Sen. Dick Durbin (D-Ill.) is collecting stories about crushing student loan debt as part of his push to reform lending laws, but few law school students have shared their woes.
“We are currently not hearing too much from law school students or former students — more stories are coming from students of for-profit schools,” a Durbin aide said in an e-mail.
At a hearing last month, Durbin was concerned that the total outstanding student loans will soon exceed $1 trillion, and said the most pressing concern is private student loans, a far riskier way to pay for an education than federal loans. Several lending sites offer private loans to law students.
Durbin, who himself took out loans to go to law school, has introduced legislation to prevent students from being lured into high-interest loans based on false promises. He urged students to contact him about their situation.
Law students owe an average of around $80,000 for graduate schooling, according to the nonprofit group American Student Assistance. The American Bar Association said the average educational debt for law school graduates last year was $66,000 for public school graduates and $100,000 for private school graduates — not counting undergraduate debt.
Durbin says the bill he introduced with Sen. Tom Harkin (D-Iowa), the Know Before You Owe Act of 2012, would require schools to counsel students before they sign on to expensive, even unnecessary, private student loan debt and inform them if they have any untapped federal loan eligibility.
During remarks on the Senate floor last month, Durbin said he is living proof that student loans work.
“I borrowed money to go to college and law school. I paid it back and felt it was money well invested. I stand here today because of it,” Durbin said. “A lot of students have gone through the same experience. Unfortunately, too many students today are being steered into loans that they will never be able to repay.”
Finally someone is trying to do something about these egregious student loans!
But it's weird that not many are voicing their experiences as this will help the fight.
Very confusing stuff...
Posted by: Ata Khan | June 06, 2012 at 05:45 PM
The economic illiteracy here is amazing. If graduates do not have the money to pay back these debts, no amount of moral superiourity nor browbeating them about "reading contracts" will make money magically appear. Harming graduates via predatory collections practises and the total inability to ever discharge the loans will not reduce the cost of law school tuition; it will increase it, as the loans are always secured by the blood and sweat of graduates in a way that no other loan is.
The dual goals need to be to work with current graduates with debt to figure out a sane way for them to pay back as much as they can, without destroying their lives, while preventing current and future students from getting into this situation. Ultimately, you're going to have to accept some reduced payment from many gradates, and are going to have to force law schools to drop tuition or to severely limit the loans students can take out.
Nothing is to be gained by browbeating anyone. As Allison said, none of this was on the radar pre-2008. In fact, I was laughed at in 2005 when I said that I was considering leaving law school because the cost (which was the same as a nearby state school charged to in-state residents) did not make economic sense. Are you going to flush an entire generation down the toilet because they aren't psychic?
Posted by: Roxeanne | April 11, 2012 at 03:48 PM
Sen. Durbin is a lawyer/politician who, along with his party colleagues, recieves generous campaign support both from parasitic personal injury lawyers, many of whom are very proud of their law school alma maters, and fat-and-happy labor unions, many of which feed at the trough of state-run and politically correct private law schools.
The unions would like to put nonunionized for-proft learning institutions -- the competition -- out of business; and the lawyers don't want their alma maters getting sued by the DOJ for allegedly fraudulent marketing. Coincidentally, Sen. Durbin tells us he's hearing complaints from disgruntled for-profit college students but not from disgruntled law students. How convenient if utterly unbelievable.
All Sen. Durbin or his staff need to do is pick up a newspaper or the National Law Journal once in a while. Barely a week goes by these days without a new lawsuit being filed against a law school by some of its graduates who can't find jobs.
Wile it seems that making trouble for allegedly fraudulent for-profit colleges is decidely in the political interest of Sen. Durbin, Attorney General Holder and President Obama, it seems that making trouble for allegedly fraudulent law schools is not.
Posted by: ColorBlindJustice | April 11, 2012 at 03:30 PM
If student loans were dischargeable in bankruptcy, very few students would be able to get loans. Most other types of loans are secured by some tangible (and repossessable) asset (like a house or car) or are offered primarily to people who are already employed and have a credit record, and/or have very high interest rates (credit cards). Who would loan money to a student, at any rate, with no assets or income, if the student could declare bankruptcy upon graduation, and would often do so, as they would honestly have no assets and a massive debt at that time? No one, unless the loans were cosigned by someone with assets and a credit record (i.e., the students' parents).
Posted by: DWPittelli | April 11, 2012 at 07:44 AM
At least when I was LS, many of the students were sophisticated, and wealthy enough, to take out student loans, to the maximum amount, to invest privately. The government loan rate being lower than market, the repayment terms more generous than market, collections clumsier than market, and all subject to inflation risk that, may, drastically reduce the effective repayment cost fo the loan.
I'm sure there are hardship cases, but I'm also sure there are people playing this game.
Posted by: pashley1411 | April 11, 2012 at 04:28 AM
Oh and by the way, these lenders (and the law schools that direct students to them) are not exactly honest about the terms of the loans, available repayment programs, or the prospects of employment/salary after graduation. When I went to law school, none of this was on the radar. Now the truth is coming out---too late for me, unfortunately. I was actively lied to about the loans I was taking out. Why shouldn't they lie? There's nothing to stop them.
Posted by: Allison | April 11, 2012 at 12:36 AM
Every other type of debt is dischargeable in bankruptcy. If someone takes out a loan to start a business and that investment goes belly-up, they can at last resort declare bankruptcy and at least be able to have a life and participate in the economy in the future. Same applies to people with gambling debt. Yet people who invest in an education and it doesn't pan out to a 6-figure income should be left to a life of debt slavery? How is that right?
Student loan lenders are not subject to any consumer protection laws. No truth in lending laws, no fair debt collection laws, no statutes of limitation, no bankruptcy release valve, nothing. Therefore, lenders have zero incentive to work with borrowers and actually have incentive to force us into default. Congress has seen fit to free them up to be loan sharks and cripple the very people this country needs to participate in the economy by investing, starting businesses, buying houses and cars, donating to charities, etc.
Why are students treated so differently from everyone else, all for the sin of trying to rise above their station and make something more of themselves? Some people seem to derive a certain satisfaction in seeing students in this situation, but sooner or later this problem will affect everyone, just as the housing crisis has. The real villains here are the predatory lenders, who as usual are making money hand over fist while people like the commenters here choose to demonize the borrower who took a risk that didn't pan out.
Posted by: Allison | April 11, 2012 at 12:33 AM
Reading a contract is a diversion from the rak issue of believing the American dream, only to find out it is a servitude nightmare ....
Posted by: Publics | April 10, 2012 at 09:07 PM
Its the taxpayer's fault that people made bad investments with their money? Is it too much to ask that students think through the implications of borrowing such sums if there is no probability of earning enough to pay the loans back? The reason the loans are onerous in terms of being discharged is directly due to the abuse of loans in the past when they were dischargeable.
Posted by: cubanbob | April 10, 2012 at 08:41 PM
Many dental students have debt from loans exceeding $200,000. 29 years ago I borrowed $30,000. We don't make 7 times the income as a general rule
Posted by: Greg Oman | April 10, 2012 at 08:32 PM
If they can't read a contract, how in the .... are they going to read the law?
Posted by: jw | April 10, 2012 at 08:19 PM