Law school says it will survive after debt restructuring, predicts national jobs/grads equilibrium
Thomas Jefferson School of Law says a debt-restructuring agreement reduces its annual cash payments by half and ensures continued operations.
The school announced in a press release (PDF) on Wednesday that bond holders will become owners of its law school building in San Diego, which was financed in 2008 with about $130 million in bond debt. Bond holders will lease the building back to the school and will receive $40 million in new notes at an interest rate of 2 percent. The deal reduces the law school’s debt by $87 million. TaxProf Blog had the news.
Under the restructuring, the law school will pay $5 million in annual rent and about $1 million in interest, compared to $12 million previously paid in interest and principal.
At a “frequently asked questions” page, the law school says enrollment is down about 27 percent since Fall 2012, and the restructuring is premised on no additional growth in incoming classes.
“Few observers predict significant growth in the near term,” the law school says. “However, we believe the downturn is bottoming out. There are recent studies that indicate that graduations from law school and growth in the job market will reach equilibrium in FY 2017.”
The school says it is taking steps to increase its bar passage rate and employment rate for graduating students. Only 29 percent of its 2013 graduates landed full-time jobs in the legal profession, the school acknowledges.
Related articles:
ABAJournal.com: “Is Thomas Jefferson law school ‘a canary in the coal mine of legal education’?”
ABAJournal.com: “Law school misses bond payment, seeks to restructure obligations”
