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Education Dept. Puts For-Profit Law Schools on Notice for Student-Debt Ratios

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By William Vogeler, Esq. on January 12, 2017 2:54 PM

Being 'in the zone' is a good thing for basketball players. It means they are in a Michael Jordan-like zone where every shot seems to go in the basket.

For students at for-profit law schools, not so much. It means their law schools are failing education department standards or are "in the zone" for failure.

According to a new report from the U.S. Department of Education, virtually every for-profit law school in the country has failed debt-to-earnings ratios or is "in the zone" for failure. That means the schools are at risk of losing federal student loans because their students are not making enough money to repay them.

With students graduating with increasingly larger debts, the education department two years ago implemented debt-to-earnings standards to protect students at career colleges from becoming burdened by student loan debt they cannot repay. The standards require that the estimated annual loan payment of a typical graduate does not exceed 20 percent of his or her discretionary income or 8 percent of his or her total earnings.

Show Me More Money

Reports show that Florida Coastal School of Law and Charleston Law School have failed those standards, and Western State College of Law, Arizona Summit Law School and Charlotte School of Law are in the zone. Along with Atlanta's John Marshall School of Law, each of these for-profit school is on the radar for turning out students who can't make enough money to pay back their federal loans.

Charlotte is fighting to keep its student-loan funding after the education department announced it was revoking the law school's funding last month. If Florida and Charleston do not make changes, they will lose also their funding.

All of the schools rely heavily on student loans. Above the Law, an online publisher of legal news, questioned whether the "gainful employment" standard will "be the death knell" for the for-profit law schools.

Not Worth the Money

Keith Scheuer, an attorney and writer on legal education, said in his blog that low LSAT scores, low admission standards, low bar pass rates and low job prospects are part of the problem. For-profit law schools have problems in all those areas.

He urged students to think twice about going to law school with unrealistic expectations about jobs in the future. In a blog, he said that he dreamt of being a professional basketball player but realized he was not physically qualified.

"As much as it pains me to admit it, I won't ever be a center in the NBA," he said. "And many undergrads should recognize the reality of their situations as well: Law school may not be a good career choice for you if it's unlikely that you'll ever make enough as a lawyer to repay your student debt."

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