BuzzFeed News, Law School Grads Could Be Next To Have Student Loans Cancelled:
Law graduates, many with more than $100,000 in debt, could soon seek to have their loans cancelled. And some may have a convincing case.
They made misleading claims about how many of their students were likely to find a job, obscuring the grim reality of how few get employment in their field. They buried their graduates in piles of debt they could not reasonably repay, and admitted unqualified students in pursuit of tuition revenue. They often failed to educate their students well enough to pass the tests required to land a job. And the watchdog that oversees them is facing sanctions from the Education Department.
This might sound very much like the scandal-ridden world of for-profit colleges. But since the recession, it has also become an accurate way to describe some American law schools.
And just as for-profit schools are leaving taxpayers on the hook for potentially billions of dollars of student loans that may need to be cancelled, some law schools are now also on shaky footing. In proposing an expanded and relatively generous student debt forgiveness rule last week, the Education Department may have opened itself up to an onslaught of claims by law graduates — a group of highly indebted and legally savvy students with a history of being misled by their schools.
If those students can successfully convince the Education Department they were defrauded by schools, it could be brutally expensive for taxpayers. There are far fewer law school graduates than there are of massive for-profits, but they carry much, much higher debt loads: $130,000, on average, for private law school students. That number climbs even higher for some schools that have faced accusations of misleading their graduates — like San Diego-based Thomas Jefferson Law School, where students owe an average of more than $180,000, or for-profit law schools, where the debt load is above $200,000.
That debt isn’t up for cancellation yet. So far, the vast majority of the 20,000 debt relief claims that poured into the Education Department since 2015 have come from a small cluster of for-profit colleges. They are almost exclusively confined to undergraduate degrees.
But last week, the Education Department proposed a final rule that would codify a so-called “defense to repayment” provision — which allows defrauded students to have their loan debt forgiven — into federal law.
Critics, who say the defense-to-repayment language is too broad, worry that loan forgiveness claims could spread rapidly to non-profit colleges and especially to graduate schools, where students take on far more debt. That would ratchet up the cost to taxpayers significantly. ...
The Education Department’s proposed guidelines for defense to repayment claims may be kinder to law school students asking to have their loans forgiven than the court system.
The original language, buried in a promissory note signed by federal loan borrowers, said only that borrowers could claim loan forgiveness if their school “did something wrong” that “would give rise to a legal cause of action … under applicable state law.”
But the new, more detailed rules specify that student loan borrowers are eligible for forgiveness if their schools made a “substantial misrepresentation,” inducing students to enroll based on “any statement that has the likelihood or tendency to mislead under the circumstances” or “omits information.”
That standard doesn’t require schools to intentionally have intentionally misled students, said Jones, the former Education Department official. And while in court cases law schools can fight back against students’ allegations, that is not usually true in defense to repayment cases, where students simply report to the Education Department what they’ve experienced and provide supporting evidence. ... Even though they’ve failed in courts, the lawsuits could provide significant fodder for law school students in their defense to repayment claims.