A blog to vent about the evils of the legal profession, the law school scam, and being jobless with a JD. A blog about the legal profession and various aspects of it.
This site has a ton of information about what your rights are against debt collectors and how you can fight back. Unfortunately, in the government’s never ending quest toover the educated, many of the defenses don’t apply to school loans. Well worth a look.
In the comments of the post above, Liz discusses how she beats the system with her repayment plan. Liz sent in a detailed explanation of the how her repayment plan works. Here it is:
The rules on student loans ARE different from most other consumer debt – the banks compound the interest daily, based on the total principal FOR THAT DAY.
And when the debtor makes the monthly payment, the banks can apply the payment FIRST to interest, based on the NUMBER OF DAYS since the last payment. The thing is, that proportion changes every month, which affects your principal outstanding, which in turn affects your daily interest charge.
So say your bill is due the 8th of the month, and you make your payment on the 3rd one month, but the 6th the next month. They’ll calculate the portion of your payment that goes to interest based on 33 days (in a 30-day month), and whatever the total principal is the day the payment is applied. Whatever is left over after covering 33 days of interest will be applied to principal. So you’re paying a little less in principal some months. And they’re calculating your daily interest based on the higher principal. So the next month maybe a little more goes to principal, but not necessarily enough to make up the difference in carrying a higher daily balance on a six-figure loan. Get it?
It’s not like other loans I’ve had, where I just make the payment and the same amount goes to interest every month. With this calculation, the debtor can never pay more than 365 days of interest a month, butthe debtor CAN pay interest calculated on a higher principal several times during the year. And the slightly larger portion of some payments going to principal a few months per year will NOT make up the difference.
That’s why the loans keep going up even for students keep making the payments. You actually have to pay extra every month just to keep the loan from growing, because they’re calculating your interest based on the principal outstanding EVERY DAY. And some months you’re not lowering principal as much as others. Subtract a few annual fees from your payments, including, ironically, “default insurance,” and you have a loan that will just never go away, even for a responsible borrower who makes every single payment.
Anyway, I have no problem paying my debts. I borrowed the money expecting to pay it back. But I do think this system of calculating interest is about as messed up as everything else about the legal instruction industry right now.
For those of you who have not visited the site Student Loan Justice, please take a moment and do so. There has been a lot of interest lately in defaulting, and you should know how the loan companies and Uncle Sam can screw you before you do so. This is from Student Loan Justice:
Congress removed bankruptcy protections, refinancing rights, statutes of limitations, truth in lending requirements, fair debt collection practice requirements (for state agencies) and even removed state usury laws from applicability to federally guaranteed student loans. Congress also gave unprecedented powers of collection to the industry, including wage, tax return, Social Security, and Disability income garnishment, suspension of state issued professional licenses, termination from public employment, and other unprecedented collection tools that are used against borrowers for the purpose of collecting defaulted student loan debt.
Concurrently, Congress established a fee system for defaulted loans that allows the holders of defaulted loans to keep 20% of all payments from borrowers before any portion of the payment is applied to principal and interest on the loan. In the absence of fundamental consumer protections, the defaulted borrowers’ only available recourse is to submit to a hugely expensive “loan rehabilitation” process whereby they are forced to make extended payments (which are almost never applied to the principal or interest on the loan), and then sign for a new loan to which additional fees are attached. This effectively obligates the borrower to a much larger debt than when the loan defaulted, often double, triple, or even more than the original loan amount.
Albany Law School, a fourth tier New York toilet, is cutting its enrollment by 10 students to 240. Well, it’s a start, but unfortunately they should be cutting it by 250. There’s no reason for fourth tier law schools to be open, no law firm is going to hire from them in this economy. Fourth tier jobs went to India a couple of years ago.
The exciting news was that law school applications were down 20 percent this year, and that means that not only has the word gotten out, OLs are actually listening and making wise decisions not to go. The law school scam is starting to suffer losses, and that makes me very happy indeed.
Law school is a one way street, and it doesn’t go in the student’s direction. David Powers was admitted to St. Johns School of Law (a toilet in New York), and when he filled out his application form, he included that he had been convicted of drug possession back in 1999. The school not only accepted him, they gave him a $20,000 scholarship. At the end of three semesters, he was third in his class.
He also is a CPA, and received a job offer from a prestigious firm and took a leave of absence. He had intended to go back this semester and also filled out his application to take the bar. He requested a letter of support from St. John’s about the prior conviction, but not only did they refuse to help one of their students, they rescinded his admission. Yep, they kicked him out for something they had known about. He is suing for a reversal of their decision to be total fucking hypocrites to rescind his admission.
Here’s what the University told him:
The University’s Assistant Dean of Students, Katherine Sullivan informed Powers in an email that, “information that you now provide in your [application’]…was not included in your [admission] application.” The university claimed he omitted the original charges for selling LSD and ecstasy to an undercover cop, according to the suit.
So, because he didn’t give the details of the charges he gets kicked out? Powers was a licensed CPA for Price Waterhouse, which is one of the best accounting firms in the world. He passed their background check and they knew about his conviction.
David’s real crime is that he forgot the most important rule about law school. If you’re a student and you made a mistake in the past and you’re honest about it, you pay for it the rest of your life. But if you’re a law school, like say, Villanova, and you “fudge” numbers to steal more money from students, you can lie for years and stay in business. One way street, David, and unfortunately, not going in your direction.