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Sunday, May 14, 2017

Vermont Law School Receives $17m Loan From U.S. Department Of Agriculture To Fund Online Education Program, Restructure Debt

Vermont Law School Logo (2017)ABA Journal, Vermont Law Receives $17 Million Loan From US Department of Agriculture:

Vermont Law School has received a $17 million loan from the United States Department of Agriculture. The loan will be used to restructure debt and further develop an online education program and year-round classes that offer greater flexibility for students. ...

The law school laid off staff in 2013 following a [39%] enrollment decline and in 2014, Moody’s Investors Service downgraded revenue bonds [to junk status] that led to the law school “technically” defaulting on a loan agreement with TD Bank. ...

Marc Mihaly, president and dean of the law school, told the newspaper that applications and enrollment are increasing. “They were attracted because we’re an economic engine, and a part of rural America that needs investment,” he says of the USDA. “Also, they were attracted because there was a crisis in law schools. There was a rapid decline. We had been through that and more than stabilized.” The school has 143 students enrolled for the 2016-17 academic year and 135 faculty members.

Valley News, VLS Receives Millions In Federal Loan:

Mihaly said the environmental law school has experienced “a bit of a Trump bump” — the school has seen a 6 percent increase in applications spurred by President Donald Trump’s election — since January, bucking the continued nationwide trend of declining law school applications.

The online offerings have helped the school expand its student base, and Mihaly said that some two-thirds of 187 master’s students are fundamentally online students, though there is some crossover that makes categorization difficult. ...

The school is directly investing roughly $2.5 million of the loan into the services, staff and technology needed to support the new direction, Mihaly said. ... The 2.4 percent interest rate on the loan will allow the school to save roughly $600,000 annually in interest payments on about $13 million in debt, according to Mihaly. The remaining $14.5 million of the loan is going to the restructuring of the school’s debt.

Prior TaxProf Blog coverage:

http://taxprof.typepad.com/taxprof_blog/2017/05/vermont-law-school-receives-17m-loan-from-us-department-of-agriculture-to-fund-online-initiative-aft.html

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Comments

Hmmm... So the purpose of these USDA loans is to "provide affordable funding to develop essential community facilities in rural areas."  And yet, for most of the years I checked, more VLS grads take the NY bar than the VT bar, and per the Valley News article, a good portion of these funds will go to developing online classes because “Our students may be on a Coast Guard ship. Or running a bank in Ohio,” Mihaly said. “They’re doing all sorts of things. They’re not going to quit their jobs and move their families to Vermont.” So if the students aren't necessarily in Vermont, and they are mostly taking their bar exam at the Javits Center, well, this is a lifeline to professorial sinecures and little more. Incidentally, by comparing the school's 2011 and 2015 ABA Form 509 disclosures, one can see that their number of faculty and staff has in fact increased, from 95 to 113 (and evidently up to 135 today per the article) while their enrollment has plunged from 607 to 375.

And though I'm sure most readers can predict this stuff by now, I'll mention it anyways: the school has an 81% acceptance rate, the median LSAT has dropped 6 points in recent years (with an 8 point drop for the 25th percentile), and only 77 of 134 grads from 2015 found full-time, long-term, license-required jobs at any salary within ten months of graduation.

I wonder if the USDA will extend low-interest loans to law school grads who technically default on their student loans? I think not.

Posted by: Unemployed Northeastern | May 14, 2017 9:59:29 AM

United States Department of Agriculture ????

"The loan, which comes from the agency’s Rural Development Community Facilities Direct Loan Program, was approved in January, but not announced until this month after the newspaper filed a Freedom of Information Act request."

I wonder if a former presidential candidate whose wife is in hot water for trying to save a different Vermont school had anything to do with this?

Posted by: Dale Spradling | May 14, 2017 10:03:17 AM

Dale, if Sanders could direct money in the fashion you're suggesting, don't you think he would have directed it to Burlington College? Why would he help "save" the law school but not his wife's job?

Posted by: Matthew Bruckner | May 15, 2017 5:48:30 AM

"Mihaly said U.S. Sen. Patrick Leahy, D-Vt., brokered talks between the school and the U.S. Department of Agriculture, and that the idea for a loan grew out of the USDA’s interest in investing in the educational model, which the school’s board formally adopted as a strategic plan in May 2016." https://vtdigger.org/2017/05/07/vermont-law-school-receives-17-million-federal-loan/

Posted by: Matthew Bruckner | May 15, 2017 6:24:18 AM

The academics treat Trump like a crook and applaud this corruption. Crazy.

Posted by: JayGo | May 15, 2017 7:04:47 AM

Online education is not a cure for what ails law schools for one simple reason: IT DOESN'T ADDRESS COST. For some insane reason, Boomer academics charge the same tuition for online classes as live classes. They are totally misunderstanding the priorities of their young customer base. The youth don't want to be unemployed debt servants. It isn't that they just want to sit staring at their computer from their parents basement and never get dressed to go outside.

Posted by: JM | May 15, 2017 8:10:17 AM

Well, the school is certainly an economic boon to the little agricultural towns including and around South Royalton. Where else can you go to law school during the day and then go see the evening sheep dog demonstrations at the Tunbridge Fair?

It's kind of an outlier as far as law schools go. Quaint, a little crunchy, but not terribly cost effective.

Posted by: ruralcounsel | May 15, 2017 8:56:52 AM