Posts Tagged ‘practical skills’

Have You Heard?: Feds Investigate For-Profit Universities Amidst Growing Default

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ahhh, it’s like music to our ears? On June 21, 2010 a U.S. Senate Committee announced a hearing entitled “Emerging Risk? An Overview of the Federal Investment in For-Profit Education”:  US Senate Committee on Health, Education, Labor, & Pensions: Newsroom – Press Releases

With the current economy and an increase of debt and student loan defaults, the federal government finally became satiated and wants answers. I really don’t understand how such a big portion of the U.S. economy both mortgages and student loans could remain unregulated for two decades and after the emerging economic collapse the question is asked “what happened?” o.k…let’s see if a little common sense will clarify: when you don’t supervise a sector and allow them to run amuck they will do anything they can, find any loophole, use any possible agent, step on the average American to get that almighty dollar. But as long as it APPEARED that the economy is ok and the private sector seemed to know what it was doing a blind eye was turned. Now, evidence of the economic consequence is so great, the country has to address it, though it appears it’s too late. Then again, it’s not like the exact same people have been in control or even members of Congress for the past two decades–wait the majority has. Yet, we have to give credit to the federal government for taking a major step to address these issues. Anyway… 

“More than two decades have passed since Congress last examined the for-profit education sector and in that time, we have seen an explosion in growth in for-profit colleges, and in the federal taxpayer dollars they receive,” said Harkin.  With students, families and taxpayers investing so heavily in for-profit institutions through large loan debt and billions of dollars in federal student aid, we must ensure that student are actually getting the knowledge and skills they need to pay off the debt. Congress has notice the massive debt that university students incur, without the ability find jobs in this horrible economy or actually demonstrate practical skills in the job market, thus making the university student “unmarketable” because as you know, you are considered as a commodity. You are a social security number, a statistic, owned by the private industry, that’s why your debt can be traded to whoever buys it and you have no say in the matter. 

“While for-profit colleges have a responsibility to their shareholders, they also have a responsibility to provide educational value to their students, and an obligation to ensure that the federal dollars they receive are well spent, particularly now that Congress has made an historic investment in student aid.” Historic? This word should cause us all concern, this sounds like a venture that is unprecedented which will require a different type of solution. The past two decades the federal government increasingly spent taxpayer dollars on colleges and universities without seeing a return. Maybe now the federal government understands what the average law graduate deals with everyday of his/her life.  College students graduating to become working citizens and meaningful participants in the growth of the economy (no, buying branded lattes does not count). But, let’s face facts, the government is seeing a constant money loss and want their money back, which is its right, however my skepticism dictates that it hardly cares whether or not students received a valuable education, just that, because the latter is lacking so is the student loans’ repayment rate. 

Witnesses will include:
Panel I
Kathleen Tighe, Inspector General, Office of the Inspector General, U.S. Department of Education, Washington, DC
Panel II
Steven Eisman, Portfolio Manager, FrontPoint Financial Services Fund, LP, New York, NY
Yasmine Issa, former Sanford Brown Institute student, Yonkers, NY
Sharon Thomas Parrott, Senior Vice President, Government and Regulatory Affairs and Chief Compliance Officer, DeVry, Inc., Chicago, IL
Margaret Reiter, former Supervising Deputy Attorney General, Office of the Attorney General, California Department of Justice, San Francisco, CA
  
Notice that not one dean of student affairs, university president, graduate student, or parent with a PLUS loan aren’t participating in this hearing session. At least there is one undergraduate student, though she only has $20,000 of debt; compared to any graduate or professional school graduate we scoff at that, but suffering is suffering. Looking at numbers, filings and memoranda will not give the full picture of this epic problem. Sometimes putting the faces with the numbers, stories of devastated lives injects the creative adrenaline needed to garner a communicable solution.

In the first panel: Kathleen Tighe , Inspector General, Office of the Inspector General, U.S. Department of Education, Washington, DC, her testimony does not get too relevant until P. 12:   

“Considering the economic downturn over the last several years, combined with escalating student loan debts, a significant concern is the potential for increased loan defaults as we have seen the national cohort default rate increase recently.” I agree we all should be worried, but I wouldn’t characterize this particular concern as ‘potential’ I think it’s more accurate to say ‘inevitable.’ I had to find the definition of ‘cohort’ default rate which refers to borrowers entering into their repayment period. Those in deferment or forbearance mask what will be the default boom of student loans. 

Not addressed by this change were two issues noted in our earlier report. In that report, we identified that cohort default rates were not a true representation, as they were reduced by: (1) a statutory change to the HEA’s definition of default from 180 days of delinquency to 270 days of delinquency; this 90-day delay excludes a significant number of defaulters from the cohort default rate calculation; and (2) an increase in the use of deferments and forbearances. As well as providing an increased period of time for universities to seek more funding with a buffer period hiding the true default, thus making the institutions appear more qualified for additional federal funding, at least that’s my theory. 

 We found that deferments and forbearances had more than doubled in the period we examined.  Borrowers in deferment or forbearance do not make payments on their loans, so they are not counted as defaulters, but they continue to be counted with other students in the cohort, thus reducing the cohort rate. May she meant “reducing the ‘cohort default rate.”  I guess I did have the right line of thinking. 

 While we recognize that the Congress has provided additional repayment flexibilities, when borrowers reach the limits on deferments and begin repayment they may still lack the income and eventually default and are not accounted for in the cohort default rate. The rest of her testimony can be read here: [http://help.senate.gov/imo/media/doc/Tighe.pdf

I wanted to highlight one of the other testifiers Yasmine Issa, as she starts you feel as if she took a portion of your life transcript:  

Thank you for inviting me to speak today. My name is Yasmine Issa. I thought that going to school to learn a marketable skill would allow me to provide for my family. Instead it has left me more than $20,000 in debt, and unable to be hired in the field I trained for. The resounding imagery of your life has now flashed before your eyes. As you can see, she assumed that what she learn was actually a marketable skill, and as with many lawyers and law graduates was left unemployed. Oh and multiply that $20,000 by 5 and you have the average student loan debt for law graduates. The rest of her story diverges as her training was not from a certified school while law schools have no problem with accredidation [http://help.senate.gov/imo/media/doc/Issa.pdf]. I may have to do a Part II, but am unsure I can stomach it.

Third Recent News Article: Law graduates, economy and job market

This is related to the previous post on Life’s Mockery: Another News Article: “Law Degree Can’t Guarantee Law Firm Offer” . Just a couple of days ago Crain Business Journal posted:

Law grads’ job prospects ebb with economy – Crain’s Cleveland Business . “As 2010 law school graduates are framing their diplomas and are preparing to enter the working world, the profession is reporting that employment rates for the class of 2009 were the lowest in more than a decade.” The low employment rate didn’t happen over night, other factors contributed to the steady decline of the legal industry. Those in certain positions knew this but not only continued enrolling law students, but increased the number of law students matriculating at their institution. You knew, 0Ls likely didn’t but agents of the industry did.

“The employment rate last year was the lowest since 1996. In addition, the employment numbers include an increase in the number of graduates engaged in part-time and short-term work, as well as more grads taking jobs at the schools they had attended.” And you still are posting on various boards and blogs which law school you’re considering attending. A wise man or woman learn from the mistakes of others.

“Jennifer Blaga, director of career planning at Cleveland-Marshall College of Law at Cleveland State University, said the employment rate for her class of 201 students in 2009 was 84.8%, though she cautioned that not all students report whether they have found jobs.” I’ll repeat what I wrote in that other post: If I went around and asked 10 people I knew were employed and they all said yes I can easily offer that out of the people I surveyed, 100% were employed, which by no means reflect the actual legal industry and broader economy.”

“Ms. Blaga said Cleveland State law graduates are better off than some because they often are looking for jobs at smaller firms, many of which did not face the same challenges that large law firms have over the past three years, when new hires often were deferred for several months and attorneys were laid off.” Smaller firms which also start off at a lower salary for attorney positions not likely to increase earning potential nor maintain a decent standard of living.

“While the 2009 NALP Employment Report and Salary Survey noted that an increasing number of law schools were boosting their employment figures by offering graduates positions at their alma maters, Ms. Blaga — herself a Cleveland-Marshall graduate, albeit in 1994 — said that is not the case at Cleveland State. In 2009, 1.2% of graduates had jobs in academia; 55.6% entered private practice, with slightly more than half of those graduates working in firms with two to 10 attorneys.” They’re on the defensive thanks to Nando at Third Tier Reality and see  Exposing The Law School Scam: A closer look at the employment stats for the 2009 law school class They know people are dissecting the statistics they proffer.

“At the 192 law schools that responded to the NALP survey, academic employment rose to 3.5% in 2009 from 2.3% in 2008. Talking about plumping a turkey so the masses can devour. These temporary, revolving positions helped law schools report exaggerated employment statistics for the new hapless crop to be harvested in next three years, but look:
“James Leipold, NALP’s executive director, said the academic hires were one piece of the “underlying weakness” the employment figures hid. More than 40% of the law schools reported that they provided jobs for graduates on campus and, including judicial clerkships, nearly 25% of all jobs for graduates were temporary.” Now that’s some honesty.

“Added Ms. Weinzierl: “Employers are realizing lawyers have a lot of skills others may not have. They’re more open to considering those who have a legal background.” You’re kidding me right? Please explain why most lawyers have noted that having a J.D. is a detriment to finding working outside the legal field and with professors and seasoned practicioners admitting that law graduates are entering the legal workforce with little to no practical skills, thus unprepared to meet the needs of firms and clients. Oh, do explain.

An article and the idea of Law Practice Reform

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I first would like to say, too little, too late for those attorneys who aren’t considered seasoned nor are newbies to the legal field. Many blogs have outlined the mass-marketing, mass-commercialization of modern, U.S. legal education. Some suggest the apprenticeship manner of practice to get the legal industry back to its roots. As noble as it sounds, it’s too late. The legal industry has thousands upon thousands of intelligent attorneys who have most likely missed a great window of opportunity to take advantage of these suggestions. Whether due to economy– thus a poor job market, lack of connections, graduation from a non-top-tier, discrimination and simply put a field that casts its law graduates aside like roadkill. Others have noted that the purpose of these blogs is to prevent wide-eyed, ignorant potential law students from taking the plunge, both economically and mentally to attend law school. I stumbled across this article:

Law.com – Three Law Firms Claim Success With New Apprenticeship Model

By no means is this some new idea, in England, which is what most state common law is modeled after, this was the norm for trades and guilds. At some point somewhere, proponents of free market and capitalism decided to mix these ideas with higher education and voile a disasterous recipe: adults with excessive debt and postponed lives with a rice-paper facade of having attained success. With any sweeping change, casualties abound. Those lawyers who weren’t IVY leagued or graduated at the wrong time will be included among the counted losses.

Apparently, the majority is not embracing this legal industry reform: “Not that there’s any rush to jump on the bandwagon — no other firms have announced similar programs since last summer. Critics worry that lower apprenticeship salaries will hurt a firm’s ability to recruit top prospects and that the programs aren’t worth the necessary partner time and resources. The few firms that have made the transition are either litigation-focused or regional in scope. No large general practice or white-shoe firms have started apprenticeship programs…”

Clients have certain demands that ingrains the lineage of prestige and the have vs. have nots. Major firms whose focus is the financial input, overhead costs and maintaining a certain level of clientele which funds their business/firms aren’t willing to sacrifice these efficacies to help produce quality attorneys. Economically it makes sense for the firms not to invest so much, since we read or have first-hand knowledge of associate burn-out, it is likely those would produce high-turnover, so why would a firm enhance skills of a non-partner, non-promotional/lateral attorney who would likely leave the firm anyway? “Partners at all three firms with apprenticeships conceded that they entail significant costs — and each said they had yet to tally up their actual costs thus far.”  Because of the nobility of the profession…[caught you laughing]

Whether the firm is a top level business or mid-sized, these are the ones that can actually afford to implement such a program, resulting in younger attorneys gaining more practial experience that they may use to advance their individual careers. Then there are the rest, who at the end of the day, regardless of whether these firms decide to follow the apprentice model, you will not hear them tell you “You’re Hired.” For the majority it doesn’t matter.