Tuesday, June 17, 2008

this is the kind of thing that makes me happy i have no student loans

The egregiously unjust part= in a world where loans are not discharged in bankruptcy except for in very exceptional "undue hardship" showings under 11 USC 523a(8) (a standard nearly impossible to meet). Student loans are treated in the same basic category as criminal restitution and child support payments in bankruptcy. The statute changed in 1998 with higher education act amendments so that now even loans 7 years old require the demanding standard. (I'd be all for this idea if they had kept a time limit-its obvious you cant have students declaring bankruptcy right out of school). In 2005 the statute changed to its current version to treat regular loans the same as non profit or government loans.

heres the situation:

average student loan debt on graduation: 90k
average salary of a law school graduate (cumulative with undergrad) upon graduation: 60k

% who graduate with debt: 82-85%

yup...that about sums up the market situation where tuition for all forms of higher education, including law school, has nearly tripled adjusted for inflation while inflation adjusted salary for law school grads have remained stable. When the standard student borrows on his future earnings to pay for school-its not going to work if school price keeps growing faster than earnings at a rate of 3:1.

definitely not a economically stable situation.

in fairness,

i don't agree with the issue about the exaggeration of student employment statistics at schools. the self reports of the schools do include information on where the students are employed-including percentages of employed graduates in legal jobs and the amount that respond to surveys.

however-the idea that student loans could be twice your pre tax salary (assuming your employed at all but under average) is pretty scary.

someone who's a moron and has bad credit card debt? bankrupscy! someone who owes huge taxes to the IRS? payment plan. Someone who took a subprime mortgae? baliout! someone who choses the wrong career and financing package or who becomes unhealthy? carry it to your grave.

Update: Dad asked me how this compares to other professions/career paths.

average med school debt (cumulative with undergrad): 130k
95% borrow
average med school grad earnings?: 120.5k (AFTER residency)

average dental school debt (cumulative with undergrad): 120k

% who had debt on graduation: 85%
average dental school grad salary: 96k

average debt of 4 year program undergraduates upon graduation: 20k
% of 4 year program undergradueates with debt upon graduation who borrowed: 65%

average undergraduate starting salery technical/buisness (non mba) degree: 40-50k
average undergraduate starting salery arts/social science: 30-35k

looks like its lawyers and dentists who are struggling the most. how poetic..some might say.

by far the best deal (at first) seems to be getting a technical degree right out of college. On top of the fact they are earning more than anybody else in comparison to their debt (at first)...they dont loose earrings on the three years they are in school.

i guess even better is they person who gets a technical degree then gets their employer to pay for an advanced degree-those guys really get the gold.

1 comment:

mhw said...

and how does that compare with grads of medical school, dental school, business school, Journalism school?