Ask the expert

Michael Simkovic is having a conniption that Noam Scheiber talked to me instead of him about whether it’s a good idea to take on $200,000+ of non-dischargeable debt to go to a law school where 60%+ of graduates don’t get legal jobs, 30% are flat-out unemployed nearly a year after graduation, and approximately 0% get good paying jobs of any kind, legal or otherwise. He claims to believe this is actually a great career choice, probably because he’s being paid to perform unnatural intellectual acts by Access Group.

Simkovic is apparently enraged because according to him he’s an expert on the economics of law school and legal practice, and I’m not. This is a curious line of argument, because it’s an implicit appeal to the authority of credentials that he doesn’t actually have: Simkovic’s CV reveals no formal training in the subject matters on which he’s opining, unless going to Harvard Law School automatically makes you an expert on everything, which I suppose may be true in a certain sense.

As to matters of substance, the inspirational quality of Simkovic’s intrepid defense of the law school status quo is captured well by this argument:

Section 108 of the Internal Revenue Code provides that debt forgiveness is only taxable as income to the extent that the taxpayer has assets greater than his debts at the time of the forgiveness. If a student borrower has unencumbered assets that exceed his debts, he can use those assets to repay his loans. If he doesn’t have unencumbered assets, then he won’t pay any taxes when his student loans are forgiven.

In other words, either he is required to pays [sic] no taxes on debt forgiveness, or he accumulates enough assets that even after paying any taxes on debt forgiveness he will still have savings left over. If it’s the latter, then it means he can afford to pay those taxes and might have been able to afford to repay his student loans in full without any student loan forgiveness.

In other words, if after 20 years of loan repayment the graduate has a net worth of zero or less, he or she won’t owe the IRS any taxes when the remainder of the loan balance is forgiven. That’s Simkovic’s argument for why it’s a fine idea to take on massive debt to attend a law school with horrendous employment outcomes: because if you’re completely broke 20 years later, Uncle Sam won’t actually stick you with an extra tax bill when he finally lets you out of (metaphorical for now) debtor’s prison.*

*Offer subject to revocation at any time by the United States government.