The New America report has been making waves, as news outlets such as Wall Street Journal report on the issue and expand on it. Note that the WSJ article is behind a pay wall.
I missed something in my original post of the New America report that WSJ has picked up: that enrollment in income based repayment programs have grown by about 40 percent in the past six months. According to the U.S. Education Department, via the WSJ, there are "at least 1.3 million Americans owing around $72 billion."
The WSJ also reports that the fastest growing program is "Pay As You Earn" (PAYE). If you have trouble keeping the different student forgiveness programs straight, PAYE has you pay 10% of your "discretionary income" (which the WSJ defines as "annual income above 150% of the poverty line") in monthly installments until you have the debt forgiven. "Public interest" jobs get your loans forgiven after making ten years of payments, while private-sector jobs take twenty years of payments.
Hilariously, the WSJ reports that the Dean of Georgetown Law, Bill Traenor, says that the government's forgiveness programs are not influencing G-town's tuition, which is approximately $50,000 (don't forget the high CoL that comes along with living in Washington D.C.). Georgetown once proclaimed that "public interest borrowers might not pay a single penny on their loans—ever!", on their website.
The face of Bill, who cashed in $500,000 in 2012, according to the 2012 IRS 990.
He invoked the "Jesuit mission." My great-uncle was a Jesuit, his Jesuit mission was assisting the poor in India.
According to the WSJ, G-Town has been "steering" its graduates into public-service jobs "as part of its Jesuit mission." We have data on how many people are in G-Town's public-interest program: 432, up 60% from 2 years ago. Maybe if Georgetown didn't charge an arm, a leg, and a gallbladder for tuition and lived up to its "Jesuit mission," its graduates could go into such public-interest jobs without needing to be bailed out by taxpayers. But I digress.
The article also puts another nail in the coffin of the government's ability to forecast the cost of anything (Obamacare supporters take note here): "debt absorbed" by Stafford Loans exceeded government predictions from a year earlier by 90%! I'm going on a limb here, but I think the "debt absorbed" by these programs is going to continue to skyrocket: after all, New America reported that the median law school graduated owed a total of $140,000 at graduation, which is $50,000 more than those who graduated from law school in 2008.
I remember reading that student loan forgiveness programs were not well known among graduates a couple years ago. That seems to have changed, and has been taken note by New America and other critics of the leaky federal loan spigot. Which, by the way, "has nearly doubled since 2007." Which, by the way, was "disproportionately driven by the growth in graduate-school debt."
Since law schools are the worst offenders of the graduate school programs, they are more and more in the crosshairs of those seeking to address issues regarding student loans, the poor job market, and escalating tuition. The WSJ uses two law school graduates working in public-interest positions as examples of how much the forgiveness programs are being covered by taxpayers on an individual graduate's basis.
One is a public-interest (the position is not specified) attorney in California, making about $60,000 a year, after racking up $172,000 attending Hastings. His monthly payment? "420 a month," which doesn't even cover the interest owed. Using the repayment calculator from New America, approximately $225,000 of student loans will have been forgiven within ten years.
The other is a public defender in New York, who makes $58,500, and pays only $350 a month on $180,000 in debt racked up at Syracuse.
It seems that the government and the law schools have found a way to increase the number of people interested in "lower-paying" government work
Who is in a better situation? A law graduate working in a private law firm on the lower bimodal bump, or a law graduate working in a government-job on the lower bimodal bump? Hell, forget about loan forgiveness and student loans. In return for dealing with government bureaucracy, you get superior benefits, hours, not having to worry about bringing in clients or business, and maybe even a pension!
Speaking from my experiences at a DA's office, I know two employees, one for the DA and one for the opposing PD's office, who went to a private presttttigious school and each racked up about $250,000 in student loans. Compare that to another recent graduate who is a prosecutor in the same office, who went to a similarly ranked public school and owes around $70,000-80,000.
I'll end with this, to be examined at a later date: from a public-policy minded regulator's perspective, what's the point of expensive private law schools with poor employment outcomes?
Bonus link: Stephen Harper and William Henderson's least favorite four-letter phrases in the English language: "I told you so."