by Dish Staff
In a long and compelling article, Paul Campos presents the for-profit Florida Coastal School of Law as a microcosm of the problems afflicting higher education in America:
Florida Coastal is one of three law schools owned by the InfiLaw System, a corporate entity created in 2004 by Sterling Partners, a Chicago-based private-equity firm. InfiLaw purchased Florida Coastal in 2004, and then established Arizona Summit Law School (originally known as Phoenix School of Law) in 2005 and Charlotte School of Law in 2006.
These investments were made around the same time that a set of changes in federal loan programs for financing graduate and professional education made for-profit law schools tempting opportunities. Perhaps the most important such change was an extension, in 2006, of the Federal Direct PLUS Loan program, which allowed any graduate student admitted to an accredited program to borrow the full cost of attendance – tuition plus living expenses, less any other aid – directly from the federal government. The most striking feature of the Direct PLUS Loan program is that it limits neither the amount that a school can charge for attendance nor the amount that can be borrowed in federal loans. … This is, for a private-equity firm, a remarkably attractive arrangement: the investors get their money up front, in the form of the tuition paid for by student loans. Meanwhile, any subsequent default on those loans is somebody else’s problem – in this case, the federal government’s.
He adds, “From the perspective of graduates who can’t pay back their loans, however, this dream is very much a nightmare”:
How much debt do graduates of the three InfiLaw schools incur? The numbers are startling. According to data from the schools themselves, more than 90 percent of the 1,191 students who graduated from InfiLaw schools in 2013 carried educational debt, with a median amount, by my calculation, of approximately $204,000, when accounting for interest accrued within six months of graduation – meaning that a single year’s graduating class from these three schools was likely carrying about a quarter of a billion dollars of high-interest, non-dischargeable, taxpayer-backed debt.
And what sort of employment outcomes are these staggering debt totals producing? According to mandatory reports that the schools filed with the ABA, of those 1,191 InfiLaw graduates, 270 – nearly one-quarter – were unemployed in February of this year, nine months after graduation. And even this figure is, as a practical matter, an understatement: approximately one in eight of their putatively employed graduates were in temporary jobs created by the schools and usually funded by tuition from current students.