Are Schools Taking Advantage of the Federal Loan System?

Federal loans for law students should provide access to a legal career for the middle class and poor. But when you examine how the funding operates, however, it becomes apparent that federal loans are an "irresistible drug" for revenue-based law schools, writes Brian Z. Tamanaha at the Law School Review.

Student loans are granted by the government without any evaluation of the likelihood of repayment. Accordingly, students at Thomas Jefferson Law School are treated equally with student at Harvard Law School. However, out of the 221 graduates of the 2010 class of Thomas Jefferson, only 73 obtained jobs as lawyers.

According to information provided by Thomas Jefferson Law School, the highest earners worked in private law firms, with a 75th percentile salary of $77,500. Based upon the numbers provided, Tamanaha estimates that at least 80% to 90% of the class earned less than $77,500.

However, the average debt of 2010 graduates of Thomas Jefferson was $137,000, which breaks down into monthly payments of $1,600.

Interestingly, only about one third of graduates actually ended up as lawyers and most of the graduates that landed lawyer jobs did not earn over $100,000 to manage the average debt of the class.

It appears that many graduates will be driven into federal programs designed to help graduates in "financial hardship," paying reduced monthly payments based upon a percentage of their income, with the balance of the loan forgiven after 25 years.

The combined debt of 2010 law graduates of Cooley was $91 million; at New York Law School it was $48 million; at Suffolk it was $46 million. Each year the enrollment goes up, and the total debt with it. These students are conduits for the money.

"These student-conduits bear the burden of the loans in the first instance, and the federal government thereafter. The average debt of graduates at all of these schools was well above $100,000. Not all of this debt will be fully paid in the end. Law schools get their money up front and have been ramping up tuition and enrollment without restraint thanks to an obliging federal loan program."

Federal loans are there to provide access to a legal career for many, but at the moment, law schools are engorging themselves on the federal loan program, at the detriment of the students, the taxpayer and the state.

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