<p>Robert Bowman was refused entry to the New York Bar because of $400,000 in student loan debt. He started in community college and borrowed heavily to get through college, grad school and law school. Original loans were about $270,000. He claims fees, etc brought the balance up to 400K. Oh... and he hasn't made a payment in 26 years.</p>
<p>He’s a jackass…</p>
<p>I’m not sure the amount of indebtedness reflects on his character, although I do question his judgment. I also question the judgment of the folks at Sallie Mae - It would be more in Sallie Mae’s interest to want him to to GET his license, and therefore have the ability to earn enough to repay the loans at some point, rather than threaten to keep him from getting his license. Considering other people I’ve seen be admitted to practice in New York, I don’t see a big problem with giving this guy his ticket, and I disagree with the decision that was made.</p>
<p>I think there is more to this story than what is written in the article. He failed to make even one payment on these loans during the past 26 years. He claims that Sally Mae failed to contact him but Sallie Mae disputes this (I assume they have proof that they did contact him). It sounds as though he deliberately ignored repeated requests that he begin to make payments. His character and integrity (or lack of) seem to be what the bar is questioning.</p>
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<p>We’re looking at an interest rate in the low teens, I’m figuring. </p>
<p>The thing that frosts me is that this guy hasn’t made a payment in 26 years! He blithely went along borrowing and it is hard to argue that he ever intended to pay these debts off. And the dumb banks that kept giving him money don’t get a lot of sympathy from me. A pox on them all!</p>
<p>I may not be the sharpest knife in the drawer,but how is it possible to not make a payment in 26 years??!! It was my understanding that repayment of student loans begins 9 months after graduation. Maybe 26 years ago things were different. Still, it’s pretty amazing that anyone can put off a loan for 26 years.</p>
<p>Well his is an extreme case, and much of it under some questionable parameters. </p>
<p>“I also question the judgment of the folks at Sallie Mae - It would be more in Sallie Mae’s interest to want him to to GET his license, and therefore have the ability to earn enough to repay the loans at some point, rather than threaten to keep him from getting his license.” </p>
<p>It does show the incredible power that SMC can levy politically, what business in gods green earth do they have possessing the ability to block license. But they have tried worse, in Montana there was a proposal to deny people drivers licenses if they were behind (note behind, not skipping) on student loan payments. So some auto mechanic who got laid off, or a nurse who got sick, could have found themselves not able to drive to work, to the job to get the money to pay Sallie Mae or their brethren. Don’t expect reasonable conduct from such as Sallie Mae they are legendary for behaving like mad King George. </p>
<p>And because of capitalization of interest and the fee enhancements it hasn’t been uncommon for SMC to blow up peoples student loans by a third or more. Even when payments are being made…</p>
<p>Have to remember that under the current structure companies like SMC actually benefit from making loans impossible to pay. The get the fee enhancements for late or incomplete payments, the fees for driving the loans into default, and collect surety money from the feds on top of it all. There’s a reason that SMC chairman was bragging a few years ago that he’d increased fee revenues 220%. And that arrow collections is one of the most profitable subsidiaries of SMC. As Premier collections is one of the most profitable subsidiaries of Nelnet corp. </p>
<p>The problem with stories like that of Bowman, is that these isolated extremes are used to distract from the ordinary people who get into bad situations because of student loan policies. Even the AMA recently begged the USDOE to restore loan forgiveness/deferments/service abatement and etc for docs and other medical people, because even those who paid were getting the shaft. And the NEA (who make much less than MD’s obviously) have raised concerns that it may not be possible to keep recruiting teachers because of abuses within student loan debt (see “My Debt, My Life” in last years NEA journal. And stories and blogs about the student debt problem are a constant issue in the “Chronicle of Higher Education”.</p>
<p>Still it would seem that blowing up any loan amount about twice over, even under conditions like that of Bowman, would seem to be usury. But apparently the Bible, and the Koran have no meaning for some people in the loan offices…</p>
<p>And anyway, methinks the proximity of this article to the current debate going on in the USDOE, Congress about a transition to direct lending and reform of the student funding system may be more than coincidence.</p>
<p>26 years is a long time to go without a payment–but if you go back to school before your 6 month deferment period is up, you can start deferring payments again. Sounds like he was a perpetual student. Also you can get hardship deferrals–looks like he’d suffered periods of unemployment, medical problems, etc. And he could just not pay them for a while.</p>
<p>He could probably pay off his loan by making an informercial about how to defer paying on your school loans forever…</p>
<p>I agree this seems amazing - 27 years and not one payment. However, there is a little more here - According to the article his actual loan amount was $270,000 which increased to to $435,000 in four years because of (among other things) 2 25 % penalties when the loan was transferred through 2 different collection agencies.</p>
<p>Atana:</p>
<p>Don’t blame Sallie Mae or other lenders/collectors. Congress writes the laws and if they are usury, it’s bcos Congress made ‘em that way. (Yes, I know, the Sallies of hte world have tremendous influence over Congress, but that is Congress’ fault.) Moreover, Sallie Mae has no legal authority to forgive the debt bcos that means you and me (taxpayers) pay for it, (unless you have personal interest in paying higher taxes so this deadbeat can become a deadbeat lawyer).</p>
<p>Atana, at some point don’t you feel the borrower has a responsibility to actually read the documents he’s signing? Or do we give him a pass since he might have been illiterate (in which case I say bravo on denying him a license to practice law) or not competent to enter into a legal contract (ditto).</p>
<p>Before we pile it on Sallie Mae and the institutions, let’s have a shout-out for people NOT borrowing money that they don’t intend to pay back. Or people who don’t care that IF you borrow and don’t make any payments, your debt will be transferred to a collection agency and that fees will accrue in addition to the interest, principal, and fees already rolled into the loan.</p>
<p>caveat emptor.</p>
<p>Something doesn’t make sense here. </p>
<p>According to the story, he graduated from SUNY Albany in 1995 and enrolled at UCSF in 2000. What was he doing during the 5 years in between? If he became a CA resident, I suppose he could get in-state tuition for grad school. Still, his undergrad debt would have followed him.
And then, according to the story, he began a Master of Laws in London (began his law degree again?). Even if he took the whole program for the LLM, doubtful unless you intend to practice in the UK, tuition for the entire degree is 13,000 BPS, or around 20,000 USD, not in the hundreds of thousands. And I’m not sure, but I don’t think you get US student loans for overseas institutions! Also, they will not let you get your diploma at UK unis unless you zero out your account.</p>
<p>Even taking into account the maximum fees that he would have paid for any of those programs (SUNY + OOS CASF + UCL LLM) the total amount owed seems incredibly high.</p>
<p>Sally Mae said “it tried to reach Mr. Bowman several times in 2007” I don’t understand what that means. People move around and disappear from sight – but your credit rating takes a huge hit from non-payment of student loans! He wouldn’t be able to buy a car or finance anything.</p>
<p>This just doesn’t add up at all. What Mr. Bowman needs is…a good lawyer!</p>
<p>(I think I’d be a little P.O.'d if I were that girlfriend in London)</p>
<p>It’s not his student loan debt that is keeping him out of the bar. It’s the fact that he has not made payments to the point that he is a big time scofflaw. There are many attorneys with debt that high. In NY, particularly around NYC, that is not a big mortgage at all. But being a gross offender in terms of not paying your bills is a big problem.</p>
<p>Actually, the real issue is that he graduated from SUNY in 1995 with a BS/BA. He took five years off, and enrolled in Hastings in 2000, when he could receive a deferal. Then, assuming he graduated from LS in three years, and added a fourth year for LLM, he finished in 1004. During those five years between undergrad and grad (1995-2000), he should have been making payments on his undergrad debt – he did not. Deadbeat. After graduating in 2004 with an LLM, his educational deferrals would run out and he would be required to start making payments sometime in 2005. He did not. Scofflaw.</p>
<p>Case closed.</p>
<p>He has made being a student a profession. No payment in 26 years? Collection agencies, and all… he worked hard to hide from repayment, declare hardships etc.</p>
<p>I do know people who haven’t make payments on student loans for at least a decade. You can keep going back to school and after school ends get hardship deferrals if you can show low income or unemployment, medical problems, etc. You can conceivably keep that kind of deferral going on for some time. So he could conceivably not have been an official scofflaw during 1995-2000.</p>
<p>I think what really frosted Sallie Mae is that after getting his license to practice law and finally being in a position to get a higher paying job and paying off his loans after 26 years of being able to dodge the bullet, he somehow “conveniently for him” became massively injured in an accident. </p>
<p>There was probably a office pool going on where people bet on what excuse he was going to come up with to beg off beginning to pay his loans off.</p>
<p>“I do know people who haven’t make payments on student loans for at least a decade. You can keep going back to school and after school ends get hardship deferrals if you can show low income or unemployment, medical problems, etc. You can conceivably keep that kind of deferral going on for some time. So he could conceivably not have been an official scofflaw during 1995-2000.” </p>
<p>Actually there’s another appalling factor to that situation. It’s been a practice for certain of the corporate lenders to report deferments as defaults under remediation because they get federal bingo money for doing so. Not exactly surprising therefore that Bowman has contended SMC booted up the fees to unreasonable amounts. It’s not uncommon for these loans under default to be increased 20%+ due to the fee enhancements. So even if one is trying in good faith to remedy such a situation its often impossible. It’s ironic and quite disturbing that the manner via which educational debt is structured is giving our middle classes a feel for what the poor have been exposed to for years with such as payday loans, rent to owns, and illegal loansharking. </p>
<p>Plus the man lost a leg in an accident, and so may not have been in any financial condition to mitigate other problems. The medical bills alone on something like that would be disasterous. </p>
<p>But Bowman’s situation aside we do have to recall that SMC has aggressively gone after even those who are completely disabled or even dead. There have been several high profile cases of accidental deaths, or disease, or suicides wherein even after the persons death SMC representatives quite happily went after the survivors. So even death is not a way out when dealing with these people. </p>
<p>Expecting reasonable conduct from companies like SMC, is like expecting sane conduct from Mad King George. And for much the same reasons of incestuous political origins and unchecked and unreasonable power. </p>
<p>And Bowman might be a scofflaw, but he’s a rank amateur. Remember the little 270 million dollar over billing of the USDOE by NNC? None of that was ever repaid because of the application of a questionable loophole. And the little attempt to back engineer a .5 increase on SLP subsidies which had already been paid, going back for almost a decade,engineered by SMC and their associates? And the most recent attempt to collect 15% out of Duncan’s and the USDOE’s new direct lending proposal, for ‘servicing’. </p>
<p>Perhaps its inevitable moral decay is a response to our current student lending system. When systemically we’ve got situations that even Boss Tweed never even dreamed of, there’s not much point for the small players to try to behave morally. It’s the situation Orlov wrote about in his comparision of the failure of the USSR and the potential failure of the US-in systemically corrupt systems those who try to hold to some idealized morality, get eaten.</p>
<pre><code>"Atana, at some point don’t you feel the borrower has a responsibility to actually read the documents he’s signing? Or do we give him a pass since he might have been illiterate (in which case I say bravo on denying him a license to practice law) or not competent to enter into a legal contract (ditto).
</code></pre>
<p>Before we pile it on Sallie Mae and the institutions, let’s have a shout-out for people NOT borrowing money that they don’t intend to pay back. Or people who don’t care that IF you borrow and don’t make any payments, your debt will be transferred to a collection agency and that fees will accrue in addition to the interest, principal, and fees already rolled into the loan." </p>
<p>Blossom I have no disagreement that people should try to pay their debts. However there is also a moral reciprocity not to arrange the debts in a manner which are usurious. Or that the attempt to collect these debts exceeds the moral restraints appropriate for such an action. Others much higher profile than myself and my colleagues have commented much more eloquently about this problem, especially at Harvard Business school. Dr. Warren’s essays and interviews about the issue are the definitive statement.<br>
Plus there is a clear reason that the Christian Bible and the Koran make clear proscriptions against usury. Usurious lending is often the gateway to systemic moral decay.</p>
<p>The problem is that attempting to use moral judgments in a matter of this type cannot work if that judgment is applied unilaterally. I would not approve of Bowman’s actions, but from the point of systemic harm the often usurious conduct of some of these lenders is more problematic because more people are affected. Both are morally problematic, but the effect is greater in one case than in the other.</p>
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<p>After my sister’s premature death in car accident at the age of 48, I had to deal with collection calls for her student loans for 2 years. I sent numerous copies of the death certificate to successive collection agencies, but they kept calling. Finally after one hapless collector happened to call on the second anniversary of her death, I was in no mood to cooperate and I told him that:</p>
<p>1) I have sent the death certificate and therefore they knew her date of death
2) Calling on that date constituted intentional infliction of emotional distress
3) If I get one more phone call, I will file a lawsuit</p>
<p>They haven’t called since.</p>
<p>I agree that Sallie Mae is not blameless in all of this. In fact, they acted irresponsibly and foolishly. But I still think this guy went too far in his negligence.</p>
<p>Atana, he did not loose a leg. I believe he had two accidents and rehab, but he has two legs to stand on. He had an ATV vs motorcycle accident and a jetski accident, but no amputation. He has overcome quite a bit, but also appears to have lived recklessly.</p>