Hole, hat, or clown. We're not entirely sure which sort of ass GULC law prof Philip Schrag is. Last November he published an article in the Georgetown Journal of Legal Ethics titled Failing Law Schools -- Brian Tamanaha's Misguided Missile. (It's there to read if you want, but please don't needlessly boost his SSRN download rank.) The main point of his paper is that Tamanaha is too hard on Income Based Repayment (IBR), and doesn't appreciate how it makes law school "affordable." Here's an excerpt:
Tamanaha’s entire discussion of student debt, however, makes it clear that his characterization of the loan repayment burden is based on his assumption that students should expect to repay this debt (plus accumulating interest) by paying the same monthly amount, every month, over a period of exactly ten years. All of his examples of debt repayment hardship assume that the proper method of repayment is “standard” ten-year repayment. Of course that method of repayment is unaffordable for a person with a debt of $100,000 or more and an income of $63,000. To illustrate the hardship, Tamanaha gives us a hypothetical student, Sarah, with a debt of $120,000 and a combined interest rate of 7.25 percent. He notes that her monthly loan payment (based on straight-line amortization of the loan—that is, the same payment each month for ten years) would be about $1,400. If she had the average salary of $63,000, he points out, then after taxes, loan repayment and rent, she would have only $775 a month to spend on food, transportation, her phone bill and all other living expenses. “It’s not doable,” he concludes, and he is correct: the $1,400 a month of loan repayment would be 27 percent of her pre-tax salary. A thirty-year repayment plan is equally unattractive, because even a thirty-year straight-line repayment schedule would require her to repay $800 a month, still a hefty sum, and because of the accumulating interest, she would pay nearly $300,000 during the 30 year period.
In 2007, however, the United States Congress solved Sarah’s problem. It created the Income-based Repayment (IBR) option. By electing this method of repaying her loan, Sarah could limit her annual payment to 15 percent of her discretionary income, defined as her adjusted gross income minus 150 percent of the poverty level for a family of her family’s size. [...]
So with IBR and PAYE, law school for Sarah is quite affordable, even if she starts professional life at a salary of only $63,000 and serves private clients rather than working in a public service entity. But instead of praising these programs that enable Sarah to afford law school, Professor Tamanaha disparages them and (except for those who plan to choose PSLF) does not take them seriously as a solution to the problem of costly graduate education. “Short of a corporate job,” he writes, “a person with [educational debt of $100,000 or more] must obtain a salary above the national average, which most law graduates fail to achieve.”
Now, here's the thing that Schrag doesn't seem to get about IBR: It's basically a welfare program. There's not really any better way to describe it. The government is saying "You don't make enough money, so we're going to give you some extra money." That's welfare.
Tamanaha's entire discussion of student debt fails to take into account that a graduate earning $14,000 a year will not only make no loan payments under IBR, but will be entitled to an additional $1,800 a year in SNAP benefits.
Does that sound like a solution to the problem to you? Well, to Schrag, it might. But to the rest of us, we understand that there is a world of difference between mitigating a problem and solving it. The problem is that the typical law school graduates are earning only about half of what they need in order to reasonably manage their debtloads. Reducing the cost of education would solve that problem. Having the government pick up the check is just, quite literally, passing the buck.
Tamanaha's entire discussion of health insurance fails to take into account that an uninsured individual will not be turned away if he seeks treatment at an emergency room, rather than with a "standard" primary care physician. Tamanaha disparages this use of emergency medical care, and does not take ERs seriously as a solution to the problem of costly health insurance.