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January 10, 2015

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Prop

When one looks at a listing of the price of a house, the price is shown, not the total cost of all debt finsnced repayments.

When one looks at the price of college, the tuition price is shown, not the total cost of debt financed repayments.

I am not sure why it should be listed differently for law schools. I can see when you get a loan package that should be disclosed, but not when listing the price of the product itself.

terry malloy

@Prop

Its about disclosure to an unsophisticated consumer.

To make an informed decision, students should know about how bad their debt-load may be.

The house analogy is not appropriate, as a mortgage on a house is a 'secured' loan where the lender will not lend to consumers likely to default.

1) you can default out of the mortgage on a house (google 'jingle mail').

2) banks will prevent you from borrowing if you are not creditworthy or the value of the property is not sufficient to justify collateralizing the loan ( certainly not true for the value of an infilaw degree, unless dean conison comes back here with some data ).

I wish I had known in 2004 that my non-T14 NYC law school degree from 2007 would lead me to taking on 143,000 in non-dischargable debt.


Nathan A

@ Prop

Is there anything inaccurate in the information?

What exactly is the objection to providing students with more information?

Nathan A

@ Prop

"When one looks at a listing of the price of a house, the price is shown, not the total cost of all debt finsnced repayments."

Neither does the LST debt-financed cost of a legal education. The LST number is just the size of the loan at the time it ENTERS repayment (much a like a home loan). The cumulative payments on a $250k loan stretch into the $400k range (depending on the repayment window).

Jojo

A couple of points:

1. The "average" indebtedness figure is misleading as it uses those few with full scholarships or mom and dad scholarships to bring down the figure. A more fair figure would be, of those who did borrow to attend, the average 3 year borrowings (excluding accrued interest) is $.........

2. This post divides the shills from the others. There is nothing misleading or untruthful about the Wiki posts. It's not pretty, but it's not false. If you are outraged or threatened by the post, the problem is with you, not the posts.

3. The wiki posts upset the game that schools have played since 2008. To use an analogy popular with law schools, law tuition since Grad PLUS loans has been a black box. Profs shill that the list price is not what students pay, and besides there's always soft default PAYE!

You now are being hoisted by your own petard. Set a nose bleed inducing list price and expect to be called out on the ugly ramifications of your egregious pricing.

Former Editor

Ben,

If you believe that the snippet of LST information that has been added to law schools' Wikipedia entries is misleading without the average debt number, you are free to add the average debt number yourself. I'd suggest indicating that you are an interested editor if you are changing your own school's page (as required by the Conflict of Interest Policy). Other than that, though, nothing stops you from simply making the addition that you believe would render the entry more accurate. If there is a dispute about what is misleading/biased, Wikipedia has procedures to resolve that.

JM

Ben, you stated that you believe the average debt figure is relevant. I think therefore you should answer this reasonable question by twbb:


Ben, what I don't understand is what possible utility you think the average indebtedness would have for a prospective student.

Let's take a student who is planning on attending Law School A and Law School B:

1. Both law schools have a total cost of attendance of $200,000.
2. Both law schools have a total debt-financed cost of attendance of $250,000.
3. Now Law School A has an average indebtedness of $200,000. But Law School B has an average indebtedness of $100,000.

What does the information in #3 above give to the student? She knows her own financial situation, and how much of her education she will have to debt-finance. He own financial situation will be the sole determinant of her eventual indebtedness -- the average indebtedness provides nothing. Indeed, it would not be rational for her to incorporate it into any decision she made as to what school to attend.

Anon

"Her own financial situation will be the sole determinant of her eventual indebtedness."

No, it won't (if be the quote above you mean the "rich parents" trope). Also determinative will be the amount of scholarship aid she receives from the school she attends, which is what the average debt figure, along with the median grant amount and proportion receiving aid, all of which are published, helps to show.

twbb

Anon, the average debt figure will only reflect scholarship data in aggregate -- again, not useful to her since she will either be offered a scholarship at a set amount or she won't. The average of what everyone else gets is not relevant to deciding where to apply.

If you mean that the average debt load can be used prior to application to decide which schools to even apply to in the first place, it may function as an indirect proxy for generosity in scholarships but it is misleading there because there are so many confounding variables (including the "rich parents" one) that it is still not useful for this purpose. Even there, median grant amount and proportion receiving aid provide the information sought and if you have those figures the average indebtedness figure does not add any relevant information.

Ben Barros

Former Editor, I know how Wikipedia works. Of course, a person at a law school wouldn't be inclined to edit, or even look at, the school's page if she didn't know that there had been a systematic effort to place a certain type of information on the Wikipedia pages of every U.S. law school. When I mentioned the fact that the LST info had been posted to Wikipedia pages to colleagues at the AALS Annual Meeting last week, not one was aware of it. Hence the post. If people want to edit the page of their school, they can do so.

JM, a prospective student should know the average debt levels so that they know that most people do not pay full sticker price. It highlights the availability of scholarships. In your example, Law School B likely gives a lot more grant money than Law School A.

Jojo

Edit your comment. Please remove: "I noticed that the folks at Law School Transparency appear to have edited the Wikipedia pages."

I realize that you've updated your post to reflect Kyle's post, but that's not sufficient. Please strike through the portion of your comment misattributing it to LST.

JM

Anon at 10:14,

That is exactly right. The average debt figure provides some conflated information about how much scholarship money, family help and savings the average student has to finance the degree. Most schools publish average scholarship information, so the discerning reader can factor that out and use the average debt figure to determine the average wealth of the student body. That's about all it is good for.

Of course the answer that Barros does not want to give is that, if the average debt figure is published next to LST figure, prospectives with no aid, savings or family help might engage in magical thinking whereby they assume that something good must happen to students within the 3 years to help reduce the anticipated debt burden (i.e. magical scholarship; magical high paid TA position).

Former Editor

Ben,

"[A] person at a law school wouldn't be inclined to edit, or even look at, the school's page if she didn't know that there had been a systematic effort to place a certain type of information on the Wikipedia pages of every U.S. law school."

Why would you think that? Wikipedia is a major source of information for the generation of students applying to law schools right now. I would think that any responsible school would monitor the contents of its Wikipedia page(s) to ensure factual accuracy and to make or suggest (with conflict of interest disclosure, of course) any necessary changes. Maybe it wouldn't be the faculty doing it, but the PR people should be.

twbb

Noticed a typo in my post above. "The average of what everyone else gets is not relevant to deciding where to apply" should be "The average of what everyone else gets is not relevant to deciding where to _attend_."

Ben Barros

FE, that is a fair point. I was surprised by the fact that no one had noticed it. Every organization (law school or otherwise) should have a person charged with monitoring the organization's Wikipedia page.

Steven Freedman

Are LST's numbers even correct? Kyle or someone else is free to explain, but it seems to be using a very incorrect interest rate in its calculations.

On LST's webpage titled "Non-Discounted, Debt-Financed Cost of Attending Law School", they state that students starting law school in 2014 are subject to interest rates of 7.1% (Stafford) and 8.1% (graduate plus) for federal loans.
(http://www.lawschooltransparency.com/reform/projects/Non-Discounted-Cost)

This differs quite a bit from the information on the DOE website. According to studentaid.ed.gov the interest rate for graduate loans depends on the date of the first disbursement. For students whose first disbursement occurs between 7/1/13 and 7/1/14, the interest rate for Stafford loans is 5.41% and for Direct PLUS 6.41%. If the disbursement is from 7/2/14 to 6/30/15, the rates are 6.41% and 7.21%.

There are loan origination fees of 1.07% for Stafford and 4.29% for PLUS, but I don't see how that gets you to an overall 7.1% and 8.1% annual interest rate assumed by LST's calculations.

Kyle, am I missing something here?

JillyFromPhilly

"a prospective student should know the average debt levels so that they know that most people do not pay full sticker price"

Ben,

Do you have any support for the above statement that more than half of all law students nationwide receive scholarships? I would be interested to know what percentage of law students are currently receiving scholarships. Thanks.

dupednontraditional

One thing that is odd about discussions like these is that there is always a camp that acts as though higher education is a good or commodity (e.g. Prop, above) and is not worthy of consumer protection information, or even heightened scrutiny.

As Nathan A correctly stated, "What is the objection to providing students with more information?" One might as well ask why one would say "Why would anybody want a Consumer Financial Protection Bureau, anyway?"

As a side note, let that sink in. Consumer. Financial. Protection. Bureau. Hard to see what is "evil" about providing people with information before making significant decisions, and providing basic protections.

We'll let Wall Street spin the Roulette Wheel, and it's OK for people to place bets on the stocks and hedges of their choice. I fail to see, however, how higher education is similar in that respect, or why young people are charged with a reasonable person standard of someone 40 years their senior when making life-changing decisions.

Oh, wait, I know. Because money.

Kyle McEntee

Steve,

No you're not missing something. We used the previous year's rate for our projection for 2014-15. Our thinking (based on a number of sources) was that the rate would be going up. It did, but not quite as quickly as assumed.

We will be updating debt projections for 2015-16 very soon. I'm waiting on the ABA for the data. The process at that point is straightforward. We'll input the new COL, new tuition & fees, information on schools that made drastic tuition reductions, and information on schools that chose to guarantee tuition. Then we'll set the interest rate assumptions. Then we'll make the new projections public.

I am very hesitant to change these numbers after the fact (when the interest rates are set).

Steven Freedman

So could you confirm that the LST estimated costs for all 200 law schools are based on the wrong interest rates?

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