Day: 2011/01/13

Taxpayers! Do Not Let IBR Turn Law Schools Into Winston University!

When I put the law school tuition bubble and income-based repayment together in my mind, I remembered a lesser-known Saturday Night Live sketch, “Winston University,” in which Billy Crystal sells a fraudulent education to college-bound high school students.  The pitch:

Your parents cough up $12,000 a year to send you to Winston University…We split it right down the middle: $6,000 for you, $6,000 for us.  For four years that’s $24,000.  Got it?

Well, Joseph of doesn’t realize how much life imitates art in his Pollyannaish response piece, “The New York Times Article on How Law School is a Bad Investment Got it Wrong.”

Tuition is increasing over inflation in every ABA-accredited law school in the nation, yet as I’ve reported previously, a legal education can be fully funded by combining federal Direct Loans and Grad PLUS loans and then going onto IBR upon graduation.  Problem solved, right?

Ha!  No.

Like Billy Crystal’s Potemkin university, IBR enables our law schools to make a similar pitch: “Taxpayers cough up $35,000 a year plus living expenses to send you to law school.  We keep the money to pay for faculty and research and to pad our U.S. News ranking, and you get to stay out of the workforce for three years during a depression.”  Not that any law school would actually need to find and kill any law students who go back on the deal.  That’s the point: the government has made it so they don’t need to.

The joke, though, isn’t just on the taxpayers who get conned by a legal education system that winks at young people while handing them degrees of decreasing value.  It’s also on the students themselves.  Joseph doesn’t tell readers that when the loans are forgiven in 25 years, graduates will have to pay income tax on the forgiveness.  Filing joint-income tax returns with one’s spouse may disqualify graduates if the spouse’s income is too high.  Also, private loans aren’t covered, and if graduates default, the show’s over and we’re back to debt peonage.  There may be other reasons people don’t qualify for IBR that I don’t know about, so beware.

IBR is NOT a reason to waive away the price tag of a legal education, nor is it an excuse to ignore the tuition bubble.  And it certainly is not cause to ignore the student debt crisis.  It’s a temporary solution for the most recent grads but is guaranteed to cost taxpayers billions of dollars in losses in the future.

The legal profession must take action and reverse the damage the tuition bubble is causing.