Following up on yesterday’s Boston Globe story regarding the situation at New England School of Law, here are some hard figures regarding exactly how this
confidence scheme institution of higher learning is an almost completely taxpayer subsidized operation, on both the front end, in the form of federal loans, and the back end, in the form of what will surely be a very high rate of soft default and quasi-bankruptcy via Income Based Repayment:
Revenue, expenses and federal loan funding at New England School of Law, July 2010-June 2011
Nominal Tuition Collected: $41,546,619
Actual Tuition Collected (i.e., tuition minus “scholarships,” i.e, discounted tuition): $32,841,264
Total Nominal Revenue: $43,423,500
Total Real Revenue: $34,718,145 (Revenue minus tuition discounts)
Total Nominal Expenses: $33,945,288
Total Real Expenses: $25,239,933 (Tuition discounts are listed as expenses)
Net Real Revenue Over Real Expenses: 37.6%
Legally speaking, NESL is a “non-profit” institution, which means among other things that this surplus is not subject to federal or state taxes.
Federal Loans Disbursed to NESL Students, July 2010-June 2011
Subsidized Staffords: $3,944,156
Unsubsidized Stafford: $5,515,978
GRAD: Unreported, but since GRADPLUS originated $19,276,698 in loans during the first quarter destined for distribution to NESL students, and almost exactly half of that sum was distributed in that quarter, we can assume the remaining sum was distributed in the third quarter, i.e, $9,560,264
GRAD: $1,139,055 (The GRADPLUS loans distributed in the fourth quarter were used by students enrolled at least half time in summer school, or NESL’s summer abroad law program, which I’ll have more to say about soon).
Total federal loans distributed to NESL students in FY 2010-11: $40,052,965
A few additional points:
94.6% of NESL’s revenue comes from tuition.
NESL students took out 22% more in federal loans than NESL collected in tuition. Slightly more than half of those loans were GRADPLUS, which feature an interest rate of 7.9% and an origination fee of 4%.
NESL produced 308 graduates in 2011, of which 17 had jobs with law firms of more than ten attorneys nine months after graduation. Four of these people had jobs with law firms of more than 50 attorneys. 34% of the class was reported to have a full-time long-term job requiring bar admission. 14.2% of these positions were graduates who listed themselves as having begun a solo practice.
NESL tuition in 2004: $22,475
NESL tuition in 2012: $42,490
Definition of BUSTOUT
: a confidence scheme in which an established business is taken over, a large stock of merchandise is purchased on credit and quickly sold, and the business is then abandoned or bankruptcy is declared