Adjunct Law Prof Blog

Editor: Mitchell H. Rubinstein
New York Law School

Monday, April 20, 2009

Law Students Beware! Failure To Pay College Loans Prevents Law School Graduate From Being Admitted To New York Bar!

3ddept Matter of Anonymous, 2009 NY Slip Op 02883, ___A.D.3d____(3rd Dep't. April 16, 2009), is a decision that every law student and every law school should be aware of. After a student graduated from law school and passed the New York bar examination in Feb. 2008, he was required to go before the Character and Fitness Committee-just like every applicant. The law school graduate specially disclosed various student loans with balances now totaling about $430,000, that the loans are currently delinquent but professes good faith intentions to pay them. His excuse-the economy and the bad faith of some of his loan creditors.
In denying his application for admission to the NYS Bar, the court's entire reasoning was as follows:

Applicant has disclosed various student loans with balances now totaling about $430,000. He has stated that the loans are currently delinquent but professes good faith intentions to pay them. He has attributed his nonpayment to the downturn in the economy and bad faith negotiations on the part of some of the loan servicers. Our review of the application indicates that the disbursement dates of the loans cover a 20-year period, from as early as 1985. Applicant has not made any substantial payments on the loans. He has not been flexible in his discussions with the loan servicers. Under all the circumstances herein, we conclude that applicant has not presently established the character and general fitness requisite for an attorney and counselor-at-law (see Judiciary Law § 90 [1] [a]).

My guess is that the $430,000 was comprised of college loan balances that accrued interest and penalties for non-payment. Moral of this case is that law students should expect to be required to pay back their student loans and, if they do not, very unpleasant circumstances will follow. Was this an extreme case? Of course it was. However, where is the line between this case and another case where a student has not repaid his or her loans? I do not know where that line is and would not want to be the person who is drawing it.

Additionally, law students will hopefully become lawyers one day. Your name means something. You would not want it to be documented that you have not repaid your loans. If this case is not enough motivation for you, I also can tell you that many employers would not want to hire someone who is not repaying their loans. Would you??

Mitchell H. Rubinstein

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Over $430k in student loans is quite a lot... I'm guessing the same--those are probably accumulated penalties, interest and whatnot. I feel sorry for the guy, I hope he'll still be able to pay them back so his education won't be wasted.

Posted by: Imee | Apr 21, 2009 1:47:37 AM

Bah. This seems like a very bad decision. First, it's a little bit bizarre to moralize the payment of debts -- generally, we don't moralize compliance with contracts (viz. "efficient breach") unless the contracts were fraudulently entered into in the first place -- so why should we treat breaching a loan contract as some kind of moral sin? Second, what sense does it make to deprive someone of his best source of income in order to sanction not paying loans? I mean, seriously? Huh? That's like cutting off someone's legs to punish her for not walking down the road.

Posted by: Paul Gowder | Apr 22, 2009 8:31:10 AM

Of course, denying him a license to practice law doesn't make it *more* likely that the loans will be repaid...

Posted by: anon | Apr 22, 2009 9:40:23 AM

Of course, if the reason this guy spent three years in law school and incurred a great deal of additional debt was so he could make a good living and afford to pay his loans, denying him a license isn't going to help anybody.

Posted by: CU Alum | Apr 22, 2009 1:59:23 PM

Maybe the bars should start investigating people once they are already licensed attorneys to make sure they are repaying their debts. If someone declares bankruptcy after being licensed or misses 6 credit card payments, perhaps the credit bureau or bankruptcy court or student loan people should monitor the various bars to take away licenses. If this man was not qualified to be an attorney, neither is the attorney who has been licensed for 20 years but falls behind on her bills because of hard times.

Posted by: anon | Apr 22, 2009 3:55:21 PM

The sum borrowed was $220,000, the approximate amount owed is $430,000. Below is the first page of correspondence and the last page - the conclusion. It should be noted that approximately 70k was borrowed to cover medical expenses after my left leg was severed off in an accident.

As luck would have it, a week after taking the Feb 2008 Bar, my good leg was fractured in four places. As a consequence I requested, among other requests, a temporary medical deferment. While required to provide such a deferment on my guaranteed student loans, my loan servicer refused to make this deferment available to me.


I was approved and certified for admission to the New York State Bar by both Court-appointed Character and Fitness Committees: the 20-member voting Committee, and the 3-member Subcommittee which interviewed me personally. After this careful review of my application, which took nine months, had
been submitted to the Court, the Appellate Division (Third Department) denied my admission to the Bar.

While I have accepted life as one raised in and out of New York State’s foster care program and homeless shelters, and generally living in abject poverty1, I was unprepared for the Court to refuse my admission simply because it believed that I paid too much for my education, took too long to complete my
education, and apparently did not yet repay enough of my student debt to deserve admission to the New York State Bar.

In the Court’s ruling2, neither the standard on which my application was denied nor the requisite conditions to reconsider my application for admission were set forth. Moreover, the decision presupposes that I am an embezzling criminal and will pilfer from my clients to pay off my student loans. Through sheer hard work and dedication in the face of adversity and the most impoverished of circumstances, I did all the things necessary to achieve the American Dream, only to be told, for antithetical reasons, that it was not meant for me.

Judicious analysis of the language used by the Court reveals the disparate and unforgiving treatment between the haves and have-nots in the conclusion it reached: my life-long endeavor to overcome poverty through education – and the requisite student loans necessary to attain the highest of educational
achievements, including obtaining my Juris Doctor Degree from the University of California Hastings College of the Law – equates to a moral and character flaw on my part. Most ironically, because my efforts have been thwarted and discredited at my final hurdle, I have been forced to live the remainder of my live in poverty, unable to repay my student debt apparently incurred in vain, or be a contributing, taxpaying member of society. Instead, it appears I will now become a burden, unable to meet my financial or social obligations.

In denying admission, the Court was informed that I had pending employment3 with a mid-size law firm,
and also that once admitted, would qualify for loan forgiveness by participating in the Loan Repayment
Assistance Program (LRAP). I am now jobless, with no employment prospects since being denied the privilege to practice law, and I now will not qualify to give back to the community from which I came by participating in the LRAP. The Court, in taking over nine months to render a decision on my admission to the Bar, has itself has prevented me from accepting employment opportunities in my profession that
would have allowed me the income to begin repaying my student loans.

Although the Court trumped both the Character and Fitness Committee’s and the Subcommittee’s recommendations for approval of my application, both committees found the behavior of my student loan servicer, Sallie Mae4, questionable. Thus, the Court’s decision also effectively endorses and perpetuates
Sallie Mae’s unlawful behavior of in the servicing of my student loans, and also contrarily holds me accountable for its wrongful conduct.

In Conclusion

Sallie Mae has breached numerous federal regulatory laws in its deceptive misrepresentation and withholding of borrower information. After my loans defaulted while spending more than 18 fruitless months trying to obtain necessary information for repayment options, deferment options and forbearance options specific to my account from Sallie Mae, Sallie Mae filed claims for my loans with HESC and EdFund. HESC has already paid on one of these loans36. EdFund has paid on two of these loans37. In forcing my loans into default, Sallie Mae has precluded me from obtaining my license to practice law.

As someone who was homeless as a child, never went to high school, began his educational endeavors with a GED and community college, and was disabled by a severed limb at the age of twenty-five while in school and without sufficient medical insurance38, I have overcome more obstacles than many can fathom. Being struck down at the final hurdle, as a result of an unprecedented decision, will mean that the past twenty-five years of my life have been a massive and costly exercise in futility. I am now unable to practice my profession that I worked most of my adult life for, repay the student debt incurred in its pursuit, or even obtain medical insurance.

Most significantly, I have shown no evidence of financial irresponsibility. I have tried and continue to try to seek the cooperation of a negligent and default-hungry loan servicer, and I incurred only student debt that I fully expected to be able to repay. In the words of Kentucky Supreme Court Justice Cooper,

"Implicit in this ... is an assumption that any attorney with substantial unpaid debts is prima facie unfit to practice law. I find that assumption untenable. One can only wonder how a young law graduate with poor parents and a substantial student loan debt is expected to earn the money to pay that debt if denied the opportunity to practice the profession which was the raison d'etre for the incurrence of the debt."39.

The consequences of this decision are far-reaching, and some are irreparable. For the rest of my life, I must state that I have been denied my license, prejudicing or altogether preventing my success on legal or other applications.

While I do not seek to disparage the Court or its judgment, the Court took over 9 months to render its decision on my admission, valuable time during which my ability to acc.ept job opportunities in my profession would have provided the income to begin repaying my educational loans, then in its decision laid blame on me for not making 'substantial payments' towards my student loans, stating that I have "not
been flexible in [my] discussions with the loan servicer§'~.

As clearly documented and detailed above, this misstates my historic interactions over the past 18 months with Sallie Mae, my only loan servicer. It is understandable that the Court would seek to protect the repute of the legal profession, but the presumption is that any poor student with substantial student loans is both irresponsible and a thief.

Apparently, the dedication, perseverance, and commitment it takes to realize this level of achievement with zero familial 'financial support is simply discounted. Applying this rationale without informing a potential Bar applicant of the ramifications of substantial student debt results in absurd and inconsistent decisions in the admissions process in which the Court is not required to layout its reasoning, not to
mention serve to widen the socioeconomic gap by punishing those who seek to elevate themselves, wholly demolishing in one fell swoop the American canon of equal opportunity.

Posted by: anonymous | Apr 27, 2009 6:06:27 PM

This is outrageous.

Posted by: a | Apr 28, 2009 3:06:56 PM

To the student above--thank you for coming here to tell your side of the story. This is a tragic story, and I sincerely hope you will find admission in the Bar of another state.

Posted by: karen | Apr 28, 2009 3:09:19 PM

I disagree. It would irresponsible to admit him to the bar (despite his sad back story). It was irresponsible for this person to shell out such large amounts when he already owed such a huge sum. I also notice he doesn't mention how he managed to accrue almost 100% of the amount owed in interest and penalties. His story is unfortunate, but the responsibility of the bar is to determine what's best for the general public. I would not trust somebody that owes $30,000 in interest payments a years to have custody over my funds, and has defaulted on multiple payments in the past.

I think the sad part about this is: (i) admitted attorneys are not monitored for similar concerns; (ii) the lack of clear standards from the NY bar (so he would've known in advance not to bother); and (iii) that there isn't a cap on student loan borrowing (I realize my tax dollars are now paying this guy's loans off through bailouts).

Posted by: devil'sadvocate | Apr 28, 2009 8:05:29 PM

devil's advocate,

First, your screen name gives me reason to smile because it appears, according to the third department, that this devil needs an advocate.

As for your response, let me clarify that while my life has been a climb out of a garbage can, I am a success story. I have succeeded where most others coming from where I have come from would be in prison. So, instead of appealing an unjust prison sentence, I have the distinct privilege of appealing an unjust response to a hard-fought success story.

As for your trust issues, as with any practicing attorney, there are serious ramifications for illegal conduct. To suggest that because of an ongoing dispute with a single dishonest and lawbreaking creditor (I have no issues with any other creditors - just Sallie Mae), that I would pilfer from my clients, simply belies logic. Extrapolating this reasoning, perhaps we should exclude a particular ethnic minority because the demographic is more likely to commit a felony. This is simply an absurd result. It appears that this court has resurrected what was once abolished - debtor prison - just without the actual bars or shackles.

Lastly, my loans went into default in February this year, while languishing over nine months in the bar admission application void. And yes, it is your tax dollars that will assume responsibility for my defaulted student loans. It is this very point that really calls into question the Court's decision to trump the certification of the Character and Fitness Committee. This decision not only results in a lifetime of wasted efforts, but it sticks the taxpayers of New York State with the bill for my failed efforts as a result of this decision.

Think about the resulting difference to society as a whole. The Court had a letter from my employer (addressed to the Admissions Office, dated January 28 2009) stating I had employment opportunity with this mid-size law firm. This employment opportunity would have provided me with enough income to pay these loans off completely within 6 to 8 years. So now, not only are your tax dollars going to pay off my loans (half the sum is interest, penalties and Sallie Mae's unexplained 'other fees'), but they are also going to pay for me to live the remainder of my life in poverty because I can't get a job now that my credit is ruined.

As for me, I will live my life tucked away in some dark corner perseverating on the words from the movie On The Waterfront, "I could've, I could've been a contender, I could've".

p.s. I almost forgot to express my gratitude for your willingness to pay off my student loans. I'm certain, since Sallie Mae became a publicly-traded company in 2004, that its shareholders are appreciative both of your gesture and of the Court. See:

Posted by: anonymous | May 2, 2009 6:16:47 PM

If this student had been a wall street banker, he would have failed upward exactly as Goldman Sachs has. This has absolutely NOTHING to do with morals. It is all about whether you are connected and whether you already have enough dough that you don't need to borrow any or you have wealthy buds (i.e. Treasury Secretaries and such) that will pull you out of the fire - period. This guy is just another victim in the class warfare that is raging in the US as we speak.

The attitude of this Court is pull yourself up by your bootstraps even if you don't have any which is what this guy did. Then, they punish the bejesus out of him because he borrowed the bootstraps. You gotta love it.

Jenny Tuffnell

Posted by: Jenny | May 17, 2009 10:38:05 AM

Reality and satire are one in the same when it comes to debt, lawyers and law practice in the United States:

"If it came between a smart lawyer and a decent lawyer, we would choose the decent lawyer every time."

- E. Pearson Firmingham, Esq., New York State Board of Bar Examiners.

Practicing law is not about intelligence; it's about enshrining dominant morality.

Read more at Reason, Commerce, Justice & Free Beer... every day:

Posted by: Balthazar Oesterhoudt | Jun 7, 2009 4:08:50 PM

Anonymous, I hope that you still check back on this entry. That's an awful story (even worse than the Jones case you quote!)

If you do check back, you should be aware that Sallie Mae has made public its recent policy of moving "forbearance" accounts into "default" status. It's not about you; it's about improving liquidity. Loans in forbearance stay on the books but don't bring in cash immediately; defaulted loans can be redeemed immediately. For what it's worth, New York and any other jurisdiction to which you apply should know this.

Forbearance rates at Sallie Mae have fallen dramatically, while defaults have risen: This comes from Sallie Mae's own SEC reports.

It's interesting that Sallie Mae assumes that forbearance accounts will eventually default, and this just accelerates the process. Available research indicates the opposite: Your high balances and advanced degree mean that you're statistically a very low risk.

Posted by: Mrs. Smith | Jun 28, 2009 3:22:25 PM

I'm in a very similar situation; having a very difficult childhood and an adulthood riddled with injustices, e.g. multiple crime victim, unable to fully prove, and afforded no prosecution. I have not found admittance in either of the two bars that I have applied. My credit issue is one of having a bankruptcy then ID theft a few years later. Mistakenly, I thought that not using credit at all would keep me safe. I am now almost resigned to the same fate as this original author. I still have a hearing, re-hearing, and appeal in one state where I passed the bar, and a chance to offer up further evidence of my "good moral character" to be able to sit for my home state's bar. However, I am not hopeful, as I am a minority (a rare multi-ethnic mix), suffered obvious bias as I was am a former professional athlete (female), not disabled - but being secondarily discriminated against for a false dx of ADHD and Epilepsy. My research of these mid-western states has shown no correlation for bad credit and theft in the profession. In fact, my preliminary searches of my home state's case law shows the exact opposite correlation; i.e. that folks with good credit often steal, misappropriate, and the like because they have no coping mechanisms to handle the curve balls life throws. Also, the history of this practically uniformly adopted rule shows it's intent was to discriminate (against primarily minorities, and consequently the disabled as well) and does so with disturbing efficacy. I admire you for your predicament, but I don't envy you. Unfortunately, it looks like I will be becoming that "coulda been" nobody, returning back to my ghetto who'll be ridiculously educated when continually being denied job after job because who wants to be sued (cuz ya know that's what they think when a J.D. applies). One more note: one committee member posited that I should not use my J.D. in job I took offense as this [pic a derogatory label] cannot assert what I have earned - all horse dung! To know that this minority female went so far, should be, but isn't enough.

Posted by: Ms. Sanders | Jun 29, 2009 1:41:20 PM

Secondly, is there a Sallie Mae class action on the way???

Posted by: Ms. Sanders | Jun 29, 2009 2:00:03 PM

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Posted by: Loans | Dec 20, 2009 11:29:56 PM

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