Paying for a Law Degree: Trends in Student Borrowing and the Ability to Repay Debt

Journal of Legal Education

Volumn 49, Issue 3, 1999, Pages 333-341

  Olivas, Michael A ^a  

^a UNIVERSITY OF HOUSTON   (United States)

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EID: 0033258961     PISSN: 00222208     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (44)

1. Most of the financial data in this article were made available by the Access Group Inc., a major private lender for graduate and professional schools, especially law schools; I was a trustee of the Access Group, and various staff members assisted me in the gathering of legal data. In several instances, I relied upon data from John Kramer, Financing a Legal Education, in Looking at Law School, ed. Stephen Gillers, 32 (New York, 1997). Additional references may be found in Lewis A. Kornhauser & Richard L. Revesz, Legal Education and Entry into the Legal Profession, 70 N.Y.U. L. Rev. 829 (1995).
2. Most of the financial data in this article were made available by the Access Group Inc., a major private lender for graduate and professional schools, especially law schools; I was a trustee of the Access Group, and various staff members assisted me in the gathering of legal data. In several instances, I relied upon data from John Kramer, Financing a Legal Education, in Looking at Law School, ed. Stephen Gillers, 32 (New York, 1997). Additional references may be found in Lewis A. Kornhauser & Richard L. Revesz, Legal Education and Entry into the Legal Profession, 70 N.Y.U. L. Rev. 829 (1995).
3. Michael A. Olivas, Administering Intentions: Law, Theory, and Practice in Postsecondary Residency Requirements, 59 J. Higher Educ. 263 (1988). See, for one such case, Smith v. University of Houston Board of Regents, 874 S.W.2d 706 (1994).
4. These data were provided by Access Group staff.
5. Data provided by Access Group staff. See also Kramer, supra note 1, at 60-61 (1995 median debt data showed law students owing $60,200, medical students owing $64,000, and dental students owing $68,000).
6. Calculations by Access Group staff.
7. Kramer, supra note 1, at 41-42 (1995 NALP data). See also Hope Viner Samborn, Business Is Booming, A.B.A. J., Oct. 1997, at 35 (reporting 1996 level as 71.4 percent).
8. Kramer, supra note 1, at 43.
9. Access Group staff estimated these data. See also Kramer, supra note 1, at 51 (1995 data).
10. Comments, The Challenge of Paying for a Graduate Degree: Trends in Student Borrowing, in The Access Group 57 (Wilmington, 1998) [hereinafter TAG].
11. Robert D. Hershey, Jr., $5000 on My Credit Card? But Mom, It's for Tuition, N.Y. Times, Oct. 12, 1997, at 11 BU. In 1997 Visa and MasterCard alone were used for charging over $7.5 billion worth of tuition, room, and board. Id. See also Halimah Abdullah, Easy Credit Lures Students Down Path to Onerous Debt, N.Y. Times, Aug. 24, 1997, at A20; Robert D. Manning, Credit Card Nation (New York, 1999).
12. Robert D. Hershey, Jr., $5000 on My Credit Card? But Mom, It's for Tuition, N.Y. Times, Oct. 12, 1997, at 11 BU. In 1997 Visa and MasterCard alone were used for charging over $7.5 billion worth of tuition, room, and board. Id. See also Halimah Abdullah, Easy Credit Lures Students Down Path to Onerous Debt, N.Y. Times, Aug. 24, 1997, at A20; Robert D. Manning, Credit Card Nation (New York, 1999).
13. Robert D. Hershey, Jr., $5000 on My Credit Card? But Mom, It's for Tuition, N.Y. Times, Oct. 12, 1997, at 11 BU. In 1997 Visa and MasterCard alone were used for charging over $7.5 billion worth of tuition, room, and board. Id. See also Halimah Abdullah, Easy Credit Lures Students Down Path to Onerous Debt, N.Y. Times, Aug. 24, 1997, at A20; Robert D. Manning, Credit Card Nation (New York, 1999).
14. See Hershey, supra note 10; Roy Furchgott, Graduating with Honors and $100,000 in Debt, N.Y. Times, May 18, 1997, at 4F.
15. Rebecca Weiner, DSL Repayment Plan Magnet for FEL Defaulters, Educ. Daily, Aug. 22, 1997, at 4; Rebecca Weiner, IG: Limit Administrators' Judgment on Student Loans, Educ. Daily, Aug. 20, 1997, at 3-4; Stephen Burd, Lawmakers Attack Education Department on Problems in Loan Consolidation System, Chron. Higher Educ., Sept. 26, 1997, at A39.
16. Rebecca Weiner, DSL Repayment Plan Magnet for FEL Defaulters, Educ. Daily, Aug. 22, 1997, at 4; Rebecca Weiner, IG: Limit Administrators' Judgment on Student Loans, Educ. Daily, Aug. 20, 1997, at 3-4; Stephen Burd, Lawmakers Attack Education Department on Problems in Loan Consolidation System, Chron. Higher Educ., Sept. 26, 1997, at A39.
17. Rebecca Weiner, DSL Repayment Plan Magnet for FEL Defaulters, Educ. Daily, Aug. 22, 1997, at 4; Rebecca Weiner, IG: Limit Administrators' Judgment on Student Loans, Educ. Daily, Aug. 20, 1997, at 3-4; Stephen Burd, Lawmakers Attack Education Department on Problems in Loan Consolidation System, Chron. Higher Educ., Sept. 26, 1997, at A39.
18. Fair, Isaac and Co., The ABC's of Credit Saving, unpublished 1997 manuscript on file with author.
19. Ronald Ehrenberg & Panagiotis Mauros, Do Doctoral Students' Financial Support Patterns Affect Their Times-to-Degree and Completion Probabilities? 30 J. Hum. Resources 581 (1995). See also William Bowen & Neil Rudenstine, In Pursuit of the Ph.D. (Princeton, 1992).
20. Ronald Ehrenberg & Panagiotis Mauros, Do Doctoral Students' Financial Support Patterns Affect Their Times-to-Degree and Completion Probabilities? 30 J. Hum. Resources 581 (1995). See also William Bowen & Neil Rudenstine, In Pursuit of the Ph.D. (Princeton, 1992).
21. Ehrenberg & Mauros, supra note 14.
22. Michael A. Olivas, Financial Aid Packaging Policy: Access and Ideology, 56 J. Higher Educ. 463 (1985); Sandra Carlin-Andrieu & Edward St. John, The Influence of Price on Graduate Student Persistence, 34 Res. Higher Educ. 399 (1993).
23. Michael A. Olivas, Financial Aid Packaging Policy: Access and Ideology, 56 J. Higher Educ. 463 (1985); Sandra Carlin-Andrieu & Edward St. John, The Influence of Price on Graduate Student Persistence, 34 Res. Higher Educ. 399 (1993).
24. Kirk Monteverde, Managing Student Loan Default Risk: Evidence from a Privately-Guaranteed Portfolio, 41 Res. Higher Educ. __ (2000) (research suggesting that student criteria on defaults are much more powerful predictors than are school data).
25. Discussion with MCW admission staff October 1997. See also Jeff Hanson, The Challenge to Schools to Reduce Defaults and to Maintain Access, in TAG, supra note 9, at 102-03.
26. See, e.g., In re Anonymous 549 N.E.2d 472 (1989) (applicant to the bar); In re McAtee v. The Florida Bar, 162 B.R. 574 (Bkrtcy N.D. Fla. 1993) (suspension from practice).
27. See, e.g., Brannan v. United Student Aid Funds, Inc., 94 F.3d 1260 (9th Cir. 1996) (discussing prelitigation collection activity requirements).
28. See 11 U.S.C. 523(a)(8) (federally guaranteed loan program); 11 U.S.C. 523(a)(8)(B) ("undue hardship" provision). See also In re Hinkle, 200 BR 690 (Bkrtcy. W.D. Wash. 1996) (reviewing grounds for dischargeability and undue hardship).
29. Edward M. Lewis, An Introduction to Credit Scoring (San Rafael, 1994). See also Monteverde, supra note 17. The Access Group is now using credit scoring for its private loan application process.
30. The Access Group, Student Loan Defaults: Working Toward Solutions (1996 report on file with author).
31. Saul Hansell, Credit Industry Tightens Terms on Money Cards, N.Y. Times, July 6, 1997, at A1; Patricia Lamiell, Credit Card Come-ons Mislead, Critics Claim, Cedar Rapids Gazette, Sept. 21, 1997, at C2. There is a surprisingly large and technical literature on this phenomenon, as well as increasing press attention to the pitfalls to student credit records and default behavior. For the former, see Dagobert Brito & Peter Hartley, Consumer Rationality and Credit Cards, J. Pol. Econ. 400 (1995); Jonathan N. Crook et al., Credit Cards - Haves, HaveNots, and Cannot-Haves, 14 Service Indus. J. 204 (1994). For the latter, see Albert B. Crenshaw, Students Pay Dearly for Debt, Wash. Post, June 13, 1999, at H2; Furchgott, supra note 11; John Milligan, Did Card Issuers Spark Bankruptcy Epidemic? U.S. Banker, Nov. 1996, at 8.
32. Saul Hansell, Credit Industry Tightens Terms on Money Cards, N.Y. Times, July 6, 1997, at Al; Patricia Lamiell, Credit Card Come-ons Mislead, Critics Claim, Cedar Rapids Gazette, Sept. 21, 1997, at C2. There is a surprisingly large and technical literature on this phenomenon, as well as increasing press attention to the pitfalls to student credit records and default behavior. For the former, see Dagobert Brito & Peter Hartley, Consumer Rationality and Credit Cards, J. Pol. Econ. 400 (1995); Jonathan N. Crook et al., Credit Cards - Haves, HaveNots, and Cannot-Haves, 14 Service Indus. J. 204 (1994). For the latter, see Albert B. Crenshaw, Students Pay Dearly for Debt, Wash. Post, June 13, 1999, at H2; Furchgott, supra note 11; John Milligan, Did Card Issuers Spark Bankruptcy Epidemic? U.S. Banker, Nov. 1996, at 8.
33. Saul Hansell, Credit Industry Tightens Terms on Money Cards, N.Y. Times, July 6, 1997, at Al; Patricia Lamiell, Credit Card Come-ons Mislead, Critics Claim, Cedar Rapids Gazette, Sept. 21, 1997, at C2. There is a surprisingly large and technical literature on this phenomenon, as well as increasing press attention to the pitfalls to student credit records and default behavior. For the former, see Dagobert Brito & Peter Hartley, Consumer Rationality and Credit Cards, J. Pol. Econ. 400 (1995); Jonathan N. Crook et al., Credit Cards - Haves, HaveNots, and Cannot-Haves, 14 Service Indus. J. 204 (1994). For the latter, see Albert B. Crenshaw, Students Pay Dearly for Debt, Wash. Post, June 13, 1999, at H2; Furchgott, supra note 11; John Milligan, Did Card Issuers Spark Bankruptcy Epidemic? U.S. Banker, Nov. 1996, at 8.
34. Saul Hansell, Credit Industry Tightens Terms on Money Cards, N.Y. Times, July 6, 1997, at Al; Patricia Lamiell, Credit Card Come-ons Mislead, Critics Claim, Cedar Rapids Gazette, Sept. 21, 1997, at C2. There is a surprisingly large and technical literature on this phenomenon, as well as increasing press attention to the pitfalls to student credit records and default behavior. For the former, see Dagobert Brito & Peter Hartley, Consumer Rationality and Credit Cards, J. Pol. Econ. 400 (1995); Jonathan N. Crook et al., Credit Cards - Haves, Have-Nots, and Cannot-Haves, 14 Service Indus. J. 204 (1994). For the latter, see Albert B. Crenshaw, Students Pay Dearly for Debt, Wash. Post, June 13, 1999, at H2; Furchgott, supra note 11; John Milligan, Did Card Issuers Spark Bankruptcy Epidemic? U.S. Banker, Nov. 1996, at 8.
35. Saul Hansell, Credit Industry Tightens Terms on Money Cards, N.Y. Times, July 6, 1997, at Al; Patricia Lamiell, Credit Card Come-ons Mislead, Critics Claim, Cedar Rapids Gazette, Sept. 21, 1997, at C2. There is a surprisingly large and technical literature on this phenomenon, as well as increasing press attention to the pitfalls to student credit records and default behavior. For the former, see Dagobert Brito & Peter Hartley, Consumer Rationality and Credit Cards, J. Pol. Econ. 400 (1995); Jonathan N. Crook et al., Credit Cards - Haves, HaveNots, and Cannot-Haves, 14 Service Indus. J. 204 (1994). For the latter, see Albert B. Crenshaw, Students Pay Dearly for Debt, Wash. Post, June 13, 1999, at H2; Furchgott, supra note 11; John Milligan, Did Card Issuers Spark Bankruptcy Epidemic? U.S. Banker, Nov. 1996, at 8.
36. Saul Hansell, Credit Industry Tightens Terms on Money Cards, N.Y. Times, July 6, 1997, at Al; Patricia Lamiell, Credit Card Come-ons Mislead, Critics Claim, Cedar Rapids Gazette, Sept. 21, 1997, at C2. There is a surprisingly large and technical literature on this phenomenon, as well as increasing press attention to the pitfalls to student credit records and default behavior. For the former, see Dagobert Brito & Peter Hartley, Consumer Rationality and Credit Cards, J. Pol. Econ. 400 (1995); Jonathan N. Crook et al., Credit Cards - Haves, HaveNots, and Cannot-Haves, 14 Service Indus. J. 204 (1994). For the latter, see Albert B. Crenshaw, Students Pay Dearly for Debt, Wash. Post, June 13, 1999, at H2; Furchgott, supra note 11; John Milligan, Did Card Issuers Spark Bankruptcy Epidemic? U.S. Banker, Nov. 1996, at 8.
37. Brito & Hartley, supra note 24, at 409.
38. Hansell, supra note 24, at A1, A9.
39. Id. at A9. See also Brito & Hartley, supra note 24, at 409.
40. This is my prediction. As stories of fraud increase, I believe I will proven be proven correct. See, e.g., Steve Stecklow, Student Applications for Financial Aid Give Lots of False Answers, Wall St. J., Mar. 11, 1997, at A1.
41. Financial Aid and Student Self-Reports, 25 Res. Higher Educ. 245 (1986).
42. Karen Arenson, Spending It: Here's One Way You Can Beat the Bursar, N.Y. Times, Sept. 21, 1997, at 10 BU; see also Prepaid College Tuition Plans: Promise and Problems, ed. Michael A. Olivas (New York, 1993).
43. Karen Arenson, Spending It: Here's One Way You Can Beat the Bursar, N.Y. Times, Sept. 21, 1997, at 10 BU; see also Prepaid College Tuition Plans: Promise and Problems, ed. Michael A. Olivas (New York, 1993).
44. Joseph F. Hurley, The Best Way to Save for College: A Comprehensive Guide to State-Sponsored College Savings Plans and Prepaid Tuition Contracts (Rochester, N.Y., 1999).