Apple isn’t just satisfied reinventing health care, it’s targeting clinical trials as well​

By Vivek Wadhwa

March 23, 2015

Jeff Williams, Apple vice president of operations, discusses ResearchKit. (Eric Risberg/AP)

When Apple announced, last year, that it was developing a watch that had the functions of a medical device, it became clear that the company was eyeing the $3 trillion health care industry; that the tech industry sees medicine as the next frontier for exponential growth. Apple’s recent announcement of ResearchKit shows that it has an even greater ambition: It wants to also transform the pharmaceutical industry by changing the way clinical trials are done.

Apple isn’t alone. Companies such as Google, Microsoft, and Samsung and hundreds of start-ups also see the market potential — and have big plans.  They are about to disrupt health care in the same way in which Netflix decimated the video-rental industry and Uber is changing transportation.

The upshot? We will receive better health care for a fraction of the cost.

This is happening because several technologies such as computers, sensors, robotics and artificial intelligence are advancing at exponential rates.  Their power and performance are increasing dramatically as their prices fall and footprints shrink.

We will soon have sensors that monitor almost every aspect of our body’s functioning, inside and out. They will be packaged in watches, Band-Aids, clothing, and contact lenses. They will be in our toothbrushes, toilets and showers.  They will be embedded in smart pills that we swallow. The data from these will be uploaded into cloud-based platforms such as Apple’s HealthKit.

Artificial intelligence–based apps will constantly monitor our health data, predict disease and warn us when we are about to get sick. They will advise us on what medications we should take and how we should improve our lifestyle and habits. Watson, for example, the technology that IBM developed to defeat human players on the TV show Jeopardy, has already become capable of diagnosing cancer more accurately than human physicians can. Soon it will be better than humans are in making any medical diagnosis.

The key innovation that Apple just announced is ResearchKit, a platform for app builders to capture and upload data from patients who have a particular disease. Our smartphones already monitor our activity levels, lifestyles and habits. They know where we go, how fast we move, and when we sleep. Some smartphone apps already try to judge our emotions and health based on this information; to be sure, they can ask us questions.

ResearchKit apps will enable constant monitoring of symptoms and of reactions to medications. Today, clinical trials are done on a relatively small number of patients, and pharmaceutical companies sometimes choose to ignore information that does not suit them. Data that our devices gather will be used to accurately analyze what medications patients have taken, in order to determine which of them truly had a positive effect; which simply created adverse reactions and new ailments; and which did both.

The best part is that the clinical trials will be continuing — they won’t stop once the medicines are approved by the FDA.

Apple has already developed five apps that target the most prevalent health concerns: diabetes, asthma, Parkinson’s disease, cardiovascular disease, and breast cancer. The Parkinson’s app can, for example, measure hand tremors, through an iPhone touchscreen; vocal trembling, using the microphone; and gait, as you walk with the device.

Combined with genomics data that are becoming available as plunging DNA-sequencing costs approach the costs of regular medical tests, a health-care revolution is in the works. By understanding the correlations between genome, habits, and disease — as the new devices will facilitate — we will get closer and closer to an era of Precision Medicine — in which disease prevention and treatment is done on the basis of people’s genes, environments, and lifestyles.

Google and Amazon are one step ahead of Apple in the data they capture — they offer a repository for DNA information. Google also announced last year that it is developing a contact lens that can measure glucose levels in a person’s tears and transmit these data via an antenna thinner than a human hair. It is developing nanoparticles that combine a magnetic material with antibodies or proteins that can attach to and detect cancers and other molecules inside the body and notify a wearable computer on the wrist. And it wants to control aging. In 2013, Google made a significant investment in a company called Calico, to research diseases that afflict the elderly, such as neurodegeneration and cancer. Its goal is to understand aging and, ultimately, extend life. It is also learning how the human brain works. One of its chief scientists, who is a mentor to me, Ray Kurzweil, is bringing to life the theory of intelligence expounded in his book How to Create a Mind. He wants to enhance our intelligence with technology and allow us to back up our brains onto the cloud.

We may have been disappointed with the advances in medicine in the past because things have moved slowly because of the nature of the health care system itself. It hasn’t been focused on delivering health care — it has been about sick care. That’s because doctors, hospitals, and pharmaceutical companies only make money when we are in bad health; they don’t get rewarded for keeping us healthy. The good news is that the technology industry is about to change all this.

I have little doubt that the next 20 years will be nothing less than amazing — as the technology industry “eats medicine.” But I’ll admit that I am not quite ready for Kurzweil to beam my intelligence up into the cloud. I’d rather keep this in my limited local storage.

Source: Washington Post

Info about the author: Vivek Wadhwa is a fellow at Rock Center for Corporate Governance at Stanford University, director of research at Center for Entrepreneurship and Research Commercialization at Duke, and distinguished fellow at Singularity University. His past appointments include Harvard Law School, University of California Berkeley, and Emory University.

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Posted in Apple, Apple Watch, Creative, Health, Medicine, Productivity, Public Health, Research, Technology

Kaplan Survey: A Majority of Future Law School Students Plan to Shoulder Most of Their Tuition On Their Own, But Many Will Also Rely on Mom and Dad

NEW YORK–(BUSINESS WIRE)–According to a recent Kaplan Test Prep survey of over 900 prospective law school students, more than a third — 36% — plan to fund their entire legal education all on their own, while another 22% say they’ll shoulder more than half of their tuition — a hefty responsibility, as law school tuition and fees run up to about $40,000 a year.* Only a lucky (or hopeful) 10% say they won’t pay for any of it.

The survey finds that loans are the go-to funding source for 78% of future law school students, while parents are the second most popular option — with nearly seven in 10 students (68%) saying they will rely on a parent or guardian for at least some of their tuition. A lesser percentage — 61% — plan to fund their legal education with yet-to-be secured merit-based scholarships. Still more than half (54%) say they plan to work while in law school to help pay for it, while 50% say they plan to dig into their personal savings. 42% say they will rely on needs-based scholarships.

But beyond going to mom and dad, future lawyers are far less likely to tap into others in their personal networks for tuition support: only 9% say they plan to hit up another relative, while even fewer (6%) say they will seek help from their significant other.

“One thing that’s notable about our survey is that more than six in 10 respondents plan on securing merit-based aid to pay for law school, which may be wishful thinking. The reality is that even in the present market, law schools offer limited merit-based aid relative to the number of students they accept — it’s predominantly based upon outstanding GPAs and LSAT scores,” said Jeff Thomas, executive director of pre-law programs, Kaplan Test Prep. “While pursuing a legal education and career in law is a longer-term investment, we strongly encourage pre-law students to maximize their return on that investment with smart planning around how they pay for it. All too often the first move of matriculated law school students is to try to secure loans, which are often accompanied by burdensome interest rates that will challenge them for years to come as they begin their careers. Our advice is to actively seek other options first including scholarships, both needs-based and merit-based. We also advise students that as soon as they know they plan to attend law school, start putting some money aside, if possible.”

According to recent numbers from the New America Foundation’s Education Policy Program, the median debt for law school graduates in 2012 was $140,616. In 2004, that number was “only” $88,634.

For more information about Kaplan’s survey, contact Russell Schaffer at 212.453.7538 or russell.schaffer@kaplan.com.

*The e-survey included responses from 901 Kaplan Test Prep students who took the September 2014 administration of the LSAT®.

LSAT® is a registered trademark of the Law School Admission Council, which is not affiliated with Kaplan.

Posted in ABA, bar exam, Career, Debt, Department of Education, Economy, Education, Financial Planning, Law, Legal Education, Millennials, Statistics, Student Loans

Time to debate overhaul of legal education

n mid-February, I received a letter from the new dean at the University of Toronto Faculty of Law asking me to consider donating to its student financial aid program.

I’m sure thousands of alumni got the same letter. The dean’s letter told us Ontario lags behind other provinces in government support for higher education. The letter didn’t mention that, at more than $30,000, the dean’s law faculty has the highest tuition across the province and the country. For that information, you could read the sad tale in the Toronto Star recently about law students at the University of Toronto trying to support their colleagues by giving up a day of pay. The idea, which organizers have since decided not to pursue, was that students with summer jobs would offer to give up one day of wages to support those with unpaid social justice jobs.

There is something very wrong with this picture.

The dean’s letter asks for donations to preserve the faculty’s “tradition of accessibility.” I doubt many young people growing up in poverty in this province would characterize that law faculty as providing an accessible education. As the United Way reported recently, Toronto is the income inequality capital of Canada. The report identified the top priority as access to jobs for young people. It also highlighted jobs as a pathway to stability and emphasized the need to remove barriers based on circumstances.

The dean’s letter included an insert from a current student, Hana, telling us that at the University of Toronto, “meritocracy continues to diversify the student body and challenge the assumption that socioeconomic status limits what promising young students can achieve.”

Notwithstanding the hopeful message from Hana, surely we have to acknowledge that socioeconomic status does in fact limit what promising young students can do. It limits whether they can pay law faculty tuition of more than $30,000 a year; it limits whether they can accept volunteer work for the summer; it limits whether they can follow the career path I followed when I graduated from the same school that focused on a poverty law practice at legal clinics for 15 years.

The dean’s package tells us that because of donor support, Hana has had the opportunity to represent low-income clients at Downtown Legal Services, compete in mooting competitions, and contribute to scholarly publications. I took advantage of the same opportunities when I was in law school and my tuition was less than $1,000 a year. I note with affection that several of the professors who taught me are still at the law school decades later. They were great teachers who engaged with their students and their communities. I doubt the position, put forward by the law school, that the massive tuition hike was necessary to keep them all from running off to American universities.

Ontario law schools recruit students with dreams of changing the world for the better and Hana is no exception. Perhaps alumni and faculty, not students, should give up a day of earnings to support Hana and other students like her. But more importantly, we need to start a new conversation in the profession about what a truly accessible legal education would look like going forward. What are the costs that are driving tuition up and how important are those items to the students and the actual education of competent and well-prepared lawyers as opposed to the quest for excellence at our law schools?

Our law schools send their graduates out into an employment market with increasingly limited opportunities. Given the shortage of articling positions and the need to establish the Law Practice Program with additional fees and, in some cases, unpaid placements, now is the time to consider a more fundamental overhaul of legal education in this province. Why aren’t our law schools leading the way in starting that discussion?


Kathy Laird is executive director of the Human Rights Legal Support Centre. She served for a number of years as a vice chairwoman at the human rights board of inquiry and the Pay Equity Hearings Tribunal. She’s a recipient of the Society of Ontario Adjudicators and Regulators award for outstanding contribution to the administrative justice system in Ontario.

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Students lose faith in professional disciplines

Zachary Zimmern knows the value of a legal education. He can count it in dollars spent on tuition and in the number of interviews he was able to obtain after graduation from Brooklyn Law School in June 2012. Comparing the two gives a picture of the state of legal education and the job market for new lawyers in the US.

“I graduated unemployed. I couldn’t find anything,” he explains in a soft New York accent. “I didn’t really find a job until nine months after I graduated, and even then it was a job that I was unhappy with.”

Still, when he compares himself with his classmates, he says he feels like “one of the lucky ones”.

According to statistics from the National Association for Law Placement (NALP), the employment rate for law school graduates has fallen for six years straight. Overall, figures are still high at 84.5 per cent, but they must be weighed against the average debt level of recent graduates — which is around $125,000 for those from private law schools.

This includes Mr Zimmern, who had to move in with his parents during the job hunt to cut his expenses. “The stress level was severe,” he recalls.

At a time when those newly admitted to the bar are struggling to find employment, one might expect to see a shift in applications to other graduate programmes, most notably MBAs, which often attract students with similar profiles and budgets.

However, there has been a decline in applications to both MBA programmes and law schools in recent years, seemingly for different reasons.

The two can be difficult to compare, given that the latter is required for legal practice while the former is not required for business. But their application trends have several similarities, both in their flat or negative growth and in the enduring strength of the most prestigious schools.

Number of applicants to business and law schools in the US

The number of US citizens taking the GMAT, the entry test for business school, fell to approximately 87,000 last year, down from 127,000 in 2010.

Data from AACSB International, a business education membership and accreditation organisation, show admissions dropped almost 14 per cent over this period.

As one might expect, not all schools are suffering equally. Applications to MBA programmes at top business schools are actually rising as part of a flight to quality. Schools such as Harvard, Stanford and Chicago Booth have therefore been able to become choosier about their entrants, just as top law schools (often at the same universities) have also had fewer difficulties.

As Dan LeClair, chief operating officer of AACSB, says: “In a world like the one we’re in right now, brand does matter.”

But while the decline in applications to law schools appears to have a direct connection to the market for graduates, the roots of the downward trend in MBA applications are less clear.

Data from GMAC show that job opportunities for MBAs remain favourable. But Mr LeClair is quick to note that business education is less monolithic than legal study. Specialised masters operate alongside MBA programmes, giving students a greater diversity of options to choose from.

“The numbers for other masters degrees are pretty strong,” he observes. “Overall, at the masters level we have seen an increase of about 11 per cent over the last four or five years.”

At law schools, it seems to be all about the lack of jobs. According to Wendy Margolis of the Law School Admission Council (LSAC), prospective students are increasingly aware of the struggles in the graduate job market. “The word is out that going into heavy debt for law school is not as sure a bet for a secure future as it once was,” she says.

In particular, Ms Margolis explains, it is becoming difficult for graduates to find positions that allow them to meet student loan repayment schedules.

“There are still many areas of employment for lawyers in the US, but not all of them generate high enough salaries.”

According to statistics prepared by NALP, the median starting salary for law firm employees has fallen dramatically since the financial crisis. Although it has recently risen slightly to $95,000, it is still $35,000 short of reported figures for 2009.

This “softness in the job market” — as Barry Currier, managing director of accreditation and legal education at the American Bar Association (ABA), describes it — has coincided with, if not directly caused, a sharp fall in application numbers. As of March 6, the LSAC reported that applications are down 6.5 per cent from the same period in 2014. Total end-of-year application numbers have fallen by more than 6 per cent every year since 2011.

It is a trend that is starting to strain the finances of once-secure law schools. Brian Leiter, a professor at the University of Chicago Law School, has predicted we could soon see the collapse of certain schools accredited by the ABA.

Mr Currier stresses that schools are cutting costs as they “adjust their behaviour to the market”. Still, he admits, those that fail to adapt “may have some issues”.

That these upheavals are affecting law degrees and MBAs, two qualifications that have long been seen as safe choices for aspiring students, demonstrates the extent of the reshuffle that is taking place in American graduate education. Just where those would-be law and business school students will go instead is uncertain.

 

The law school model of large lecture theatres, the Socratic teaching method and a focus on in-class instruction is connected with a long – and some would say inflexible – tradition. “Sometimes we’re accused of being a little too slow to think innovatively”, says Barry Currier, who oversees the law school accreditation arm of the American Bar Association. “I don’t think that’s true.”

Innovation in legal education has received a boost lately with the launch of the United States’ first “hybrid” online and in-class law school programme at William Mitchell College of Law in St. Paul, Minnesota. The programme, which welcomed its first class in January 2015, will take four years to complete (instead of the usual three years) and will see students spend only one week per semester on campus. Tuition, at $27,770, is the same as that for the school’s part-time programme.

The new programme aligns well with the school’s ethos, according to William Mitchell’s president Eric Janus. William Mitchell “started as a night law school”, he explains. “The traditional mission is serving working people, people with families.” Of the 85 students in the first class, Mr Janus says “they all have life circumstances – jobs, geographic locations, families – that would have made it impossible for them to go to law school but for a programme like this.” So far, the response from students has been very positive. “They were uniformly excited and grateful,” he says.

January also saw the launch of a Massive Open Online Course (Mooc) on contract law from Harvard Law School. Students will get a taste of this foundational part of the law school curriculum at one of the country’s top institutions. The programme is intended for a general audience rather than part of studies for a law degree, and will “give people a sense of how the law works, and what kind of thing the law is”, according to Charles Fried, a Harvard professor and the course’s instructor. According to Professor Fried, it has already proven immensely popular. Students registered for the course number “well over 15,000 people, and they’re in all sorts of places, including two in Papua New Guinea.”

Posted in ABA, Debt, Department of Education, Economy, Jobs, Legal Education, Salary, Student Loans

Cleveland Clinic Grapples With Changes in Health Care

By: Reed Abelson

In downtrodden East Cleveland, a three-story family health center has replaced the city’s full-service hospital. Seven thousand miles away in Abu Dhabi, a gleaming 24-story hospital is preparing to admit patients this year.

Back in Ohio, shoppers at Marc’s, a local discount grocer and pharmacy in Garfield Heights, can enter a kiosk equipped with a stethoscope, a blood pressure cuff and a two-way video screen that lets a patient talk directly to a doctor.

These disparate ventures bear the imprimatur of the renowned Cleveland Clinic, one of the most respected nonprofit health systems in the nation, as it tries to manage the extraordinary changes now transforming health care.

While it has traditionally relied on its ability to provide high-priced specialty care, the system, along with every stand-alone community hospital and large academic medical center, is being forced to remake itself. Patients are increasingly seeking care outside the hospital — in a family health center, a doctor’s office, a drugstore or at home. Medicare and other insurers are moving away from volume-based payments to new models, to pay less for better care.

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Dr. Delos M. Cosgrove, a 74-year-old former heart surgeon who took over as chief executive about a decade ago, likens what is happening in health care to the upheaval decades ago in the steel industry, where companies disappeared when they were unable to respond to change and new competition. “The disruption is going to happen,” he said. As an inevitable shakeout takes place among health care institutions, a look at how the clinic is responding underscores the industry’s challenges and the flurry of activity taking place as institutions try to adapt.

As other health systems have experienced, the clinic’s revenue growth is slowing; it rose 4 percent in 2014 to reach $6.7 billion. Hospital admissions are down from where they were five years ago. Its rivals, like University Hospitals, are teaming up with other hospitals, and the clinic’s market share has fallen from half or more of Cuyahoga County to 45 percent.

“They are not immune to those challenges,” said Lisa Martin, a bond analyst at Moody’s Investors Service who follows the clinic.

To avoid becoming marginalized in an environment where insurers are looking to health systems that can manage all of a patient’s medical needs, the clinic — long known for treating the “sickest of the sick” — is trying to become as good at primary care and treating chronic disease as it is at performing complicated heart valve repairs. “It’s challenging to develop two business models,” Ms. Martin said.

The clinic has been slow to experiment with some new payment models like a Medicare program for so-called accountable care organizations, which offer systems a share of the savings if they can keep costs low while meeting assorted quality goals. The models seek to push health systems to become better at caring for large groups of people who have a wide variety of medical needs.

Other systems have been working under these models for a while, although with mixed success. “We’re so far behind that we can be ahead,” said Ann Huston, the clinic’s chief strategy officer.

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A waiting room at the Stephanie Tubbs Jones Health Center in Cleveland, a family health center that replaced a hospital.Credit Dustin Franz for The New York Times

In addition to the main campus, the clinic operates 10 community hospitals and 16 family health centers, which constitute the bulk of its assets.

The clinic’s efforts to reshape itself are most visible in East Cleveland, a low-income neighborhood. In recent years, Dr. Cosgrove has moved to shrink some of the clinic’s facilities, eliminating specialties at some and shutting down one, Huron Hospital, and replacing it with a family health center. A similar fate awaits another hospital, Lakewood, which is owned by the city and managed by the clinic.

“We are doing things differently,” said Dr. Nana Kobaivanova, the medical director for the Stephanie Tubbs Jones Health Center, the facility that was built to replace Huron, which was demolished.

The Huron location has been designated as green space, with grass planted where the building stood. The health center’s doctors have shifted their emphasis to preventing disease and managing chronic conditions, with primary care consisting of about 40 percent of what they do.

A patient with diabetes could take a cooking class to learn how to eat healthful foods and work with a diabetes educator on how to better manage the disease.

The facility recently expanded the hours of its separate walk-in clinic, where patients with sprained ankles or sore throats can come in without appointments, and it is trying to persuade people who go to the emergency room for their basic medical care to visit the walk-in clinic instead.

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A patient at the Stephanie Tubbs Jones Health Center.Credit Dustin Franz for The New York Times

The Cleveland Clinic must also figure out how to deliver care less expensively. As they develop narrow networks, private insurers are dropping hospitals that they consider too costly or poor-quality care providers. While the details remain vague, Medicare has announced plans to tie as much as half of its payments to value or quality payment models by 2018. Regardless of what happens, “the challenge still points to making health care more affordable,” said Steven C. Glass, the clinic’s chief financial officer.

The clinic cut expenses by roughly $500 million last year. The system is avoiding unnecessary lab tests, for example, and performing a hip replacement for $1,500 less than it did two years ago by standardizing the devices used and using less blood and other supplies, all, it says, without sacrificing quality. Its doctors are typically on salary, making it much easier for the clinic to work with them to figure out how to better care for patients.

“Our biggest challenge is managing all the change,” said Mr. Glass, who is also trying to handicap the odds of whether the Supreme Court will rule against allowing subsidies for people enrolled in the federal health insurance exchange in states like Ohio.

There is also tremendous uncertainty as systems prepare for payment systems that have not yet been fully developed. But systems cannot afford to wait, said Jeff Hoffman, a consultant at Kurt Salmon. “You have to move forward,” he said. “This is something you cannot flip a switch on.”

Dr. Cosgrove was initially skeptical of the Medicare program, for example, but accountable care organizations in Medicare and private insurance have proliferated in recent years. Last December, the clinic announced it would finally take part.

To prepare for these changes, the system has invested heavily in the computer systems that allow it to track patients in different settings and look closely at how they are managing their care. Systems like Kaiser Permanente in California have long used clinical information to better manage the patients they insure under their own health plans.

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The exterior of the 24-story Cleveland Clinic Abu Dhabi, part of the clinic’s efforts to expand internationally as it treats more patients from overseas.

Under Dr. Cosgrove, the clinic has emphasized the need to measure patient outcomes and other information to better judge how well it is delivering care. “We should have the very best shot at figuring out what is optimal care,” said Ms. Huston, the chief strategy officer.

The question for many health systems is whether they need to add a health plan to their portfolios. While Dr. Cosgrove says he thinks the clinic will be soon assuming the risk of providing care under the new arrangements, potentially losing money if care is too expensive or ineffective, he is reluctant to take the plunge into insurance. “That’s a tough dilemma,” he said.

He has also been trying to broaden the clinic’s reach, particularly through affiliations that include North Shore-Long Island Jewish Health System in New York to provide cardiac care. In Ohio, the system recently agreed to team up with Akron General Health System, a move that will give it a broader presence in the state. It also joined the Midwest Health Collaborative, a group of health systems that hopes to work together to provide care across Ohio.

“Toby’s very interested in our expanding our footprint, finding unique ways to collaborate,” said Robert E. Rich Jr., the clinic’s chairman, referring to Dr. Cosgrove by his nickname.

Its doctors will begin seeing patients at a 2.7 million-square-foot hospital in Abu Dhabi, part of its ambitions to expand internationally as it treats more patients from overseas. While the Cleveland Clinic will staff and manage the hospital, it is owned by the government of Abu Dhabi’s Mubadala Development Company.

There have been missteps. The clinic’s affiliation with Community Health Systems, a for-profit chain of hospitals, ended abruptly after Dr. Cosgrove realized the two systems’ goals were significantly different. “It didn’t bear fruit,” Dr. Cosgrove acknowledged.

But Dr. Cosgrove continues to experiment, pushing to keep the clinic competitive on all fronts. He has made same-day appointments a priority for the system, so patients can easily see a doctor.

He is also eager to explore its capabilities online through tools like Health Spot, the kiosk.

“I think you’re seeing an organization that can essentially respond,” Dr. Cosgrove said.

Source: NYTs

Posted in Economics, Financial Planning, Innovation, Medicare, Medicine, Policy, Productivity, Public Health, Research, Statistics, Technology

Finding Debt a Bigger Hurdle Than Bar Exam

Finding Debt a Bigger Hurdle Than Bar Exam

Suzy Allman for The New York Times
Robert Bowman was refused entry to the New York bar because of $400,000 in student debt.

All his life, Robert Bowman wanted to be a lawyer. He overcame a troubled childhood, a tragic accident that nearly cost him a leg and a debilitating Jet Ski collision. 

He put himself through community college, worked and borrowed heavily to help pay for college, graduate school and even law school. He took the New York bar examination not once, not twice, not three times, but four, passing it last year. Finally, he seemed to be on his way.

In January, the committee of New York lawyers that reviews applications for admission to the bar interviewed Mr. Bowman, studied his history and the debt he had amassed, and called his persistence remarkable. It recommended his approval.

But a group of five state appellate judges decided this spring that his student loans were too big and his efforts to repay them too meager for him to be a lawyer. 

“Applicant has not made any substantial payments on the loans,” the judges wrote in a terse decision and an unusual rejection of the committee’s recommendation. “Applicant has not presently established the character and general fitness requisite for an attorney and counselor-at-law.”

Mr. Bowman, 47, appears to have crossed some unspoken line with his $400,000 in student debt and penalties, accumulated over many years.

New York’s courts have overlooked misconduct like lawyers’ solicitation of minors for sexefforts to deceive judges and possession of cocaine. Those instances have led merely to temporary suspensions from practice. 

“It usually takes a pretty significant record of some underlying misconduct to keep you out permanently,” said Deborah L. Rhode, a law professor at Stanford who has studied bar admissions across the states. Excluding someone for having too much debt was odd, she said; the hard questions about loans usually involve applicants who have used bankruptcy to try to escape loans, she said, and Mr. Bowman has not. 

Mr. Bowman concedes that he has never made a payment on his loans, partly because of medical and other deferrals and problems with his lender. But he says he intends to make good, adding that his only hope is to begin practicing law — which means overturning the judges’ decision. 

While thousands of indebted students have complained about their treatment by lenders, Mr. Bowman has documented his personal debt crisis with remarkable, obsessive intensity.

He claims Sallie Mae overcharged him, imposing hefty and unjustified fees; did not allow him to defer payments when he was entitled to do so and improperly accounted for periods when he did defer.

According to his detailed records, a Sallie Mae representative even threatened him. “If you default, your license will be taken from you,” the representative said. “Do you understand that?”

When Mr. Bowman said that he did not yet have a law license, the representative responded that the company would prevent him from getting one.

Martha Holler, a Sallie Mae spokeswoman, said that such threats would violate the company’s rules. 

“The size of this account is extremely unusual, but not surprising given that the customer took out 32 loans to pursue undergraduate, law and masters of law studies and has not made a single monthly payment over his 26-year student loan history,” Ms. Holler said. “We are performing an extensive review of his extraordinary case, and if we identify any errors we will quickly rectify them.” 

Mr. Bowman has not had an easy time of it. He was shuffled through foster careand various legal proceedings as a child. He was impressed by the lawyers who represented his interests and saw a possible life’s work. 

Getting a college degree took 10 years because he had spent nearly six in rehabilitation, relearning how to walk after an all-terrain vehicle hit him while he was stopped on his motorcycle. The accident nearly cost him his left leg; he graduated from the State University of New York in Albany in 1995.

He enrolled at the University of California Hastings College of Law in San Francisco in 2000.

After his third year, he began a masters of law program in London, where he lived with a girlfriend. He graduated in December 2004 with about $230,000 in student loan debt, and she helped support him while he studied, and studied again and again, for the bar exam.

In 2007, Mr. Bowman asked for an accounting of his loans, the payment deferrals he had used and his repayment options. He said he did not receive that information for nearly two years — a point disputed by Sallie Mae, which said it tried to reach Mr. Bowman several times in 2007.

Mr. Bowman passed the New York bar in February 2008. Soon after, while living with his once-estranged mother in Miramar, Fla., he was swimming at a beach when a Jet Ski lost control and slammed into him, breaking his good leg in four places. 

“My luck on these things,” Mr. Bowman said. “So I contacted Sallie Mae and I’m like, I need a medical deferment and advice. Their response is, none available.”

Sallie Mae transferred Mr. Bowman’s private student loans, the ones not guaranteed by the federal government, to a collection agency, which tacked on a 25 percent fee. That agency transferred the loan again, and he said the next collection agency tacked on another 25 percent fee. Sallie Mae denied this, saying he was charged the fee only once. But suddenly, Mr. Bowman found that he owed more than $400,000. 

Knowing it would be difficult to explain his debt to New York’s Committee on Character and Fitness, which reviews applications for admission to the bar, Mr. Bowman gathered correspondence with Sallie Mae, loan statements, even the emergency room report on the Jet Ski incident. 

The three lawyers who interviewed him in Albany in January found Mr. Bowman’s “determination to pursue a postsecondary education remarkable,” according to the written evaluation. As for the loans, they continued, “it appears unconscionable that a student loan indebtedness could go from $270,000 to $435,000 in four years.” 

Two of the committee members did not return calls seeking comment; the third could not be reached. 

In April the judges rejected the committee’s recommendation and ruled Mr. Bowman could not be a lawyer. Michael J. Novack, the clerk of the court that handled Mr. Bowman’s application, declined to comment specifically on his case. 

“Generally speaking, if the committee on character and fitness recommends admission of an applicant, the court approves of it,” Mr. Novack said. “But not always.”

Along with asking the court to reverse its decision, Mr. Bowman has consulted lawyers and is preparing a lawsuit against Sallie Mae. One way or another, he vows, he will make the switch from client to lawyer.


Source: NYTs 

July 1, 2009

Posted in Debt, Department of Education, Jobs, Legal Education, Student Loans

“Right to Work” Is the Wrong Answer for Wisconsin’s Economy

Introduction and executive summary

Four years after Wisconsin severely restricted public employees’ right to collective bargaining, state legislators may soon consider whether to make Wisconsin a so-called right-to-work (RTW) state.

RTW laws have nothing to do with anyone being forced to be a member of a union, or forced to pay even a penny to political causes they do not support; that’s already illegal under federal law. What RTW laws do is to make it illegal for a group of unionized workers to negotiate a contract that requires each employee who enjoys the benefit of the contract to pay his or her share of the costs of negotiating and policing it. By making it harder for workers’ organizations to sustain themselves financially, RTW laws aim to restrict the share of employees who are able to represent themselves through collective bargaining, and to limit the effectiveness of unions in negotiating higher wages and benefits for their members.

A range of national evidence shows why Wisconsin lawmakers should reject RTW:

  • RTW is associated with lower wages and benefits for both union and nonunion workers. In a RTW state, the average worker makes 3.2 percent less than a similar worker in a non-RTW state.
  • Through weakening unions, RTW hurts the middle class. As union membership has declined in recent decades, the share of overall income received by the middle class is essentially at a 45-year low.

Additional evidence further demonstrates why RTW is the wrong answer for Wisconsin’s economy:

  • The strong performance of Wisconsin’s manufacturing industry indicates that the state’s manufacturers do not need RTW.
  • Through cutting wages, RTW may undermine Wisconsin’s small businesses, which depend on the state’s residents having wages to spend. Additionally, through reducing the number of people with health insurance, RTW may endanger the state’s health care industry.
  • According to multiple quality-of-life measures, Wisconsin significantly outperforms the states with RTW laws. Thus, it appears RTW states should be trying to become more like Wisconsin, instead of Wisconsin becoming more like RTW states.

In short, Wisconsin lawmakers considering a RTW law should weigh the consequences, specifically the impact on wages, against the unsubstantiated claims that RTW laws would boost the state’s economy and attract new businesses to locate in the state.

What does the national research tell us about RTW?

Hundreds of things affect a state’s economic growth—including warm or cold weather, the urban or rural nature of its economy, possessing natural resources such as oil, and a wide variety of state laws. RTW is just one of these hundreds of things, and it is not the main or only factor controlling states’ economies.

That’s why there’s no consistent pattern of RTW states growing faster or slower—or having better or worse unemployment rates—than other states. For instance, both the highest unemployment rate in the country (Mississippi) and the lowest (North Dakota) are in states with RTW laws.

While it is far from determinative as far as a state’s economic performance is concerned, a wide range of national evidence shows why RTW would be detrimental to Wisconsin.

RTW lowers wages and benefits for both union and nonunion workers

The mark of serious economic research is that it uses statistics to hold “all else equal,” in order to specifically measure what impact an RTW law would have on Wisconsin’s economy. Dr. Heidi Shierholz, now chief economist of the U.S. Department of Labor, and Dr. Elise Gould at the Economic Policy Institute conducted a study controlling for a wide array of variables showing that:

  • Wages in RTW states are 3.2 percent lower than those in non-RTW states.
  • The incidence of employer-sponsored health insurance is 2.6 percentage points lower in RTW states.
  • The incidence of employer-sponsored pensions is 4.8 percentage points lower in RTW states.

Why nonunion workers are hurt by RTW

RTW lowers wages and benefits for nonunion workers as well as union workers. In places where unions are strong, they create pressure for nonunion employers to raise their own wages and benefits—or to see the best employees go work for a union employer. If RTW laws weaken unions and cut union wages and benefits, nonunion employers no longer have to compete with such high standards in order to get the best workers, so there is a negative spillover effect in which they lower their own wages and benefits.

RTW is intended to lower wages

The goal of RTW—according to its supporters—is to cut wages and benefits in the hopes of encouraging out-of-state manufacturers to move in. If it didn’t lower wages, there would be no incentive for companies to move into the state. As the Indiana Chamber of Commerce explained, “Unionization increases labor costs … [and thus] makes a given location a less attractive place to invest.” RTW is supposed to solve this problem. Similarly, a Missouri state representative championed RTW by projecting it would cut wages by “2 to 3 dollars an hour” as part of the process of attracting more companies to hire cheaper labor.

Weakening unions hurts the middle class

Unions are a critical part of what makes it possible for normal working people to earn a decent living. As unions have shrunk—due in part to antiunion policies such as RTW laws—the middle class has suffered. Companies may still be profitable, and executive salaries may soar ever higher, but the share of income that goes to the middle 60 percent of the country is essentially at a 45-year low, as shown in Figure A.

Union membership rate versus the middle class’s share of aggregate income, 1967–2013

Year Union membership rate Middle-class share of total income
1967 28.3% 52.3%
1968 28.2 53.2
1969 28.0 52.9
1970 27.8 52.7
1971 27.2 52.4
1972 26.6 51.9
1973 26.6 51.9
1974 26.2 52.2
1975 24.6 52.1
1976 24.5 52.0
1977 24.1 51.8
1978 23.4 51.7
1979 24.4 51.6
1980 23.3 51.7
1981 21.7 51.6
1982 21.0 51.0
1983 20.3 50.9
1984 19.1 50.8
1985 18.2 50.4
1986 17.7 50.2
1987 17.3 50.0
1988 17.0 49.8
1989 16.6 49.3
1990 16.3 49.5
1991 16.3 49.7
1992 16.0 49.4
1993 16.0 47.6
1994 15.7 47.3
1995 15.1 47.6
1996 14.7 47.4
1997 14.2 47.1
1998 14.1 47.2
1999 14.0 47.0
2000 13.6 46.7
2001 13.7 46.3
2002 13.5 46.9
2003 13.0 46.9
2004 12.6 46.6
2005 12.5 46.2
2006 12.1 46.0
2007 12.2 46.9
2008 12.5 46.6
2009 12.4 46.4
2010 12.0 46.5
2011 11.9 45.7
2012 11.3 45.7
2013 11.3 45.8
Union membership rateMiddle-class share of total incomeMiddle-class share of total incomeUnion membership rate197019801990200020101015202530%4547.55052.555
ChartData Download data

Note: The middle class is defined here as the middle 60 percent of U.S. households.

RTW does not create jobs

In the 1970s or 1980s, companies may have left the Upper Midwest for cheaper labor in the South or Southwest. But globalization has fundamentally changed our economy. Today, a company that’s primarily interested in cheap labor is going to China or Mexico, not to South Carolina or Arizona.

Oklahoma is the only state to adopt RTW since NAFTA and where enough time has passed to measure its impact. Oklahoma lawmakers were told that if they passed a RTW law, there would be an eight- to 10-fold increase in the number of new companies coming into the state—especially in manufacturing. Instead, manufacturing employment in the 10 years after RTW fell by one-third (as shown in Figure B), as did the total number of new jobs created by companies coming into the state.

Oklahoma manufacturing employment (thousands), 1990–2010

Year Manufacturing employment (thousands)
1990 155.8
1991 155.7
1992 151.9
1993 155.5
1994 157.9
1995 160.5
1996 161.9
1997 167.8
1998 175.0
1999 176.7
2000 176.9
2001 169.8
2002 152.3
2003 143.2
2004 142.3
2005 144.9
2006 149.2
2007 150.5
2008 149.9
2009 129.6
2010 123.3
Okla. adopts RTW1990199119921993199419951996199719981999200020012002200320042005200620072008200920100255075100125150175200
ChartData Download data

In fact, employers themselves say RTW is not important. Area Developmentmagazine conducts an annual survey asking small manufacturers to list the most important factors in their location decisions. RTW has never ranked in the top 10. In 2013, it ranked 12th; the top two factors were availability of skilled labor, and access to a major highway.

This is even truer for higher-tech, higher-wage employers—the kinds of jobs that every state is focused on recruiting. The State New Economy Index is a nonpartisan survey that ranks states according to their suitability for high-tech companies. In 2014, the top five states were all fair-share (i.e., non-RTW) states. Wisconsin ranked higher than a majority of the RTW states.

Wisconsin manufacturers do not need RTW

Wisconsin Manufacturers and Commerce (WMC) President Kurt Bauer has voiced the same claims that proved false in Oklahoma, saying that “businesses … shun closed shop states like Wisconsin in favor of Right to Work states.” But the facts do not support this claim.

Wisconsin is ranked fifth in the nation in manufacturing job growth. In 2013–2014, employers created 10,000 new manufacturing jobs in Wisconsin—more than in 21 out of 24 RTW states, and 25 times more jobs than employers created in RTW Iowa. Even among WMC members, when asked to name one thing the state could do to improve business, only 15 percent mentioned RTW. Over 70 percent of WMC members project that they will add new jobs even without RTW.

Explaining “why manufacturers choose Wisconsin,” the Wisconsin Economic Development Corporation (WEDC) points to the state’s “access to 23 ports and three international airports – all connected by a reliable interstate highway system” and, above all, “one of the highest quality manufacturing workforces in the nation.” Indeed, Wisconsin’s high school graduation rate is second in the country, and the number of Wisconsin workers with technical-college degrees in key manufacturing fields is four times the national average.

Moreover, numerous manufacturers are already choosing Wisconsin over RTW locations. For example, in 2011, Mercury Marine moved its MerCruiser assembly lines—and 200 jobs—from RTW Oklahoma to Fond du Lac, Wisconsin. More recently, the WEDC profiled the “success story” of United Natural Foods, Inc., the nation’s largest organic food distributor, which chose Wisconsin over potential locations in RTW Indiana and Iowa.

RTW may undermine key sectors of Wisconsin’s economy, particularly health care and small business

Over the next 10 years, the industry that will add the most jobs in Wisconsin is health care—accounting for 25 percent of all new jobs. If RTW reduces the number of people with health insurance, this industry’s growth may be endangered.

Similarly, through reducing workers’ wages, RTW may hurt Wisconsin’s small businesses, which are not in the position of deliberating whether they want to be in Green Bay or Phoenix, but are rooted in their local communities and depend on local residents having wages to spend. On average, for every $1 million in wage cuts, in addition to the impact on the people whose wages are cut, an additional six jobs are lost through people spending less on groceries, rent, clothing, and other family needs.

It may be unsurprising, then, that in discussing Wisconsin, the National Right to Work Committee admitted that “we’re not purporting to prove that right-to-work produces superior economic performance.”

Wisconsin already outperforms RTW states

By multiple quality-of-life measures, Wisconsin significantly outperforms the states with “right to work” laws, as shown in Table 1. It thus appears that RTW states should be trying to figure out how to become more like Wisconsin, rather than Wisconsin trying to figure out how to become more like RTW states.

Table 1

Quality of life is lower in RTW statesIncome and other quality-of-life measures, Wisconsin versus RTW states

Wisconsin RTW states
Household income $55,285 $49,220
Median hourly wage $18.31 $16.95
Jobs with health insurance 64% 54%
Jobs with pensions 53% 44%
Poverty rate 11% 15%
Child poverty rate 16% 20%
High school graduation rate 91% 77%
Infant mortality (per 1,000 live births) 5.99 6.9
Births to teenage girls (per 1,000 aged 15–19) 26.2 39.5
Physicians (per 10,000 people) 26.5 22.6
Child abuse (per 1,000 children) 3.6 8.4
Violent crime (per 100,000 people) 237 370.5

Source: U.S. Census Bureau, Current Population Survey, Kaiser Family Foundation, National Assessment of Educational Progress, National Vital Statistics Reports, Centers for Disease Control and Prevention, U.S. Department of Health and Human Services, Federal Bureau of Investigation

Is “right to work” about freedom?

Corporate lobbies advocate RTW with the goal of restricting unions. There are many organizations that, like unions, require membership dues. For instance, an attorney who wants to appear in court must be a dues-paying member of the bar association. One may dislike the bar association, but must still pay dues if he or she wants to appear in court.

Condominium or homeowners associations similarly require dues of their members. A homebuyer can’t choose to live in a condominium development without paying the association fees.

Yet the national corporate lobbies supporting RTW are not proposing a “right to practice law” or a “right to live where you want.” They are focused solely on restricting employees’ organizations.

By federal law, unions are required to provide all their benefits to every employee covered by a union contract. In “RTW” states, if a non-dues-paying employee has a problem at work, the union is required to represent her—including providing an attorney at no charge if one is needed—the exact same as it would a dues-paying member.

Unions in RTW states are the only organizations in the country forced to provide all benefits for free, and banned from requiring those who enjoy the benefits to pay their fair share of the costs of creating them.

Indeed, employer associations themselves refuse to live by the same rules they seek to impose on unions.

In Owensboro, Kentucky, the local Building Trades Council decided to withdraw its membership in the local Chamber of Commerce, but asked if it could still receive full member benefits even though it would no longer be paying dues. Absolutely not, answered the Chamber. “It would be against Chamber by-laws and policy to consider any organization or business a member without dues being paid. The vast majority of the Chamber’s annual revenues come from member dues, and it would be unfair to the other 850+ members to allow an organization not paying dues to be included in member benefits.”

The Chamber’s logic is simple: If it had to provide all its services for free, and dues were strictly voluntary, it might go out of business. This, then, appears to be the true aim of RTW, and may explain why some corporate lobbies continue advocating for it even though it doesn’t add up as economic policy. It appears that the main goal of RTW may be not to create jobs or give workers more freedom, but instead to make it harder for workers to have an effective voice in negotiating with their employer.

About the author

Gordon Lafer is a political economist and an associate professor at the University of Oregon’s Labor Education and Research Center. A research associate at the Economic Policy Institute, he has written widely on issues of labor and employment policy, and is author of The Job Training Charade (Cornell University Press, 2002). Lafer has served as an economic policy analyst for the Office of the Mayor in New York City and has testified as an expert witness before the U.S. Senate, House of Representatives, and state legislatures. In 2009–2010, Lafer took leave from his faculty position to serve as senior labor policy advisor for the U.S. House of Representatives Committee on Education and Labor. He holds a Ph.D. in political science from Yale.

Endnotes

1. National Council of State Legislatures, November 2014 unemployment by state, http://www.ncsl.org/research/labor-and-employment/state-unemployment-update.aspx.

2. Heidi Shierholz and Elise Gould, The Compensation Penalty of Right-to-Work Laws, Economic Policy Institute, February 17, 2011, http://www.epi.org/publication/bp299.

3. Lawrence Mishel and Matt Walters, How Unions Help All Workers, Economic Policy Institute, August 26, 2003, http://www.epi.org/publication/briefingpapers_bp143.

4. Richard Vedder, Matthew Denhart, and Jonathan Robe, Right-to-Work and Indiana’s Economic Future, Indiana Chamber of Commerce Foundation, January 2011, http://www.indianachamber.com/images/media/studies/IndianaRightToWork-1-27-11.pdf.

5. Rep. Bill Lant, quoted in Missouri Digital News, December 1, 2014, http://www.mdn.org/2014/STORIES/2015RTW.HTM.

6. Keith Miller and David Madland, New Census Data Once Again Illustrate Importance of Unions to the Middle Class, Center for American Progress, September 18, 2014, https://www.americanprogressaction.org/issues/labor/news/2014/09/18/97477/new-census-data-once-again-illustrate-importance-of-unions-to-the-middle-class/.

7. Since Indiana and Michigan adopted RTW in 2012, there are not yet enough years of data to measure the law’s impact in those states.

8. W. Robert Reed, “Does Right to Work Boost Economic Development?” Oklahoma Council of Public Affairs, February 2001, www.ocpathink.orf/publications/policy-papers/?module_news&id=1566; Bill May, “Proponents Foretell Benefits of Right to Work,” Journal Record, September 19, 2001.

9. U.S. Bureau of Labor Statistics, Oklahoma manufacturing employment, seasonally adjusted; Oklahoma Department of Commerce, “Announced New and Expanded Manufacturers and Services,” 2010 Annual Report, January 2011, www.okcommerce.gov/Libraries/Documents/2010-Annual-Report-Announced-N_3224.pdf.

10. Area Development, “28th Annual Survey of Corporate Executives: Availability of Skilled Labor New Top Priority,” 2014, http://www.areadevelopment.com/Corporate-Consultants-Survey-Results/Q1-2014/28th-Corporate-Executive-RE-survey-results-6574981.shtml?Page=2.

11. Robert Atkinson and Adams Nager, The 2014 State New Economy Index: Benchmarking Economic Transformation in the States, Information Technology and Innovation Foundation, June 2014, http://www.itif.org/publications/2014-state-new-economy-index.

12. Kurt Bauer, “Continuing Wisconsin’s Era of Reform,” Wisconsin Manufacturers & Commerce, December 8, 2014, https://www.wmc.org/issues/continuing-wisconsins-era-of-reform.

13. Marc Crawford, “Regional Report: Advanced Industry Clusters Fueling Growth in the Midwest States,” Area Development, 2015 Profiles, http://www.areadevelopment.com/RegionalReports/December-2014/advanced-manufacturing-clusters-fuel-midwest-growth-2776651.shtml.

14. Population figures are for 2013, based on Census December 2013 release, reported by Infoplease.com, http://www.infoplease.com/us/states/population-by-rank.html. July-July 2013–2014 manufacturing job growth is from Arizona State University, School of Business, Job Growth USAhttp://research.wpcarey.asu.edu/seidman/current-state-rankings.

15. Both the 15 percent RTW figure and the 71 percent projecting growth in 2014 are reported in “Steady Economic and Job Growth Predicted by State Business Leaders,“ Wisconsin Manufacturers and Commerce press release, July 21, 2014, https://www.wmc.org/news/press-releases/steady-economic-and-job-growth-predicted-by-state-business-leaders.

16. Wisconsin Economic Development Corporation, “Recognized Industry Leadership Drives Manufacturing Advancements in Wisconsin,” December 2014, http://inwisconsin.com/wp-content/uploads/2014/12/Manufacturing_Industry-Profile.pdf.

17. Rick Sommell, “Mercury to Complete Move of Oklahoma Work to Wisconsin,” Milwaukee Journal Sentinel, August 17, 2010, http://www.jsonline.com/business/100889519.html.

18. The company asked a location consultant to find it the best possible spot within 200 miles of Chicago; this includes all of northern Indiana down to Indianapolis, and out past Davenport in Iowa. See Wisconsin Economic Development Corporation, “Growing Organic Foods Wholesaler to Build Distribution Center in Wisconsin,” http://inwisconsin.com/wp-content/uploads/2013/04/UNFI-Case-Study-13.26.13.pdf.

19. Wisconsin Department of Workforce Development Office of Economic Advisors, Wisconsin Long-Term Industry Employment Projections, 2012-2022, August 2014.

20. Calculation based on tax cut and corporate tax multipliers, provided by Heidi Shierholz, Economic Policy Institute, 2011.

21. Stan Greer, quoted in Matthew DeFour, “Right-to-Work Would Trim Union Clout, but Broader Economic Impact Unclear,” Wisconsin State Journal, December 14, 2014, http://host.madison.com/349156d2-33b1-563e-9183-b09b3315e40e.html.

22. U.S. Census Bureau; Current Population Survey; Kaiser Family Foundation; National Assessment of Educational Progress; National Vital Statistics Reports; Centers for Disease Control and Prevention; U.S. Department of Health and Human Services; Federal Bureau of Investigation.

23. Letter from Jody Wassmer, Executive Vice President, Owensboro, Kentucky Chamber of Commerce, September 8, 2005.

Tagged with: ,
Posted in right to work, union

Our Washington Post Op-Ed Example Explained

Our op-ed in the Washington Post today uses a hypothetical student loan borrower to illustrate one of the reasons why the Obama administration revised the costs of the Income-Based Repayment (IBR) program up by $21.8 billion. Politico reportedthe revision earlier this month, which was included in the president’s budget. Our op-ed provides some important context to the Politico article. It illustrates why graduates students — even those earning good incomes — are the biggest winners under the IBR program and likely account for a lot of the extra $21.8 billion in costs. We provide more detail about the example we used in the op-ed below.

We profiled a hypothetical law school graduate, Robert, who graduates with $150,000 in debt (the average for a law school student with loans) at a 6% interest rate. Robert lands a job making $70,000 a year, with his wife making $80,000. In his first year of repayment under IBR, his monthly payment will be $0, because IBR uses his previous year’s income (while he was in school), to calculate his payment.

In his second year of repayment, his monthly payment will be $238 on what is now a $159,000 loan, thanks to a year’s worth of interest. Under IBR, borrowers make payments equal to 10 percent of their “discretionary incomes” and have any debt remaining after 20 years forgiven. Before the Obama administration changed the program in 2010 and 2012, those figures were 15 percent of discretionary income and 25 years of payments before loan forgiveness.

If Robert’s $238 monthly payment seems too low to be 10 percent of his income, that’s because it is. This is one of least-understood benefits of IBR.

First, Robert can exclude his wife’s income from the calculation by filing separate income taxes. And as we show later, he can still claim his wife and child in his household size when calculating his exemption under IBR, no matter how he files his taxes.

Second, Robert’s payment is not calculated off of his total income, but rather his Adjusted Gross Income, $59,500, which is lower because pre-tax expenses are automatically excluded. Even though Robert earns $70,000, his $3,000 in health insurance premiums, $4,000 in retirement savings, and his $3,500 contribution to a dependent care account are excluded from that figure, resulting in an Adjusted Gross Income of $59,500. (Borrowers who don’t file separate income taxes can also deduct their student loan interest payments from their total incomes when calculating Adjusted Gross Incomes.)

After that, he subtracts another $30,900, which is the exemption he receives under IBR for himself, his wife, and his child as a basic cost-of-living allowance. Therefore, the 10 percent of income, in this case, is actually calculated off of only a $28,600 income.

In reality, Robert isn’t making loan payments equal to 10 percent of his total household income; he’s paying only 1.9 percent. He won’t make a dent in his student loan paying at that rate. That is true even though Robert earns an annual raise of 4 percent, and a promotion in his 10th year of repayment brings his salary to $150,000 that year. By his 20th year of repayment he earns $222,000 per year.

At that point, which is when he qualifies for loan forgiveness under IBR, Robert hasn’t even reduced the loan’s principal. He’s paid only interest for 20 years, and not even all of it. He still has a $166,000 balance at that point, more than he borrowed, which the government then forgives. Note that the forgiven debt would, however, be treated as taxable income, but the Obama administration wants that rule repealed.

Before the Obama administration made changes to the IBR program, Robert would have fully repaid the loan. That is because he pays more per month and for five more years. His payments would total $330,000 in principal and interest.

Our op-ed does not mention the Public Service Loan Forgiveness benefit available to anyone working in a non-profit or government job. That benefit works just like scenario we described above except that loan forgiveness occurs after only 10 years of payments and the forgiven debt is not taxable. Had Robert qualified for that benefit, he would have $201,734 forgiven after making total payments of only $38,266.

The calculator we used for this estimate can be downloaded here. It can be used to generate other scenarios by entering debt level, interest rate, borrower income and household size.

Posted in Calculator, Legal Education, Student Loans

Law school costs no longer worth it for most students

By: Daniel Burns

Law schools and the degrees they offer are increasingly financially unattainable for prospective students. Not only has tuition risen exponentially, but the actual return on investment has drastically devalued due to an oversaturation in a shrinking job market.

Many students are no longer buying in. Sources like lawschooltransparency.com place law schools’ deceitful use of statistics under scrutiny. Schools often present inflated employment numbers that do not list whether or not graduates find employment as lawyers or in jobs that even require a Juris Doctor (J.D.).

At Syracuse University College of Law, only 54 percent of graduates can expect to obtain a long-term legal career, according to lawschooltransparency.com. This horrifying statistic is further compounded by the fact that the average debt that a student will face upon graduation from Syracuse is close to $235,000.

Many prospective lawyers do not worry about this debt due to the false assumption that their future lawyer salary will quickly ease the burden of student loans. For most law graduates, this is not the case. Most lawyers who make enough to pay back large student loan debt are those with careers in “Big Law” at top law firms. This creates yet another ugly problem, as the reality of landing such a job is slim.

Recent statistics show that most “Big Law” firms only hire graduates from the top 20 law schools in the country. Your J.D. degree from a school ranked 54, and the hundreds of thousands of dollars you spent to get it, mean nothing to “Big Law” firms unless you graduated first in your class or know someone in the firm. What these factors add up to is an expensive degree that is worth far less than the time and money spent on it.

I am not saying that law degrees are worthless, but the reality is that the commitment of resources necessary to obtain such a degree is astronomical and unfair. A lawyer salary of $50,000 would be feasible if the money spent on a law degree matched the salary. In order for degree price and salary to match, one of two steps must be taken. Either law schools stop milking students for a degree in a field that is nowhere near as lucrative as it used to be or an alternative to acquiring a J.D. is created to compete with law schools.

The second step seems more probable. Before law school became the primary means to obtain a J.D., prospective lawyers could apprentice themselves under an attorney as an assistant in “reading law.” Once these assistants spent enough time and had practiced enough, they took the bar exam and became lawyers if they passed. Although “reading the law” fell out of practice after the advent of law schools, it is still legal to become a lawyer in this way in some states, such as New York and California.

The “reading law” route serves as an established way in which anyone, regardless of assets, can become a lawyer. If it became more prominent, apprenticeship could allow many prospective lawyers to enter the market without the financial burden associated with law schools. With competition comes change. If ”reading law” becomes common place, law schools will be forced to adapt. Competition will destroy the monopoly held by law schools and finally open the career up to those unable to participate in the old system.

Source: Pipe Dream

Posted in ABA, Debt, Department of Education, Economics, Legal Education

Law Schools: Reform or Go Bust

By: James Huffman

The theme of the recent Association of American Law Schools annual meeting was “legal education at the crossroads.” Legal education is at a crossroads, but you would hardly know it from the AALS convention program, from the American Bar Association’s recent revision of its accreditation standards, or from what law schools are actually doing in response to a six-year decline in applications.

To head off the crisis, legal educators should be talking about an entirely new business model. That the existing model has failed should be evident to any thoughtful observer. But because most law faculty view themselves as public servants and legal education as a public good, they reject the very idea that legal education can even be thought of in business terms.

The Crisis in Legal Education

Like it or not, law schools face real business challenges. Demand has declined every year since 2010—not just a little but by nearly 40 percent. The same number of law schools have 33,000 fewer prospective customers than they had five years ago.

At a minimum, this means law schools must be far less selective if they are to come close to historic enrollment levels. Because the vast majority of law schools are heavily dependent on tuition revenue to meet expenses, achieving enrollment targets is critical to the bottom line. It doesn’t matter how much public good they are doing, law schools, like the universities to which most of them are attached, do have a bottom line.

But even achieving enrollment targets does not guarantee a balanced budget. For the past two decades, law schools have been relying on discounted tuition to recruit the best students. Students with higher test scores and undergraduate grade point averages boost rankings, which helps with student recruitment.

But tuition discounts, sometimes approaching 100 percent, are problematic. When aggregate discounts become too large, more students actually result in less net revenue. Without endowment income sufficient to cover tuition revenue lost to discounting (which very few schools have), the least qualified students with the worst prospects for gainful employment after graduation end up paying for the most qualified students to attend law school.

It is also the case that law school tuition has risen in excess of inflation for the past four decades. When I entered the University of Chicago Law School in 1969, tuition was equivalent to $16,000 in 2014 dollars. Chicago’s 2014 tuition was over $54,000. No one can claim that today’s students are getting three and a half times more value than I did 45 years ago, but they are willing and able to pay that much because they can get government guaranteed loans to cover the expense.

Top graduates from the University of Chicago will have no difficulty repaying $150,000 to $200,000 in law school debt, but most graduates of most law schools will spend most of their careers paying for their legal education, while many will never be able to do so. The economics of legal education are inextricably linked to the demand for new lawyers, which is linked to the market for legal services. That market has changed dramatically and permanently over the past decade resulting in six consecutive years of decline in the demand for new lawyers.

In the face of these economic challenges, most legal educators appear to assume that their options are three: cut expenses, somehow maintain enrollments or get their universities to bridge the growing financial gap.

Cutting expenses within the current business model is difficult. Short of moving into smaller and less commodious space, there is little to be done about facilities costs in the short term. Program cuts compromise highly competitive student recruitment. Indeed many schools are considering the addition of new programs, including graduate degrees that will add to total costs for students willing to enroll, in hopes of enticing more students. Faculty, the largest expense for most schools, are almost all tenured making cuts impossible without scaring off prospective students by declaring financial exigency.

As noted above, maintaining enrollments in the face of plummeting applications requires some combination of lowered admissions standards and tuition discounts. But the former threatens rankings, which undercuts recruitment, and the latter can lead to a decline in net revenue. Because most universities face similar financial challenges, there is little prospect for sustained help from parent institutions.

The current practice of year-to-year, incremental expense cuts, combined with heavily discounted tuition to maintain enrollments, is not going to fix the problem. The deeply ingrained business model that yields the numbers indicated above for both law schools and their students is not sustainable.

The longer legal educators remain in denial about the true magnitude of the financial crisis they face, the more devastating will be the crash. It should be obvious to even the casual observer why the existing business model is broken for all but the well-endowed, elite law schools.

The Failed Business Model

Through the first half of the last century law schools relied on small faculties to teach large classes in facilities consisting of a few lecture halls, offices and a library. Today large faculties teach small classes in elaborate facilities housing high tech classrooms, court rooms, cafes, lounges, suites of faculty, administrative and student organization offices, computer labs, libraries and even workout rooms in a few schools. Faculty teach not only smaller, but fewer, classes, with frequent sabbaticals and research leaves. Little wonder tuition has risen in excess of inflation for four decades.

As someone who promoted all of the above as a law school dean and benefited from it all as a law professor, it pains me to acknowledge that during my nearly four-decade career legal education, I abandoned frugality for profligacy. Some of the rise in cost resulted from program expansions in response to a plethora of new legal specialties and from steady pressure from the American Bar Association for more training in lawyering skills that requires a much lower student-faculty ratio.

But the core factor in the escalating cost of legal education is that the guild of law school professors long ago captured the combined regulatory apparatus of the American Bar Association (ABA) and the AALS. We law professors have constructed a legal education model that, first and foremost, serves faculty interests—higher salaries, more faculty protected by tenure, smaller and fewer classes, shorter semesters, generous sabbatical and leave policies and supplemental grants for research and writing. We could not have done better for ourselves, except that the system is now collapsing.

A New Business Model

With a new business model, a quality legal education could be provided at half of today’s average tuition. Here are a few suggestions for how to do it:

  • Cut faculty numbers in half by requiring faculty to devote most of their time to teaching. In the existing model, law faculty are expected to teach, produce scholarship, engage in public service and perform service to their institution. Because achieving tenure at most institutions depends almost entirely on the production of scholarship, that function has come to dominate faculty time. Prospective professors are asked not about their interest in and preparation for teaching, but whether or not they have a research agenda. High level scholarship is important to the development of the law and can be a positive influence on teaching, but it is not in the interest of the public or of students (paying the bills) for the thousands of law faculty at some 200 law schools to devote most of their time to writing articles that usually duplicate the efforts of others. Reducing the administrative responsibilities of faculty will also free up time for teaching. A role for faculty in institutional governance is important, but in most law schools endless committee meetings and mundane administrative tasks can become overwhelming despite the rapid increase in administrative staff.

  • Eliminate tenure and take advantage of a highly competitive market for law professors. Tenure once served as a bulwark of academic freedom, but today’s speech codes and mandatory trigger warnings make a mockery of that once grand idea. Tenure has become little more than a form of job security in a world where most people manage without a guarantee of lifetime employment. Today’s law professors earn a comfortable living. Some even become wealthy by double dipping through lucrative consulting assignments that also take away from time for teaching. While there are thousands of practicing lawyers and judicial clerks standing in line for law teaching jobs, tenure assures that available teaching positions at any given time are relatively few. A more competitive market for law teachers would reduce costs while improving teaching quality.

  • Reduce law school from three to two years. Although the law has become ever more complex over the last many decades, the basic intellectual skills required of practicing lawyers have changed little. Two years in a well-conceived curriculum are ample to provide those skills. It would be a fool’s errand to try to teach law students the broad substance of our burgeoning and always changing laws no matter how long they stay in law school. Law schools also have taken on many tasks, like instruction in basic writing skills, which should be and can be more effectively acquired prior to law school. The expansion of lawyering skills training appeals to students anxious to become “real” lawyers. But after a half century of clinical and other skills programs, law schools continue to be faulted for too much theory and not enough skills training. This suggests that the existing model is not working. Perhaps legal educators should look to the British or elsewhere for a different approach. It is long past time to acknowledge that the biggest obstacle to making law school significantly less costly for students by reducing it to two years is that law schools are addicted to the tuition revenue generated by the mandatory third year or its equivalent. The fact of the matter is that most third year students are biding their time, at great expense, until they are allowed to take the bar exam and get on with their careers.

  • Stop the facilities arms race. While new programs and larger faculties have required law schools to expand office space, the last two decades have witnessed a surge in the construction of ever more palatial law school buildings. Many have been debt financed placing an added burden, along with new maintenance costs, on operating budgets. With declining enrollments and smaller faculties law schools will require smaller, not grander, facilities in the coming years.

  • Take greater advantage of online instruction technologies. There is little doubt that some of what lawyers need to know is best taught by professors in a classroom. But there is much that can be learned, as well or better, through online instruction. Why have hundreds of professors ranging from excellent to terrible teaching the rules of evidence, or the Internal Revenue Code, or administrative procedures act to 50 or 100 students at a time when a handful of truly outstanding teachers could be made available to every law student in the country? Most law professors will object that they are teaching students far more than the substance of the law—that they are teaching them to solve problems and to think like lawyers. But those skills do not need to be taught in every course, and the reality is that most law students are centrally concerned with learning the substance so they can pass a bar exam. The Socratic method can be stimulating and mind-opening, but few professors do it well, and even if all professors were masters of Socratic dialogue there are steeply diminishing returns to its repetition in every course.

Other Obstacles Remain

These are just a few of the more obvious elements that might contribute to a new business model for legal education. Once legal educators accept that drastic change is needed, other, and probably better, ideas will surface.

But there will be little such circumspection and innovation until law schools are freed from the heavy-handed, one-size-fits-all ABA accreditation standards. Although the ABA has just completed a comprehensive review of the standards and has made some changes intended to give law schools greater flexibility in meeting those standards, there remains little room for true innovation.

In fact, the most substantive change is to mandate for all law schools to require all students to take a minimum of six credits in “experiential courses,” a requirement that will increase the costs of compliance given the low student-faculty ratio normally required for such courses. The new standards also allow for more “distance education,” but with tight restrictions that protect the central role of in-house faculty.

The ABA would better serve the public and the profession if it turned its attention to ensuring that law schools are transparent about what they offer and how their graduates fare in the market for lawyers. Otherwise law schools should be allowed to innovate, specialize, experiment and appeal to prospective students not on their rank among a sea of law schools doing basically the same thing, but on the basis of the unique education they offer. Only then will new business models emerge and be tested against the realities of the 21st century market for legal services.

Because the ABA accreditation process serves the vested interests of law professors and of law schools in relation to their parent institutions, the needed reform is unlikely without pressure from others with an interest in the future of legal education.

Fortunately those others exist, and they have the power to force change. Each state, usually acting through its high court, determines who is qualified to practice law within its borders. To the extent that each state requires candidates for admission to the bar to hold a degree from an ABA accredited law school, each is complicit in sustaining the cartel that is American legal education.

Odd as it seems, the key to finding new business models for legal education may rest with the high courts of the 50 states. If their bar admission standards focus more on the qualifications in individual applicants and less on where applicants acquired those qualifications, legal educators would be freed to succeed or fail on the basis of the quality of the education they offer.

The legal profession and the public it serves would be better for it. Legal education would become sustainable and better adapted to 21st century needs. And law students could begin their careers with little or no debt.

James Huffman is dean emeritus and formerly the Erskine Wood Sr. professor of law at Lewis and Clark Law School in Oregon. This article first appeared on the Hoover Institution website.

Source: Newsweek

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