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Thomas Jefferson School of Law, whose students have dismal bar-exam and job-placement records, recently restructured the debt on its fancy, eight-story building downtown that it occupied in 2011.

Yesterday (November 5), the New York Times's DealBook column examined the deal with the bondholders and noted that "a troubled law school is like Dracula: hard to kill." Steven Davidoff Solomon of UC-Berkeley noted, "Failing law schools are kept on life support."

Said the Times, "A recent debt restructuring at Thomas Jefferson School of Law shows that a law school may be worth absolutely nothing."

The debt restructuring went through in late October, and Dean Thomas F. Guernsey boasted, "It puts the school on a solid financial footing."

The deal hardly puts bondholders on solid footing. Ninety percent of bondholders agreed that the debt would be reduced by two-thirds and annual cash flow obligation cut in half. The bondholders will own the building and lease it back to the school; and they'll get $40 million in new notes.

Comments the Times, "Thomas Jefferson got a sweetheart deal, but its creditors had no choice. If they shut down the law school, the only value left would be a law school building that would need to be repurposed and redesigned. A closed law school is worth little, or most likely nothing to creditors."

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Comments

Visduh Nov. 6, 2014 @ 5:16 p.m.

TJ School of Law "is worth little, or most likely nothing to" those would study law there. And it is similarly worthless to its recent graduates. The honorable thing to do would be to shut it down with minimal delays. Arrange for students currently enrolled to transfer their credits to other schools, and then liquidate the remaining assets. Harsh? Sure, but it is more harsh to keep admitting students to the school, given its dismal record.

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Don Bauder Nov. 6, 2014 @ 6:59 p.m.

Visduh: The statistics on percentage of bar exam passage and placement of grads in legal jobs certainly suggest that what you say is true. But they had the bondholders over the barrel; they had to agree to the deal, one-sided as it was, because they believed the only faint chance they had was keeping it open as a law school. Apparently, it would be very expensive to convert the building to other uses. On the other hand, office buildings are converted to condos successfully. Best, Don Bauder

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rehftmann Nov. 6, 2014 @ 6:32 p.m.

Shed a tear for lawyers, or even wannabe lawyers? I can't. We've got a city with it's own top dog lawyers from similar diploma mills, so a bad law school isn't the kiss of death.
My sobs are reserved for the graduates of the other "for profit" colleges, especially here in San Diego. Art Institute students leave with a degree of nothing and a debt of tens of thousands to get pick up work at $12/hour. Doomed for life.

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Don Bauder Nov. 6, 2014 @ 7:02 p.m.

rehftmann: Bridgepoint is the worst in San Diego, but I don't know how many San Diegans are actually enrolled in its online programs. Its headquarters is in San Diego -- for now. Best, Don Bauder

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AlexClarke Nov. 7, 2014 @ 9:32 a.m.

Maybe all for profit schools should have to meet some realistic standards for performance. Just turning out graduates is not worth anything if they can not pass exams or get a job. Many not for profit schools graduate students with useless degrees. College/advanced degrees schools both non and for profit have turned into money collectors. When I went to college, a looooooooong time ago, I could afford a modest tuition and could work a minimum wage job to support myself. I was able to use my degree (education) to become a valuable and reasonably well compensated employee and was able to participate in the American (dream) economy. Again, follow the money.

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Don Bauder Nov. 7, 2014 @ 12:51 p.m.

AlexClarke: The U.S. Department of Education is trying to set up realistic performance standards. But politics always gets in the way, and the standards become emasculated, Best, Don Bauder

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Don Bauder Nov. 7, 2014 @ 12:54 p.m.

Jake Jewell: I am happy that Jefferson has meant so much for you. I, too, hope Jefferson survives. But as a journalist, I have to report the bad with the good. Now the news is almost universally bad, although the bondholder settlement was good for Jefferson, although a disaster for bondholders. Best, Don Bauder

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Visduh Nov. 7, 2014 @ 4:58 p.m.

Jake, you are to be congratulated. You didn't mention just how large the Jefferson scholarship was, nor when this happened. But as far as diversity goes, and helping those who might not have ever aspired to law school goes, it is not offering a bargain basement priced law education. Last time I saw figures, it charged more than Stanford for a year of law school tuition. If it, in fact, was generous with scholarships for a long time, that might explain some of the local success stories. Your success deservedly sets you apart, but nowadays it appears as if you are an exception to the story of TJ grads.

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Don Bauder Nov. 7, 2014 @ 7:04 p.m.

Visduh: Yes, Jefferson is not cheap -- particularly for the students who pile up debt and then can't get a decent job with a Jefferson degree. Best, Don Bauder

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