Wednesday, November 11, 2009

ABA is Actually Doing Something! Too Little, Too Late!

I stole this from ATL, but I think I have to address it... and I'd like to think I have different readers. Apparently, the ABA is actually lobbying the Obama Administration for recent grads. What does this relief entail? The ABA is hoping that Obama will convert private loans to federally backed loans. Why? Because federal loans can be deferred for up to 3 years. I guess the ABA thinks that these recent jobless grads will be settled into their high paying jobs in 3 years. Yah right! We all know by now that the market is saturated beyond to belief and will continue to be such until schools are closed and people stop flocking to law schools. Besides, what isn't mentioned is that a deferral isn't that helpful. While you defer paying your loans, the interest accrues and the principle ends up being larger than it was when you started. I know someone that deferred his loans to pay off other debts for three years. A 50K loan ballooned to a 75K loan in those three years. Is that the answer?

I think that answer is to both forgive interest on loans for the period that law students are without work AND tie payments to income. If you can only find a job for $45K, then a payment of $150 is probably all that you can afford.

Although, I would like to give credit to the ABA for looking out for lawyers (for once), I am prohibited from doing so because I fear they haven't made much ground in this recent crusade. After all, Access Group (the largest lender of private loans) hasn't even heard about the ABA's latest mission. Go ABA! Keep fighting the good fight for us!


  1. Don't start cheering yet. This move benefits the banks since it takes the risk off of them. Likewise, though deferral is a short term solution, in the end it saddles graduates with more debt since whatever itnerest isn't paid gets added to the loan principal. True, there are other benefits (mainly the IBR and public forgiveness option), but that means squat without - you guessed it - job opportunities for graduates of FTTs and TTTs alike, and this won't change that.

  2. I have discussed this issue with friends, and decided that the only solution would be for law students to default on student loans en masse. And then, for the students, NOT the ABA, to lobby the Government to change the Bankruptcy Code. Then Access will be punished for handing out loans willy nilly. I pray for the day.

  3. This appears to be nothing but an effort to head off attempts at bankruptcy reform.



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