November 24, 2015

Thankful for the Financial Times (Michael Simkovic)

This Thanksgiving, I'm thankful for the Financial Times.  

While some leading business and financial newspapers have adulterated their coverage to appeal to a mass audience or reduce costs, the Financial Times continues to produce high quality, fact-based reporting about serious business, financial, and economic issues.  The FT's target audience continues to be legal and financial professionals who are prepared to pay a premium for reliable information.  The FT includes a minimum of hyperbole and fluff.  It also offers a more global perspective than most U.S. papers, while still providing strong coverage of important U.S. issues.  

For the last 5 years, I've routinely recommended the FT to students in my business law classes, who are generally more familiar with U.S. papers.  The FT is available on Lexis (with a few days delay), but is well worth the cost of a subscription.  

If you're not a regular reader of the FT, but have been following U.S. newspapers' higher education coverage, you can get a sense of the differences between the FT and U.S. newspapers' approach across subject areas by reading this article about fees at public UK universities exceeding those at U.S. universities.  The article is entirely focused on costs and benefits of education and how those costs and benefits are distributed between students, government, and employers.  There are no unrepresentative anecdotes, no histrionics, only summaries of data.  When advocacy groups are cited, their interests are noted.  This is what journalism can and should be.

Pearson recently sold the FT to Nikkei.  Hopefully the new owners maintain the FT's high quality. 

November 24, 2015 in Guest Blogger: Michael Simkovic, Of Academic Interest, Professional Advice, Student Advice, Weblogs | Permalink

November 12, 2015

New America Foundation versus College (Michael Simkovic)

In the Los Angeles Review of Books, Frank Pasquale reviews "The End of College" by Kevin Carey of the New America Foundation:

"Tax-cutting, budget-slashing politicos are always eager to hear that education could be much, much cheaper. . . . “disrupting education” mobilizes investors and excites startups. Kevin Carey’s The End of College is the latest book to seize the imagination of disrupters. It touts massive changes for post-secondary education. . . .


[Carey] believes things need to change drastically in higher ed, and that they will change. But bridging the gap between “is” and “ought” is a formidable task — one Carey tries to solve by muckraking indictments of universities on the one hand and encomia to tech firms on the other. . . .  In The End of College, Silicon Valley thought leaders are as pragmatic, nimble, and public-spirited as university administrators are doctrinaire, ossified, and avaricious. . . . They’ve devised methods of teaching and evaluating students that solve (or will soon solve — Carey vacillates here) all the old problems of distance education.


Online learning at the University of Everywhere could eventually improve outcomes — or degenerate into an uncanny hybrid of Black Mirror and Minority Report. Big data surveillance will track the work students do, ostensibly in order to customize learning. . . . Want to prove you aren’t faking exams? Just let cameras record your every move and keystroke — perhaps your eye movements and facial expressions, too. . . . Certainly we can trust Silicon Valley to respect our privacy and do nothing untoward with the data! . . . 


Silicon Valley has even lured universities into giving away lectures for free. The colleges think they’re establishing good karma with the public, but disrupters hope for a more chaotic endgame: students deciding to watch free courses, then proving their credentials to certifiers who give out “badges” to signify competence in a skill set. . . . It could be a very profitable business. As students pay less for actual instruction by experts, they have more money to spend on badges. . . . 


Carey implies that faculty opposition to MOOCs is simply a matter of self-interest. His concerns about greed, so prominent when he discusses universities, fade away when he rhapsodizes about ed tech’s “disruptive innovators.” . . . One of Carey’s heroes . . . had a no-bid contract to MOOCify San Jose State University math instruction, only to see the partnership pause after “no more than 51 percent of Udacity students passed any of the three courses” (while “74 percent or more of the students in traditional classes passed”). . . .


Traditional college education endures — and even those who dismiss it rarely, if ever, try to dissuade their own children from attending a university. If colleges were really so terrible at preparing the workforce, the college earnings premium would have disappeared long ago. . . . [E]mployers are unlikely to subscribe to Carey’s [alternatives to college].


So why bother reading Carey? Because, like Donald Trump blustering his way to the top of the Republican field by popping off shocking sentences, Carey’s rhetoric has political heft. To the extent it gains traction among education policy staffers (and the student loan companies that love to hire them), it changes the debate. The End of College is a master class in translating an elite project of privatization and austerity into bite-sized populist insults, even as it sings the praises of powerful corporations.


Carey claims he wants dramatically better educational opportunities for all. But that goal will require more public support . . .  Many millionaires and billionaires want to see their taxes go down . . . Before touting D.C. researchers’ “findings” and “big idea books,” the media and indeed all of us should look closely at exactly what interests are funding the think tanks behind them."

November 12, 2015 in Guest Blogger: Michael Simkovic, Law in Cyberspace, Of Academic Interest, Web/Tech, Weblogs | Permalink

November 03, 2015

Failed the Bar Exam? Try Again (Michael Simkovic)

Noah Feldman recently argued that law schools are not helping students with low standardized test scores by denying those students the opportunity to attend law school simply because those students might find it challenging to pass the bar exam.*  According to Feldman, denying people an opportunity to try to improve their situation in life is “paternalism that verges on infantilization.” Moreover, “A standardized test score, taken alone, shouldn't determine your future.”

Feldman’s perspective is bolstered by an important feature of bar exams:  People who fail an exam can study harder and then retake it.

Standardized test scores might predict the likelihood of passing the bar exam on a single try.  But a more important question is arguably whether an applicant can eventually pass a bar exam.  Delays in bar passage can have short-term financial costs, entail logistical challenges and stress, and in rare instances where employers require recent hires to practice law without supervision, even result in the loss of a job.  But most law graduates won’t lose their jobs for retaking the bar exam, and an individual who passes after multiple attempts will have the same license for the rest of his life as one who passes on the first try.** 

Many law schools maintain exclusive admissions, not necessarily for the benefit of the students to whom they deny admission, but rather for the benefit of prospective employers and clients—in other words, to maintain a brand that suggests certain qualities above and beyond the ability to pass a bar exam.  Different law schools have different brands. 

The probability of eventually passing the bar exam is a function of how many times an applicant is willing to try.***  A bar exam taker with only a 50 percent chance of passing on any one try has an 88 percent chance of passing the bar exam if he is willing to retake the bar exam up to two times, and a 94 percent chance of passing if he is willing to retake it up to 3 times.

Probability of Eventually Passing the Bar Exam as a Function of Number of Tries


Probability of Passing on Each Try






Number of Tries

Cumulative Probability of Passing


























These model-driven calculations seem to map well to the real world.  For example, Florida Coastal—which admits many students with very low LSAT scores—reports that although its first time bar passage rate is much lower, 93 percent of its graduates eventually pass the bar exam. 

How motivated is a particular law school applicant?  This is something an applicant is likely to know better than a law school admissions officer.  For those with grit and determination, failure is often temporary.  And anecdotally, law graduates have failed bar exams and gone on to have successful careers.

It would be strange if newspapers claimed that those who fail a road test on the first try are doomed to never obtain a drivers license, will never be able to hold down a job, and should never have enrolled in high school in the first place.  But in the world of legal education, members of the press too often make comparably misinformed claims about law students and the bar exam. 

Continue reading

November 3, 2015 in Guest Blogger: Michael Simkovic, Legal Profession, Of Academic Interest, Professional Advice, Weblogs | Permalink

October 29, 2015

Brooklyn Dean Allard: Legal Profession Should Challenge Slanted, Inaccurate Press Coverage (Michael Simkovic)

Dean Nick Allard of Brooklyn Law School writes:

[T]he New York Times editorial . . . “The Law School Debt Crisis,” . . . is symptomatic of . . . the continuing negative drum beat that is demeaning law schools, law students, and the entire profession. 

The time has come for the legal community – and law schools in particular – to press the reset button on the reputation of our profession. As Deans, we should not stand silent as those with biases and outdated or inaccurate information recycle myths and tired, predictable versions of their “wisdom” about our profession, law schools and the quality of newly minted lawyers. Over and over again.

The overarching challenge facing lawyers and the law school community across the country is that there is virtually no effective public counterweight to offset the worn perceptions repeated by high visibility media and others. We must, together, come to the defense of the value of law and lawyers, and make the compelling case for lawyers’ contribution to society . . .

Let's stop the hand wringing, whining and the recycling of misperceptions. Let’s instead call attention to the positive value of our profession and the contribution we, our colleagues, and our students make. Let’s challenge ourselves and our institutions to do better. . . .

I've expressed similar sentiments about the need to work to improve the accuracy of increasingly slanted and inaccurate press coverage. 


October 29, 2015 in Guest Blogger: Michael Simkovic, Legal Profession, Of Academic Interest, Weblogs | Permalink

October 28, 2015

N.Y. Times is Mistaken: Law Student Loans are Safe and Profitable for the Government (Michael Simkovic)

This weekend, The New York Times Editorial Board  published a sensationalist lead editorial, “The Law School Debt Crisis,”  claiming that law student borrowing is harmful to taxpayers.  The New York Times is mistaken.

The Times cited Florida Coastal School of Law, a for-profit institution, as its prime example of law schools “vacuuming up hordes of young people, charging them outrageously high tuition and, after many of the students fail to become lawyers, sticking taxpayers with the tab for their loan defaults.”  Florida Coastal seems like an easy target—even a Federal Court which dismissed a fraud suit against Florida Coastal described it as having “some of the lowest admissions standards of accredited or provisionally accredited law schools in the nation.” The Times has repeatedly criticized for-profit colleges, which it deems “predatory” based on their unusually high student loan default rates. (See opinion, upshot, news and news again). 

If the Editorial Board's accusations were true—if the “majority of law schools” really were running “a scam” in which they load down their students with “crushing amounts of debt” which “they can’t repay”—Florida Coastal and other law schools should have among the highest default rates of any institutions of higher education in the country.

They don’t and they aren’t.


For the cohort entering repayment in 2012—the most recent year of data available*—the national 3-year cohort default rate on federal student loans was 11.8 percent.  The comparable figure for Florida Coastal was only 1.1 percent—more than 10 times lower.

This isn’t a one-time fluke.  In 2010 and 2011, Flordida Coastal's 3-year Default rates  were 1.6 and 5.2 percent, respectively, compared to much higher national rates of 13.7 and 14.7 percent.

Other measures tracked by the Department of Education, like repayment rates, also show law school borrowers performing as well or better than most.

We see the same pattern across law schools and going back decades for which data is available.**  Even low ranked law schools with allegedly “outrageously high” tuition generally have much lower student loan default rates than either the national average, or the average for institutions that grant bachelor’s or advanced degrees. 


Law students not only have higher debts than most student loan borrowers; as professional students, they also pay higher interest rates on government loans than undergraduates.  

Law students rarely default because the financial benefits they receive from attending law school are usually far greater than the costs.*** Law school typically boosts annual earnings by around $30,000 (median) to $60,000 per year (mean) compared to a bachelor’s degree.****  Even at the 25th percentile, toward the low end of the distribution, the annual boost to earnings is around $20,000 per year—more than enough to repay typical law school loans over the course of a career.

Taxpayers also benefit.  For every extra dollar a law graduate earns, the federal government receives an extra 30 to 40 cents in payroll and income taxes.  The federal government charges far more in taxes than most law schools charge in tuition.

But the government isn’t paying for most law graduates’ education.  In fact, loans to law students are among the most profitable in the federal government’s student loan portfolio, thanks to high interest rates and low default rates.  Many law graduates are such good credit risks, and are overcharged so much by the government, that private lenders have offered to refinance law graduate loans for substantially lower interest rates. 

There are cases in which particular individuals have unusually bad outcomes and struggle to repay their loans.  Thankfully, these situations are relatively rare among law graduates. 

Incomes for law graduates may seem low when they first graduate, but typically climb rapidly over the next several decades.  Education loans exist precisely so that borrowed money can be repaid later in life, when employment is more stable and incomes are usually higher. 



The New York Times is right that many law school graduates—around 40 percent—do not practice law. But law graduates do not have to practice law or earn spectacular salaries to benefit financially from their degrees and repay their loans over their careers.  They need only earn roughly $10,000 per year more than they would have earned without a law degree. The overwhelming majority of law graduates, including those not practicing law, receive substantially larger boosts to their earnings.

Thanks to income based repayment programs with debt forgiveness and progressive taxation, the overwhelming majority of successful law school graduates can offset the risks of investment in education for those rare unfortunate individuals who do not benefit as much from their educations.

It would be a mistake to let the small tail of defaults wag the much larger dog of public benefits.

Scaling back access to federal student loans to law students will not benefit taxpayers.  To the contrary, the loss of revenue would mean larger deficits for the government, and eventually higher taxes for the rest of us. 

Continue reading

October 28, 2015 in Guest Blogger: Michael Simkovic, Legal Profession, Of Academic Interest, Professional Advice, Rankings, Science, Weblogs | Permalink

October 25, 2015

Pasquale responds to New York Times' latest critique of law student loans (Michael Simkovic)

Frank Pasquale responds  to a very poorly researched editorial by The New York Times Editorial Board.  My own response is forthcoming and I'll link to other responses in the coming days.

Update 10.25.2015 8:30pm: Pasquale places the student loan debate in the broader context of privatization efforts.

October 25, 2015 in Guest Blogger: Michael Simkovic, Legal Profession, Of Academic Interest, Weblogs | Permalink

October 16, 2015

Federal Court dismisses another suit alleging misleading law school employment statistics (Michael Simkovic)

The Wall Street Journal reports that a Federal District Court recently dismissed a lawsuit alleging that Florida Coastal School of Law defrauded its students through misleading employment statistics.  (hat tip Paul Caron)  As noted in the Journal, this is the latest in a long string of victories for defendant law schools in these cases.  

The legal issues and relevant facts of many of the suits against law schools are substantially similar because of standardized data collection techniques and methods of disclosure.  Although courts thus far have either denied class certification or dismissed these fraud suits on the merits, the language of opinions has tended to be somewhat more sympathetic toward plaintiffs when the defendant law school admitted students with lower undergraduate GPAs and standardized test scores.  (For example, compare the decision in Brooklyn to the decision in New York Law School (especially the more plaintiff-friendly appellate opinion)).

Given Florida Coastal's admissions standards--described by the Court as among "the lowest . . .of accredited law schools . . . in the nation"--Florida Coastal may have been among plaintiffs' attorneys best chances for success. Failure in this case does not bode well for future lawsuits against law schools based on similar legal theories and fact patterns.  

The Florida Court explained that Florida Coastal students were college-educated and therefore sufficiently sophisticated that they were unlikely to be misled, but rather would have reasonably understood the limits of the data disclosures or requested additional clarifying information.  

The Court's detailed reasoning follows:

Continue reading

October 16, 2015 in Guest Blogger: Michael Simkovic, Jurisprudence, Legal Profession, Of Academic Interest | Permalink

October 08, 2015

Growing Support for Bankruptcy Relief for Student Debtors (Michael Simkovic)

Student loans are more difficult to discharge in bankruptcy than most consumer or business debts.  Discharge is only available if repayment “would impose an undue hardship on the debtor and the debtor’s dependents.”   11 U.S.C. § 523(a)(8).

These restrictions on discharge are controversial. Supporters note the possibility of strategic filings by student debtors with low assets and high expected future incomes and the danger of such defaults driving up the costs of credit.  Skeptics argue that such concerns are empirically unsupported and that bankruptcy discharge provides an important mechanism for spreading the risks of investments in higher education. 

In policy circles, momentum seems to be building for at least some relaxation of the restrictions on student loan discharge.  The Department of Education recently released a report supporting discharge of private student loans in bankruptcy.   The report argues that federal student loans should be treated differently from private loans because federal loans are not underwritten and because income based repayment with debt forgiveness is available for federal loans.  Adam Levitin made similar arguments in the Wall Street Journal several months ago. 

Access Group announced its support for discharge of student loans after a 7 year waiting period, as long as the loans are not already eligible for income based repayment with debt forgiveness after at most 25 years.  The proposal also calls for restricting discharge for those who have previously discharged student loans in bankruptcy.

Access Group’s proposal appears to leave open the possibility of private student loans retaining current protection against discharge in bankruptcy by offering income-based repayment terms similar to those available from the federal government.

October 8, 2015 in Guest Blogger: Michael Simkovic, Of Academic Interest, Weblogs | Permalink

September 21, 2015

U.C. Irvine Symposium on Higher Education Access (Michael Simkovic)

U.C. Irvine is hosting a Symposium on Higher Education Access, this Friday, September 25.  

I'm presenting A Value Added Perspective on Higher Education.  Jim Chen is presenting his work on competitive merit scholarships.  Sandy Baum and Eileen O’Leary are presenting research on higher education finance.

Other speakers include: 

Associate Justice Goodwin Liu,  California Supreme Court (Keynote)

Continue reading

September 21, 2015 in Faculty News, Guest Blogger: Michael Simkovic | Permalink

September 01, 2015

Student loan borrowers with the highest debt levels have the lowest default rates (Michael Simkovic)