Sunday, November 29, 2009

The higher education bubble personified



The higher education bubble personified.

From Friday's New York Times, Again, Debt Disqualifies Applicant From the Bar. Excerpt:

[A] panel of five New York judges [denied] one would-be lawyer, Robert Bowman, admission to the bar because his debt approached half a million dollars.

“His application demonstrates a course of action amounting to neglect of financial responsibilities with respect to the student loans he has accumulated since 1983,” the judges wrote in a decision issued late last week. They went on to criticize his “dealing with the lenders.”

The decision, which comes as students borrow ever larger sums to cover the cost of higher education, blocked Mr. Bowman’s effort to have his bar application reconsidered after it was initially denied earlier this year. His long struggle to enter the legal profession was the subject of an article in The New York Times in July.

Without practicing law, Mr. Bowman said it would be difficult to earn enough to repay his debts which, because of fees, penalties and interest, were growing by about $10,000 monthly.

“This has destroyed my life,” Mr. Bowman said. “Everything I’ve worked for, every effort, every fight that I’ve taken to make this progress, has been for nothing.”


The photo above, of Mr. Bowman posing alongside his expensive wall decorations, accompanied the previous article about him in the New York Times and was credited to Suzy Allman.

4 comments:

Chic Noir said...

The guy is screwed. He can't discharge student loans in bankruptcy court so what can he do? He should go teach school in a low-income neighborhood. That way he can get some of his loans "forgiven".

DaveinHackensack said...

He should have thought about that before going half a million dollars in debt in student loans.

Nick Rowe said...

Dave, with all due respect I seem to recall we had a rather lively discussion on this very topic on Mark Perry's blog.

If I recall correctly, I made the comment that student loans were, in effect, a government subsidy because of the deferment of payments and interest and the government guaranty. I stated that the lenders had an opportunity cost of funds and the government guaranty was a transfer payment. For some reason, you disagreed.

So I asked you for a $2000 loan which I promised to pay back in one year, with no interest, out of my substantial earnings from a PhD already earned - a much safer bargain for a lender than a student loan.

Have I recalled this conversation incorrectly or has your opinion on the matter changed?

@Chic:

Only Perkins Loans can be discharged by teaching in low-income school districts. At least that's my understanding from my ex-wife's student debt for her Education degree.

At least this guy had some reasonable expectation of a decent income. When Education majors go to a private school, amassing $100K in debt for a $30K a year job, that's pretty foolish.

The Bar Association's limitations are nothing less than monopolistic control over labor supply. Their passing scores are arbitrary.

Nick Rowe said...

My recollection was faulty Dave. The blog post related not to student loans but to an alumni loan program at Harvard.

I considered the interest free $2000 loan as charity. You considered it a networking opportunity. So that debate bears little relevance to this article.

You stated in your post that there was a counterintuitive notion that asking someone to do you a favor is the quickest way to make a friend. You provided no source. Where did you first hear this idea?

When interviewing for jobs, I follow the counterintuitive path of suggesting why a job is right for me, not why I'm right for the job. It has worked well. But I don't see the cases as analagous. I've never befriended strangers who asked me for favors. I've never made a friend by asking for a favor. It's not at all in my experience.

I maintain that working is the best recourse for people to earn money for college. Networking doesn't require a Save the Student program. And connecting alumni from the same school might be common, but it's nepotistic, incestuous, and demeans and ignores the talents of capable and hard working people from other schools.

In fact, I would suggest there is something insidious about the fraternity, alumni, skull and bones, secret handshake societies fomented by this mindset. Are they networking to find the best business matches or to find compliant Mini Me's as proteges.