Student Loan Debt Is Leaving Women Broke and Vulnerable

Law school was supposed to be Erika Stallings’ path to financial stability. The first in her family to attend college, Stallings earned a full ride to the University of North Carolina, and then chose to attend Georgetown Law because the school offered her a partial scholarship. But she graduated with $115,000 in student loans anyway, and today, the $1,000 monthly loan payment eats up a big chunk of her paycheck. So despite her white-collar job and fancy diplomas, she remains in a state of financial precariousness.

“I’m probably as well-off as someone age 30 can be,” Stallings said in an interview. “But even I feel the panic of knowing if I lost my job today, because I’ve been trying to pay off as much debt as possible, I don’t have the Suze Orman emergency fund. If I were unemployed for a while, trying to keep up with these $1,000 a month payments would be terrifying.”

Of course, Stallings situation is not unique. Across the United States, women like Stallings are staring down piles of student debt—bigger piles, in fact, than the ones facing their former male classmates. They’re also making less money with which to pay off that debt. The combination is making women poorer, more dependent, and setting them up for a more tenuous retirement. And it’s creating a systematic gender wealth gap that persists for women’s entire lives.

“I don’t have a familial safety net,” Stallings said. “If I didn’t have this student loan debt, I could start building my own safety net. There would be more money for me to send home. I could switch careers. Last year I had major surgery—adding those bills onto the student loan debt is scary.”

With more women attending college and graduate school than ever before, it naturally follows that more women are also racking up student debt. Women are more likely to take out student loans than men, in an economy where college costs significantly more than it did a generation ago. While it’s a significant feminist achievement that women now account for 57 percent of graduates earning bachelor’s degrees, those women are more likely than their male peers to start their careers in a financial hole: 68 percent of those female graduates are leaving school with some amount of student loan debt, compared to 63 percent of men.

More on the Student Debt Crisis:
Here’s What You Should Do If You’re Buried Under Private Student-Loan Debt
I Asked An Expert What Would Happen If I Stopped Paying My Student Loans
These Debt Strikers Are Refusing to Pay Their Student Loans

That happens for a few reasons. Women make up 62 percent of students at private and often pricey four-year institutions, where tuition costs are often in five-figure range; there are also a million more women than men in community colleges, which are more affordable, but have high drop-out rates – just one in five first-time full-time community college students graduates in five years, leaving the ones who don’t with limited job prospects and accumulated debt.

Women also make up a larger number of first-generation college studentsthan men, and students who are the first in their family to go to school are more likely to come from low-income familiesmore likely to take out loans, and more likely to drop out before completing a degree than students who have a parent with a bachelor’s degree. Female college students are also more likely than men to be from poor families, whether they’re first-generation students or not, and that financial disadvantage requires them to borrow more.

Once they graduate—if they graduate—women make less money than men , and so spend a greater proportion of their salaries to pay off their loans. So while their male peers have more money to play with – to put into a 401k, to invest, to save for a home, to put in an emergency fund, to use as a cushion when they take a big career risk – women throw much of their income down a student debt hole that often stretches on for decades.


The Business of Life: Why Is College So Expensive? 


But while Democratic politicians have called attention to the gender pay gap, and proposed legislation to close it, there has been less of an emphasis on how student loans help turn the pay gap into life-long gender wealth disparities.

A 2013 study by the American Association of University Women found that women who graduated in college in 2008 saw an immediate gap in their earnings compared to their male classmates: One year out of college, women working full-time made just 82 percent of what men who graduated the same year made.

Some of that gap can be accounted for by factors like the number of hours worked, the kinds of occupations women tend to work in, and employment sector. But even when all else is equal, women still make 7 percent less than men one year out of college.

“Because women earn less, paying back their student loans is effectively more difficult for them because a higher proportion of their earnings is devoted to the student loan payment,” said Catherine Hill, AAUW’s vice president of research and one of the study’s authors. “Because of the pay gap, the student debt is taking out a bigger chunk of their smaller paychecks, leaving them with less money to live on.”

There is some degree of “choice” involved in the pay gap – insofar as women funneled into certain careers and men into others is a “choice.” More women major in the humanities than in fields like business, engineering and the sciences, which usually lead to better-paying jobs after graduation. Within employment sectors, men gravitate toward high-paying specialties, while women may focus on areas that are more fulfilling or more flexible, but less remunerative.

But even when researchers account for those factors, women still make less than men when in the first year of their careers, even when doing the exact same jobs—a trend that persists throughout their careers. Gender discrimination, intentional or not, seems to be the only explanation.

Almost no industry is immune. In business and management jobs, women a year out of college make 86 cents to their male peers’ dollar. If they work in sales, it’s 77 cents. Among nurses, a field dominated by women, the handful of men in the industry make much more over the course of their careers—an average of $5,100 every year.


WATCH: VICE and Barack Obama Host a Roundtable on the Price of Education


This financial burden can impact every major decision a woman makes for the rest of life—from her career to her marriage to her children to caring for her aging parents to her retirement. Research shows that women who have student loans are less likely to marry—and the more in debt they are, the more their marriage prospects decrease—while the same doesn’t hold true for men. According to the female-focused financial site LearnVest, nearly half of in-debt college graduates delayed buying a home because of their student loans, and nearly a quarter postponed having kids.

“You think about the expense of kids and it’s like, how would I ever take that on and maintain the loan payments? It gives me pause,” Stallings, the first-generation college student, said. She added that while she wants to be able to plan for children, the weight of her debt makes that difficult.

“I have a BRCA II mutation, so one consequence of that is I’m probably going to have my ovaries taken out when I’m 38,” Stallings said. “If I had the money right now I would get my eggs frozen, but trying to find another $15,000 to do that is not easy.”

“Then saving for an emergency fund,” she said, describing her financial priorities. “Then a house or an apartment, not necessarily for myself — I’ve thought of buying my mom property in North Carolina because it’s cheaper, and that would stabilize her financial situation.”

And unlike lots of women, Stallings has a well-paying job that allows her to make her monthly payments in full. For the many women who default or miss payments on their student loans, the hit to their credit scores can compromise their ability to buy a car or a house or even rent an apartment for years to come. For women with car payments or mortgages, piled-on student debt forces some hard choices.

When women spend higher proportions of their income on student debt—and 47 percent spend more than the recommended 8 percent, compared to just 39 percent of men—they’re less able to make the kind of investments that build long-term wealth. There’s less money to put into a 401k, to put toward emergency savings, to buy a home. And after a lifetime of shoveling money toward student loans, and getting paid less than their male counterparts, women entering retirement could be looking at years of financial stability, even poverty.

“I joke all the time that I’ll pay off my house before I pay off my student loans,” Suzanne Meyer, a 43-year-old high school English teacher in North Carolina, told me. “I’m going to be 87 years old in a nursing home and still paying off my student loans. That’s my reality.”

Meyer took out about $30,000 in loans to go to graduate school and get her teaching license. After consolidating, deferring, and missing payments, she now owes nearly $60,000.

“I pay my mortgage first, and we need electricity and food, so the student loans are always last to get paid, and a lot of times that means they don’t get paid at all,” she said. “Which sounds awful, and it’s doing horrible things to my credit, but the reality is they aren’t going to come take my licensure because I didn’t pay my bill.”

The $5,000 she’s hoping to get from the federal loan forgiveness program will make a dent, Meyer said, but not a big enough one. She would like to see the government consider more innovative ways people with student loan debt could repay it—for example, by volunteering or tutoring in a state or federal educational program.

“It’s unrealistic to say I want the whole loan to go away,” Meyer said. “I did borrow the money. But I can give back in other ways that the government needs. It’s a government loan and the government needs certain things – there are programs out there that need assistance and I would be capable of doing that. Let me pay it back in a different way.”

While she’s not making enough money to pay back her own student loans, Meyer has another one looming in the near future.

“I have a kid in high school. I don’t have a college fund for her,” she said. “I’m looking at the other side of student loans now for my child, and that scares me.”

Follow Jill Filipovic on Twitter.

Posted in bankruptcy, Department of Education, Education, Law, Legal Education

Former Law Student’s Loan Debt Not Dischargeable in Bankruptcy, Court Says

Aug. 3, 2015 – Mark Tetzlaff owes about $260,000 in student loan debt, including debt incurred while pursuing a law degree. Recently, the U.S. Court of Appeals for the Seventh Circuit ruled that Tetzlaff’s student loan debt cannot be discharged in bankruptcy.

Student loans are not dischargeable in bankruptcy unless a debtor shows an “undue hardship” – that is, he or she could not maintain a “minimal” standard of living if forced to repay the loans, “additional circumstances” determine that the debtor’s financial situation is likely to persist, and he or she made a “good faith” effort to repay the loan.

The 56-year-old Tetzlaff, who was unable to pass a bar exam, said depression, alcohol issues, and criminal convictions made it difficult to secure employment. He had previously worked as a financial advisor, a stock broker, and an insurance salesman.

The bankruptcy court found that Tetzlaff met the first requirement of the so-called Brunner test because he could not maintain a “minimal” standard of living. However, the court concluded that Tetzlaff did not meet the second two requirements. He appealed.

In Tetzlaff v. Educational Credit Management Corp., No. 14-3702 (July 22, 2015), a three-judge panel for the Seventh Circuit Appeals Court affirmed, concluding Tetzlaff did not fully meet his burden to prove the existence of an undue hardship.

The panel noted that the “additional circumstances” prong requires courts to find a “certainty of hopelessness” in the debtor’s financial situation.

In this case, the panel affirmed that Tetzlaff’s financial situation could improve since he was an intelligent person who held a MBA degree from Marquette University, a law degree from Florida Coastal University Law School, and the family dynamics that contributed to his legal problems were largely over. In addition, the panel noted that a psychologist determined Tetzlaff’s depression and anxiety was not debilitating.

“On these facts, the bankruptcy court’s analysis of the additional circumstances prong was not clearly erroneous,” wrote Judge Joel Flaum for the panel.

“Given Tetzlaff’s academic degrees, prior work experience, and age, we agree with the bankruptcy court that he is capable of earning a living.”

The panel noted that Tetzlaff may have been exaggerating his mental health problems; there was no evidence that his depression and anxiety reached clinical levels.

Tetzlaff was not allowed to introduce expert testimony that would have bolstered his case, because he failed to timely disclose the experts despite extensions. One would have testified that memory loss may have affected his bar exam performances.

The panel also ruled that Tetzlaff did not make a good faith effort to repay the loans, rejecting his argument that he did pay some of his law school-financed loans, even though he had not paid toward his loans with Educational Credit Management.

“The bankruptcy court was not required to consider Tetzlaff’s payments to Florida Coastal as evidence of a good faith effort to repay Educational Credit, as his Florida Coastal debt was not included in the discharge action,” Judge Flaum wrote.

“Furthermore … it seems that Tetzlaff repaid his debt to Florida Coastal largely because he needed the school’s cooperation in releasing his diploma and transcript,” Flaum wrote. “Thus, Tetzlaff was motivated by certain incentives to pay down his Florida Coastal debt that do not apply to the repayment of his debt held by Education Credit.”

Posted in bankruptcy, Student Loans

For Young Voters, Crushing Student Debt Is Front And Center

Soure: NPR

Dan Tothill, 26, and Megan Brabec, 24, are struggling with high student debt burdens and underemployment. “I hope that I can look back on myself in 10 years, like ‘Oh, I was so silly to be worrying about that,” Tothill said. “But, at this point, it doesn’t feel that way at all.”

Jesse Costa/WBUR

The economy is always a key issue in presidential campaigns.

But whose economy are we talking about? Many millennial voters are underemployed and crushed under thousands of dollars of student debt.

And perhaps nowhere is the problem more acute than in New Hampshire.

Seventy-six percent of the class of 2013 had loans. On average, each New Hampshire student was carrying $32,795 of debt, according to The Project on Student Debt. It’s the nation’s biggest student loan debt burden.

And it undoubtedly plays a role in how young New Hampshire voters feel about the 2016 election.

$44,000 in loans for public school

Megan Brabec, 24, graduated from college a couple of years ago. She double-majored in political science and international affairs, and she minored in women’s studies and Spanish.

But even with those concentrations, it’s been hard to find a full-time gig.

These days, Brabec works a mish-mash of part-time jobs — all at her alma mater, the University of New Hampshire. Her current office is across the street from her old dorm.

“Technically, through the university’s eyes, it’s three separate part-time jobs, so I don’t qualify for benefits or anything like that,” she said as she walked through campus.

Brabec makes about $29,000 a year. But she says there’s a backstory to her income.

“My parents and I took out $44,000 to pay for UNH,” she explained. Her parents are helping pay back most of it. She has $12,000 in her own name.

And what bothers Brabec is that she went to the University of New Hampshire because she thought it was the cheaper, in-state option. “We get very little state funding, but we’re technically a state school,” she said.

In fact, an analysis from the Washington D.C.-based Center on Budget and Policy Priorities finds that New Hampshire state colleges receive the smallest amount of public funding per pupil in the country.

“But the tuition is higher. … And the tuition is higher because, you know, without broad-based taxes, without a sales tax, without an income tax, the state just doesn’t have a lot of resources,” explained Tom Horgan, president of the New Hampshire College and University Council, a consortium of public and private colleges in the state.

And that means for a public school, the University of New Hampshire has one of the highest in-state tuition levels in the nation.

‘Extremely underemployed’ with bills on top of debt

That financial mix forces students to take out huge loans. But, for Brabec, the economic woes of her generation are more complicated.

“I don’t think the economic situation of young people is purely because of student loans,” she said. “I think it’s because young people are now extremely underemployed, and trying to pay regular bills, plus very high student loans on lower incomes than our parents had at our age.”

Brabec commutes about 45 minutes to work for her three jobs. She lives in Concord, on a quiet street with waist-high sunflowers in the front yard.

She splits the rent, $925 a month, with her boyfriend, Dan Tothill, who graduated from the University of New Hampshire School of Law in 2014.

And, since then, Tothill’s been applying for a lot of jobs.

“The jobs that I’ve been able to find that are law jobs, one was only offering $10 an hour,” he said.

He hasn’t found a legal job, but, for now, he’s found a full-time job with an insurance company. It’s not exactly what he had hoped, but he has $132,000 of students loans he needs to pay off.

“It feels terrifying to have that number looming over my head that’s not dischargable in any sort of way,” said Tothill, on a break from his second job, a part-time security guard at the law school.

In retrospect, Tothill says going to law school felt like buying a lottery ticket — just a big gamble with no guaranteed return on investment.

“I hope that I can look back on myself in 10 years, like ‘Oh, I was so silly to be worrying about that. Things worked out fine.’ But, at this point, it doesn’t feel that way at all,” he said.

Where Tothill is more introspective, Brabec is chatty and candid. She says if they both didn’t have so much debt, they would probably make different professional and personal decisions.

“Sorry, Dan, to scare you right now, but I think that we would be more on our way to getting married,” Brabec said. “But, it’s important to me to have all the people I love at my wedding, and I know that right now if I were to try to have a wedding, it would be very small.”

How their finances affect their political views

Brabec pulls some cheese out the fridge to make tortellini salad. She always cooks dinner at home to save money.

As she mixes the salad, the conversation turns to politics. For Brabec, it’s hard to divorce student loans from the presidential campaign. Brabec says her personal economy definitely affects her political opinions.

“It does really frustrate me when I hear candidates talk about, ‘Oh, well, you should have majored in something else.’ I’m like I went to school with two majors and two minors, don’t tell me that I didn’t work hard enough or didn’t do something that was hard enough because I worked really hard, I got a really good GPA,” she said.

Brabec is a devout Democrat. But she’s not sure if she’s a faithful follower of the front-runner, Hillary Clinton.

“A few months ago, I would have said, ‘I’m voting for Hillary, no question,” Brabec said. “But Bernie Sanders has been getting a lot of recognition from young people.”

Brabec and Tothill say most of their friends are in the Sanders camp. And Tothill says he understands why.

“I’ve kind of felt pulled along in the trend of Bernie Sanders, in that I thought of him as too far left, but then the more I’ve looked at what he has to say, the more it’s connected I guess with me,” he said.

Brabec is more conflicted. She would love to see a woman in the Oval Office. “I do have a little bit of an issue voting for another old white man to run our country. I would really love to see someone who looks like me hanging on the walls of any of our buildings,” said Brabec. “But, I don’t think that is reason alone to vote for someone.”

Her boyfriend thinks Sanders would be better on tackling the wealth gap. And he sees student loans as a part of the economic inequality equation.

“I think it’s disingenuous for schools to be able to just pump out degrees without having any sort of skin in the game,” Tothill said.

He wants to hear a solution that balances the risks and rewards of going to college more fairly. He saw Sanders last year at a roundtable on student loans and was impressed. He’s not sure the Vermont senator’s idea of free public college is the right answer, but he’s excited by the conversation, and thinks it could spark some constructive debate.

“There’s other countries that have been able to solve this problem and figure it out,” Tothill said. “That’s what our country was kind of founded on, was looking around to what worked in other countries, and bringing it back and coming up with our own sort of solution based on that.”

Tothill and Brabec say whatever political solution might be created is probably going to be too late for them. They just hope that one day, if they do get married and have kids, a college education at a public university is more affordable.

Posted in Debt, Department of Education, Economy, Politics, Student Loans

Law School Debtor Loses Bankruptcy Decision to Discharge His Debt, But Lessons Learned

The United States Court of Appeals for the Seventh District just ruled that a student loan debtor could not discharge his loans in his consumer bankruptcy case. Lately I’ve been writing about bankruptcy cases where consumers have been able to discharge substantial amounts of student loan debt. You can see the articles here.

Before I go on I owe a hat tip to the kind reader who sent the court decision in to me. Thank you. If you have similar information you’d like to share with me, click here.

The case of Tetzlaff v. Educational Credit Management Corporation (ECMC) is a loss for Tetzlaff but a good lesson for other consumers who might want to discharge their loans through bankruptcy to pay attention to.

Other Courts have ruled that even if a consumer can’t make payments on their student loan debt, it would not hurt their chances of having made a good faith effort to pay. Being unable to pay anything can’t count against you if there is nothing available to pay.

For example, “The Court finds that this evidence of Conniff’s status of being in a loan deferral provides further support for her claim that she cannot pay the debt and maintain a minimal standard of living without suffering an undue hardship and in addition, is evidence of good faith.” – Source

But this case, Tetzlaff v. ECMC, is different because the Court determined Tezlaff had not really made a good faith effort to repay ECMC through regular payments, a deferment, or income driven payment program.

So let’s look at the appeal details.

“Tetzlaff currently owes approximately $260,000 in student loan debt, which is guaranteed by Educational Credit Management Corporation. When Tetzlaff filed for Chapter 7 bankruptcy in 2012, he sought to have this debt discharged, claiming that repayment constituted an ‘undue hardship’ under 11 U.S.C. § 523(a)(8). After a trial, the bankruptcy court held that Tetzlaff’s student debt could not be discharged.”

“Tetzlaff is fifty-six years old and lives [XX] with his eighty-five-year-old mother; they both subsist on the income from her Social Security payments. Tetzlaff is divorced, has no children, and is currently unemployed. From the mid-1990s until 2005, Tetzlaff pursued a Masters in Business Administration from Marquette University, as well as a law degree from Florida Coastal School of Law (“Florida Coastal”). Most relevant to this appeal, Tetzlaff took out various federally guaranteed student loans to finance his graduate education. In 2004, Tetzlaff consolidated his student loan debt, and Educational Credit Management Corporation (“Educational Credit”) is now the guarantor for the outstanding loan amount.

Tetzlaff has been unsuccessful at passing a state bar exam to date (although he has made two attempts). Prior to attending graduate school, Tetzlaff worked as a financial advisor, an employee-benefits consultant, an insurance salesman, and a stock broker.”

At this point it seems like the Plaintiff has a similar case as others have made that would lead to an undue hardship student loan discharge.

But the standard which bankruptcy courts are currently using to determine if student loans are dischargeable in bankruptcy is called the Brunner test. That test requires debtors to show that:

(1) [he] cannot maintain, based on current income and expenses, a “minimal” standard of living for himself and his dependents if forced to repay [his] loans;

(2) additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period; and

(3) [he] made good faith efforts to repay the loans.

So on face value it looks like Tetzlaff might have qualified for the student loan discharge on part of those standards.

But here is where it appears things ran off the rails, the good faith effort to pay. According to the public court record, “The bankruptcy court noted that “[Tetzlaff] repaid much of the loan to Florida Coastal Law School, but nothing on the loan at issue in this adversary proceeding.” Drawing on these facts, the bankruptcy court concluded that, as with the additional circumstances prong, Tetzlaff did not meet Brunner’s good faith requirement.”

The case comes down to this, “Educational Credit points to In re Roberta Spence, 541 F.3d 538, 545 (4th Cir. 2008), in which a debtor also sought to discharge student loan debt (also held by Educational Credit) and argued that her attempt to pay Perkins Loans should qualify as a “good faith” effort to re-pay her Educational Credit debt. The Fourth Circuit noted that “[Spence’s] choice to repay some of the Perkins Loans does not demonstrate a good faith effort to repay the student loans held by [Educational Credit].”

In the Tetzlaff case the payments made to Florida Coastal is not what sank the discharge. Rather it was the failure to pay the ECMC loans. The Court concluded, “The bankruptcy court was not required to consider Tetzlaff’s payments to Florida Coastal as evidence of a good faith effort to repay Educational Credit, as his Florida Coastal debt was not included in the discharge action. Furthermore, as the bankruptcy court noted, it seems that Tetzlaff repaid his debt to Florida Coastal largely because he needed the school’s cooperation in releasing his diploma and transcript. Thus, Tetzlaff was motivated by certain incentives to pay down his Florida Coastal debt that do not apply to the repayment of his debt held by Educational Credit. Therefore, we decline to hold that the bankruptcy court erred when it refused to consider the repayment of debt not included in the loan discharge proceeding before it in making a determination of good faith under the Brunner test.”

You can read the full appeal, here.

Bottom line, before pursuing a bankruptcy discharge for student loans, take some action to deal with your student loans in some way.
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This article by Steve Rhode first appeared on Get Out of Debt Guy and was distributed by the Personal Finance Syndication Network.

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Posted in bankruptcy, Department of Education, Student Loans

The Student Loan Problem No One Is Talking About: Grad School | Credit.com

Student loan debt isn’t a problem. Having a lot of student loan debt is the problem. That sounds obvious, but it’s a point that’s lost in a lot of discussion involving large numbers like the $1.2 trillion bill being carried around by America’s former students.

Look behind the numbers, and you’ll see that the student loan debt problem – just like the credit card debt problem, or the mortgage debt problem – is multi-faceted. Some people are managing their debt just fine, some aren’t.
For example, despite many claims that student loans are blocking millennials from buying homes, a study by Goldman Sachs last year argued that millennials with average college debt (around $30,000, depending on how you count) are no less likely to get a mortgage than their loan-free peers. That makes sense. Paying down a $30,000 student loan isn’t much different from paying off a car loan. On the other hand, former students with more than $50,000 in debt are considerably less likely to own a home, and those with large debt that eats up a big chunk of their income are much worse off – those who spend more than 10% of their income are 22% less likely to own a home.
So the problem isn’t debt, it’s unmanageable debt. And not all college debt is created equal. For example, The New York Times recently reported that only 12% of students who graduated from public colleges owed more than $40,000, while 20% of private college graduates did. On the other hand, fully 48% of for-profit college graduates owed more $40,000.
But to find the really stunning student debt numbers – and the heart of the problem — you need to look at students who go on to graduate school.
Median combined college / graduate school debt for someone who earned a degree in 2012 was $57,600 and worse, one-quarter of all grad degree earners had borrowed more than $100,000, according to a paper published last year by the New America Education Policy Program. One in 10 borrowed more than $150,000.
It should come as no surprise that people carrying six-figure student debt balances aren’t taking out mortgages. They are already making what feels like a mortgage payment every month.
Roughly 40% of the $1 trillion-plus outstanding student debt is owned by graduate school students, the paper says
Jason Delisle, who wrote the New America paper, blames skyrocketing graduate school debt on changes to federal loan programs that essentially allow grad students unlimited borrowing. The more students can borrow, the more schools can charge. Recent research linking increased lending limits to tuition inflation suggest he’s right.
“Looking at the debt levels of law school students, for example, there was no significant change in the average amount of debt students graduated with between 2004 ($88,634) and 2008 ($90,052). But by 2012 (after loan limits were raised), the average spiked to $140,616, and the average monthly payment shot up from $760 in 2008 to $1,187 in 2012,” he writes.
In other words, when talking about the $1.2 trillion student loan problem, it might be more specific to talk about the graduate school student loan problem. And it might be possible to focus the discussion even more. A new study released in July from the Center for American Progress (CAP) found that 20 universities received one-fifth of the total amount of loans the government gave graduate students in the 2013-2014 academic year. Those schools educate only 12% of the students, however — and most of them are private, for-profit schools.
So we might think of the student loan problem as the graduate school and for-profit school problem.
Delisle says that’s not quite accurate, however.
“For-profits are a small share of the problem,” he said. His data shows that for-profit schools generate only 10% of the total debt for students who end up owing more than $100,000. For grad students borrowing between $25,000 and $50,000, that number swells to 16% — disproportionate, since that accounts for only 8% of students, but still a small slice of a big problem, he said.
“Graduate school debt is driving the big numbers,” he wrote in a post on Forbes.com recently. “Even if lawmakers expunge the system of unscrupulous for-profit colleges, those trends won’t change.”
The danger of graduate school debt comes into focus even more sharply when you consider the surge in graduate school applications that occurred during the Great Recession, when many suddenly unemployed mid-career professionals jumped into graduate schools for a lifeline. Their loans are just starting to come due now.
Of course, big graduate school balances aren’t the only serious problem in the student debt world. College students who drop out face perhaps the biggest obstacles of all – no degree and years of monthly repayments. College graduates with higher-than-average loan balances also face a steep climb. But when you hear horror stories about overwhelming student loan balances, odds are, you are hearing about a former graduate school student.
If you’re having trouble paying your student loans, it’s important to contact the loan servicer to see if you qualify for a relief program (here’s a list of repayment options), or if you can restructure your loans for a more manageable payment. Missing payments, not to mention defaulting, can have a big negative impact on your credit. If you want to see how your student loans are affecting your credit, you can get a free credit report summary, updated every month, on Credit.com.

Posted in Department of Education, Economy, Education, Legal Education, living expenses, Student Loans, Wage

New Therapies in the Treatment of High CholesterolAn Argument to Return to Goal-Based Lipid Guidelines 

On July 25, the US Food and Drug Administration (FDA) approved alirocumab (Praluent), the first in a new class, the proprotein convertase subtilisin/kexin type 9 (PCSK-9) inhibitors. Approval of a second medication in the class is expected shortly. The injected medications are used to treat patients with hyperlipidemia, and early results suggest these drugs have a powerful effect on levels of low-density lipoprotein cholesterol (LDL-C), likely more potent than statins.1 Although evidence continues to accumulate, the class appears to represent an important new development in hyperlipidemia management.
This class also poses a new challenge for health care payers. It is an expensive specialty medication that targets a very common condition; more than 73 million adults (32%) in the United States have elevated LDL-C.2 As a reference, when sofosbuvir, which is used to treat hepatitis C, was approved and marketed over a year ago, it shocked the health care system because of the high cost and relatively large eligible population, up to 3 million infected individuals.3 Unlike new therapies for hepatitis C, which represent a cure for most patients, PCSK-9 inhibitors will be used long-term—generally for the remainder of the lives of treated patients. As a result, most payers, both government and commercial, should begin to consider thoughtful ways to rationalize the use of these medications.
The best approach will be to promote use of low-cost statin medications rather than PCSK-9 inhibitors, but this approach will be complicated by recent changes in recommendations for treating hyperlipidemia. In particular, the release of the American College of Cardiology and American Heart Association (ACC/AHA) cholesterol management guidelines in 2013 fundamentally altered the way cholesterol-lowering medications are prescribed4 and inadvertently limited the ability of payers to employ typical utilization management tools. The authors of the guidelines may not have contemplated this challenge in 2013, when little clinical evidence was available for this new class of medications.
One problem is that the recent ACC/AHA guidelines abandoned the longstanding principle that clinicians should treat patients to a specific LDL-C target. Prior to the release of the new guidelines, this group’s earlier guidelines had always centered on stratifying patients by their cardiovascular risk, assigning an LDL-C target, and titrating medication use to reach that target. The newest set of guidelines noted that the trials on which those guidelines were based were not designed to test a treat-to-target approach.5 The authors modified the guidelines and now suggest that once patients are stratified based on risk, the most effective therapy should be initiated. For patients at high risk of a cardiovascular event, high-dose, high-potency statin medications are recommended, indicating that more aggressive management of cholesterol is appropriate—lower LDL-C is better. Moreover, a microsimulation model suggested that applying the arteriosclerotic cardiovascular disease risk threshold (≥7.5% risk) used in the current guidelines has an acceptable cost-effectiveness profile when used to guide statin therapy and dose.6
How can these guidelines be interpreted now that the treatment options to address hyperlipidemia are increasing? The guidelines were established when statins were the primary treatment for hyperlipidemia. The results of the recently published Improved Reduction of Outcomes: Vytorin Efficacy International Trial (IMPROVE-IT) study were not yet available, demonstrating improved clinical outcomes in hyperlipidemic patients treated with ezetimibe.7 No evidence was yet available on the efficacy of PCSK-9 inhibitors. In the absence of other therapeutic options, initiating higher-dose therapy and selecting more potent statins for patients at high risk of cardiovascular events did not represent a very challenging clinical scenario; high-potency statins are available as generic products, limiting the financial effects on patients and payers. The dilemma presented by the introduction of the PCSK-9 inhibitors reinforces the need to update guidelines on a regular basis, or at least offer clarification when new data emerge.
Now, a richer set of therapeutic options are available to clinicians treating hyperlipidemia, and the most recent set of guidelines do not provide clarity on how to choose. In particular, the guidelines do not recommend titration of therapy based on LDL-C control. Will clinicians interpret the guidelines to indicate that the highest-risk patients should be prescribed PCSK-9 inhibitors? Perhaps most concerning from a social cost point of view, will relatively low-risk patients be considered for PCSK-9 inhibitors? The cost implications for payers and society could be extraordinary; if used broadly, PCSK-9 inhibitors would likely be the most costly class of medications marketed thus far.
The FDA advisory panels noted the lack of outcomes data and the need for more broad evaluation to assess potential adverse effects of the PCSK-9 inhibitors; the panels suggested that use for those who do not have a diagnosis of familial hypercholesterolemia should be limited. However, there is likely to be substantial enthusiasm about this class of drugs in the marketplace.
When faced with expensive new therapies, payers generally apply utilization management criteria to be sure that the treatments are used in those who are eligible and for indication and patients for which the evidence about benefit is clear. Traditional utilization management techniques, such as step therapy and prior authorization, require patients to first try a lower-cost, evidence-based therapy, and if clinical goals are not met, therapy can be escalated to a more intensive and costly therapy. However, some may argue that such a strategy cannot be supported when the guidelines do not endorse treating to specific targets and titrating therapy based on their effects.
This may mean that reasonable utilization management can occur only with a return to reliance on lipid goals. Although studies in the literature may not have been designed to test the approach of treating to specific cholesterol targets, ample evidence supports the clinical utility of reaching specific cholesterol targets. The European Atherosclerosis Society consensus statement on treating familial hypercholesterolemia (August 2013),8 the American Association of Clinical Endocrinologists’ (AACE) Guidelines for Management of Dyslipidemia and Prevention of Atherosclerosis (March and April 2012),9 and the National Lipid Association Recommendations for Patient-Centered Management of Dyslipidemia (September 2014) all maintain specific LDL-C targets in the management of hyperlipidemia. The commonly referenced AACE guidelines are similar to the previous ACC/AHA guidelines, the Third Report of the National Cholesterol Education Program Expert Panel on Detection, Evaluation, and Treatment of High Blood Cholesterol in Adults (ATP III), affirming the utility of these thresholds. Use of such lipid goals could facilitate the cost-effective use of PCSK-9 inhibitors, although given the cost of the drugs, lack of evidence of effect on “hard” outcomes such as stroke and myocardial infarction, clinical trials that compare treating to a specific cholesterol target with PCSK-9 inhibitors vs more traditional statins, may be necessary.
As clinicians and payers prepare for the entry of PCSK-9 inhibitors to the market, there is a need to achieve consensus around management strategies for patients with hyperlipidemia. The differences in costs between newer and older therapies are substantial (Praluent is priced at $14 600 a year). The comparative clinical outcomes are not yet clear. Large-scale clinical trials currently under way will provide greater insight into the long-term clinical outcomes and population health effects of different management strategies. The guidelines will likely change.
In the meantime, a rational, step-wise approach that again utilizes specific LDL-C target levels would help. In the absence of such an approach, clinicians will be forced to simultaneously consider multiple competing priorities in clinical decision-making: efficacy, safety, evidence quality, as well as responsible stewardship of limited health care budgets. Clear guidelines and targets would be attractive to support rational clinical decision making, particularly as increasing evidence emerges about the optimal role of PCSK-9 inhibitors.
Source: William H. Shrank, MD, MSHS; Jane F. Barlow, MD, MPH; Troyen A. Brennan, MD, JD

JAMA. Published online August 10, 2015.

Posted in Financial Planning, Health, Healthcare, Leadership, Medicare, Medicine, Policy

The case against the ‘gig economy’

Source: Fourtune 

When I first met Andrew Berlin at a Stanford executive program in the early 1990s, Berlin Packaging was a small enterprise doing maybe $40 million in sales in what was then, and still is, a very tough, almost commodity-like industry. Today, the packaging company brings in close to $1 billion in annual revenues, Andrew Berlin has an ownership interest in the Chicago Cubs and a World Series ring from his past ownership interest in the White Sox, and he runs a company growing earnings at a low double-digit rate that achieves good margins.
Andrew Berlin has made a fortune by building a competitive advantage through his company’s culture and his people. Having recently joined Berlin’s board, I could anticipate Andrew’s answer to my question, “why have employees?” First of all, he said with a chuckle, “I like my employees.”
More fundamentally, Berlin said that his company is special because he has employees who are interested in both beating the competition and delighting others. “Contractors would not have the same level of commitment,” he added. If organizational culture is a key to competitive success, you can’t just turn that over to someone else.
Ed Ossie, COO of insurance software company Majesco, also believes in the importance of culture and people for business success. When I asked him that same question—why have employees in a business where outsourcing and contracting is common—his reply focused on the connections between people and profits. “Talented, trained employees treated well by their employers will treat customers well and deliver exceptional service,” Ossie said. “Customers will remember our employees delivering exceptional service and will find reasons to extend the commercial relationship with our company.”
Such perspectives are exceedingly rare as the U.S. and other countries confront what has been called the “gig economy,” and as notions of what it means to have a job change in profound ways.
Nothing about the new employment arrangements lacks controversy, including how significant such contingent work is. A recently published piece in The Wall Street Journal noted that official U.S. government data show no dramatic changes in either the percentage of Americans who say they are self-employed (only about 6.5%) or who say they are working multiple jobs.
A response to the WSJ piece noted that estimates of the proportion of people in several major cities who received 1099 (miscellaneous income) forms ranged from 10% to 20%, and that the proportion of people filing Schedule C (self-employment income) forms with their income tax returns had increased in the recent past. These trends were taken to imply a rise in self-employment or at least an increase in the percentage of people receiving self-employment income. A 2015 survey of over 1,000 American workers noted that about 60% received 25% or more of their income from freelance work. That same report maintained that about 34% of workers had freelance jobs. And financial software company Intuit estimates that this proportion will grow to some 40% by 2020.
The U.S. Government Accountability Office (GAO) attempted a study in 2000 of contingent work arrangements in response to a request from Congress. Among its conclusions: the percentage of the U.S. workforce that could be characterized as contingent or on-demand ranged from 5% to 30%, depending on the precise definitions used. No wonder there is so much disagreement and confusion!
The Gallup organization has studied what it calls the payroll to population ratio (P2P), the percentage of the adult population that reported being employed full-time. For 2014, Gallup reported that this ratio had remained unchanged worldwide at about 26%. And lest anyone think that freelancing is a sign of a robust economy, Gallup’s report noted that “the countries with the highest P2P rates tend to be some of the wealthiest,” while countries with lots of self-employment and few people working full time included places like Mali, Niger, Liberia, South Sudan, and Sierra Leone.

What is not in dispute is that the proportion of contractors, freelancers, and part-time, contingent workers in the U.S. has been increasing and has been for a long time. More than 25 years ago, James Baron and I published a paper on the trend to “take workers out” of their companies, documenting the trend—and its causes—of companies using more part-time people, temporary help, and outside contractors in place of full-time, regular employees.
Speaking of companies, they seem to be going the way of full-time jobs—disappearing. Gerald Davis, a business school professor at the University of Michigan who is writing a book about the disappearance of the corporation and its implications for society, told me that since 1997, the number of public corporations in the U.S. has fallen by more than half and that the “going public” fad of the 1990s is long gone. There were about one-third the number of IPOs in 2014 as there were in 1999. And it’s not just publicly traded corporations. As economist Richard Florida wrote in 2014, the rate of new business formation has declined by almost 50% since 1978.
Moreover, Davis argued that the new companies being formed may make tons of money for their founders and early stage investors, but they produce precious few real jobs. According to Davis, as of December 2014, Uber, which had a reported enterprise value of $50 billion, had about 2,000 employees but more than 160,000 “driver-partners” in the U.S. alone, while Netflix employs a small fraction of the number of employees that used to work in the company it supplanted, Blockbuster.
What “gig workers” stand to lose
In the U.S., for good or bad, many benefits and social assistance programs are largely, though not exclusively, handled by employers. The U.S. is unique among advanced industrialized countries in not offering universal health care coverage. Instead, coverage decisions are at employers’ discretion. According to the Kaiser Family Foundation, even though employer-provided health insurance coverage has declined, about 58% of the nonelderly population still received employer-sponsored health insurance coverage in 2013.
A similar situation holds for pensions. Even though employers have moved aggressively from offering defined-benefit to defined contribution plans since 1998, most large employers still offer some form of retirement plan. Employers make contributions to Social Security for their employees, and while the self-employed are required to contribute, their contribution rate is less than that of the combined employee-employer rate.
Unemployment insurance, an important countercyclical source of income, is funded through levies on employers based on their number of employees and the stability of employment. Employers that have resorted to significant layoffs and firings often face higher contribution rates. Similarly, workers’ compensation benefits for on-the-job injuries rely mostly on experience-based employer insurance contributions. And many employers provide disability coverage, which can be an important supplement to disability payments provided through Social Security.
In addition, employers, particularly large employers, often offer various forms of assistance, including wellness programs to help employee manage their weight and stress, smoking cessation programs, and other forms of assistance for mental health, alcoholism, and addiction issues.
What happens to these benefits when fewer people hold traditional working relationships with employers? Individuals will have to shoulder significant risk, and taxpayers will likely end up paying for these services. Inadequately paid employees already benefit from public assistance—which has led to a conservative case for raising the minimum wage so the state doesn’t wind up subsidizing low-wage employers. People who can’t afford to retire or lack needed benefits are more likely to wind up on some form of public assistance.
The GAO report on the contingent workforce presents a series of dire, but not surprising, findings, including, “contingent workers are also less likely … to receive health insurance and pension benefits” and that such workers are generally not covered by wage and hour regulations, which include overtime pay and limits on hours worked, designed to protect workers.
Although contingent work is often promoted for the flexibility it offers, a study of reasonably well-paid technical contractors in Silicon Valley found that such latitude was a mirage. Because contractors need to maintain their reputations in the market, because they often bill by the hour and are chronically aware of what downtime costs them, and because of the nature of the work itself, “markets place more rather than fewer constraints on workers’ time.”
Moreover, much research shows that economic insecurity has adverse health effects. One study, using data from the Panel Study of Income Dynamics, found that the negative health effects associated with job loss persisted even after workers found new jobs.
The heart of the matter
Worker well being is often ignored in discussions that emphasize productivity, profitability, economic growth, and similar concerns. In response, Pope Francis “has defined the economic challenge of this era as the failure of global capitalism to create fairness, equity and dignified livelihoods for the poor.”
Of course, taking care of human beings and turning a profit are not mutually exclusive goals. Robert Chapman has run privately owned manufacturing firm Barry-Wehmiller for years, enjoying a compounded annual return in profits of 16% annually. Chapman believes that “leadership is the stewardship of the lives entrusted to us,” and those lives include his employees. According to Chapman, having employees offers “a chance to profoundly affect the lives and wellbeing of others.”
As the cases I have discussed make clear, business success comes from having something that others cannot readily imitate. What a company can buy on the open market, others can too. That is why successful executives ranging from Bain consultant Fred Reichheld to Men’s Wearhouse founder and former CEO George Zimmer have long emphasized the powerful relationship between cultivating talented, loyal employees and having dedicated, long-term customers.
The so-called “sharing economy” has been better at disbursing pain and economic stress than in providing people with good jobs and stable incomes. People are better off as employees, covered by employment protections, offered benefits, and, most importantly, having both greater income security and the benefit of being affiliated with an organization and fellow employees who can provide social support. Society is better off not having to shoulder the burdens offloaded by businesses that do not provide steady incomes or benefits to the people who do their work. And companies can benefit from having committed employees who can provide the customer service and innovation that leads to success.
Beyond the issue of costs and benefits, there is the matter of human dignity and well being. This is the concern that animates the current Pope and many of his predecessors. It is something that should concern everyone, regardless of their religion. All faiths value human life. So should we all.
Jeffrey Pfeffer is the Thomas D. Dee II Professor of Organizational Behavior at the Graduate School of Business, Stanford University. His latest book, Leadership B.S.: Fixing Workplaces and Careers One Truth at a Time will be published in September

Posted in Freelancer, Millennials, Technology

Breaking Down Student Loans by Profession

The continued growth of student loan debt in the United States has reached staggering numbers of more than $1.2 trillion and 40 million borrowers. After receiving a bachelor’s degree, many students continue to earn a graduate degree in order to improve their knowledge base and earning potential. Those pursuing a medical, dental, MBA or law degree have to deal with a serious price tag that is significantly higher than the national average undergraduate balance of $29,000. A recently graduated dentist, for example, will acquire an average of $240,000+ of student loans or 7.9 times more than those with a four year degree alone.

More Tuition Numbers by Graduate Degree Type: 

MBA: The average annual tuition for a two-year MBA program exceeds $60,000. If you attend one of the top business schools in the U.S., you can expect to pay as much as $100,000 or more in tuition and fees.

Law
: The average yearly tuition for a law degree is around $50,000. However, the average debt taken on by a law school graduate was $84,000 if you attend public schools and $122,158 if you attend private schools.

Medical
: The average yearly tuition for a medical student is $28,719 for resident students at public institutions, $49,000 for non-resident students at public institutions, and $47,673 for students at private institutions. The average debt a medical student graduates with is between $170,000 and $190,000.

Dental: The average yearly tuition in-state is $38,826 and out of state is $63,774. The average dental student graduates with $241,097 of debt.

These students have to pay off major tuition costs from graduate school and may need to pay off their undergraduate loans as well. It becomes an astronomical amount of money leaving many students with financial issues even after securing a high paying job. Plus, many of these working professionals are paying high-interest rates for their graduate student loans. As a good first step, they should research their options and consider refinancing their student loans to pay a lower rate and ensure that they start their professional careers on solid financial footing. Many working professionals don’t know that they can refinance their student loans and some who are aware don’t make the effort because they think it will take a good deal of their already limited time. But this is not true, as many student loan refinancers, including DRB, make the application process simple and easy with fast approval.

DRB recently announced a new product that will offer perspective MBAs the opportunity to finance their student loans while still in business school. This marks DRB’s first financing product for in-school borrowers. This product can change the debt numbers across the board as students will be able to finance their loans while they are still attending school. It will give students a head start as they begin to financially set up their lives after graduation and keep them from being buried in debt.

Aryea Aranoff works on strategy, marketing and technology at DRB Student Loan, a marketplace lender and FDIC-insured bank offering low rate student loan refinancing to working professionals and parents with PLUS loans. DRB Student Loan is a leader in this space offering some of the lowest rates in the country on its student loans.

Posted in Department of Education, Law, Medical Education, Student Loans

One Path to Debt-Free College

With college tuition costs at an all-time highDemos, a D.C.-based public policy organization, recently proposed a debt-free college initiative. “The Affordable College Compact” calls for state and federal partnership in higher education with the goals of substantially increasing public investment in higher education and reducing student debt.

In the current job market, a college degree continues to have tremendous value. As the New York Times noted in 2014, college graduates make 98 percent more per hour than people without a degree, and not obtaining a college degree costs about half a million dollars. Demos notes that “nearly two-thirds of all new jobs in the next 6 years will require some training beyond high school, and 35 percent will require at least a bachelor’s degree.”

Despite its value, the cost of a public college education has risen as state and federal investment in education has declined. Inflation-adjusted tuition and fees have increased 117 percent at public four-year institutions and 62 percent at two-year schools over the last two decades. Meanwhile, the average debt accumulated by students at public schools has increased by almost a third over the past decade. Not surprisingly, the debt load is heaviest for first-generation students, low- and middle-income students and students of color.

Demos intimates the consequences of college becoming less affordable are disastrous. The United States is only 12th in the world for college attainment among 25-34 year olds (we are first for those over 65). The gap in college graduation rates by race and class are widening. Student debt is an increasing drag on the economy as it reduces household formation and homeownership. The risks of delinquency and default are high for those who graduate with degrees, and even higher for the 29 percent of borrowers who drop out.

In response to this crisis, the Affordable College Compact proposes the federal government leverage funds to ensure that poor, working class and middle-class students can attend college debt-free. States would be required to treat higher education as a public good (which Demos defines as ensuring that tuition revenue does not exceed revenue appropriated) and in return would be eligible for 20 percent or 60 percent matching federal grants for every dollar they spent on higher education, depending on their level of commitment. States increasing their commitment over time would be eligible for an additional 40 percent match.

Demos’ estimate is that the Affordable College Compact would cost $29.5 billion if all 26 currently eligible states (those who meet the public good requirement) participated at their current funding levels and increased funding by 1.4 percent. Of course, these initial estimates would rise as more states and students respond to federal incentives, and it remains uncertain whether states, which are still recovering from the Great Recession, are prepared to shoulder these costs. However, this budget is still less than the federal government invests in Pell Grants, less than it invests in tax-based student aid and far less than the Department of Defense’s budget of $496 billion.

Debt-free education is not as radical as it might seem. Countries like Germany, Denmark, England, and Australia have all deemed education worthy of investment at approximately these levels. Whether we conceive of it as a public good or not, Americans need to consider making a similar investment. Kudos to Demos for sketching out one way to accomplish it.

Isaac Bowers is Associate Director for Law School Engagement & Advocacy, overseeing the Student Debt, Student Engagement and Law School Relations programs. He was previously responsible for the organization’s educational debt relief initiatives. In that capacity, he wrote a weekly blog for U.S. News; conducted monthly webinars for a wide range of audiences; advised employers, law schools and professional organizations; and worked with Congress and the Department of Education on Federal legislation and regulations. Prior to joining Equal Justice Works, he was a Fellow at Shute, Mihaly & Weinberger LLP in San Francisco, where he represented citizen groups and local agencies in environmental litigation and land use and planning issues. Isaac received his J.D. from New York University School of Law.

Lauren Hunter is a Communications Consultant for Equal Justice Works, and a full-time Ph.D. student in the Department of Communication at the University of Maryland. She studies rhetoric and public address with a focus on rights and public policy.

Follow Equal Justice Works on Twitter: www.twitter.com/EJW_Org

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Posted in Uncategorized

How lawyers can avoid burnout and debilitating anxiety

Posted Jul 01, 2015 06:00 am CDT

By Leslie A. Gordon

Soon after graduating from New York University School of Law and joining the corporate practice of a white-shoe Manhattan law firm, Will Meyerhofer gained 45 pounds, was sleep-deprived and was frequently sick. “I was a nervous wreck. I was shattered,” says Meyerhofer, who’d also graduated from Harvard. “Even though I got to the very top, I was treated like an idiot and I felt I didn’t belong in the field. I was a mess. At the end of the day, I really only looked forward to seeing my dog.”
Not surprisingly, this experience triggered major anxiety for Meyerhofer, who often found himself “curled up in a ball, crying, losing it.” Even after he left the profession, he had panic dreams about being back at the firm.

Meyerhofer’s experience is not unique. A 1990 Johns Hopkins University study examined more than 100 occupations for anxiety-related issues and found that lawyers suffer from depression at a rate 3.6 times that of the other professions studied. A National Institute for Occupational Safety and Health study—based on data from 1984-1998—concluded that white male lawyers are more likely to turn to suicide than nonlawyer professionals. Falling Through the Cracks, a 2014 survey of Yale Law School students, found that 70 percent of them have struggled with mental health issues during their time at law school.

“The official number is that something like a gazillion lawyers are stressed out, and that amounts to a bajillion percent of the profession,” observes Meyerhofer, who became a licensed clinical social worker after benefiting tremendously from therapy he himself underwent to “get a grasp on what happened to me in BigLaw.” Counseling stressed-out attorneys has since become a specialty for Meyerhofer, who’s also written a book, Way Worse Than Being a Dentist: The Lawyer’s Quest for Meaning. In his practice, lawyers complain frequently and primarily about depression and anxiety. “I see it like crazy.”

PERFECTLY NEGATIVE

Two character traits—perfectionism and pessimism—are prevalent among lawyers and may make them prone to anxiety, according to Gayle Victor, who worked as a consumer debt attorney for 25 years before becoming a social worker. “Perfectionism helps lawyers succeed in practice because the profession is excessively detail-oriented. In the Johns Hopkins study, optimism outperformed pessimism—except in the legal profession, because lawyers are hired to always look out for what can go wrong.” Stressed-out lawyers account for 75 percent of Victor’s practice, Care for Lawyers, which is based in Evanston, Illinois.

Taken to the extreme, perfectionism transforms into a feeling that nothing is good enough. “Attorneys develop an overdeveloped sense of control, so if things don’t go as planned, they blame themselves. They think they didn’t work hard enough or they were careless,” explains Tyger Latham, a Washington, D.C.-based psychologist who treats many lawyers and law students. “Paid worriers, lawyers are expected to predict the future, to anticipate threats and guard against anything that could arise. So they learn to see problems everywhere, even when they don’t exist. And they start to perceive threats as if they’re life-or-death matters. That’s the very definition of anxiety.”

Gayle VictorGayle Victor says two traits—perfectionism and pessimism—are prevalent among lawyers and may make them prone to anxiety. Photo by Wayne Slezak.

What can then happen is that looking for risk and problems moves beyond just being a job or a profession and becomes the way that lawyers approach life, says Alan Levin, who spent 34 years as a labor and employment lawyer before co-founding the Care for Lawyers therapy practice with Victor. Lawyers tend to perceive far higher stakes when they encounter adversity, Levin says. “It’s like coming home with four A’s and a B and only focusing on the B. Mistakes are not tolerated well. Plus, the atmosphere of law offers minimal support amidst the high pressure,” contributing to a profound sense of isolation for lawyers. As a result, “without a doubt, every lawyer I see has anxiety greater than the average population.”

Mental health disorders can profoundly affect attorneys’ daily functioning.Irritability, obsessive thoughts, feelings of inadequacy, difficulty concentrating, a sense of worry and impending danger, sleep disturbances, heart palpitations, sweating, fatigue and muscle tension are all side effects of anxiety and depression, according to Latham. Some attorneys withdraw from peers, friends and family or engage in “maladaptive coping behaviors,” such as self-medicating with alcohol and other substances.

Will Meyerhofer
Will Meyerhofer underwent therapy for anxiety while working at a corporate law firm. He now has a practice counseling stressed-out attorneys.

Meyerhofer, too, has seen “strange compensatory behavior” among lawyers eager to gain a sense of control over their lives, including “hair pulling, hand washing, food disorders and gym anorexia,” he says. “I’ve seen weird stuff—lawyers who stay up all night playing video games, guys who use prostitutes.”

What’s notable about lawyers’ unhappiness is that there’s a sense of acceptance rather than outrage, says Jeena Cho, a San Francisco bankruptcy lawyer who blogs about anxiety and mindfulness and is working on a book. “Why do we accept this as the norm? Why do we have to accept that our jobs have to be miserable?”

AVOIDING ANXIETY

The good news is that healthy coping mechanisms are available and are proven to reduce anxiety and depression among lawyers. Chief among them is meditation, which is not surprising given the media attention it has received in recent years. And the practice is gaining momentum in the legal profession. The law schools at Yale, the University of California at Berkeley and the University of San Francisco have begun offering mindfulness courses. In Northern California, Spirit Rock Meditation Center offers weekends solely for attorneys—the only profession-specific retreat the center offers.

In addition to her law practice, Cho teaches meditation courses for lawyers, coaches attorneys on stress and anxiety management, and produces the Resilient Lawyer podcast. She says a meditation practice will bring notable changes to stressed-out attorneys. “Start a daily meditation practice,” Cho says. “It doesn’t have to be long. It may just be a couple of minutes. It doesn’t even have to be a formal meditation practice: Just sit at your desk, close your eyes and breathe.”

Professionals such as attorneys can be resistant to meditation because of prevalent but erroneous stereotypes. Karen Gifford, a lawyer-turned-executive coach and co-founder of Broad Ventures Leadership in San Francisco, tries to demythologize meditation. “You don’t have to go to the top of a mountain or wear funny clothes” to bring mindfulness to your day, she says. “The territory you’re heading into is yourself, which is a very safe place to be. And it doesn’t involve giving up your logical mind.”

Criminal defense lawyer Brian Berson of San Francisco took Cho’s meditation course after experts at the Stanford Center for Sleep Sciences and Medicine suggested that he try meditation to help with his profound sleep disturbances. “I have a high-stress business. All of my clients are desperate. I’ve had various sleep disorders, including waking in the middle of the night thinking about work,” Berson says. “The meditation class was very soothing; and overall, it’s helped me with everything.”

The basic idea, according to Berson, is to just be in the moment. “All of us have a tendency to think about other stuff no matter what we’re doing. But it’s counterproductive and prevents you from enjoying life if you’re doing something pleasurable—or even if you’re doing something mundane that can be pleasurable, like taking a shower. You should stop and really feel the water instead of thinking about what you need to do when you get out. When you’re walking down the street, enjoy it. Smell the air, look at the surroundings instead of thinking about where you’re on your way to. Mindfulness is more than just meditation. It’s a whole different way of thinking.”

Berson continues to do online meditation sessions with Cho whenever he can fit it into his schedule. Because he has “trouble getting into that zone” on his own, he says, he likes the structure of a guided practice. “It’s a really good thing for anyone with a stressful job,” he says. “Most lawyers are under a lot of stress. We’re advocating for people who are desperate—not just criminal defense lawyers like me whose clients are in prison. Litigators, too, are warriors. We’ve got to fight people. The aggressive state of mind is hard to turn off. That’s stressful. It’s bad for your health and for your state of mind.”

Even if lawyers don’t want to take a class or begin a formal meditation practice, Cho suggests they at least try adopting what’s called the STOP approach to daily tasks: Stop. Take a breath. Observe. Proceed mindfully.

“Studies have shown that people literally hold their breath when they look at emails. It triggers the fight-or-flight response,” Cho says. She recommends simply taking one long inhale and exhale before opening your inbox.

Small changes like mindfulness can have huge implications, particularly for lawyers who tend to be incredibly disconnected from themselves, according to Gifford. “When you sit with your own mind every single day, you see what your thought patterns are. You soon realize that certain thoughts aren’t based on anything real or true—it’s just a pattern. So you learn not to take yourself so seriously, which is incredibly freeing. You learn not to always think that opposing counsel is this horrible human being set out to ruin your life. All of a sudden, negotiation with that person has so many more possibilities.”

FOCUSING ON THE PRESENT

Cho noticed a tremendous shift in her own law practice when she brought mindfulness and meditation into her life. For example, “You see your own role in the relationship with opposing counsel. You start to ask, ‘What am I doing to contribute to this relationship?’ Holding a mirror up isn’t easy, but meditation creates the space to do that,” she says. “Doing dishes, sitting in traffic, someone cutting you off—the knee-jerk reactions, the state of constant annoyance: That’s all gone away. Because of meditation, I’m able to do everyday things with more joy. I’m not living in the future, not living to cross things off a to-do list. I live more presently.”

From their first days of law school, lawyers are taught to vigilantly search the horizon for problems—to anticipate, prevent and resolve problems. But many attorneys lose the ability to choose when to approach the world that way, and a meditation practice can reverse that trend, according to Richard Carlton, acting director of the State Bar of California’s Lawyer Assistance Program, which helps lawyers and bar applicants grappling with stress, anxiety, substance abuse or career concerns.

“When I teach CLE programs throughout the state, I insist that thinking like a lawyer is a legal skill, not a life skill,” Carlton says. Adopting mindfulness, “just paying attention to the present moment,” is a great way to combat this tendency. A mindfulness practice can be as simple as closing your eyes and counting backward from 100, he says.

Experts insist that staying present is essential not just for mental health but also for effective law practice. In the Yale Law School study, 50 percent of respondents indicated that mental health challenges affected their ability to perform academically. Stressed-out lawyers make poor decisions, leaving them open to liability. As a result, the benefits of mindfulness have become a big topic of discussion and education among professional responsibility groups, according to Terry Harrell, chair of the ABA’s Commission on Lawyer Assistance Programs.

“Meditation and mindfulness are not just good for us the way things like fish oil are. They actually affect the quality of legal work,” Harrell says. “A mindfulness practice makes us better decision-makers, better ethical decision-makers. And that translates into better lawyering.”

Along those lines, the promotional materials for Spirit Rock Meditation Center’s weekend for lawyers say that “law students, law professors, corporate attorneys and public interest attorneys alike have found that incorporating mindfulness into their life and law practice leads to greater effectiveness in skills such as client interviewing, managing the stresses of oral argument or a complex trial, and cultivating greater equanimity within a challenging profession.”

In addition to meditation, eating both healthfully and mindfully should not be underrated as a method of combating anxiety, according to Cho. “Most lawyers eat at their desks or in front of the TV—there’s no rest or digestion. But it’s important to pause and do nothing but enjoy your meal. Eating properly, sleep and exercise are such foundational practices” for managing the stress of lawyering, she insists.

Exercise, too, is one of the best natural antidepressants and cures for anxiety, Meyerhofer notes. “I strongly urge everyone to find a physical activity: karate, yoga, swimming. Exercise releases endorphins. It will do wonders. The benefits are enormous.”

Even the busiest lawyers can incorporate more walking into their everyday routines as a physical boost, suggests Victor of Care for Lawyers. Yoga, with its emphasis on transferring attention to the body and to the breath, can help reduce anxiety while also releasing physical tension and restoring energy. Adequate rest, too, is essential for regulating mental health, she says. “Sleep deprivation and resulting tiredness can make you even more vulnerable to stress and anxiety.”

SACRIFICING HEALTH

Lawyers “intellectually know” that sleep, diet, meditation and exercise are important, according to Latham. “We know we feel better when we get a good night’s sleep. But attorneys sacrifice sleep and healthy habits to meet unrealistic expectations. They skip meals, eat out, skip exercising. It’s a snowball effect. Lawyers may also start to pull away from friends and family, to withdraw. But it’s important to feel connected to other people or the problem compounds with isolation and shame.”

In recalling his own experience with anxiety, Meyerhofer notes that one of his “profoundest regrets” is having remained so isolated from his peers at the firm. “It would have helped so much to have someone to talk to who understood.”

Despite the proven benefits of healthy habits like meditation, nutritious diet and exercise, there’s no blanket panacea for anxious lawyers, Latham cautions. “What may be helpful for one person may not be especially helpful for another. I always inquire about previous coping skills and what has proved helpful in the past.” That inquiry—in the form of therapy—may truly be the key to mental health for many lawyers.

Meyerhofer similarly notes that it isn’t that lawyers are unaware of wellness solutions like exercising and getting a good night’s sleep. “It’s that they are driven by financial considerations to earn as much money as possible by billing as many hours as possible, and that means they sacrifice other things—like time with friends and family, a healthy diet and exercise—to the almighty billable hour. How are you expected to get to the gym or yoga class or the pool when you’re billing 300-hour months?

“How are you supposed to get the recommended seven hours of sleep every night, which is critical to good mental health, when you’re expected to pull all-nighters and work weekends?” Meyerhofer asks. “People don’t need good advice on getting to the gym and eating their vegetables. They need a time out, to listen to themselves and process the static in their heads.”

Because medications treating anxiety and depression only do so much and can sometimes be addicting, Meyerhofer says, it’s far more effective to combat such conditions by getting to the root of a problem through therapy. Therapists can help lawyers reality-test common thoughts, such as “I’m not any good. I’m going to fail. Someone will criticize me.”

Expressing feelings of anxiety to another person who listens, cares and understands can be enormously therapeutic, “simple though it may seem,” Levin adds. Sadly, while attorneys are statistically the professionals most in need of therapy, they’re also deeply resistant to it, instead expending precious energy to hold everything in, according to Levin.

“Lawyers are a help-rejecting population,” he says. “They mistakenly believe that if you’re vulnerable, you’re weak. There’s this notion of being the rock of Gibraltar for your clients.” But lawyers who seek and get help “can be more effective helpers.”

Latham adds: “There are cultural variables that contribute to lawyers’ feelings of isolation from colleagues and prevent them from seeking help. There’s a stigma to any perceived weakness because it runs counter to the idea of attorneys being invincible and resilient.” In the Yale Law School study, a chunk of the students who considered seeking treatment for mental health challenges opted not to because they feared exclusion from faculty, administrators, peers and state bar associations, which sometimes request information about applicants’ mental health history.

Professional organizations, including the ABA and state and local bar associations, can educate lawyers about these issues, encourage them to seek help and, importantly, challenge the long-standing cultural factors that contribute to attorneys avoiding aid, Latham says. “These organizations can play a role in destigmatizing therapy, making it more acceptable for lawyers who are suffering to seek help and be able to talk openly,” he says. “There should be no shame in that.”

In a Psychology Today article, Latham wrote: “Just as any psychologist would consult an attorney when addressing legal issues outside of their area of expertise, so, too, an attorney should be prepared to consult a mental health worker if he or she feels ill-equipped to address the psychological stressors in his or her life.”

In California, all lawyers are entitled to at least two free counseling sessions with a professional who specializes in working with attorneys, says Carlton of the State Bar of California. But typically only about 200 lawyers out of more than 183,000 active bar members take advantage of this benefit at any given time.

KNOWING THERE ARE CHOICES

It’s important to note that no strategy should be touted as a cure-all. “The implication can become that you’re struggling with anxiety or depression because you’re not doing your yoga or not meditating or not eating right or somehow choosing to go without sleep,” Meyerhofer says, “that it’s your fault for not having mastered some ‘effective strategy’ that would make all these issues disappear.” The fact remains that law can be brutal, and most young associates are not equipped for what they find when they enter the profession, he says. “You’re not tossing and turning in bed, roiled by anxiety, because you’re choosing to eat badly or to skip your yoga class. It has a lot more to do with being thrown into the deep end in an extremely competitive, exploitive business driven not by compassion or collegiality or the desire to mentor, but by profit and money and competition for prestige.”

The perfectionist and competitive ideals are so entrenched in the profession that lawyers may be unaware of those questionable values and how damaging they are, Levin says. “It’s great to make $1 million a year but when all your competitors are making $1.1 million or $1.2 million, that’s hugely anxiety-producing,” he says. “What’s missing from all of this is the notion of quality of life, of feeling a connection and belonging in a common enterprise.” What’s needed is, essentially, a profound shift from the four-A’s-and-a-B attitude, he says.

Changing the culture of the profession can go a long way toward curbing the epidemic of lawyer anxiety and depression, according to Levin. He recounts a conversation he once had with a law firm partner who criticized a young associate for expressing lack of confidence when the associate was about to do something for the first time. The partner worried that the associate would express that insecurity to the client.

“I thought: ‘Give the associate some credit for being smart enough to know the difference.’ And if an associate can’t get support from an older mentor in private, then where will he get it? That associate needed to hear: ‘It’s natural to be afraid.’ An associate who hears that is going to do a much better job, as opposed to someone simply working just to avoid a mistake. Lawyers need to be willing to let go of the belief, endemic to the profession, that expressing vulnerability is weakness.”

Meyerhofer, too, laments the “hypercritical environment” of law firms. “Lawyers don’t understand proper management and the value of praise,” he says. “You don’t beat the horse or else the horse turns into a shaky mess.”

In his own case, anxiety disappeared once Meyerhofer left BigLaw and found a supportive mentor at his next job.

“Often, frankly, the ‘solution’ to lawyers’ anxiety is to take a pay cut and work at a smaller, less hectic job, whether at a smaller firm or in-house or in a different field.” Meyerhofer tells his clients that everyone has a right to look forward to what they’re going to do each day.

Lawyers need to understand that they’re not trapped, and that changes are possible, Levin adds.

“They can go to a smaller firm, create their own practice, teach, go to a corporation,” he says. “We do a lot of work in our practice about getting lawyers to realize they have choices. Lawyers don’t ask themselves ‘What do I really want?’ They’re not used to it.”

This article originally appeared in the July 2015 issue of the ABA Journal with this headline: “Stressed Out: How to avoid burnout and debilitating anxiety.”


Leslie A. Gordon, a former lawyer, is a legal journalist based in San Francisco.

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Posted in ABA, Law, Legal Education, mental health
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