Student loan debt–it’s one of the most pervasive concerns for young adults today. Approximately 44 million Americans have student loan debt–those Americans in total owe about $1.3 trillion. The average graduate of the Class of 2016 will hold $37,172 in student debt by the time they graduate. But how much do students actually know about the debt they’re taking on? A new survey conducted by LendEdu, a New Jersey-based company that calls itself the “Kayak of student lending” shows that they may not know that much.

One of the biggest revelations from LendEdu, which surveyed current college students, is that about half of college students surveyed think their loans will qualify for federal forgiveness after graduation–and most of them are probably wrong. In truth, there are very few ways to get your loans completely forgiven. One way is to go into public service work for a minimum of 10 years, but a relatively small percentage of the population follows that path. A few other (rare) ways that students manage to qualify for student loan forgiveness is by accepting certain teaching programs that place teachers in underserved areas, or if the university you attended shuts down while you’re a student or within 120 days after you graduate. For the record, death also qualifies someone for student loan forgiveness…but it’s probably safe to say that most students aren’t including that as a viable option when it comes to not paying back student loans.

Other questions on the survey indicated that the respondents don’t have a great handle on a few different aspects of student loans. According to the survey: “80 percent of college students could not identify the current interest rates on undergraduate federal subsidized and unsubsidized student loans.” Similarly, “79 percent of college students could not identify the current repayment term of a federal student loan” and “when asked, 64 percent of college students incorrectly believe that it is possible to refinance student loan debt with the federal government.”

This of course, isn’t to say that these are facts that all borrowers of student loans should have off the top of their heads. Student loans–from applying to paying back the debt–are complicated. But at the same time, it’s important to teach and encourage realistic expectations as student loan debt continues to grow.

Anneliese Mahoney

Anneliese Mahoney is Managing Editor at Law Street and a Connecticut transplant to Washington D.C. She has a Bachelor’s degree in International Affairs from the George Washington University, and a passion for law, politics, and social issues. Contact Anneliese at amahoney@LawStreetMedia.com.

The post How Much Do You Know About Your Student Loan Debt? appeared first on Law Street.

Welcome to RantCrush Top 5, where we take you through today’s top five controversial stories in the world of law and policy. Who’s ranting and raving right now? Check it out below:

Jessica Alba Thinks Honest Company Lawsuits are NBD

Jessica Alba’s Honest Company, which produces home and personal care items like detergent and soap has been under fire for…well, for being not that honest. But during an interview with the “Today” show yesterday, Alba explained she’s not too worried about the suits, saying:

If an organization wants to bring awareness to their cause, I’m an easy target and our brand is an easy target obviously, because I get a different kind of attention than other brands would. We stand by our ingredients, the effectiveness of the products and we’re pretty optimistic that we’re going to win every case.

via GIPHY

Rant Crush

RantCrush collects the top trending topics in the law and policy world each day just for you.

The post RantCrush Top 5: August 26, 2016 appeared first on Law Street.

The Consumer Financial Protection Bureau (CFPB) proposed new rules June 2, marking the federal government’s first attempt to regulate the predatory practices of payday loan lenders. The regulations will curb certain high interest payday, auto-title, and other small loans that feature outrageous fees and interest rates and leave borrowers in long term debt.

With approximately one in 20 Americans taking out payday loans each year, the multi-billion dollar industry has faced heavy criticism for creating a profit-oriented system where borrowers cannot pay off loans and are forced to re-borrow.

According the CFPB data, 80 percent of payday loan borrowers take out more than one loan, 45 percent take out four or more, and about 15 percent take out 10 or more. So, more than one out of 10 “short-term” loan borrowers are in debt for over four months.

Under the new rules, payday loan officials and other lenders will have to incorporate a full-payment test to ensure borrowers will be able to repay the loan or installment payments on time, while also fulfilling other financial responsibilities and basic needs.

Further, the rules limit payday lenders’ ability to debit borrowers’ accounts without giving them written notice–an imperative move when 50 percent of online borrowers had a failed debit attempt or overdrafted their account in the past 18 months. These failed debit attempts lead to overdraft fees, and more than one third of borrowers with a failed payment are in jeopardy of losing their account.

The last major limit imposed on payday lenders requires a cool-off period after borrowers take out three consecutive payday loans. This is a devastating blow to payday lenders who collect 75 percent of their loan fees from borrowers who take out more than 10 loans in a year.

The CFPB rules are intended to reduce the circumstances in which payday loans can lead to exhaustive debt. However, the rules face criticism from payday loan lenders, because they limit a necessary business for many people who cannot access traditional lines of credit due to bad credit history, lack of a dependable checking account, and other reasons. While this criticism is to be expected, the regulations have also received skepticism from consumer advocates claiming that the rules are not expansive enough.

The Center for Responsible Lending points out that numerous loopholes will allow payday lenders to still trap borrowers in debt. Primarily, the full-payment test is only required for individuals taking out more than $500. However, as demonstrated in a former Law Street piece, a loan with the average principal of $325, if renewed eight times (or over the course of four months) would cost the borrower $798–1.5 times the initial loan.

While the new CFPB rules mark an important step in limiting the predatory nature of payday loans, which rely primarily on poor and vulnerable people who lack the bargaining power to reject 400+ percent interest rates on loans, the rules are not without flaw. By setting too high of a threshold for certain rules, the CFPB allows a large portion of the payday loan business to continue unfazed.

Regulations need to provide protection for all borrowers who enter a loan agreement where the lender has coercive power. As it currently stands, the CFPB’s rules are not expansive enough to make a real dent, and they fail to propose an alternative to payday loans, which are the only option for many customers.

Ashlee Smith

Ashlee Smith is a Law Street Intern from San Antonio, TX. She is a sophomore at American University, pursuing a Bachelor of Arts in Political Science and Journalism. Her passions include social policy, coffee, and watching West Wing. Contact Ashlee at ASmith@LawStreetMedia.com.

The post New Regulations Limit Predatory Payday Loan Lenders appeared first on Law Street.

Access to credit is a necessity for individuals who are faced with a sudden financial emergency. But for the “unbanked” and “underbanked,” there are very few options to get that access. To cover an unexpected expense, even a relatively modest one, that they can’t pay for with their savings or by selling something, these individuals often turn to payday loan providers. It’s an industry that generates billions of dollars a year and is characterized by many as being unconscionable. The interest rates on the loans are often as high as 400 percent per year (though the loans typically last two weeks) and users of payday loans are often trapped in a cycle of loan renewals that result in paying thousands of dollars to borrow hundreds.

High Interest Rates

The terms of payday loans are terms that most of us would never consider signing on for. An interest rate of 400 percent is by any definition, usury. But for the unbanked and the underbanked who desperately need that credit to get them through whatever emergency they are facing, those terms are agreed to. Contracts like this are sometimes referred to as “contracts of adhesion.” A contract of adhesion is one that involves a stark difference in the power of the two parties–where the stronger party is the drafter and the weaker party is unable to modify or negotiate the contract. Usually, these contracts are found in large transactions, like purchasing a house or a car. Courts are willing to take a closer look at these contracts because of the differences in bargaining power and if they find the contract, or a provision of it, to be “unconscionable” they will invalidate it.

The court’s ability to invalidate these contracts is meant to protect the weaker parties with little bargaining power. Just as stricter regulations on payday loan providers would be an attempt to protect the unbanked and underbanked from “predatory” lending practices. But calls for regulation do not address the underlying concern that if the payday loan industry were eliminated and nothing replaced it the unbanked and underbanked might actually be worse off than they were before. They would have no access to emergency credit. And while the majority of people who use payday loans get caught in a trap of debt some people are able to use these loans and benefit from them. If payday loans are going to be regulated to extinction or outright eliminated there needs to be some instrument for emergency credit to replace them.

By The Numbers: How Do PayDay Loans Work?

So what exactly are the terms of a payday loan? How bad are they really? Pretty bad, as it turns out. They are designed to not be paid back, which is why some states have banned them altogether. But that is, from the lenders’ point of view, the beauty of the system. Here is how it works. The borrower takes out a loan to pay off a debt. Often that debt is fairly small–the typical payday loan is for a few hundred dollars–and the term of the loan is usually two weeks. Borrowers often can’t pay back their loan within that two week period, which is not surprising given that they had no savings to fall back on, causing them to take out the loan in the first place. Borrowers then often end up “renewing” the loan. This is where loan providers make much of their money, from the frequent renewals. More than 80 percent of payday loans are renewed at least once and 22 percent are renewed six times or more, ultimately costing borrowers more in fees than the amount they borrowed in the first place.

Let’s use some of the numbers from Mehrsa Baradaran’s book “How The Other Half Banks” as an example. If someone takes out a loan of $325, a typical amount, and renewed it eight times (or took four months to pay it off) would cost the borrower $793. That number reflects a principal of $325 combined with additional interest of $468. In a very short time, the interest added up to almost 1.5 times the initial loan.

It actually gets worse. When the borrowers take out payday loans they sign over their paychecks or give a lender permission to withdraw money directly from their account. So when they get their paychecks the money they owe is taken directly from them, taking, according to a report from Pew Charitable Trusts, 36 percent of the borrower’s paycheck before they even get their hands on it to pay for other expenses–automatically.

Take a listen to this for an audio recap of how some of these numbers work out.

Given how high these interest rates are, what kind of borrowers would agree to them? It may not be the individuals you think. It isn’t the completely destitute who take out payday loans because they can’t offer their future paychecks to pay the loans back. According to a survey conducted by the Pew Charitable Trusts, “there are five groups that have higher odds of having used a payday loan: home renters, those earning below $40,000 annually, those without a four-year college degree, those who are separated or divorced, and African Americans.”

This PBS segment on the issue does an excellent job of showing the kinds of individuals who might take out a payday loan and some of the effects that it has on them and on society as a whole.

Unconscionability And Solutions

The numbers for the unconscionability argument against payday loans certainly seem damning at first glance. But just because the fees are high does not mean that they are unfair from an economic perspective. According to the economists at Liberty Street Economics, the unfairness argument shouldn’t necessarily depend on what the fees are but rather on whether those fees are being determined by a competitive market. A competitive market will produce a fee that is “fair,” but will still allow companies to cover the costs of doing business. One could make the argument that the costs of running this business are so high because these debtors are bad credit risks (likely to default) so higher fees are justified to cover the costs of those defaults. Providing credit isn’t a charity and we shouldn’t be writing policy as though it were.

Payday lenders will point to the high default rate on payday loans, and therefore the increased risk to the lender, as an explanation for high interest rates. If you look at the default rate for payday loans they are pretty high–studies in different states have found default rates of between 44 and 56 percent. This is not surprising when you are lending to a segment of the population that has no savings and limited access to banking options.

But the rate of default is more complicated for payday lenders. Payday lenders have the unusual and critical advantage of being able to draw funds directly from the borrower’s account.  This means that while the borrower may “default” because they don’t have enough money to pay back their debt in their account the lender can take the money anyway and subject the borrower to an overdraft penalty on their account. So the lender is still getting repaid even though they are categorizing it as a default. The Center for Responsible Lending calls this “Invisible Default.” In fact most borrowers (66 percent) who “default” actually do end up paying their debt back. The default rates on payday loans is often used to explain why lenders charge such high interest rates, but if lenders are still able to recover most or all of the money, these invisible defaults may not be as financial damaging as it may seem.

Potential Alternatives

There are several potential ways to reform payday loans but the two main ways, other than eliminating them altogether, are capping the amount of interest that can be charged and putting a cap on the number of times the loan can be renewed. A 36 percent cap is what is often proposed, but that is effectively viewed as a ban on payday lending, as lenders claim that they would not be able to cover costs. Even though 36 percent is much higher than the average credit card interest rate, the loan amounts are so small and the risk of default is so high that it probably would kill off payday lending, at least as it currently operates. A cap on renewals would also be costly for them but perhaps not to the same extent, depending on how many renewals were allowed per loan. If the number was very high it might not present much of a deterrent to either lenders or borrowers.

It is possible for a borrower to use a payday loan and not become ensnared in debt, as long as that borrower is able to avoid renewing that debt repeatedly. For those borrowers who need that credit and who believe they will be able to pay it back in two weeks, it seems unfair to eliminate their ability to borrow money at all. The inability of other people to borrow responsibly shouldn’t hinder their ability to enter into contracts that they think will benefit them, even if they end up being wrong.

The main premise for nullifying a contract of adhesion is that the parties weren’t on equal terms, and often, it is based on the notion that if the weaker party really knew what they were signing up for they wouldn’t have done so.  But in the case of payday loans, the borrowers do understand that they are signing a contract that is skewed entirely in the lender’s favor–the evidence suggests that they know what they getting into and are choosing to sign up for it anyway. Eliminating payday lenders without presenting another option is taking away their ability to make financial choices and preventing them from accessing credit.

The answer to an individual contract of adhesion may be to nullify the contract if there really is evidence of foul play and manipulation. But the answer to millions of those contracts isn’t to assume that each one was made by predators and prey. It’s to come up with a better kind of contract; one in which the terms are not seen as unconscionable by outside parties.

Borrowers are always going to need access to credit. Payday loans, as awful as they are, exist because that need is not being met by any other lender. But it could be–there are several different solutions to the problem of credit for the unbanked and the underbanked that we could implement here in order to eliminate the majority of the demand for payday loans. One such solution is one advocated in the book “How The Other Half Banks,” which is the institution (or actually re-institution) of the U.S. Post Office as a banking service. If you would rather listen to a discussion of the idea, you can listen to Mehrsa Baradaran, the book’s author, talk about it here. As discussed in both the podcast and the book, post offices reach even very remote communities and could be used as a place to deposit funds and could even be used to provide emergency credit.

Another solution Barandaran discusses is a British style overdraft where you are allowed to have a negative balance on your checking account (for an interest fee) without paying the high overdraft fees that many banks currently charge. If there were other options for borrowers who utilize payday loans to access the credit they need, such loans may not be necessary.

Conclusion 

Payday loans can be a spectacularly bad idea for borrowers, especially if they are not able to pay off their balance after the loan’s two-week period. The problem is that for the people who need them, a spectacularly bad idea may still be better than the alternative. The solution to the problem is not to eliminate a service, that despite its flaws may still be necessary, without replacing it. Rather a better solution for borrowers is to create an option, or a combination of several options, that gives them access to credit.

Resources

Goodreads: How The Other Half Banks

Pew Charitable Trusts: Payday Loan Facts and the CFPB’s Inpact

Liberty Street Economics: Reframing The Debate About PayDay Lending 

International Business Times: Payday Loans: Study Highlights Default Rates, Overdrafts As Groups Debate CFPB Regulations

Cornell Law School: Contract of Adhesion

Freakonomics: PayDay Loans 

SlateMoney: PayDay Loans, Postal Banking and Pre-paid Credit Cards

Huffington Post: PayDay Loans: The Worst Abuse is not Regulated

The Center for Responsible Lending: Payday Mayday: Visible and Invisible Payday Lending Defaults

Mary Kate Leahy

Mary Kate Leahy (@marykate_leahy) has a J.D. from William and Mary and a Bachelor’s in Political Science from Manhattanville College. She is also a proud graduate of Woodlands Academy of the Sacred Heart. She enjoys spending her time with her kuvasz, Finn, and tackling a never-ending list of projects. Contact Mary Kate at staff@LawStreetMedia.com

The post Payday Loans: Predatory or Necessary? appeared first on Law Street.

For a while, it seemed like for-profit colleges were the newest, hottest frontier in higher education. But with current student debt problems, and many revelations about some of the predatory practices of for-profit colleges, the trend appears to have officially passed. Arguably the most well-known for-profit institution of higher learning–The University of Phoenix–may be the latest to find itself in hot water.

Late last week the parent company of the University of Phoenix, Apollo Education Group, released information that the Federal Trade Commission (FTC) was investigating the company. The investigation is attempting to determine if the University of Phoenix ran deceptive or unfair business practices. The investigation is particularly focused on its recruitment of veterans. The accusations claim that the company has left veterans with high levels of debt after collecting hundreds of millions in GI Bill money. It’s not just the GI Bill money that the University of Phoenix has collected, however, according to financial records the company has collected over $488 million in fees and tuition from veterans’ own money for its online programs, and additional sums at various physical locations.

The University of Phoenix has been declining slowly for a little while now. Five years ago, the school reported almost half a million students. That number has been essentially halved since then. In 2012, the University of Phoenix was forced to close 115 of its campuses. In addition, revenue has been declining, and there have been many accusations levied against the company in regards to the way that it treats its students and potential recruits.

The controversy over the University of Phoenix is borne out of concerns that the school required participants to take out expensive loans, which could have been fine had those participants had the ability to pay back those loans after they graduated. However, the education provided at the University of Phoenix doesn’t necessarily lead to employment, the credits usually don’t transfer to other schools, and the degrees aren’t always recognized by employers.

In order to cooperate with the investigation, as Apollo Education Group promised in its statement, the company will have to provide the federal investigators with documents such as financial information, marketing, billing, debt collection, accreditation, and military recruitment practices.

This investigation into the University of Phoenix is consistent with a theme of increased scrutiny on for-profit schools, many of which are struggling in the now seemingly turbulent educational environment. Last month, the Obama Administration began cracking down on for-profit schools. A new rule that took effect in July from the Department of Education is the “gainful employment rule” which “requires colleges to track their graduates’ performance in the workforce and eventually will cut off funding for career training programs that fall short.”

Equal opportunities for education are essential, but not if they hurt students more than they help. There’s now significant suspicion that many for-profit institutions fall into the latter camp–University of Phoenix may just be the latest to get in trouble as a result.

Anneliese Mahoney

Anneliese Mahoney is Managing Editor at Law Street and a Connecticut transplant to Washington D.C. She has a Bachelor’s degree in International Affairs from the George Washington University, and a passion for law, politics, and social issues. Contact Anneliese at amahoney@LawStreetMedia.com.

The post University of Phoenix Under FTC Investigation appeared first on Law Street.

Students affected by one of the largest educational scams in modern years are finally getting some relief. The U.S. Department of Education (DOE) says it will forgive students’ federal student loans on the grounds that Corinthian Colleges Inc. defrauded them after the company’s bankruptcy earlier this year.

A string of reports and lawsuits, including one by California Attorney General Kamala Harris, led to Corinthian’s end. The for-profit school used tactics that enticed students, many with limited education and money, with promises of workplace skills ranging from video game design to nursing. Students left these colleges with nearly worthless degrees and very little knowledge in their fields.

Before its closure, the two decade-old company was one of the biggest for-profit education companies in the United States, operating more than 100 campuses at one point under various names, including Everest, Wyotech, and Heald. Corinthian had campuses throughout North America and Canada. It ceased operations this April, shutting down campuses and selling off others after the Department of Education cut off its loan lifeline and fined Corinthian $30 million for misrepresenting job placement rates. The ending was tragic for many–thousands of students were given a one-day notice when campuses closed, leaving them to wonder if their hard work and credits could be transferred to other institutions to complete their education.

This is a very sensible decision by the DOE that will help thousands of students who were struggling to pay back these loans. But although this may give many students a fresh start, consumer and education groups worry that this loan forgiveness process will be too tedious for most to complete. Students have to individually apply for the loan relief. This process requires legal savvy and documents–including transcripts–that could be difficult to obtain, especially considering that the schools are no longer operating. It is also important for those who apply to know that the relief is only applicable to federal student loans, not the private loans which countless students were reportedly lured into getting. Finance blogger, Alexis Goldstein, criticized the plan stating:

Instead of providing broad debt cancellation to former students of Corinthian Colleges, Inc. the Department decided to require students to jump through extensive loopholes in order to apply for relief.

Although this may give the impression that the Corinthian problem is solved, it is only the beginning. Because federal regulators let the operation run too long, the lost loans may total up to $3.5 billion in taxpayer money.

We’re going to do everything we can to help #CorinthianCollege students, while also protecting taxpayers. http://t.co/FhePt7hD6c

— Arne Duncan (@arneduncan) June 8, 2015

A Huffington Post analysis recently found that nearly half of the schools listed by the Department of Education as “Alternative Education Options” are for-profit institutions owned by corporations that are also under federal investigation for possibly misleading students. The Obama administration is already guaranteeing forgiveness to the 40,000 students who borrowed hundreds of millions in federal loans to enroll at Heald from 2010 on. Forgiving the loans is a great step for the thousands of hard-hit students, but it should also make the government much more watchful of the educational marketplace.

Taelor Bentley

Taelor is a member of the Hampton University Class of 2017 and was a Law Street Media Fellow for the Summer of 2015. Contact Taelor at staff@LawStreetMedia.com.

The post For-Profit College Scam Victims Get Loan Forgiveness: Will it Be Enough? appeared first on Law Street.

It’s no secret that college costs have gone up. Way up. Bloomberg estimated that the cost of college had gone up 1,120 percent since 1978. While inflation over time is obviously normal, that’s a huge jump. Compare it to the fact that over the same time period, the price of food has only risen 244 percent. Going to college now requires that many students take out loans, and then struggle to pay those loans off for years to come. President Obama and other politicians have been saying that something needs to be done for a while, and he recently floated a plan to help ease college costs for some students: two years of free community college for students who are willing to work for it.

Obama gave a speech at Pellissippi State Community College in Tennessee about his new plan. At its core, it’s a simple enough idea. Students who maintain a GPA over 2.5, attend at least half time, and make steady progress toward completing their degree will be eligible for the tuition elimination. The schools are going to be held to high standards as well:

Community colleges will be expected to offer programs that either (1) are academic programs that fully transfer to local public four-year colleges and universities, giving students a chance to earn half of the credit they need for a four-year degree, or (2) are occupational training programs with high graduation rates and that lead to degrees and certificates that are in demand among employers.

The reasoning behind providing those first two years free is to train students for more high-skilled jobs. While our unemployment numbers are looking better than they have in years–under six percent as of December 2014–there are still plenty of Americans who are unemployed and underemployed. Despite this nearly five million jobs remain unfilled in areas that require specialized training, such as healthcare work or technology. This plan will attempt to fill that gap by providing workers with skills that can be used in those jobs. As jobs that require a college degree increase–by 2020 it’s estimated that 33 percent of all job openings will require post-high school education–it makes sense to make it as easy as possible for people to get those degrees.

It’s estimated that this will cost about $3,800 per student, and that nine million students will take advantage of the program. That all adds up to a pretty hefty price tag, roughly $60 billion over ten years, which begs the question: how is the Federal government going to pay for this all? The details don’t appear to be fully formed yet, but advocates argue that it’s an investment in the economy. Until our work force is at its most productive, we’re not going to be able to get much done.

Despite the fact that this plan is more bipartisan than most undertaken by the government these days–Republican Senators Lamar Alexander and Bob Corker attended the speech in Tennessee–there are plenty of lawmakers who disagree with the plan. Detractors point to the high price tag as an unnecessary expense. There are also concerns that community colleges aren’t necessarily that successful–only 30 percent of students entering community college graduate within three years.

While there are both positives and negatives to the plan, it’s an early step of what needs to be a much larger solution to the huge problem of college costs and student debt as a whole.

Anneliese Mahoney

Anneliese Mahoney is Managing Editor at Law Street and a Connecticut transplant to Washington D.C. She has a Bachelor’s degree in International Affairs from the George Washington University, and a passion for law, politics, and social issues. Contact Anneliese at amahoney@LawStreetMedia.com.

The post College Tuition Elimination Plan Aims to Fill Skilled Jobs Mismatch appeared first on Law Street.

On Thursday, October 23, 2014, NBCUniversal agreed to pay $6.4 million to settle claims that it violated labor laws over its unpaid internship program.  NBCUniversal’s decision to settle is pivotal because it marks a huge step toward eliminating unpaid internship programs completely.

The lawsuit against NBCUniversal began when Monet Eliastam, the lead plaintiff of the lawsuit, interned at Saturday Night Live for 25 hours per week or more and did not receive compensation. She and other unpaid interns filed a class-action lawsuit and sued NBCUniversal. Elisastam claimed, according to the Hollywood Reporter, that NBCUniversal “misclassified its workers as unpaid interns and thus denied them benefits like a minimum wage salary, overtime pay, social security contributions, and unemployment insurance.”

The Hollywood Reporter further reports that a United States District Court will have to approve the settlement, but if it stands, $1.18 million of the total $6.4 million will go to plaintiffs’ attorneys, Elliastam will receive a $10,000 service payment, and five other plaintiffs will receive service payments of $5,000 and $2,000 rewards. The rest will go to NBCUniversal interns, and the average settlement payment to interns will be $505 for those who interned in New York since July 3, 2007, in California since February 4, 2010, and in other states since February 4, 2011.

Unpaid interns have filed cases against Fox, Sony, Warner Brothers, and Viacom, and companies like Conde Nast have also settled unpaid internship cases. Unpaid internship cases are thus becoming the norm, which it should be.

As a law student, I have had my fair share of unpaid internships. One summer, I worked 35-40 hours per week at an entertainment company and did not receive a dime. Instead, I received credit and had to take an externship class. On the surface, that may not seem terrible because I got to apply three more credits to my total needed to graduate. However, I had to pay a few thousand dollars to take the externship class because the minimum amount of credits that my loan would pay for was six, and my externship class was only three.

It doesn’t take much to realize how unfair that is. Not only did I give the company free labor, but I was out a few thousand dollars in order to get that free labor. Where is the logic in that? There is none.  The unpaid internship system is designed to take total advantage of students just so the student can put that company’s name on his or her resume. The school makes money, and the company gets free labor.

Even for students who take internships or externships during the school year and do not have the student loans issue that I did, no one wants to take a class in addition to interning.  Especially in law school, students are so busy that externship classes take a back seat to a student’s more substantive school work, internships, law journals, and/or moot court.

Moreover, the entertainment companies exist in, not surprisingly, the most expensive cities in the country. Students can’t live on unpaid internships — not when your average lunch in New York City, for example, is around $10 or more. It’s simply not feasible. Yes, you can argue that students can live on student loans, but that misses the point.  Students want to be compensated for their work and be valued as integral employees. It’s as simple as that.

Fortunately, companies are starting to pay interns because companies do not want to be victims, which has been echoed to me in several legal internship interviews.

Hopefully interns will finally begin to get paid for their work across the board, and students will not have to experience what I and millions of other students have.

—

Joseph Perry (@jperry325) is a 3L at St. John’s University whose goal is to become a publishing and media law attorney. He has interned at William Morris Endeavor, Rodale, Inc., Columbia University Press, and is currently interning at Hachette Book Group and volunteering at the Media Law Resource Center, which has given him insight into the legal aspects of the publishing and media industries.

Featured image courtesy of [Knot via Flickr]

Joseph Perry

Joseph Perry is a graduate of St. John’s University School of Law whose goal is to become a publishing and media law attorney. He has interned at William Morris Endeavor, Rodale, Inc., Columbia University Press, and is currently interning at Hachette Book Group and volunteering at the Media Law Resource Center, which has given him insight into the legal aspects of the publishing and media industries. Contact Joe at staff@LawStreetMedia.com.

The post NBCUniversal Settles With Unpaid Interns for $6.4 Million appeared first on Law Street.

Monday again, huh? It’s rough. I’m not even going to try to dispute that. Ease into the work week with a recap of last week’s top stories from Law Street. Blogger Hannah Kaye took the number one spot with an analytical look at the the myth of “stranger danger” through the lens of the disturbing case of Hannah Graham in Virginia; writer Hannah Winsten took it to the people behind #GamerGate and violence against women to earn the number two spot; and I wrote about Starbucks’ upcoming competition to win free coffee for 30 years. ICYMI, check out the top three stories from last week.

#1 The Case of Hannah Graham and the Myth of Stranger Danger

On September 13 2014, 18-year-old University of Virginia student Hannah Graham went missing, and recently authorities arrested and charged 32-year-old Jesse L. Matthew Jr. in relation to the incident. His current charge is described as abduction with intent to defile in the case of Graham. (Intent to defile meaning he intended to sexually assault the victim.) Matthew is currently being held without bond and is scheduled for a hearing in early December. Unfortunately, after two weeks of searching, Graham has still not been found, but authorities are doing all they can to locate her. Read full article here.

#2 GamerGate Takes Misogyny to a Whole New Level

How many of you are big video game players? Probably a decent number of you. I, personally, don’t really get the whole video game thing, mainly because I didn’t grow up with them. My parents had really strong opinions about what kinds of activities made children’s “brains melt out of their ears.” Melodramatic, Mom. But! I’m in the minority here. You guys totally like to relax with a cold beer and a few hours of Madden, am I right? Read full article here.

#3 Starbucks for Life Campaign: You’re Welcome Law Students

If there are two things common to basically every law student ever, it’s this: 1. You’re exhausted in every possible way imaginable and subsisting on caffeine; and, 2. There’s no point in even thinking about the 30 years it’s going to take you to pay off your student debt. Lucky for (a handful of) you, Starbucks announced its new “Starbucks for Life” campaign. Read full article here.

—

Chelsey Goff (@cddg) is Chief People Officer at Law Street. She is a Granite State native who holds a Master of Public Policy in Urban Policy from the George Washington University in DC. She’s passionate about social justice issues, politics — especially those in First in the Nation New Hampshire — and all things Bravo. Contact Chelsey at cgoff@LawStreetMedia.com.

Chelsey D. Goff

Chelsey D. Goff was formerly Chief People Officer at Law Street. She is a Granite State Native who holds a Master of Public Policy in Urban Policy from the George Washington University. She’s passionate about social justice issues, politics — especially those in First in the Nation New Hampshire — and all things Bravo. Contact Chelsey at staff@LawStreetMedia.com.

The post ICYMI: Best of the Week appeared first on Law Street.