those who have no chutzpah! In the end government should stay out of our business as much as possible.
Yet, we have all that money in the rainy day fund.
Rainy day fund…ha! It ends up in campaign celebrations.
My daughter (20) just enrolled as a transfer student to UNLV Undergrad for the 19-20 school year. In addition to her Millennium Scholarship (Full Tuition Paid @$7,124.10) and full Pell Grants ($6,195) offered. They offered her some $15,000 in student loans. She lives at home, has a good job and zero expenses. WTF???
Try telling me that getting the Feds OUT of student lending wouldn't drop the tuition cost. Also, with it going private and possibly making them dischargeable in BK, the banks can and will do a cleaner and more efficient job of administering it. Maybe then a Bachelor's Degree will MEAN something in this world.
$800 Million for the October 1 Shooting?
What's Eglet Prince cut?
Anyone else doubt that Sisolak is prepping for Presidential run in 2024 assuming Trump wins in 2020? His actions seem entirely made for public consumption and to cross all the Ts and dot all the Is so that he is electable. Pushing a progressive agenda while not raising personal income taxes, State Constitutionally barred of course, so that he has a good shot at President? Seems screaming obvious to me that is his goal, but then again What do I know?