Following up on yesterday's post, NY Times: A Majority Of Law Schools Are Scamming Students And Taxpayers: Frank Pasquale (Maryland), Bootleggers and Baptists in the Student Loan Debate:
The New York Times editorial board has intervened in the student loan debate, focusing on law schools. There are many problems with the piece, but three are fundamental. First, it inexplicably focuses on limiting federal loans to law schools, when the private loans likely to replace them feature harsher terms. Second, it conflates for-profit and non-profit law schools, saying the latter "increasingly" act like the former, while ignoring clear differences in governance and mission. Third, it provides surprisingly little data to back up its assumptions about defaults—assumptions that one of the Times's own contributors questioned last month.
Student debt is far too high. And emerging empirical research is giving us a clearer picture of the problem--which is sometimes counterintuitive. From the NYT's own contributor, Susan Dynarski [Why Students With The Smallest Debts Have The Larger Problem]:
It’s natural for people listening to the politicians to connect the two facts with a causal arrow: More debt leads to more default. But the reality is surprising: Borrowers who owe the most are least likely to default. The reason for this strange pattern? The biggest borrowers tend to become the highest earners.
In particular, borrowing is highest for those who go to graduate school. Forty percent of new loans go to graduate students. Among those earning law and medical degrees in 2012, median debt (undergraduate and graduate school) is $141,000 for lawyers and $162,000 for doctors. Those holding graduate degrees tend to handle higher debt because they earn more.
Frank Pasquale (Maryland), The Larger Debate on Federal Credit Programs:
Earlier today I criticized a New York Times proposal regarding law school loans. Whatever you think about the proper cost of legal education, the NYT is off-base, because it ignores the role of private finance in our economy.
(Hat Tip: Francine Lipman.)
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