December 2, 2009

The Worst Student Loan Story Ever

A New York man who passed that state's bar exam will not be allowed to practice law, because he has over $500,000 in student loan debts.  He complains, perhaps with some justification, that he needs to have a job that will allow him to earn enough money to service that (non-dischargeable) debt -- which currently is running him a total of about $10,000 a month.  As I see it, in order to service that debt, pay rent for an apartment in New York, and eat, he needs to be making something on the order of $200,00 to $250,000 a year.  Which, without a license to practice law, will probably be something of a challenge for the guy.

How in the names of Tsai Shen Yeh, Mammon, and Juno combined does one accumulate half a million dollars in student loan debt?  The answer is it took him twenty-six years, during which time he's been given one associate's degree from a community college, one bacchalaurelate degree from an undergraduate college, and one juris doctorate.  If he was able to take just enough credits at any one time to qualify as a full-time student, he would have been able to defer making payments on past student loans that entire time -- although while payments are deferred, interest continues to accumulate.  Meanwhile, he's taking out more loans for more classes the whole time, so the principal increases all the way.  He took four tries to pass the New York bar exam, but I think maybe we ought not to read too much into that.

Twenty-six years for an A.A., B.A., and J.D. is a whole lot of time in school for not that much result. I can only compare that to my own experience -- I took six years to get a B.A. and a J.D. and wound up with about $75,000 in student loan debts for it (most of which has been paid off, but I'm in no hurry to pay it off any faster than I am, because it's the cheapest money out there; I'm paying more interest than that on my house).  So that's getting to the same result two decades faster and at a comparative savings of $425,000.  My guess is that perhaps this dude was not quite as serious about pursuing graduation as I was.

I'm also thinking a bit about seeing The Wife's experience as a student at University of Phoenix.  Each class came with its own student loan, and which automatically deferred the rest of the loans.  It looked like the "paperwork" to get all of that going was as simple as a few check-boxes on the UoP website.  The classes were expensive and so were the textbooks; after a while the total became a rather significant sum but since it was incurred only a few thousand dollars at a time, it kind of crept up on us.  And it sure seemed like she wasn't making any real progress towards getting the degree.  Fortunately we can handle it, but paying the residual finance charges for our respective educations is still a significant bite out of our monthly budgets.

One of the reasons I was dissatisfied with teaching at University of Phoenix was seeing this debt-accumulation machine at work; it didn't seem that a lot of education was being provided for the money; only the very motivated students would do the studying and actually learn much of anything.  But the price was very dear, which may well have contributed to the "If you pay, you get an A" mentality of so many of my students there -- which was another source of my dissatisfaction as a teacher.

So if this fella was doing University of Phoenix or an equivalent sort of education, I can see how he might have been effectively spinning his wheels for a long time.  If he was enrolled at a physical institution, he could have been taking very light loads -- the minimum needed to defer payments on existing loans.  And there's all sorts of career colleges and other places one can claim full-time student status (in exchange for a fee, which is available through financial aid) and gain deference on loan payment obligations with rather little work involved.  But now, the guy has hit the end of the road in terms of being a professional student forever -- he's got to be at least in his mid-forties by now, and finally, someone at a bank or a government agency or something like that said, "Enough.  You've got a professional graduate degree.  Time to start paying the money back."

What an incredible world of hurt.  But hey, it's a powerful object lesson to young people who are going through school now -- yes, you can borrow the money to get the educaiton you want, but it will all eventually come due, and if you're doing that, take the time to figure out a plan to become gainfully employed sooner rather than later.


wooddash said...
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Transplanted Lawyer said...

Blog-spam is becoming more polite, better-written, and cleverer to evade the word verification. This one read:

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..and contained a link for a site I wouldn't trust.

aileen said...
This comment has been removed by a blog administrator.
Transplanted Lawyer said...

Hah. Proof that this is a spambot -- the exact same message, with the same link!