Divorcing Law Grads, Stressed Over $190K in Debt, Victims of ‘Education Hoax’
Posted Jan 20, 2009 7:09 AM CDT
By Debra Cassens Weiss
Some time after he graduated from California Western law school in 1995, Joel Kellum married his law school sweetheart. The couple had $190,000 in student debt.
Kellum and his wife made $145,000 in loan payments, but they paid off only $21,000 in principal, Forbes magazine reports. The variable-interest rate debt, which leapt as high as 12 percent, was a major source of stress in their marriage, according to the couple, and they divorced last year. "Two people with this much debt just shouldn't be together," Kellum told Forbes.
The magazine uses the couple to support the thesis of its article. It calls the lawyers “victims of an unfolding education hoax on the middle class”—the myth that college and advanced degrees translate to a life of economic privilege.
The average law grad has $100,000 in student debt, according to the magazine. UCLA law professor Richard Sander says the problem can be compounded for African-American students, who are lured in to improve law school diversity rankings without being told that less than half will pass the bar. Schools also “goose employment statistics by temporarily hiring new grads and spotlighting kids who land top-paying jobs, while glossing over far-lower average incomes,” the story says.
"There are a lot of aspects of selling education that are tinged with consumer fraud," Sander told the magazine. "There is a definite conspiracy to lead students down a primrose path."
Private loans can be more onerous than those funded by the government, the story says. Many lenders charge 10 percent loan origination fees and 18 percent variable interest rates that start to accrue as soon as the loan is funded. And student loans cannot be discharged in bankruptcy.
Many educators tout the statistic that college graduates will earn $1 million more than high school grads. The magazine examines the claim and says the statistic doesn’t account for some facts.
First, the higher salary figure may reflect the fact that college graduates are smarter and work harder—characteristics that could boost salaries for such people even if they don’t attend college. Second, the cost of a college degree has risen at twice the rate of inflation, coming to nearly $100,000 for a private school. Third, college students give up about $125,000 in pay for the four years they are in school.
The story cites a College Board study that found one in four college grads earns considerably less than the top quartile of high school grads.
One law school dean, Richard Matasar of New York Law School, says law schools are "exploiting" students who don't succeed in life, according to an account of his remarks at a recent program by TaxProf Blog.
Matasar said registrations for the law school admissions test are flat or below the norm for this year. “That's never happened in a downturn in the economy before,” he said. “They're catching on. Maybe this thing they are doing is not so valuable. Maybe the chance at being in the top 10 percent [helpful in landing a good job] is not a good enough lottery shot in order to effectively spend $120,000 and see it blow up at the end of three years of law school.”
Updated at 9:35 a.m. CT to include Matasar's remarks.