College Cost Reduction and Access Act, Part 3

On September 27, 2007, President Bush signed the College Cost Reduction and Access Act into law. I previously blogged about this very significant piece of legislation here and here. Several additional points come to mind about this legislation, so I am setting them out here.

First, the act does seem to address the problem of spiraling higher education costs in a fairly head-on manner. I should note that as Kiplinger's Personal Magazine reported in an article on 9/28/07, the act is being funded, at least in part, by reductions in federal subsidies to student loan companies. So that puts some of the bill sponsors' statements about this being "no-cost" legislation in better (and somewhat more accurate) perspective. (See my previous posts for more regarding that point.)

Second, while I think this act is a welcome development, it is worth pointing out that being in favor of education is sort of like being in favor of Mom and apple pie. People generally are not against education per se. So that explains much about the bill: popular subject + big problem = grand legislative solution. That's not a criticism; it's just an observation. Hopefully the impact of this new law will be positive and it will help many in need of student debt assistance. An Associated Press article that ran nationwide on 9/30/07 highlights the problem quite well.

Third, as astonishing as it may seem to people outside academia, tuition costs at most universities do not cover the cost of education. Does that help explain the rapidly rising cost of higher education in recent years? I think in large part it does. True, state colleges and universities receive state subsidies--but in many cases those subsidies have been reduced in recent years. Also, both private and public universities look to private donors for donations to build up their endowments, and those monies are used to fund school programs. And, of course, colleges and universities also obtain state and federal grant money for many of their programs.

But the fact remains that tuition increases are sometimes hard to resist. For example, what happens when a school has little endowment--or even rich endowments but still needs more capital? Neither situation is uncommon. If students are willing to pay more, and if the school is able to charge more (many states limit or cap public institution tuition rates by statute), then there is strong temptation for schools to raise tuition rates or tack on special fees. And it's a really tough choice, I think, because the students pay either way: either schools raise tuition, and students bear the brunt of it, or schools do not, and therefore cannot fund many much-needed educational programs. To give just one example, higher educational literature puts a great deal of focus on the importance of "active" learning (as opposed to passive lectures in big halls)--but active learning is often more expensive. So sometimes the choice might boil down to providing better and more costly education versus controlling costs at the expense of educational quality. Again, either way, it's the students who pay.

I fully realize, of course, that more money does not in all cases equal better education. Yet sometimes it does. And as schools offer more innovative programs like clinics and externships, focus on reducing faculty-student ratios, and invest in technology to make the classroom more interactive, someone has to foot the bill. The College Cost Reduction and Access Act hopefully means that students will foot less of it over time. But if it does not completely solve the problem--and I don't think it will--then we are back to the question of who pays. If rich donors come forth voluntarily, that's great, but there will be some institutions left out in the cold. If we decide to federally subsidize higher education that might be great too, but it also likely would be fraught with problems.

Like any good (bad?) law professor, I am doing a far better job of posing questions and framing issues than I am of offering answers. For me, at least right now, the answers are unclear. What is clear, however, is that in today's information economy, education is of paramount importance for the nation's economic well-being. Reducing the debt burden of students is an investment worth making.

PS: Education is a service, and I blogged about the rapidly rising cost of services last year in two posts on the subject of Baumol's Cost Disease (here and here). Those discussions are relevant to this topic too for those who are interested. The gist of Baumol's Cost Disease is that the cost of services often rises faster than the overall rate of inflation, because while we can automate many processes or make them more efficient--and thus hold the price (and rate of inflation) down--it's harder to automate certain services like teaching. Which from a purely self-interested point of view is not necessarily a bad thing.

"Must Sue TV"

Today's post is about the blog That's What She Said, on which blogger and attorney Julie Elgar discusses legal/HR issues raised by episodes of the US TV show The Office. Specifically, Elgar assigns a litigation value to various actions that occur on the show. I blogged about her blog briefly in a previous post.

Tonight (9/27/07) was the season premiere, which means that tomorrow morning (Friday) Elgar will post a blog entry about the episode. It's very interesting to see the show dissected for legal liability purposes. And the truth is that there are a lot of idiot bosses out there, so it's not a hypothetical exercise. One boss I know ordered his employees not to conjugate in the hallways. Seriously. In the same office, an internal office memo from the boss explained that security was being improved at the front door by installing a "security intercom buzzard." Again, no joke. Dilbert bosses are alive and well. So the idea of treating the scenarios on The Office as if they were real is a legitimate exercise. And fun, which is the most important thing.

I have added That's What She Said to my blogroll for those who are interested in checking it out on a regular basis.

Law Firm Salary Distributions, Part 2

The Wall Street Journal's Law Blog had a good post today entitled The Dark Side of the Legal Job Market. It concerns law firm salaries and the disparity between the top of the class and the rest of the class--and also between top schools and regional schools. The gist is that the top grads get great salaries, but the rest don't--and that when this is combined with mounting student debt loads, it's a structural tension that will have to be resolved in one way or another. In other words, the message is that things can't go on as they are now, and that changes may be substantial.

I blogged about law grad salary disparities in another recent post. As I discussed in that post, these figures have interesting implications for the future of law schools beyond mere graduate salary distributions.

When reading the WSJ Law Blog post above, bear in mind that it blends two points that are actually distinct:

1. Grads of top law schools tend to get more of the "Big Law" (read: Big Money) jobs.

2. Top grads at any law school tend to get more Big Law jobs than their classmates with lower class rank.

In other words, if you go to a national school, you have improved your odds of landing the big paycheck, but you have not guaranteed it. Conversely, if you go to a regional school, fewer people from your school will land these big jobs. But some will. These are obvious points, perhaps, but I think they are worth making, since the WSJ article jumps between the two without distinguishing them.

The Pros and Cons of Typing Exams

Over at CALI's Pre-Law Blog, Austin Groothius has a post you should read, if for no other reason than the title. His post discusses my recent comments on another student blog post at The Legal Scoop entitled "Typing Your Way to an 'A.' " I have a few more thoughts on both the Legal Scoop post and Pre-Law Blog post, which I set forth here.

First, here's what I said in my recent post:

[The Legal Scoop's recent post, "Typing Your Way to an 'A,' "] discusses the importance of typing to law school success. I'd add that a long exam answer is no guarantee of a good answer if you do not know what you are doing, but it may help avoid a complete meltdown if you can at least randomly hit important points. If you know what you are doing, however, being able to flesh out your answer in great detail certainly does help.

Comment #1:

What Pre-Law Blog Says: Groothius agrees with the Legal Scoop post, and says that "arguing that a law student should even consider hand-writing an exam over typing when typing is an option is a silly argument unless that individual student is a poor typer. . . . [S]ubconciously, professors prefer typed exams to handwritten."

What I Think: When text is neat and easy to read (whether hand written or typed), that does ease the professor's burden. And it's also perhaps true that text in print looks "smarter" or more professional than handwritten text, which I suppose helps on some level. By way of analogy, I will say that I always think my law review articles look a lot smarter in their final, formatted form than they do in ordinary MS Word format or on Lexis or Westlaw. So in that sense, I agree with Groothius.

Yet in my experience, some people write better by hand than by typing. And by "write," I really mean "effectively present their thoughts." Are you the kind of person who processes what you think better on paper, or on a computer screen? That's an important question to ask yourself. Try taking some sample exams by computer and others by hand writing your answers. Does one feel more natural or comfortable to you? If one way seems clearly better to you, then use that approach.

I tell my students that they should take exams however they are most comfortable doing it--either writing or typing. As much as I like the legibility of typed exams, that should not trump the important considerations of comfort and effectiveness of presentation and organization of your answers.

It's also worth pointing out that in the last several semesters, grades for people who have typed their exams in my (anonymously graded) classes have been virtually identical to grades for people who have hand written their exams. The point, I suppose, is that typing is not a guaranteed way to a better grade.

Comment #2:

What Pre-Law Blog Says: Groothius suggests that if you are a bad typist, then you should consider taking a typing course of some sort.

What I Think: I absolutely agree. Even if you hand write your exams in law school, some day you hope to practice law or do something else in the professional world. Which will entail typing. And the faster you are, the better off you are.

College Cost Reduction and Access Act, Part 2

Last week I posted about the College Cost Reduction and Access Act (my previous post is available here). In that post I referred to a "soon-to-be-available article" by Professor Philip Schrag of the Georgetown University Law Center that would give a very good, technical analysis of the act. He has just posted his article online here. I recommend it for anyone wanting to understand this act better. Another summary of the act, by the National Association of Student Financial Administrators, is available online here.

A Few Law Student Blogs

The new law school academic year has been in swing for several weeks now, and that means (at least in my own estimation) that it is time to report on law student blogs.

Law student blogs are a double-edged sword. On the one hand, they are great fun, and can offer wonderful insight into the modern student mind. I just finished writing a law review article that centers on the subject of law professor "fade" or obsolesence, and a large part of that fade is due to disconnects (often generational, but not always) between profs and students. (Watch for a separate post about my article soon.) So student blogs are great, in that they shine light into the gap between students and profs.

But student blogs are also problematic. First, it's always dangerous to reason from the specific (a student blog) to the general (all students)--although perhaps less dangerous than not seeking any insight into the student mind. Second, blogs are like lawyers: there are too many of them, but never enough good ones. Student blogs are no exception (and neither are law prof blogs, I suppose). Too many student blogs end up being either exercises in venting or posturing, or blogs with no posts.

But there are some gems. I always enjoy reading Shelley's Case, and Shelley has reciprocated with some of the best comments on my blog. CALI's Pre-Law Blog does a good job of providing student-oriented advice. The Frugal Law Student has one of the best schticks on the web, in my opinion--the blog is basically about ways Mr. Frugal Law Student is trying to "mitigate [his] crippling law school debt" by doing things like freezing his credit cards in ice. One post concerns how to save money by not washing your clothes. These days the blog is visually very slick, but I miss the old look: it used to look like a preformatted blog, but with a little graph at the top showing his current negative net worth. The whole idea of a prefab blog design fit pretty well with the idea of a frugal law student. The new format looks like he paid someone (which he says he didn't), or spent time designing his blog that would have been better spent freezing his money. But you can't stop progress, I suppose.

There are a few others worth mentioning, including these:

T Sinister. T Sinister (a left-handed fellow named Trevor) is a student at Harvard Law School, and his posts are usually quite good. He strives for funny, and often gets there, but sometimes he is serious too, perhaps somewhat by accident. A good recent post is "What I Wish I Had Known About Law School At The Start of My 1L Year." It's excellent advice.

Luis Villa's Blog. Not exactly the most original name for a blog, but he gets points for truth in adverstising, I suppose. He has a very good recent post about blogging and how to deal with it when interviewing for law jobs.

The Legal Scoop. There's a bit of everything here, as one might expect from a group blog. But that's a good thing. A good recent post is "Typing Your Way to an 'A,' " which discusses the importance of typing to law school success. I'd add that a long exam answer is no guarantee of a good answer if you do not know what you are doing, but it may help avoid a complete meltdown if you can at least randomly hit important points. If you know what you are doing, however, being able to flesh out your answer in great detail certainly does help.

Some new blogs are bound to crop up as the school year progresses, and I will try to keep an eye out for them.

College Cost Reduction and Access Act

Last week, Congress passed the College Cost Reduction and Access Act, which President Bush has indicated he will sign. It has been hailed by the House of Representative's Education and Labor Committee as "the single largest investment in higher education since the GI Bill." Interestingly, a separate press release from that committee explains that this "investment" actually comes "at no new cost to taxpayers." A cynical soul might point out that this is not so much an "investment" as is it a "cost reallocation," but I suppose the larger (and more important) question is whether the act will be beneficial.

As with much legislation passed by Congress, the act is long and contains numerous provisions. Text of the full bill is available here (click on "Text of Legislation," then choose option #6--the version "Enrolled as Agreed to or Passed by Both House and Senate"). For purposes of this post, I will focus on two provisions that might affect law students and recent law graduates.

Section 203: A High Debt/Low Income Provision

Section 203 of the act would limit loan repayments to 15% of "discretionary income," as that term is defined in the act. Without getting into a great deal of detail or math, the point is that monthly payments on student loans, which by the end of law school can rival a mortgage, will be capped, with the cap level depending in large part on the loan holder's discretionary income. So if you want (or have) to take a lower paying job, then your loan repayments cannot eat up all of your income.

On the one hand, this means that payment schedules might be stretched out for a long, long time--just like if you were to make the minimum payment on existing credit card debt. On the other hand, at least it helps manage cash flow. And on the third hand (there's no limit to the number of hands when discussing legal issues), any remaining principle is forgiven after 25 years.

That third hand provision is astounding, in a good way. I wonder exactly on whom such costs will fall, and how that jibes with the Edlabor Committee's claim that the legislation imposes no new costs on taxpayers. It certainly imposes a cost on somebody. But as worded, this section looks like it will operate as both a protector of loan recipients' cash flows/discretionary income, and also as a loan reduction provision.

Section 401: Accelerated Debt Forgiveness for People in "Public Service Jobs"

Section 401 allows people who intend to work for 10 years or more in a "public service" job to obtain debt forgiveness after 10 years, instead of 25. For someone who has funded expensive college and law school educations with student loans, that is an enormous write-off. There are of course technical requirements and limitations, which I do not want to go into here. But it is worth setting forth the definition of "public service job" in full. It is quite broad.

PUBLIC SERVICE JOB- The term `public service job' means--

(i) a full-time job in emergency management, government, military service, public safety, law enforcement, public health, public education (including early childhood education), social work in a public child or family service agency, public interest law services (including prosecution or public defense or legal advocacy in low-income communities at a nonprofit organization), public child care, public service for individuals with disabilities, public service for the elderly, public library sciences, school-based library sciences and other school-based services, or at an organization that is described in section 501(c)(3) of the Internal Revenue Code of 1986 and exempt from taxation under section 501(a) of such Code; or

(ii) teaching as a full-time faculty member at a Tribal College or University as defined in section 316(b) and other faculty teaching in high-needs areas, as determined by the Secretary.

So clearly, a lot of jobs, including jobs in the public interest legal sector, are covered. There are many law schools in the U.S., including my school, that have started offering Loan Repayment Assistance Programs, or LRAPs, which are intended to help graduates who pursue low-paying public interest sector jobs. These programs should stay in place (at least I hope they do). And perhaps the College Cost Reduction and Access Act might be best viewed as a great big federal LRAP program--one that is not limited to law graduates. Which is a good thing.

Of course, being a professor of Administrative Law, I will be very interested to see the regulations that are promulgated pursuant to this statute, and exactly how the act's provisions play out at the regulatory level. As any lawyer or law student knows, the devil is in the details.


NOTE: For more details concerning the act, I refer you to a soon-to-be-available article by Professor Philip Schrag of the Georgetown University Law Center. Professor Schrag currently serves as Vice-Chair of the Committee on Government Relations and Student Financial Aid, which is part of ABA's Section of Legal Education and Admission to the Bar. He has been very involved in this area, and he has drafted an excellent technical analysis of the act, which will be posted online at the Social Science Research Network (SSRN) and also will be published in the Hofstra Law Review in the fall of 2007. (I have an advance copy that he has requested not be made available online, and it's very good.)

ADDITIONAL NOTE, SEPT. 18, 2007: Since the original date of this post, Professor Schrag has posted his article online here.