Jeff Matthews Posted November 24, 2014 Share Posted November 24, 2014 (edited) Florida Coastal is one of three law schools owned by the InfiLaw System, a corporate entity created in 2004 by Sterling Partners, a Chicago-based private-equity firm. InfiLaw purchased Florida Coastal in 2004, and then established Arizona Summit Law School (originally known as Phoenix School of Law) in 2005 and Charlotte School of Law in 2006. These investments were made around the same time that a set of changes in federal loan programs for financing graduate and professional education made for-profit law schools tempting opportunities. Perhaps the most important such change was an extension, in 2006, of the Federal DirectPLUS Loan program, which allowed any graduate student admitted to an accredited program to borrow the full cost of attendance—tuition plus living expenses, less any other aid—directly from the federal government. The most striking feature of the Direct PLUS Loan program is that it limits neither the amount that a school can charge for attendance nor the amount that can be borrowed in federal loans. Moreover, there is little oversight on the part of the lender—in effect, federal taxpayers—regarding whether the students taking out these loans have any reasonable prospect of ever paying them back. This is, for a private-equity firm, a remarkably attractive arrangement: the investors get their money up front, in the form of the tuition paid for by student loans. Meanwhile, any subsequent default on those loans is somebody else’s problem—in this case, the federal government’s. The arrangement bears a notable resemblance to the subprime-mortgage-lending industry of a decade ago, with private equity playing the role of the investment banks, underqualified law students serving as the equivalent of overleveraged home buyers, and the American Bar Association standing in for the feckless ratings agencies. But there is a crucial difference. When the subprime market collapsed, legislation dedicating hundreds of billions of taxpayer dollars to bailing out the banks had to be passed. In this case, no such action will be necessary: the private investors have, as it were, been bailed out before the fact by our federal educational-loan system. This situation, from the perspective of Sterling Partners and other investors in higher education, comes remarkably close to the capitalist dream of privatizing profits while socializing losses. From the perspective of graduates who can’t pay back their loans, however, this dream is very much a nightmare. Indeed, it’s easy to make the case that these students wind up in far worse shape than defaulting homeowners do, thanks to two other differences between subprime mortgages and educational loans. First, educational debt, unlike mortgages, can almost never be discharged in bankruptcy, and will continue to follow borrowers throughout their adult lives. And second, mortgages are collateralized by an asset—that is, a house—that usually retains significant value. By contrast, anecdotal evidence suggests that many law degrees that do not lead to legal careers have a negative value, because most employers outside the legal profession don’t like to hire failed lawyers. http://www.theatlantic.com/features/archive/2014/08/the-law-school-scam/375069/ Edited November 24, 2014 by Jeff Matthews 1 Quote Link to comment Share on other sites More sharing options...
oldtimer Posted November 24, 2014 Share Posted November 24, 2014 Touch-a touch-a touch-a touch me I want to feel dirty Touch-a touch-a touch-a touch me Creature of the night. Quote Link to comment Share on other sites More sharing options...
Paducah Home Theater Posted November 24, 2014 Share Posted November 24, 2014 (edited) One of my welders graduated from an electronics school with $80,000 worth of debt at a very high interest rate, I think in the upper teens. His payments are nearly $950 a month, no telling for how long, and he can't get a tech job. Just insane. Locally there was a legal school that actually went out of business, they were promised accreditation which they never received, and passed on those promises, last I checked there were even people who went there for a full 3 years with nothing to show for it except a crazy loan, no chance of ever getting a degree, and classes cannot be transferred to another school as to get credit for them, they have to start all over. Edited November 24, 2014 by MetropolisLakeOutfitters Quote Link to comment Share on other sites More sharing options...
oldtimer Posted November 24, 2014 Share Posted November 24, 2014 (edited) So I guess they learned something. Edited November 24, 2014 by oldtimer 1 Quote Link to comment Share on other sites More sharing options...
garyrc Posted November 25, 2014 Share Posted November 25, 2014 capitalist dream of privatizing profits while socializing losses. Sounds familiar. Quote Link to comment Share on other sites More sharing options...
garyrc Posted November 25, 2014 Share Posted November 25, 2014 Locally there was a legal school that actually went out of business, they were promised accreditation which they never received, and passed on those promises, last I checked there were even people who went there for a full 3 years with nothing to show for it except a crazy loan, no chance of ever getting a degree, and classes cannot be transferred to another school as to get credit for them, they have to start all over. I have a suggestion for the students. Sue! Quote Link to comment Share on other sites More sharing options...
oscarsear Posted November 25, 2014 Share Posted November 25, 2014 Usury lending laws do not apply? Quote Link to comment Share on other sites More sharing options...
Jeff Matthews Posted November 25, 2014 Author Share Posted November 25, 2014 Usury lending laws do not apply? No. The issue is this: The feds will loan anyone whatever price a college charges for tuition, room and board. No limit. So, imagine if you can start a school, get students to come and charge them enormous prices? Eventually, decades of this leads to a glut of underemployed and unemployed students with extremely high debt who will be haunted with it the rest of their lives. Quote Link to comment Share on other sites More sharing options...
eth2 Posted November 25, 2014 Share Posted November 25, 2014 (edited) As student loan debt is not dischargeable in bankruptcy, it stays with the borrower forever. So a 21 year old starts out life with tens of thousands of dollars owed for all to often no tangible earning benefits. I also agree that law education has become a moneymaking scam. Med schools, engineering schools, hard science programs all require a significant capital investment in facilities. Law schools require only a few classrooms, and thanks to electronic research, only a minimal library. I firmly believe that if a student cannot be accepted to a top 25 law school, he/she should strongly consider another career. Prospects for second tier law school grads are very limited, to say nothing of tier three and four. Edited November 25, 2014 by eth2 1 Quote Link to comment Share on other sites More sharing options...
Jeff Matthews Posted November 25, 2014 Author Share Posted November 25, 2014 As student loan debt is not dischargeable in bankruptcy, it stays with the borrower forever. So a 21 year old starts out life with tens of thousands of dollars owed for all to often no tangible earning benefits. I also agree that law education has become a moneymaking scam. Med schools, engineering schools, hard science programs all require a significant capital investment in facilities. Law schools require only a few classrooms, and thanks to electronic research, only a minimal library. I firmly believe that if a student cannot be accepted to a top 25 law school, he/she should strongly consider another career. Prospects for second tier law school grads are very limited, to say nothing of tier three and four. You're a lawyer or have looked into it? Quote Link to comment Share on other sites More sharing options...
Paducah Home Theater Posted November 25, 2014 Share Posted November 25, 2014 (edited) My wife is an attorney and she definitely didn't go to a top 25. She should have chosen a different career but that has more to do with personality. We homeschool and she works for herself so it works out ok. Not all attorneys are money grubbing rich folks, some are happy being self employed in their home town and working on petty stuff like deeds, wills, and guardianships. Absolutely no need for a ridiculously overpriced top 25 law school education for that. Unless you get into things like personal injury where there are regular large settlements in which you take 1/3 of, it's hard to make the kind of bucks that many people envision. Edited November 25, 2014 by MetropolisLakeOutfitters Quote Link to comment Share on other sites More sharing options...
CECAA850 Posted November 25, 2014 Share Posted November 25, 2014 You're a lawyer or have looked into it? I believe Earl is an Atty. Quote Link to comment Share on other sites More sharing options...
wvu80 Posted November 25, 2014 Share Posted November 25, 2014 As student loan debt is not dischargeable in bankruptcy, it stays with the borrower forever. So a 21 year old starts out life with tens of thousands of dollars owed for all to often no tangible earning benefits. I also agree that law education has become a moneymaking scam. Med schools, engineering schools, hard science programs all require a significant capital investment in facilities. Law schools require only a few classrooms, and thanks to electronic research, only a minimal library. I firmly believe that if a student cannot be accepted to a top 25 law school, he/she should strongly consider another career. Prospects for second tier law school grads are very limited, to say nothing of tier three and four. You're a lawyer or have looked into it? Earl stayed at a Holiday Express last night. What kind of a lawyer are you, Earl? Quote Link to comment Share on other sites More sharing options...
eth2 Posted November 25, 2014 Share Posted November 25, 2014 (edited) As student loan debt is not dischargeable in bankruptcy, it stays with the borrower forever. So a 21 year old starts out life with tens of thousands of dollars owed for all to often no tangible earning benefits. I also agree that law education has become a moneymaking scam. Med schools, engineering schools, hard science programs all require a significant capital investment in facilities. Law schools require only a few classrooms, and thanks to electronic research, only a minimal library. I firmly believe that if a student cannot be accepted to a top 25 law school, he/she should strongly consider another career. Prospects for second tier law school grads are very limited, to say nothing of tier three and four. You're a lawyer or have looked into it? I am a lawyer. As Abe Lincoln is alleged to have said, "I wish to speak evil of no man, but the truth is that he is a lawyer." I am a labor lawyer and also do pro bono special education work on behalf of students Edited November 25, 2014 by eth2 1 Quote Link to comment Share on other sites More sharing options...
twk123 Posted November 25, 2014 Share Posted November 25, 2014 Usury lending laws do not apply? No. The issue is this: The feds will loan anyone whatever price a college charges for tuition, room and board. No limit. So, imagine if you can start a school, get students to come and charge them enormous prices? Eventually, decades of this leads to a glut of underemployed and unemployed students with extremely high debt who will be haunted with it the rest of their lives. I agree 100%. Just like the housing crisis the Feds created this mess. By backing all these loans they have created an artificial demand for education as the true cost is hidden and put off. As the demand increases far beyond the supply the price raises which requires more loans. If they quit the loan programs then enrollments will temporarily drop sharply until Universities are forced to lower their prices to the actual market level. Of course the government doesn't actually have this money so we simply borrow it from China of have the Federal Reserve print it... Its funny how we have a Fascist system that we call Capitalism in an effort to promote Socialism as the supposed solution. Quote Link to comment Share on other sites More sharing options...
Paducah Home Theater Posted November 25, 2014 Share Posted November 25, 2014 (edited) At least when witnessing what's going on at my alma mater, the problem seems to be that schools have figured out that they can charge whatever they want due to no limits on student loans, then instead of investing it back in to the actual education, they build nicer buildings, pay for better landscaping, and hire better sports coaches then say look at us, our school is better. The degree and education in general is not much better than before. Part of the problem too though is that students aren't taught to be frugal, instead it's almost encouraged that they get student loans to pay for food, cars, clothing, entertainment, etc. When my wife went to law school she got out with a $40K loan which was twice what it should have been due to being out of state. The chicks across the hall were IN-state, yet they racked up nearly $120,000 in loans, each. Same dorm, same classes, same degree. $80,000 difference. Of course she had me to prop her up somewhat, but most of that was due to the other girls being sloppy with their spending. Putting entire cars on 30 year student loans isn't nearly as uncommon as you would think. Hell I did it myself but at least mine was cheap, they took their spending to a whole new level. Edited November 25, 2014 by MetropolisLakeOutfitters Quote Link to comment Share on other sites More sharing options...
Jeff Matthews Posted November 26, 2014 Author Share Posted November 26, 2014 Its funny how we have a Fascist system that we call Capitalism in an effort to promote Socialism as the supposed solution. LOL! I like that! But are you sure it's not our Socialism that we call, "Capitalism," that is causing many to call for Fascism as the supposed solution? Quote Link to comment Share on other sites More sharing options...
Jeff Matthews Posted November 26, 2014 Author Share Posted November 26, 2014 I am a lawyer. As Abe Lincoln is alleged to have said, "I wish to speak evil of no man, but the truth is that he is a lawyer." I am a labor lawyer and also do pro bono special education work on behalf of students I never heard that Lincoln quote before. I'd actually like to think we could strive to rise above it, but I'm afraid he's right. Lincoln was an extraordinary man. It is simply mind-boggling how much labor law has grown and branched-out like a giant tree over the last 20 years. It truly is a specialty at this point. Quote Link to comment Share on other sites More sharing options...
twistedcrankcammer Posted November 26, 2014 Share Posted November 26, 2014 I worked and PAID my own way through school, and my brother worked and paid his way through one associates degree, two Bachelors, a Law degree and a Masters in Tax Law. I don't have much sympathy for those that take out student loans, kinda feels a little like welfair to me.. Roger Quote Link to comment Share on other sites More sharing options...
tigerwoodKhorns Posted November 26, 2014 Share Posted November 26, 2014 Jeeze Roger, that is kind of harsh. I worked and paid my way through engineering school and law school too and the only things that I have ever financed are a few primary residences. Buy come on, a 21 year old (figure they start 1 year ahead of time) falls prey to a sophisticated scam to trap them, and they are stuck for the rest of their lives. These kinds are also striving for a goal, at least they have ambition. It stinks that they are being taken advantage of. Quote Link to comment Share on other sites More sharing options...
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