A warning for parents with kids in college

Posted on February 19, 2012 by NTLAdmin
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The warning being to think long and hard before borrowing against a 401K, or cashing in other retirement savings, to pay for college for a child.  As described in this article, parents who have emptied retirement accounts to pay for a child’s college, or worse still, co-signed on student loans, are now finding themselves in trouble now that the child has graduated, can’t find a decent job, and can’t repay the parents or the lender.

And while the child might have thirty, forty, or even fifty years to regain some economic traction before retirement, and thus has time to make up for a slow start in the workplace, the parent might only have ten, perhaps fewer, years before retirement is a reality.  This isn’t enough time to recoup losses sustained from expensive college bills, and catching up on the retirement savings is hampered with a non-dischargeable student loan payment.  Even more so, now that most parents are scrambling to recoup some of the losses sustained in the recession which ruined even some of the most sound and conservative retirement plans.

My thoughts on this are simple: if my kids decide to attend an expensive college, one that will result in hefty student debt, I’ll strongly encourage (require) them to look elsewhere.  I’m happy to help pay the college bills, and I’m even happy to co-sign on a modest student loan for a really good school, but I fully intend to not be part of the cycle of ever-increasing tuition and ever-increasing student debt.  Jeez, I’ll be paying off my own student debt until my kids are my age right now (early middle age), so hopefully that will be a good example of what not to do.  There are good schools out there that don’t cost a fortune to attend, and that provide perfectly good educations, and those will be the schools that I push my children towards.

Many of us have seen the damage large student loans do to a recent graduate or a young family, and many of us have seen the damage large student loans do to a career.  It’s just not worth it, and I, for one, will be putting a stop to it in my family.  If it’s the last thing I do, my kids will attend college without incurring significant student debt, and without me incurring additional student debt.  It’s just not worth it.

Posted in Careers, Employment, Finances, General education, Higher Education Bubble, Scholarships, Student debt | Leave a comment

Comparing loan repayment programs

Posted on February 10, 2012 by NTLAdmin
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First up, this article about Yale’s Career Options Assistance Program (loan repayment for low-paid grads) being scaled down:

Faced with increased enrollment and rising loan costs, the Yale Law School is scaling back its loan forgiveness program.

The Career Options Assistance Program, which partially subsidizes tuition loan payments for Law School graduates should they enter relatively low-salary careers, will require a larger student contribution from members of the incoming and future classes than it currently does.

. . .

COAP is designed to encourage Law School alumni to pursue public service careers, though the program does not limit participation to specific career paths.

Under the previous policy, law school alumni who earn less than $60,000 in their postgraduation careers are eligible to have their loans payments fully subsidized by COAP, while those earning more than $60,000 are expected to contribute a quarter of their income above that baseline. The new policy sets the baseline salary lower, at $50,000, and expects participants to contribute varying percentages of their income toward loan payments, based on a sliding scale of income brackets. For alumni with adjusted incomes over $80,000, for instance, COAP expects a contribution of $6,750 in addition to 60 percent of the income exceeding $80,000.

. . .

Spending on COAP currently constitutes 3.5 percent of the Law School’s annual budget, at $3.5 million per year. The money comes from the Law School’s $961 million endowment — which allocates several hundred thousand dollars to the program — as well as general Law School funds.

That’s a nice program, and a model for what other law schools should be doing.   Sure, Yale has a large endowment, but many schools could find the funds for loan repayment programs if they bothered to consider it important.

Here’s my law school’s loan repayment plan, just for comparison:

You’ve got to be kidding.  We’re spending that money on vacations sabbaticals.

Most law schools have a similar lack of concern for their low-paid grads who end up in public service.

What struck me as particularly good about Yale’s program is that it covers every grad who takes a low-paid position, public service or not.  If a grad wants to take a low-paid job in a small firm somewhere, they’re covered too.  It’s as if Yale is guaranteeing that its grads will be alright financially for a decade after graduation, and standing by its education, not merely paying lip service to loan repayment programs by creating a token plan that virtually no students qualify for, but that can be used as publicity material to suck in new applicants each year.

If only every law school was required to have a substantial loan repayment program as part of its ABA accreditation.

Posted in ABA, Careers, Employment, Finances, Forgive Student Loan Debt to Stimulate the Economy, General education, Law school, Public Interest, Student debt | Leave a comment

Building upon yesterday’s post, and worrying SEO tactics…

Posted on February 9, 2012 by NTLAdmin
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My inbox was once again full of junk today, including the usual emails from people who claim to be working as “Search Engine Optimizers” (SEOs), a profession that is the result of the rise in popularity of social networks, and competition for placement on Google, and it’s essentially what’s clogging up the Internet with low-quality content and all those sites that link to other sites that link to other sites and so on.  SEOs spend their time trying to ensure that their clients’ websites are pushed higher up in the results of, well, Google, because nobody really uses anything else to search anymore.  And they spend their time on “viral” marketing, which is little more than stirring up interest in stuff that isn’t generally worthy of attention by utilizing social networking.  In order to do this, they try to put links to their clients’ sites on other sites, to make their clients look more popular/legitimate than they really are.  And they sometimes write/create content that makes sites look legitimate or more than mere collections of links.

I’m not specifically bashing Shpoonkle here, but it’s a prime example of publishing trash content just to make a site look legit as far as Google is concerned, pushing it up the results for no reason other than having lots of new content.  For example, on the Shpoonkle blog, the most recent post is the following:

TechPluto is a  Technology site that showcases web start ups by doing their critical  analysis and writing in-depth review, digging out utility services [link removed] and covering latest tech news and events from across the globe.

Check out “Shpoonkle’s review” [link removed] at TechPluto. . . . Also check out TechPluto’s Online Business Board, that keeps track of hottest online businesses in Tech Industry.

Junk content, and on obvious link exchange to boost site rankings that was written by TechPluto.  (In case you’re interested, TechPluto is linked to a marketing company called AQR8, which posts reviews on TechPluto for a fee.  It’s all paid marketing and social media trickery, not legitimate and spontaneous interest in Shpoonkle.  But hey, if Shpoonkle wants to toss me a few hundred bucks, I’d be happy to write an article about how great it is.  It would help pay for the upkeep on Nontradlaw.)

If this isn’t blatant enough, the secondmost recent post is a “guest” post from a jewellry appraiser, the third post is about “Fata Morgana” (“the name for a mirage associated with the enchantress Morgan Le Fay, of the King Arthur legend”, just in case you’re interested, but it has nothing to do with law and everything to do with a generating unique content for boosting Google rankings), and it’s all just a big old game to add content to try and fool Google – and real people like you and me – that something is a legitimate, trustworthy, popular endeavor that is widely-respected by other sites across the Internet.  When in fact, it isn’t.  Again, not singling out Shpoonkle, but it’s a prime example.  There are many others, but I happen to visit Shpoonkle once in a while, just to see how they’re getting on, so I can vouch for the fact that the Shpoonkle blog is full of worthless content just for the sake of making Google think that the site is fresh every day.

And freshness and content matters.  When I post a blog entry here, this site’s Google ranking jumps.  And when I don’t post an entry for a few days, the ranking falls.

But back to the main point.  I felt a little bad for highlighting Aldo Baker in a somewhat negative manner in my post yesterday, so I subsequently looked at his web personal site.  He’s a SEO, not a law student or student debt activist.  I foolishly originally thought that he was a concerned student debt activist who wanted me to show his good infographic.  His bio says the following:

My main focus revolves around Social Media and SEO. I consult for clients and help spread unique relevant content around the web. I love working with clients who get it and actually want to produce content that people will respond to.

Lately, I have been very interested in infographic marketing. It’s exciting to see a piece of your content going viral across the web on different social media outlets. Not to mention it’s a fantastic link bait campaign.

In this ever changing world of online marketing, it is important to stay ahead of the game.

And that’s fine.  It’s a job, it’s what he enjoys, and I have no problem with that.  And the infographic link he sent me was a good infographic – someone clearly spent time on that.

But here’s where the whole SEO thing gets a little sinister…

My concern yesterday was that this legitimate infographic was being used to sell some of the lowest-quality, highest-cost education available – degrees from for-profit online schools.  The infographic was using warnings about student debt to sell overpriced online degrees that will result in excessive student debt.  Weird.  Surely one would expect articles and infographics about how great online degrees are?  Or how cost-effective online education is?  Using your enemy to sell your product is all a little too Paula Deen/Novo Nordisk for me.

Here’s a sample of the emails I receive from SEOs:

Hi,

Let me take this opportunity to introduce myself, I’m [name removed] and as Search Engine Optimizer I manage & run a large selection of quality sites in different topics.

While working on one of my project sites I’ve found  nontradlaw.net [I doubt this] and I believe that with my help you can reach higher results in terms of search engines, Page Rank, visibility and traffic.

I’d really love to elaborate more about my proposal and if you’re interested please do not hesitate to contact me and I will happily send you the additional details.

This stuff usually ends up in my trashcan.  It’s an obvious form email that gets cold-sent to thousands of other potential clients.  But it’s concerning that SEOs are being used by for-profit colleges and online colleges to aggresively push their products, and to manipulate search engine results in order to sell junk degrees to unsuspecting students.

But far worse, I regularly get offers from SEOs to post their articles, which are generally “top” lists of something or other related to education, and the source is always – ALWAYS – a site that is peddling junk online degrees that would benefit from the traffic generated by being associated loosely with Nontradlaw.  Some openly suggest that Nontradlaw could be added to the list that will be circulated to other (online) college sites (an offer that I always refuse), or promoted on those sites, but the real reason is not that Nontradlaw is actually listworthy material, but rather they want me to spread their fake articles around and unwittingly act as a trusted conduit that will help push their online degree sites upwards on Google.

For example, this email from one SEO:

Hi Charles,

We would love to share with you an article that we just posted on our own blog! “10 Leaders Who Are Fighting for Student Loan Reform” (link removed) would be an interesting story for your readers to check out and discuss on your blog.

Either way, I hope you continue putting out great content through your blog. It has been a sincere pleasure to read.

Sounds legit, and there’s nothing I like more than anyone fighting for student loan reform.  But the site that is hosting that particular list is OnlineCollege.org, a clearing house for junk online degrees.  Looks legit on the surface, but it’s a classic example of low-quality, throwaway, but seemingly-compelling and important content used to promote/legitimize for-proft online education.  It’s advertising material dressed up as educational material, and it’s implying that people who are anti-”onlinecollegeandhugedebt” are endorsing “onlinecollegeandhugedebt”.  Alan Collinge, from studentloanjustice.org, surely can’t endorse OnlineCollege.org, right?  Or Kyle from Law School Transparency?  Yet they’re right there, on OnlineCollege.org.  Of course, most people can see through this marketing tactic, but there’s enough who can’t figure it out, and who will see that article as an endorsement of that particular online degree clearinghouse.  “Oh, look, these legitimate activists are mentioned in this article posted at this clearinghouse, so these online degree must be legit too…”

This bothers me.  I don’t particularly care about advertising, but I’m seeing a worrying trend of SEOs and other marketers deliberately targeting those people and organizations who are the polar opposite of what their clients are, and using those targets in materials and articles to make it look as if the targets are somehow endorsing the SEO’s clients.

And I was reeled in yesterday – to some extent – by even linking to the infographic.  It makes it appear like this site is collaborating, endorsing, and approving of the online degree site that hosts the infographic, which is not the case.  Infographic good, online colleges bad.  And I’ve seen a significant rise in emails recently from SEOs who want to use me (and I imagine many other opponents of costly online for-profit colleges) to become entangled with their sites online, and thus directly or indirectly endorse their goals.  I’d rather that Nontradlaw remains low-ranked but trustworthy, instead of highly-ranked but linked to anything that wishes to use Nontradlaw’s good name as a means to make online degrees look like they are worth spending even a dime on.  The cost of those links is way too high in terms of the damage it would do to the reputation this site has built up over the past thirteen years.

Here’s another one:

Hi Charles,

I recently discovered your blog, and I have become a frequent reader. We recently published an article “10 Professors Who Were Caught Dealing Drugs” that dovetails well with your audience. Perhaps you would be interested in sharing with them?

Here’s the link: [removed]
Thanks for the great content, and I hope the article I’ve linked primes your interest.

This one was from someone at OnlineColleges.net, another clearinghouse for rip-off online degrees.  On the surface, the article looks like something I’d be interested in – professors out of control, showing a hidden dark side of higher education.  But it’s a carefully-crafted article designed to attract those who are against rampant “onlinecollegeandhugedebt” and use them as tools to promote rampant “onlinecollegeandhugedebt”.  People would visit Nontradlaw, read that article, and click through to that clearinghouse, taking with them the idea that Nontradlaw is vouching for the quality of those degrees.

And another:

Hi Charles,

I work with Onlineuniversities.com, where we just published entitled, “15 Surprising Side Effects of Rising College Costs” Considering this overlap in subject matter with your blog, I thought perhaps you would be interested in sharing the article with your readers? If so, you can find the article here:
(link removed).
It has been a sincere pleasure to read your great content.

Yet another weak article/list sent to me by yet another for-profit degree clearinghouse to try and promote its services.  And it’s promoting junk online degrees by addressing the very things that make online degrees worthless, because this is the latest tactic of these marketers: by promoting their junk degrees along with feeble, throwaway articles that seemingly show concern for important higher education and student debt issues, it makes it look like their clients are the “good guys” and not part of the problem.

It’s almost non-stop, and every time I open my email, it’s literally filled with articles from SEOs, link exchangers, and other marketers who are looking to place their content on this site, include Nontradlaw in their content, use me to promote online degrees, and generally try and make online for-profit colleges look legitimate.  It’s easy to get lured in by offers of cross-promotion that might boost this site up the Google rankings, but I like to think that my readers are a little smarter than that.

The easy way to sift through the crap?  Just look where the information you’re reading is posted.  If it’s at a site that is anything to do with online colleges, online degrees, or online education, chances are you’re reading advertising material dressed up as legitimate articles, designed to promote online degrees and generate large profits for online colleges.

Or just remember that there are virtually no circumstances where clicking an “online degree finding tool” will result in your prospects in life being improved.

Posted in For-Profit, General education, Higher Education Bubble, Law school, Nothing to do with law, Online Education, Rip off, Student debt | Tagged , , , | Leave a comment

Sorting through email

Posted on February 8, 2012 by NTLAdmin
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A number of people emailed me things that are worth posting, but for whatever reason (business, laziness, etc.) I never got around to adding them to the site.

So, first up is a news release from New York Law School:

The New York Law School Law Review announces the publication of its latest issue, the Clinical Theory Workshop 25th Anniversary Conference. The 13 articles in this issue, by 24 authors, seek to answer two questions: What have clinical legal educators learned from the last 25 years of clinical scholarship and what should they work on next? The authors explore the elements of good lawyering, ways to help students learn those elements, and the pedagogical and other duties of law schools from a variety of perspectives. These and many more papers were presented at the Clinical Theory Workshop 25th Anniversary Conference held in October 2010 at New York Law School.

For those of you who have the time and inclination, this might be an interesting read.  Some of the articles seem, on their faces, decent enough: Clinicians, Practitioners and Scribes: Drafting Client Work Product in a Small Business Clinic by Robert Statchen; New Roles to Solve Old Problems: Lawyering for Ordinary People in Today’s Context by Martha Mansfield and Louise Trubek; Revision Quest: A Law School Guide to Designing Experiential Courses Involving Real Lawyering by Deborah Maranville, Mary Lynch, Susan Kay, Phyllis Goldfarb, and Russel Engler, and so on.  It’s worth noting that these reasonable articles are written by professors who are clinical professors and who have, in general, some decent practical experience under their belts.

And then there’s some articles that seem to demonstrate exactly what the disconnect is between law schools and real-world lawyering: Epistemology and Ethics in Relationship-Centered Legal Education and Practice by Susan Brooks and Robert Madden, for example.  Really?

How about before we start in on the epistemology in relationship-centered legal education, we start answering this question: “Why the hell can’t law schools teach more practical law?”  (Answer – because most law professors don’t know how to practice law, never having done it, but I don’t want to get into that now.)  But I guess accepting that simple truth would mean that the majority of authors of the articles in this law review would be out of jobs…

Point being, some of the articles look decent enough.  But the wider puzzle is this: if this group has been around for twenty-five years, looking at issues of clinical legal education, then why on earth have they made so little headway in pushing clinical legal education to the forefront?

Next up, an email from Alan Collinge at Studentloanjustice.org, pointing me to his extremely good article about the issues surrounding the loss (theft?) of consumer protections for student loans.  This article is a must-read, as is a letter to your Senator and Representative afterwards.  Take a look at the piece here.  Bankruptcy protection must be restored to student loans as soon as possible.  Good stuff.

Next, the good folk at Law School Transparency dropped me a quick email about the latest round of lawsuits filed against law schools.  As ever, LST is working hard to collaborate towards change, and readers of this blog should make sure that LST is a site that they regularly visit and pay attention to.

Last, Aldo Baker notified me of the latest infographic over at www.topcollegesonline.com, entitled “The Walking Debt“.  It’s a good infographic, but why on earth is it posted at a site that exists for the sole purpose of pushing people towards junk online degrees, which are by far the easiest way to rack up mountains of student debt?  I find it puzzling that a site very closely linked to what I (and many others) consider to be at best exceptionally expensive degrees, and at worst life-ruining scams from repeat offenders such as Phoenix, Full Sail, Capella, Kaplan, etc. is displaying info cautioning people about excessive student loans.  Or is that part of the marketing strategy (“we’re legitimate and trustworthy because we’re open about student loans, so you don’t need to worry about any of the for-profit colleges we’re directing you towards”), or maybe part of the legal defense strategy (“look, we warned these students that it’s expensive, but they clearly didn’t listen…”)  Who knows.

I regularly get propositions via email from numerous people for blog post exchanges and suchlike, but almost without exception, the blogs end up being nothing more than directories pushing people to online degree providers.  I’m sure that these sites get commissions from online colleges when they refer prospective students to the college sites, and I typically refuse to even respond to them.  I’m happy to have anyone use this site as a forum for their own blog posts, articles, opinions and whatever, provided they are not doing so merely to push traffic towards something that is damaging to any movement for student loan relief, tuition reduction, education reform etc. (i.e. no guest posts from any bloggers at sites that direct people to for-profit online education).  And please, if you have blog posts that are languishing elsewhere on the Internet, I’m happy to repost them here – just shoot me an email.  We’re all in this together, and if I can promote your site/movement, let me know.

Posted in Careers, Employment, Fairness For Struggling Students Act, Finances, For-Profit, Higher Education Bubble, Law professor, Law school, Law School Transparency, Online Education, Rip off, Student debt, Theory v. Practice | Leave a comment

Sallie Mae Watch – January 30, 2012

Posted on January 30, 2012 by NTLAdmin
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It seems that Sallie Mae could well have been copying the tactics of the subprime lenders, way back from 2006 onwards.  That is, making risky loans, hiding the risk from investors, and making money in the process.  (Is this new to anyone though?  I guess it is, because people still borrow from Sallie Mae, and people still attend for-profit colleges.)

This story, which is getting shamefully little coverage, provides a brief overview of a class action lawsuit against Sallie Mae which has been certified.  Here’s the gist of the story:

A federal judge has certified a securities fraud class action against Sallie Mae, the top student loan provider in the United States.

Lead plaintiff SLM Ventures accused SLM Corp., Sallie Mae’s corporate name, of telling investors it used strict underwriting standards for its loans, while weakening those standards by approving risky loans to students at for-profit schools.

U.S. District Judge William H. Pauley III laid out the allegations in a 19-page ruling.

“In 2006, Sallie Mae’s management decided to expand the company’s PEL [Private Education Loan] business. Between June 2006 and December 2007, Sallie Mae’s PEL portfolio more than doubled, growing from $7 billion to $15.8 billion. At the time, Sallie Mae publicly stated that it had applied strict underwriting standards to all PEL borrowers. However, SLM Ventures alleges that Sallie Mae actually relaxed its underwriting standards and loaned billions of dollars to borrowers with low credit scores and other high risk borrowers who attended part-time, correspondence, or for-profit schools.” (Citations omitted.)

Sallie Mae then moved as many problem loans as possible into forbearance to hide the true number of private loans that were delinquent or in default, in violation of Generally Accepted Accounting Principles and Securities and Exchange Commission regulations, the investors said.

They accuse Sallie Mae’s chairman of fudging the numbers to profit on a merger.

“In April 2007, Sallie Mae and its then-Chairman of the Board, Albert L. Lord (‘Lord’), negotiated to sell the company to a group of private equity investors (the ‘Flowers Transaction’). The strike price was set at $60 per share, and was contingent on Sallie Mae’s financial performance and outlook. If the proposed merger closed, Lord would receive a cash payment totaling $225 million representing the value of his stock options.

(Underlining added by me.)

The details of the SM lawsuit, including today’s class certification, can be found here, at the web site of Girard Gibbs LLP, lead counsel.

I’m not particularly surprised to hear that Sallie Mae was allegedly involved in this kind of behavior (and I’m almost certain that there is no need for the use of the word “allegedly”, based on SM’s past performance).  I’m not surprised, either, that for-profit schools are involved too, and that for-profit schools are once again revealed as nothing more than a vehicle for siphoning money from the government and individuals, straight into the coffers of Sallie Mae’s investors.

Updates to follow as information arrives…

Posted in For-Profit, General education, Higher Education Bubble, Sallie Mae, Student debt | Leave a comment

Good news at last?

Posted on January 28, 2012 by NTLAdmin
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I’ll be the first to admit that this blog does tend to dwell on the negative aspects of higher education.  (Well, after all, those are the parts that need to change, and thus deserve our attention).  But time for some good news.  Half good, at least.

Obama did bring higher education reform, albeit rather weak, to the front and center during the State of the Union speech this week.  The policies he set forth essentially put higher education on notice that his administration will not sit back and let tuition costs continue to rise, and will not allow higher education to become a luxury.  Fine goals indeed.

And for anyone still unsure about the upcoming election in November, this short piece in Forbes spells it out neatly with the following quote:

The question at this point isn’t whether or not Republicans are vulnerable [on issues of higher education]; the question is: “When will young voters start to take notice?”

I lean to the left politically, but given a strong, moderate, competent, and uniting conservative candidate, and not the increasingly right-wing, religious, backward, and inappropriate candidates the Republicans have thrown into the mix this year, I’d be tempted to vote for the right, particularly if such a candidate supported some solid and sensible economic reforms and dropped some of the more ridiculous social and fiscal positions held by those seeking attention in the Republican party these days.  Obama has his faults.  Fewer than most, admittedly, but there are some flaws.

But his flaws do not include ignoring the massive issues surrounding higher education, which is a far bigger deal than most politicians currently understand.  And even if his stated policies are nothing more than an attempt to win the youth vote, it’s a step in the right direction.  The Republican candidates have no viable position on these issues, which is essentially the same as favoring the status quo – higher education becoming increasingly profit-oriented, and rapidly becoming Big Education.  They just don’t see the younger voters as important, they don’t get the issues that younger voters are concerned about, and if either Romney or Gingrich is elected, you can bet that college will continue to get more and more expensive, more and more out-of-touch, and less and less beneficial to the average student.

In fact, it’s well documented that for-profit education as a whole is against the Obama administration’s proposed and already-enacted reforms, which reduce government money flowing to these institutions, thus reducing the amount of government money flowing into the pockets of investors.  If this is still unclear to any readers, just take a quick look at this article from the New York Times, detailing just one of many instances of money coming from a for-profit college and into the Romney campaign, and the subsequent endorsement of this particular college by Romney as a shining example of how great for-profit education is.  Do we really want to elect a president who has been bought by the for-profit education industry?  Do people realize how damaging this would be for legitimate higher education?

In my opinion, it is extraordinarily short-sighted to allow our system of higher education to continue rotting, both for economic and social reasons.  So right now, if you’re truly concerned about higher education, there is nobody who you should be voting for except Obama.

Moving to a slightly different point, I noted one huge omission from Obama’s State of the Union speech: assistance for recent grads (and even assistance for grads over the past decade, many of whom are still struggling with student loans.)  Half a generation of graduates – from at least 2000 to 2010, probably from the late-1990s and through today, are hugely burdened by student debt that they were encouraged to incur, told was “good debt”, and led to believe was the route to prosperity.  And it turns out that it wasn’t.  And that’s half a generation who is financially lost at this point to a greater degree than prior generations.  A little help would go a long way to ensuring that these graduates aren’t left out, and aren’t left to struggle while those before and those after enjoy the fruits of reasonably-priced higher education.

What could be done to help recent grads?  A reduction in interest rates would help to lower the payments.  How about earlier forgiveness?  Maybe 15 years?  Who knows.  It’s all well and good to worry about how the high costs of higher education will affect graduates of the future, but let’s not forget those recent grads who are already suffering and whose futures are already damaged.  If ever there was a mess that could use a little triage to sort out the victims in terms of need, this is it.  But as it stands, some of the sickest graduates are ignored, while those who aren’t even ill yet are promised future benefits.

Posted in Employment, Finances, General education, Higher Education Bubble, Student debt | Leave a comment

Sallie Mae Watch – January 19, 2012

Posted on January 19, 2012 by NTLAdmin
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As you may have heard, Sallie Mae released its 2011 Q4 financial results yesterday.  I’ve browsed through the content, and it’s generally business as usual.  A few staggering facts to show how big the student debt problem continues to be:

  • SM is hogging about 50% of the private student lending market, and expects to grow in the future.
  • Net income was $511 million.
  • SM originated $457 million in new loans in Q4, and $2.7 billion for the entire year.
  • SM expects to originate 18% more private loans in 2012, a total of $3.2 billion.

Those figures show a hunger for private student loans that, despite all efforts to the contrary, is growing fast.

Why?  Well, because it can.  Colleges continue to increase tuition without justification, and for-profit colleges continue to suck in the gullible and foolish.  And SM, to be honest, is merely reacting to market conditions.

Efforts to push for reduced college costs are key to reducing the student loan problem.  Until college gets with the program and stops fleecing students and their parents, the problem will perpetuate; colleges will continue to develop empires rather than minds.

Some comments in the conference call were interesting.  Albert Lord, the CEO, said the following:

Let me just wrap up with a final word on the increased media attention that private student lending is getting. And I often see the term student loan bubble . . . .  I suppose the term student loan bubble is a headline grabber.  I do not see it on the private side of student lending.

And he’s absolutely correct.  There is no bubble, in the traditional sense.  There’s no instability to the business.  Nothing’s going to collapse.  If borrowers find out that their expensive degrees are worthless, if they find that they can’t get jobs that cover the loan payments, then SM won’t be the loser.  The borrowers will lose, the taxpayer will lose, but SM, with its bankruptcy-proof loans, will rake in the cash.  And it’ll rake in additional cash from the collections process.  As far as SM goes, this is bubble-proof.

The following question was asked by one analyst:

There’s an increasing likelihood that the Republicans have a real chance to win the election this fall, and the Republicans have always been much more favorable to the student lenders than the Democrats. They always oppose the expansion of the Federal Direct Program and supported . . . a repeal of the student lending takeover. Is there [any candidate] talking about . . . opening up the market . . . and repealing the nationalization of the private student loan sector?

The Republicans have at least one voter, I guess, judging from that.  The question can be summed up as, “Do you know if the Republicans will deregulate the market and remove consumer protections?”

And the answer was telling, again from Lord:

I have not heard anybody talk about student loans yet, on either side of the campaign and certainly, within among the Republican candidates.

This is a huge problem.  Huge.  Because if someone at the very core of the student loan industry has not heard a damn thing about any student loan reforms – bankruptcy reform, lending restrictions, nothing – from any politicians, then it’s clear that everyone’s protests are falling on deaf ears in Washington.  So for all the efforts of OWS and other activist groups, there’s no insider information leaking from politicians that anything legitimate is in the works to change the student lending status quo.  You would have thought that there might be a few politicians who are making sure student lending reform is high on the agenda, but it appears that it’s still a fringe issue.

Posted in Finances, For-Profit, Sallie Mae, Student debt | Leave a comment

Shpoonkle still around?

Posted on January 17, 2012 by NTLAdmin
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Evidently, yes it is.  The latest news release is that Shpoonkle is offering a large library of free legal forms for the public to download.  Take a look here.

After a quick browse, however, it’s evident that this library is at best irrelevant, and at worst actually harmful.  It seems to be a a collection of state and (mainly) federal forms that is duplicative of what’s already available on the Internet for free.  There is no curation of these forms at Shpoonkle, and there’s very little point in merely linking to every single form out there with no reason other than trying to create a large resource for marketing purposes.  It’s as if an intern or two has just bulk-downloaded every form they could find, and posted them to the web site with about as much thought as it took me to write this sentence.

The danger comes in when downloading a legal form from anywhere but the official source.  It is extraordinarily bad, er, ‘form’ to use anything but the most recent version from the official source, and downloading forms from a third party like Shpoonkle rather than from the offical web site (e.g. IRS, Social Security etc.) will lead to people submitting the wrong information on the wrong form to the wrong address, and missing all the helpful information that the original web sites provide to aid the consumer in filling out the forms in the first place.

I just can’t imagine any circumstances where someone would actually need to go to a third party for these important forms.  From Shpoonkle’s press release:

The benefit to the newest Shpoonkle feature is to provide a centralized hub for State and Federal forms to everyone for free. People needing these forms don’t have to pay for them anymore, or scour the internet to find the correct one. Then when they review the form, they choose to either find an affordable attorney on the site to assist them, or do it themselves. Shpoonkle is providing a one stop center for all consumers’ legal needs.

It seems it’s a feature designed to draw in unsuspecting customers.

First of all, these state and federal forms are free to begin with – only a true fool would ever consider paying for them, and they are so clearly free online that I’m not sure where Shpoonkle came up with the idea that anyone actually ever pays for them, even if they are offered for sale side by side with the sites that offer them for free.

Second, these forms are easily obtained from the obvious sources; tax forms from the IRS, etc.  They aren’t difficult to find.  For example, if someone needs an immigration form, they generally go to the US Bureau of Citizenship and Immigration Services – it’s right up at the top of Google, along with the following text: “Official U.S. government site. Download Forms FREE. Learn how to file. Get information on citizenship, green cards, work visas, E-Verify and more.”  It’s not like it’s a puzzle to find these things.  I mean, tax forms from the IRS, immigration from USCIS, etc.  Few, if any, people wouldn’t know where to look.

Third, when obtained from the official sources, they are usually accompanied by all manner of helpful information, such as explanations of the law, the agency, the processes behind getting whatever it is you want done, done.  Names, email addresses, and phone numbers of people at the agency who can help.  Shpoonkle isolating these forms from their original context creates confusion rather than clarity by ensuring that the consumer doesn’t get to see all of this helpful info, and doesn’t get to understand how to fill in the forms or who to ask.  But I guess then people figure they’ll need a lawyer, and they’re already at the Shpoonkle site…you can join the dots.

What am I missing?

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Please read this report…

Posted on January 17, 2012 by NTLAdmin
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…from Law School Transparency, available here.  Bottom line: law schools, across the board, are still touting the benefits of a legal education, yet hiding the true lack of opportunities.  Depressing stuff.

Posted in Careers, Employment, Law school, Law School Transparency, Rip off | Leave a comment

Sallie Mae Watch – January 11, 2012

Posted on January 11, 2012 by NTLAdmin
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So our friends at Sallie Mae are bragging about their Chief Security Officer, Jerry Archer, and how he recently won an award recognizing “information security executives for outstanding achievements in risk management, data asset protection, compliance, privacy and network security”.

According to the press release, “the award salutes Sallie Mae’s information security team’s accomplishments ensuring millions of customers can rely on the company’s systems which transact billions of dollars to save and pay for college securely and smoothly.”

Odd.  Because Sallie Mae owns Upromise – yes, that “college savings” scheme that allows people to literally save pennies towards college in return for shopping at certain retailers and buying certain products.  (That’s perhaps slightly unfair – I know of one family that saved over over a whole dollar after using this program for god knows how many years.)

And Upromise recently settled charges with the Federal Trade Commission in relation to its gross failings in customer information security.  From the FTC news release (which is notably absent from Sallie Mae’s own web site):

A membership reward service aimed at consumers trying to save money for college has agreed to settle FTC charges and will be barred from its allegedly deceptive practice of using a web-browser toolbar to collect consumers’ personal information without adequately disclosing the extent of the information it is collecting.

The settlement with Upromise Inc. is part of the FTC’s ongoing efforts to make sure that companies live up to the promises they make about privacy and data security. The settlement order will require Upromise to clearly disclose its data collection practices and obtain consumers’ consent before installing or re-enabling any such toolbar products, and to notify consumers how to uninstall the toolbars already on their computers. The settlement also will bar misrepresentations about the extent to which the company maintains the privacy and security of consumers’ personal information, and require the company to establish a comprehensive information security program and to obtain biennial independent security assessments for the next 20 years.

Twenty years of independent security assessments?  But I thought Sallie Mae was a leader when it came to information security.  The FTC release continues:

In its complaint against Upromise, the FTC alleged that to allow consumers to identify and select merchants that would provide rebates, Upromise’s website offered a “TurboSaver Toolbar” download that would highlight partner merchants in consumers’ search results. When downloading the toolbar, consumers saw a message that encouraged them to enable the “Personalized Offers” feature of the Toolbar, which Upromise allegedly claimed would collect information about the websites they visited “to provide college savings opportunities tailored to you.”

The FTC alleges the Toolbar with the “Personalized Offers” feature enabled collected and transmitted, in clear text, the names of all websites consumers visited and which links they clicked on, as well as information they entered into some webpages, such as search terms, user names, and passwords. In some cases, the information collected included credit card and financial account numbers, user names and passwords used to access secured websites, security codes and expiration dates, and any Social Security numbers consumers entered into the webpages. The Toolbar transmitted consumers’ information without encryption.

According to the FTC, while Upromise’s toolbar was collecting and transmitting the data, its privacy statement claimed, “We understand the need for our customers’ personal information to remain secure and private and have implemented policies and procedures designed to safeguard your information.”  Upromise also said it was “proud of the innovations we have made to protect your data and personal identity,” and that “Upromise automatically encrypts your sensitive information in transit from your computer to ours.”

The Upromise TurboSaver Privacy Statement allegedly stated that the Toolbar would collect and transmit information about websites consumers visited, and that “infrequently” the collection might “inadvertently” collect a “name, address, email address or similar information,” but that any personally identifying information would be removed before the data was transmitted.

What, is Sallie Mae still living in the 1990s, when credit card and other personal data was sent unencrypted over the Internet and when vendors thought that tracking customers online was acceptable?  That just about says it all.

Sallie Mae, including all of its components, seems rotten to the core.  It’s student loan products are horrific in terms of the damage they will do to an unsuspecting student’s future.  The bank accounts linked to its student loans were exposed by this web site as containing set-off provisions that would have allowed Sallie Mae to take its payments directly from the unsuspecting students’ accounts under certain circumstances, a policy which was changed only after it was made public.  And now Upromise is exposed as being less-than-healthy.  The modus operandi of Sallie Mae appears to be “let’s start by doing stuff that is illegal, highly-profitable, just plain wrong and/or utterly contrary to the welfare of our customers, and then if/when we get caught, we’ll back off a little.”

Taking a step back in time, let’s look at this pattern of behavior.  With its Sallie Mae bank accounts recently, the terms and conditions expressly allowed Sallie Mae to reach its hand into the accounts to take money for student loans if the student loans were in default.  Any competent lawyer reviewing the terms and conditions of the bank accounts would have seen this as a huge problem.  Sallie Mae’s legal team and business team would have read those terms and conditions many times during the development of its bank account product, tweaking them here and there, before releasing it to the customers.  So it follows that Sallie Mae knew that the set-off provisions in the terms and conditions were there, and they knew the effect that it would have.  It’s just too big of a mistake to claim that it was unintentional.  (See my earlier posts for more detailed info about that whole episode).  In short, Sallie Mae was deliberately trying to get one over on the customer.

And the same thing seems to have happened with its Upromise tracking.  No competent Internet development team would have accidentally allowed all of this data to be tracked, transmitted (unencrypted!), and collected.  It is something so obvious that it can only have been done deliberately.

And this is the standard behavior of a company that is asking you to trust it with what could be tens of thousands of dollars (and over six figures in some cases?) of student loans?  If they are actively looking to bend every rule to the very limit, sometimes beyond the limit, they will do the same to you when you borrow from them – you’ll just be another customer to squeeze to the boundaries of legality in the name of making money for its shareholders.  Why do business with a company that behaves in this manner?

I can’t urge readers strongly enough to shop elsewhere for private student loan products, along with loyalty programs, bank accounts, and whatever other products Sallie Mae might offer for as long as Sallie Mae treats its customers like dupes, and actively tries to sneak harmful ingredients into its products, hoping that nobody will notice.  Sallie Mae is after one thing – your money – and it looks as if it will stop at nothing to take it from you.

Posted in Finances, General education, Rip off, Sallie Mae, Uncategorized | Tagged , , , , , , | Leave a comment