Here's the missing link: https://finance.yahoo.com/news/student-loans-discharged-in-bankruptcy-kevin-rosenberg-190151284.html Definitely worth reading.
It will be very interesting if this becomes the new norm. I suspect lenders will become more selective if so. As an aside, he is the classic example of much of the problem. Getting an expensive degree and then afterwards figuring out the job wasn't for him. It shouldn't take $200K+ to find out for the first time what the profession you hope to be part of actually does.
It shouldn't. But the problem isn't that this guy decided to make a career change. The problem is that it costs $200k to become a lawyer. Very few schools give a satisfactory view of what your day to day life looks like post-graduation. Nursing does it pretty well. But I've heard plenty of complaints from lawyers who worked in law clinics while still in school complain that the real world legal life ain't like it is when you're a student. Let's play with some numbers but use CUNY as an example. If you went to Hunter College and paid the in-state/city tuition rate you would pay $6,930/yr in tuition. That's pretty cheap. Of course, if you don't have the luxury of living with your parents while you attend, you'll spend an additional $22k per year in living expenses, but I digress. Let's pretend everyone lives with their parents and CUNY is a typical tuition rate for all public institutions. That puts your bachelors degree at $27,720. Now let's say you go on to CUNY Law with an annual tuition of $15,450. Three years of that puts you at $46,350. Your total tuition is now $74,070. That is significant cheaper than if you went to a non-CUNY school or if you paid the out of state rate for the CUNY schools. Easily double that if you drove in from Jersey. $74,070 is still a lot of money. And that's from being educated in one of the cheapest university systems in the country. Consider what would happen if we ditched the bachelors requirement for law school and turned the JD back into an LLB. Treat it as a bachelors degree in all respects and let people enroll in it directly out of high school. Costs are significantly reduced. Why would we do such a thing? Because the bachelors is useless anyway. You just need a bachelors, any bachelors, to get into law school. You could tack on a fourth year just to get students up to speed academically, charge the same CUNY rate and educate lawyers for $61,800. Of course, CUNY Law has some plus sides but is not a Tier 1 school. You're not going to get the same sort of job as if you graduate from Cardozo. So you pay a premium. It's bonkers to say that we should shackle people in their early to mid 20's with such a crushing amount of debt that even if they choose a career based solely on earnings, they are now stuck in that career for the rest of their lives to service the debt. For starters, our economy could not support as many practicing attorneys as we have admitted (or who are eligible for the bar). Job markets should not be focused on "getting stuck." It should be, in my opinion, OK for a physician to practice for a little while and say "Yeah, I need to get out of this, even if just for a few years. I'm going to bounce to this pharmaceutical company and try out business" without crippling lifelong debt throwing off the math. We need people to step off to the side and do other stuff. This guy didn't want to be a lawyer and wanted to work for himself. I assure you he could also find a nice career in business where his law degree would basically be like an MBA. But we want guys like him to make room for the people who want law jobs. Guys like this go off and start businesses that create more jobs for everyone. Career rigidity hurts the economy. Flexibility helps the economy. If this case makes it harder to get student loans then schools that subsist almost solely on tuition dollars will need to either adjust or die. And frankly, we probably have too many colleges anyway.
The real problem here is the evolution of degree-granting institutions into career starters. This didn't used to be. When colleges and universities first got into vocational/professional education, it was in places like law and medicine. These professions operated like guilds--controlling who got in and how. But now colleges and universities are gate-keepers for all kinds of occupational lines, even those for which the degree is not a significant element of one's preparation for entry. It's the "you need a college degree to get a job at McDonalds" thinking. (Not true, but....) How did it get this way? In my opinion, it stems from a huge shift in the 1970s that itself came from two forces convening coincidentally, yet forcefully. First, the country moved away from defined benefit pensions towards defined contribution retirement savings plans almost overnight. This one move disincentivized employees from lifelong employment--they were no longer tied to their respective companies' pension plans. They were more mobile. This, in turn, disincentivized employers from investing in their employees' learning and development. (Why watch your investment in someone walk out the door?) This, in turn, put pressure on employees to do their own development in ways that would be recognized not just by their current employers (like with internal training programs), but by future employers, too. Demand for college degrees went sky-high. Couple this force with the other: the development of distance learning (and other forms of alternative delivery systems) that exploded in the 1970s (and beyond). Suddenly, you didn't have to quit your job to finish your degree--or to get another one. You could do it at night school, by correspondence, independent study, and--eventually--on your computer via that new-fangled internet. It's no coincidence that we saw an explosion of for-profit schools either getting into the degree-granting business (along with their accreditors like DEAC), or new schools emerging to fill the demand. Of course, the not-for-profits got in on it, too. Supply and demand. What a concept. Add student loans as the rocket fuel, and you can see how we got where we are. Where does it all end? It might not. The law school bubble burst, but the medical profession hasn't had a similar outcome. Some schools, like the University of Phoenix, over-extended, but retrenchment seems to be going well. And we don't see a trend away from college degrees as a primary source of competitiveness in the workplace. Time to revive the chancellorate?
