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Life of a Law Student, University of Houston Law Center

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Forbes: The Great College Hoax; Ignoring the Obvious Solutions?

By: Luke Gilman | Other Posts by
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Forbes’ cover story, The Great College Hoax, is making the rounds in legal circles. The poster children for the article’s thesis are a pair of lawyers who recently divorced under the weight of crippling student debt despite both having the six-figure jobs they went to school for.

As steadily as ivy creeps up the walls of its well-groomed campuses, the education industrial complex has cultivated the image of college as a sure-fire path to a life of social and economic privilege.

Joel Kellum says he’s living proof that the claim is a lie. A 40-year-old Los Angeles resident, Kellum did everything he was supposed to do to get ahead in life. He worked hard as a high schooler, got into the University of Virginia and graduated with a bachelor’s degree in history.

Accepted into the California Western School of Law, a private San Diego institution, Kellum couldn’t swing the $36,000 in annual tuition with financial aid and part-time work. So he did what friends and professors said was the smart move and took out $60,000 in student loans.

Kellum’s law school sweetheart, Jennifer Coultas, did much the same. By the time they graduated in 1995, the couple was $194,000 in debt. They eventually married and each landed a six-figure job. Yet even with Kellum moonlighting, they had to scrounge to come up with $145,000 in loan payments. With interest accruing at up to 12% a year, that whittled away only $21,000 in principal. Their remaining bill: $173,000 and counting.

Kellum and Coultas divorced last year. Each cites their struggle with law school debt as a major source of stress on their marriage. “Two people with this much debt just shouldn’t be together,” Kellum says.

The two disillusioned attorneys were victims of an unfolding education hoax on the middle class that’s just as insidious, and nearly as sweeping, as the housing debacle. The ingredients are strikingly similar, too: Misguided easy-money policies that are encouraging the masses to go into debt; a self-serving establishment trading in half-truths that exaggerate the value of its product; plus a Wall Street money machine dabbling in outright fraud as it foists unaffordable debt on the most vulnerable marks.

A WSJ article Hard Case: Job Market Wanes for U.S. Lawyers made similar waves by illustrating the debt trap but described the catch as the inability of many newly minted law grads to land the high-paying positions they had anticipated. Kellum’s situation is more chilling because the debt trap came despite landing a six-figure income.

Forbes lays out the numbers, but seems to approach the problem in a very binary, black and white manner:

While the premium that college grads earn over high schoolers has remained relatively constant over the past five years, the cost of acquiring a degree has risen at twice the rate of inflation, dramatically undermining any value a sheepskin adds.

and not only is the cost going up, the cost of the cost is going up:

Warped as the numbers are, they don’t begin to account for the hidden cost of higher education: financing it. Borrowing has doubled over the past decade, to roughly $85 billion in new student loans in the 2007–08 academic year, bringing total student debt owed to well over half a trillion dollars. The average borrower went $19,200 into debt for a diploma in 2004, a 58% increase after inflation since 1993, according to the Project on Student Debt.

So the basic thesis seems to be this: the cost of college now outweighs its benefits for a large number of people; therefore those people shouldn’t go to college.

Another way to skin this cat…

One of the main reasons that college is so expensive relative to the short term income potential is that it’s tuition cost on top of opportunity cost: If you spend 20 a year on tuition and 20 a year to live but you could have made 30 if you were working you’re down 40 instead of being up 10. College costs you 50 a year, not 20. But what if you go to college (-20), live (-20) AND work (+30)? You’re down 10 and most of your free time, but it’s doable. It’s what I did for undergrad and now law school.

I would be the first to tell someone thinking about law school to question the hype, but if you want to be a lawyer, there are ways to make it happen.

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