Thursday, January 19, 2017

A Technical Programming Error

It's time to take a short break from failing law schools, as this will be going on for some time, and instead take a look at failing federal agencies.  Namely, the Department of Education:

Last Friday, the Education Department released a memo saying that it had overstated student loan repayment rates at most colleges and trade schools and provided updated numbers.

When The Wall Street Journal analyzed the new numbers, the data revealed that the Department previously had inflated the repayment rates for 99.8% of all colleges and trade schools in the country.

The new analysis shows that at more than 1,000 colleges and trade schools, or about a quarter of the total, at least half the students had defaulted or failed to pay down at least $1 on their debt within seven years.

Well, hey, anybody can make a mistake, amirite?  At least it wasn't 100%, so that counts for something!  I thought IBR and PAYE and all that alphabet-soup was solving the student loan crisis so that liberty and justice could abound, among other things.  What, pray tell, is the culprit here? 

A spokeswoman for the Education Department said that the problem resulted from a technical programming error.

Those damn computers, lemmetellya.  Continuing on:

This isn’t the first time data problems have affected the Education Department. A recent government report criticized how the department tracks information including the budgetary implications of student loan forgiveness.  

“This is a quality control issue with a Department of Education that has been facing criticism already for other data issues,” Robert Kelchen, an assistant professor of higher education at Seton Hall University.  The department “needs to be regularly audited so these issues can be discovered sooner.”

No college saw its repayment rate improve under the revision, and some schools saw their seven-year repayment rates fall by as much as 29 percentage points.

Wait, we have Education Professors at Seton Hall taking shots at the student loan gravy train, and demanding accountability and standards?  You may want to watch your back, Professor Kelchen, as the Law School next door may have a thing to say about that.    A law school, by the way, that puts approximately 25% of its class in full-time, long-term bar-passage-required jobs, at a $270k sticker price?  Physician, heal thyself!

Zerohedge, as usual, cuts through the chaff:

There is another interpretation: as we reported yesterday, when we revealed that a Chinese province admitted it had fabricated fiscal data for the period 2011-2014, the reason the data were made up "because officials wanted to advance their careers." One can imagine that the career pressure for those government workers who would report, and be held accountable, for revealing the true picture of America's disastrous student loan bubble, would be likewise staggering...the far more dire implications, however, are for broader student loan market, because if the latest unfabricated data suggesting that loan delinquencies are rapidly rising toward 50% across most of America's colleges, then the US is facing a default problem of staggering proportions. 

Ok, kids, non-trads, whoever:  go sign up for law school, and take out those massive student loans!  I'm sure IBR will be there, waiting for you.  No worries.  The Law School Cartel says so.  I have no doubt that they all have your best interests at heart.  I'm also sure the angry Senators and Representatives who feel mislead about ballooning higher education costs will get over it soon...


  1. I was still a teenager when I figured out that the primary purpose of welfare was not to help the poor but rather to provide a living for the people who pass out the checks.

  2. Maybe 25 years ago I read a fictional novel I found very interesting called "The Losers" by David Eddings. It had a lot of social commentary, in particular about social workers.

    One thing that stuck was the characterization of social workers as having the main mission of getting more and more people on the assistance rolls, secondarily to help the poor sots out, of course, but primarily to ensure the continued justification of the existence of the programs.

    ( - - - micro/macroaggression trigger warning - - - )

    The other thing that stuck was his characterization of social workers as:

    "Girls who can't type".


    1. (Sorry, above was intended to be a direct reply to 10:25 rather than a general, open comment)

  3. "Nothing to see here. Just math happening. Nothing to see.. move along. Move along."

  4. Where is the list of schools with bad outcomes? Could not find it on the DOE website and I called today and they were out for the inauguration.

    Wonder how many law schools are on that list, or if it is only colleges and for profit schools.

  5. We already know for a fact that the law school pigs will tell you anything to get your ass through the doors, i.e. "You have the makings of a future great lawyer." "You can do ANYTHING with a law degree!" "You have set yourself apart as an outstanding young person."

    Of course, the swine don't know whether IBR will remain in effect, or for how much longer. Furthermore, they don't give a damn. After all, their pay - courtesy of the federal student loan $y$tem - is not tied to any student outcomes or on the availability of IBR or any other such program. They just need asses in seats, and whatever happens afterward is on YOU, the student or recent grad.

    1. And on the public, which will be liable for unpaid student loans.

  6. People who go on IBR or PAYE cannot afford to repay their loans in accordance with the terms of the loan documents that they signed. That’s another way of saying that they are in default. Of course the government doesn’t count them as being in default, but let’s not kid ourselves, the true default rate is much higher than anyone cares to think about. And it’s all unsecured debt. When the bubble bursts, it’s going to be ugly.

    1. When the bubble bursts it's going to be a non-event. This direct, federal student loan debt became the taxpayers debt on the day it was taken out.

      The loans were funded with sovereign debt that is already the obligation of every US taxpayer (young enough) and is already counted in the national debt.

      As repayment gets worse, all that happens is that Congress is deprived of the money DOE turns over to them to spend every year. (They've been repaid 250 billion dollars on that 1.3 trillion balance and did not spend one penny on the national debt.) Last year it was 55 billion...that's a rounding error in their ginormous budget.

  7. The Charlotte School of Law has reportedly fired two-thirds of its professors:

    1. The best part was the whining of a former faculty member who is now teaching at Western Carolina University. WCU has no law school but its website boasts of how its pre-law program will give you the foundation you will need for law school.

      Talk about a win-win. The learned professor doesn't go down with the ship in Charlotte and WCU gets a faculty member already well-versed in selling worthless garbage as education. Only losers are the students who are being told that "pre-law" is anything other than a joke, and not a funny one at that.

    2. Does anyone know if Charlotte Law held classes today (01/23)? Did students show up?

    3. Yes, Harlotte opened today:

      According to this report, two-thirds of the professors are gone, few students showed up, and the bar-review coaches have all been sacked. Something tells me that the hallowed halls of Harlotte didn't reverberate to the tune of "Happy Days Are Here Again".

    4. In other news, Harlotte too turns out to have paid people not to take the bar exam:

      Margaret Kocaj, the new darling of the Charlotte media, reports that she and her classmates did not suspect foul play. Really, now, Ms. Kocaj, what were you thinking (if anything)? Your profit-seeking toilet school offers you a five-figure payment in exchange for "extended bar prep", when it has already received all of the money that it will ever wring out of you, and you don't think that something is amiss? Why exactly would a profit-seeking institution hand out cash in that manner, if not for some self-serving purpose? (Note that these payments involved real money, unlike the paper discounts that the law schools pass off as "scholarships".)

  8. Captain Hruska Carswell, Continuance KingJanuary 20, 2017 at 5:20 PM

    The problem is not student loans for law students/attorneys or even the high cost of tuition. The problem is that with so many attorneys out there it is dog eat dog. It is a cage fight for the same clients. It is $49.00 traffic defense billboards around Chicago. It is a buyer's market and a race to the bottom. Before I pay anything on a law school student loan from nearly 30 years ago, I pay the mortgage and the light bill. Give me a law job where I can amortize my big student loan nut and I will start tomorrow. Problem again is that I will have 1000 other "competitor" applicants.

    1. You hit the nail on the head. I am just looking up my coworkers from big law five years later. The unemployment rate and underemployment rate has skyrocketed. Big law is no longer a safe stopping place for one's legal career because there are simply not enough full-time permanent legal jobs to employ the former big law lawyers in.

      There is no accountability for law schools relying on employers who throw lawyers out under a legally approved seniority scheme. The bottom line is that the system does not work due to extreme lawyer oversupply.

      Yes, if you can get a full-time permanent job in the private sector, you may earn a good salary. However, not everyone coming out of big law will be able to get a full-time permanent legal job. With the people I know who left once they were too old to be associates, the employment rate may be 50%.

    2. Very few people have the aptitude to get into an elite law school and ultimately land a big law job. If you do have that ability, the fact of the matter is, you probably have better career options than going to law school. I never worked in big law, but I've known people who have, and it seems like a miserable existence. Why take an exceptional skill set to live in misery for a few years, get bounced by a big law firm, and maybe end up ok, maybe not? Better off going into something else like finance, consulting, or health care.

    3. Health care and education right now are the two safest paths.

      Problem is that in the past graduates of top schools did not know about the risks of law school. Maybe it was less risky than now when there were many fewer lawyers.

      A high percentage of the undergraduate class at Yale went to law school for many years until the internet spilled the beans about a risky career with many poor outcomes, even for the best students. A number like 230 of a class of 1150 at Yale College would enroll in law school each year before the internet.

      The idiots who were in charge at Yale literally did nothing to warn prospective students of any risks of law school. No warning on what lawyers make. No information on what careers paid or how secure they were. No classes teaching this and no advisory services for undergrads at Yale teaching this.

      Students today are so fortunate to have the internet at their disposal. It is much easier than in the past to research one's options and one's realistic chances of success in a career.

    4. The lawyer oversupply is to the point where I am spending literally years of my life on unproductive job searches with two top degrees, at the very top of the legal profession and at the top of the college world.

      I am not alone. I have many similarly situated colleagues doing the same thing and struggling.

      In the geographic area and practice area where I practice, on the websites that list open jobs, there are about 8 jobs for lawyers with up to eight or so years of experience, maybe one job without an experience limit and sometimes one more temp job for lawyers without an experience limit.

      Some of the experienced jobs from the past have been advertised for months or even years and sometimes they are not ever filled. They just disappear.

      Even in house jobs at large employers sometimes have experience limits requiring less than 6 or 8 or 10 years of experience. Some jobs can be filled from any one of several locations around the country, reducing the odds of anyone from my geographic area getting the job.

      The odds of working as a lawyer until you want to retire in full employment are poor today. Even going to a top law school and being somewhat of a super star when you are young does not necessarily lead to a full career of full employment as a lawyer.

      If you go to a top college and a top 6 or 8 law school, and do not earn more than the median hourly wage for your geographic area, and cannot get enough work to be fully employed because you are unemployed or underemployed for long periods, you made a mistake going to a top law school. That is the way it is for many top law graduates in the second half of their career.

      Too many of the law jobs proportionally are for relatively inexperienced lawyers, and there is a severe weeding out of lawyers in the second half of their careers. Some of those lawyers appear to be doing okay, because they are working. However, lawyers in the smaller and even mid sized law firms may earn little money because the work is just not there. There are too many lawyers.

      I agree 6:39 that going to any law school is a big economic risk. Even if you have the debt paid off, or are able to pay the tuition without borrowing, the law degree is as likely as not to not have any economic value in the second half of your career.
      The big law firms that pay decent salaries employ fewer and fewer lawyers up the age scale. What do you do with your top law degree if you cannot get full-time long term work once you have aged out of working at big law? The top law degree today is not worth it because of the risk of not being able to get full-time long term legal work when you are older than associate age.

  9. Just a thought: cites to ZeroHedge will not do anything to enhance the credibility of this blog. It'll just make you look like a bunch of wacky conspiracy theorists when you actually have something worthwhile to say.

    1. Admittedly, ZH can have a lot of doom pr0n. But it has some data, too.

    2. ZH is atrocious. But sometimes the data is data and therefore useful on its own.

      The problem is ZH never acknowledges strong markets or rises, and has been insisting the market is either collapsing or will collapse every day for the past 8 years. If you're consistently wrong you have to at least admit it and change tune.

      The day ZH changes tune is the day you have to actually worry about any type of economic collapse.

  10. Excellent editorial in the WSJ this morning about this fiasco. Bottom line, 54% of undergraduate borrowers are either in default, forbearance, or IBR/PAYE and have not paid down a single dollar of debt principal. The more you look at it, the more you realize, the student loan system is a vast wealth transfer from the tax payers to the higher education fat cats via student loan conduits who are often left holding the bag.

  11. Imagine if these rules would apply to the rest of us.

    "I just understated my tax amounts for decades! Turns out I actually DID owe taxes! Whoda think it?!?!"