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Obama administration moves against higher ed lobby

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Over the last few years a bunch of law schools figured out that they could exploit various changes in the federal funding of education in a way that would allow them to jack up tuition radically, while selling this price rise to potential students as a proverbial free lunch at taxpayer expense. The thought leader in this regard was Georgetown, which was so aggressive in pitching the idea that Congress had “solved” the problem of spending nearly $300,000 to get a GULC degree that the school ended up in the pages of the Washington Post last August, as an exemplar of Michael Kinsley’s dictum that the scandal is what’s legal:

Delisle and Holt found a video of Charles Pruett, assistant dean for financial aid at Georgetown Law, explaining to students that he doesn’t worry about the Feds figuring out what’s going on, since they aren’t going to dare force former law students to pay big loan bills that they were promised they never had to pay.

There’s also video of Pruett encouraging students to (legally) shelter income from the federal government so as to lower the loan payments that Georgetown Law has to make on their behalf through income-based repayment . . .

To be clear, what Georgetown Law is doing is perfectly legal. The question is whether it’s appropriate for the federal government to be paying almost $160,000 to students at an elite law school.

GULC professor Philip Schrag has also played a leading role in promoting the idea that law students need not worry their pretty little heads that it costs $80,000 per year to attend that fine institution:

“In 2007, however,” Schrag announces, “the United States Congress solved [hypothetical law student with a low-paying job and high debt] Sarah’s problem,” by creating IBR . . .

Is IBR a good deal for Sarah? That, as we shall see, is far from clear. What is clear is that it’s an unbelievably fantastic deal for law schools. You don’t need a Nobel prize in economics to figure out what will happen to the cost of law school if that cost no longer bears any relationship whatsoever to what a significant portion — indeed quite possibly a majority — of law graduates actually end up paying for their degrees. (As Matt Leichter recently pointed out, a huge percentage of law graduates going forward are going to be IBR-eligible. He also quotes the rather Zen-like economic aphorism that “debts which can’t be repaid, won’t be.”)

But let’s leave behind the world of law school administrators, who are no doubt fantasizing even now about opening taxpayer-subsidized International Environmental Space Law summer programs in Ravenna, and return to Sarah. Does IBR make law school a good idea for her? [tl;dr: no]

Law professors love to believe that their work is affecting public policy. Most of the time this is belief is pure fantasy, but in this case, it appears the Obama administration has been paying heed:

The Budget proposes additional changes to PAYE to include:

• Eliminating the standard payment cap under PAYE so that high income, high balance
borrowers pay an equitable share of their earnings as their income rises;
• Calculating payments for married borrowers filing separately on the combined household
Adjusted Gross Income;
• Capping Public Sector Loan Forgiveness (PSLF) at the aggregate loan limit for independent undergraduate students [currently $57,500] to protect against institutional practices that may further increase student indebtedness, [emphasis added] while ensuring the program provides sufficient relief for students committed to public service;
• Establishing a 25 year forgiveness period for borrowers with balances above the aggregate loan limit for independent undergraduate students.

Now this is just the administration’s proposal, and it’s very unlikely to be adopted in this precise form by Congress, but what it signals is that powerful actors all across the political spectrum are catching on to how higher ed in general, and law schools in particular, have been engaged in egregious rent-seeking in the name of improving “access” and encouraging “public service.”

Or, in less technical terms:

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