Paul L. Caron
Dean


Wednesday, July 25, 2018

Simkovic: Northwestern's Mark Cohen Can't Defend His Views On Cause Of Vermont Law School's Purge Of Tenured Faculty

Following up on Thursday's post, Vermont Law School's Tenured Faculty Purge And What It Portends For Legal Education:  Michael Simkovic (USC), Northwestern Lecturer Mark A. Cohen’s Angry Outburst on Twitter:

I recently pointed out some factual problems with claims by Northwestern lecturer Mark A. Cohen. Cohen, writing in Forbes, claimed that faculty terminations at Vermont Law School were proof that student debt was unsustainable, not only at Vermont, but at all law schools except for a handful of elite institutions.

Here’s the problem: When student debt levels are unsustainable, student default rates are high. But at Vermont--and at most law schools--default rates are low.

When Professor David Herzig pointed out some of the relevant literature to Mr. Cohen, Cohen responded with the following angry outburst on twitter:

That "evidence" has been panned by every credible source I know. The methodology and premises upon which the conclusions were drawn are laughable and fly in the face of real studies. I was a bet-the-company trial lawyer for many years--the "study" you cite is 3rd rate fiction.

Low student loan defaults for law graduates are consistent with the peer reviewed literature, such as The Economic Value of a Law Degree (final version here), Timing Law School (final version here), and related work by me and Frank McIntyre about the value of legal education.  Law degrees generally provide benefits that are substantially greater than their costs, even toward the low end of the distribution, across race (final version here), sex and college major, both before and after the financial crisis, and including those who graduate during a recession.  More than the top 75 percent of law graduates are getting good value relative to a terminal bachelor’s degree. ...

Mr. Cohen has yet to specify what he believes is wrong with the methodology in the studies—which were authored with a PhD labor economist, peer reviewed and carefully vetted, use high quality government data, use mainstream methods and assumptions that are well established in labor economics, and include sensitivity analyses and robustness checks. The results have been replicated by other researchers.

Mr. Cohen also has yet to specify which “real studies” he thinks use better data and more widely accepted methods, and why. He has yet to explain how his litigation experience qualifies him as a labor economist, statistician, and literary critic. Or why, as a seasoned litigator, he thinks so many of the lawsuits against law schools have been dismissed. ...

If Mr. Cohen has serious, well-reasoned, substantive critiques of the peer reviewed literature to which I and others have not responded already (see my contributions to Brian Leiter’s Law School Reports from 2013 forward), I would be delighted to hear them. If not, Cohen should acknowledge his mistakes, print a correction in Forbes, and move on.

https://taxprof.typepad.com/taxprof_blog/2018/07/simkovic-northwesterns-mark-cohen-cant-defend-his-views-on-cause-of-vermont-law-schools-purge-of-ten.html

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Comments

Well, Mike's papers have certainly had multiple negative reviews & criticisms over the years from lawyers, law professors, social scientists, and newspaper writers, nearly all of whom had advanced degrees in quantitative social sciences, which Mike... does not. So I'm going to limit my comments at present to “Here’s the problem: When student debt levels are unsustainable, student default rates are high. But at Vermont--and at most law schools--default rates are low.”

Here’s the actual problem: a low default rate is not the same thing as a high repayment rate nor is it proof that a given school is affordable for its students. To claim otherwise is just ignorant or acting in bad faith. I mean, this is student lending policy 101 stuff. Also student loan default rates are highest among college dropouts who hold relatively small amounts of debt and it has little to do with the cost of their institution but whatever.

Per the New York Federal Reserve – who I believe employs multiple economists – the national combined default & delinquency (i.e. >90 days late) rate on federal student loans is around 17%. Does that mean the percentage of student loans in full and active repayment is 83%? Not even close. It’s in the mid 30s. The remainder – nearly the majority of student loans – are either in forbearance, deferral, an income-based repayment plan like IBR, PSLF, or PAYE, or otherwise making so little headway that the principal is increasing from month to month. So yes, federal law school loans have low default rates, which one might expect given the negative incentive of bar licenses getting yanked for defaulting on them, and that one is given enough forbearance and deferral time to get past the three year default measuring window,* and because one can be out of work, go on an IBR plan, pay $0.00 per month, and be considered in active repayment. But this does not mean that those grads’ balances are decreasing, nor does it mean that law school was affordable for them, particularly when we stop to consider the $150k average law school debt v. $65k NALP median starting salary (20% less in real dollars than what it was for the Class of 2008, the last year Mike’s study felt like including but still considerably higher than the $52k Co2016 NALP median starting salary at Seton Hall, where Mike taught until recently – that figure is barely above the nationwide average starting salary for four-year college grads regardless of major).

As the standard repayment on $150k of student loans** would consume nearly 50% of that $65k median salary even if one lived somewhere with no state-level income tax, it is exceedingly probable that the broad mass of law school grads around or below that median salary are hiding out on an IBR plan, which as the government’s own website helpfully points out, is for people with partial economic hardships. Or maybe we are to pretend that ~50% of takehome pay is “affordable?” Then there is the matter of which direction the underlying principals are heading for all those people; playing around with IBR or PAYE repayment calculators with those debt and salary figures does not paint a pretty picture. Nor does what those growing balances transform into when the loans are forgiven in 20-25 years, i.e. realized income. We have additional evidence from the predicted default rates of private law school loans in the pre-GradPLUS years when the cost of attendance was much lower and the job market much better than it has been for the last decade. Some of those predicted law school default rates yawned into double digits, most notably those of AccessGroup, who, come to think of it, once gave a generous grant to none other than Michael Simkovic to produce pro-law school studies. So in the mid-2000s, when the legal job market was on fire and average student loan debt was maybe $85k there were law school loan defaults approaching the mid-teens but now that the average law school debt is $150k and the legal job market and real dollar NALP median salaries have been collapsing for a decade even as the economy recovers we’re supposed to believe things are better for law students? Spare me.

Also I’m sure it’s just a coincidence that this op-ed by Mike under his own name is essentially just a paraphrase of various well-worn pseudonyms in the comments under Taxprof’s reposting of Cohen’s Forbes article; nyms that exclusively cite Mike. Yup.

Oh, and an “Angry outburst on Twitter?” As opposed to an 11,000 word rant to a NYT reporter? Pot, kettle.

* In the fully rational world economists pretend we live in, no federal student loan should ever default because one can simply forbear them past the default measuring deadline. And yet…

**And of course this is being generous as those average student loan figures do not include the three years of interest building while in law school, bar expenses, or any undergraduate loans. Even without undergrad loans, such students are looking at a figure more around $175k. With average undergrad, $205k or so.

Posted by: Unemployed Northeastern | Jul 25, 2018 7:33:49 PM

1) A law school should hire UNE to teach law. Perhaps a law school along the coast of California has an opening?

2) Professor Simkovic is a poor academic. He found some data (student loan default rates) and he argues the data is evidence that student loan debt must not be unsustainable. However, as UNE pointed out, Simkovic ignored a whole lot of contradictory data and facts in reaching his conclusion. This argument might be great if you are a lawyer arguing a case (well maybe not, lawyers need to be able to counter their opponent’s argument rather than ignore it). However, academics are not lawyers. Academics seek the truth and try to understand the world around them.

Simkovic brags about credentials. He throws out a lot of terms like “peer reviewed” and “methodology” without a real understanding of what those terms mean. Psychologist Daryl Bem from Cornell published a peer reviewed article in 2011 in the Journal of Personality and Social Psychology titled Feeling the future: experimental evidence for anomalous retroactive influences on cognition and affect. In other words, Bem found statistically significant evidence for ESP! Just because a paper has been published and peer reviewed does not mean the hypothesis is fact. Academics further test hypotheses and gather additional data to find the truth.

Posted by: anonlawprof | Jul 26, 2018 6:44:58 AM

The old law school business model and it's defenders will not go quietly. But thanks, UnempNor'easter, for a compelling constructive critique of where their arguments go astray.

Posted by: ruralcounsel | Jul 26, 2018 7:34:27 AM

Simkovic and that default rate. Who does he think he is fooling? Is he even going to try to respond to the above? He comments here frequently enough, so silence will be quite the admission.

Posted by: JM | Jul 26, 2018 8:02:48 AM

Please cite one negative review from a social scientist of any of Simkovics' published research. If you can't then I think TaxProf should take remedial action.

Posted by: Anon | Jul 26, 2018 11:00:16 AM

UNE, can't you both be correct?

Your point is essentially that Vermont is a bad deal because students cannot afford to pay back their loans and so are in IBR-like programs paying $0.
But isn't Mike's point that this is sustainable for Vermont? Yes, grads borrow heavily but they're not defaulting in large numbers. Thus, the cost is not prohibitive because IBR-like programs exist.

Posted by: Matthew Bruckner | Jul 27, 2018 10:13:28 AM

@ Matthew Bruckner,

No that situation is not sustainable. Resingning yourself to having zero net worth until the age of 50 is not attractive to buyers. That is why they are not applying to VLS, which in turn is why the school is near closure. Nice try though.

Posted by: JM | Jul 27, 2018 6:50:47 PM

anonlawprof

I did not include it, but let’s just say one can get lost for quite a while reading the results of searching on a term like “peer review criticism,” including, inter alia, peer reviewers taking less than three hours to “review” highly technical papers, successfully peer reviewed papers later found to be fraudulent (there was a famous case involving stem cell research a dozen years ago), and at least one study that involved deliberately planting errors to see if reviewers caught them. They did not. I mean, quantum mechanics and general relativity conflict under certain conditions despite both being empirically tested and verified out the wazoo for the last century.

@Matthew Bruckner,

Were the forgiven balances under IBR, PAYE, and REPAYE after 20-25 years' repayment not considered realized income, I'd be more inclined to agree. A month or so ago, there was an article / op-ed reprinted on this very website by a GULC prof claiming that the *affordable* payments under these plans renders the underlying balance irrelevant. I spent a few minutes crunching numbers using the fine tools at finaid.org: if a GULC student pays the school’s ~$90k/year sticker, as about half do per the school’s Form 509s, and then is lucky enough to make an average of $150k/year for the next 20 years, 1) they will be well within the income threshold for PAYE eligibility 2) will almost certainly enroll when they see that their standard repayment is in the realm of $3500/month, and 3) in PAYE the principal will swell to the extent that, with that $150k income, the tax bill on their loan forgiveness will come to about $140,000. Again, that’s not the forgiven balance, it is the tax owed on the forgiven balance presuming that $150k income. Possible to sock that away? Probably. But it’s a real big hit, particularly for folk who will be ~15 years or so out from retirement and have kids and mortgages and whatnot. To put it another way, the tax bill on loan forgiveness for such a student is equivalent to paying sticker for a GULC degree ten years ago.

Also, with respect to my New England neighbors, it’s Vermont. Vermont. The firm that bills itself the largest law firm in the southern part of the state has six (6) lawyers. Four of the seven largest employers in the state are ski resorts. The state capital has 7,000 people. How many new lawyers do you think such a market can train and absorb? Plenty of BC and BU law grads still wind up in doc review around here, to say nothing of the umpteen lesser law schools. Ditto for NYC. Most of the rest of northern New England resembles the Rust Belt economically, and they have their own struggling law schools. So there’s not really anywhere in the region for VLS grads to go. And I harbor far more concern for them than I do their law school. For me, the law school is not sustainable if their graduates’ finances are not sustainable.

Incidentally, in the blissful time before 2016, there was a bipartisan proposal to scrap the default measure for many of the reasons I outlined in my earlier comment (plus one more; occasional third-party studies that push the federal loan default measuring rate beyond three years find that the defaults increase dramatically) and replace it with a repayment rate; that is, the percentage of student loan holders whose principals are decreasing by at least $1 per year. Schools would be required to a bit for each of their wards who failed to meet this threshold. I think it a nice compromise when viewed against the venal ugliness of something like the PROSPER Act, which is such an existential threat to law schools and students that it beggars belief that you guys aren’t screaming to the heavens about it (how many law schools & law students could get by on a $28,500/year annual federal student lending limit for tuition & living expenses??) – but I suspect something similar will reappear in the future.

Posted by: Unemployed Northeastern | Jul 27, 2018 8:31:11 PM