Another bubble that hasn’t popped yet: student loans. It’s a long article, but I highly recommend reading it.
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Is Law School a Losing Game?
IF there is ever a class in how to remain calm while trapped beneath $250,000 in loans, Michael Wallerstein ought to teach it.
Here he is, sitting one afternoon at a restaurant on the Upper East Side of Manhattan, a tall, sandy-haired, 27-year-old radiating a kind of surfer-dude serenity. His secret, if that’s the right word, is to pretty much ignore all the calls and letters that he receives every day from the dozen or so creditors now hounding him for cash.
“And I don’t open the e-mail alerts with my credit score,” he adds. “I can’t look at my credit score any more.”
Tuition at even mediocre law schools can cost up to $43,000 a year. Those huge lecture-hall classes — remember “The Paper Chase”? — keep teaching costs down. There are no labs or expensive equipment to maintain. So much money flows into law schools that law professors are among the highest paid in academia, and law schools that are part of universities often subsidize the money-losing fields of higher education.
WHEN he started in 2006, Michael Wallerstein knew little about the Thomas Jefferson School of Law, other than that it was in San Diego, which seemed like a fine place to spend three years.
“I looked at schools in Pennsylvania and Long Island,” he says, “but I thought, why not go somewhere I’ll enjoy?”
He remembers little about the promotional materials the Thomas Jefferson school sent when he applied in 2006, other than a pamphlet with lots of promising numbers. That was before the economy crumbled, but the school’s postgraduate data still looks fabulous, particularly given its spot in the fourth and bottom tier of U.S. News’s rankings. The most recent survey says 92 percent of Thomas Jefferson grads were employed nine months after they earned their degrees.
WHEN Mr. Wallerstein started at Thomas Jefferson, he was in no mood for austerity. He borrowed so much that before the start of his first semester he nearly put a down payment on a $350,000 two-bedroom, two-bath condo, figuring that the investment would earn a profit by the time he graduated. He was ready to ink the deal until a rep at the mortgage giant Countrywide asked if his employer at the time — a trade magazine publisher in New Jersey — would write a letter falsely stating that he was moving to San Diego for work.
“We were on a three-way call with my real estate agent and I said I didn’t feel comfortable with that,” he says. “The Countrywide guy chuckled and said, ‘Everyone lies on their mortgage application.’ ”
Instead, Mr. Wallerstein rented a spacious apartment. He also spent a month studying in the South of France and a month in Prague — all on borrowed money. There were cost-of-living loans, and tuition of about $33,000 a year. Later came a $15,000 loan to cover months of studying for the bar.
Today, his best guess is that he should be sending $2,000 to $3,000 a month in total, to lenders that include Wells Fargo, Citibank and Sallie Mae.
“There are a bunch of others,” he says. “I’m not really good at keeping records.”
Mr. Wallerstein didn’t know it at the time, but Thomas Jefferson leads the nation’s law schools in at least one category: 95 percent of students graduate with debt, the highest rate in the U.S. News rankings.
Beth Kransberger, associate dean of student affairs at Thomas Jefferson, stands by that figure, noting that it includes 25 percent of those graduates who could not be located, as well as anyone who went on to other graduate studies — all perfectly kosher under the guidelines.
Certain definitions in the surveys seem open to abuse. A person is employed after nine months, for instance, if he or she is working on Feb. 15. This is the most competitive category — it counts for about one-seventh of the U.S. News ranking — and in the upper echelons, it’s not unusual to see claims of 99 percent and, in a handful of cases, 100 percent employment rates at nine months.
A number of law schools hire their own graduates, some in hourly temp jobs that, as it turns out, coincide with the magical date. Last year, for instance, Georgetown Law sent an e-mail to alums who were “still seeking employment.” It announced three newly created jobs in admissions, paying $20 an hour. The jobs just happened to start on Feb. 1 and lasted six weeks.
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