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June 18, 2005
Enjoy A Steaming Hot Cup o' Debt

Do you remember when fifty cents would get a thirsty man a cup of coffee, when hot java represented the common and inexpensive breakfast drink that united the various economic classes of America? Well, those days are gone, thanks to the marketing genius of places like Starbucks, which has turned that simple cup of coffee into a dizzying variety of blends, lattes, espressos, and the like -- and all of them more expensive than a typical drink at a bar. The power of the economic transformation made Seattle one of the most important business centers of the western US in the 1990s.

Now, in a bit of irony, the very success that Starbucks created for its home city of Seattle may wind up sinking the hopes and dreams of its next generation in java-flavored waves of debt. The high prices, easy credit, and addictive nature of Starbucks and other competitors have become an obstacle for students who wish to pursue higher eduction:

At a Starbucks across the street from Seattle University School of Law, Kirsten Daniels crams for the bar exam. She's armed with color-coded pens, a don't-mess-with-me crease in her brow and what she calls "my comfort latte."

She just graduated summa cum laude , after three years of legal training that left her $115,000 in debt. Part of that debt, which she will take a decade to repay with interest, was run up at Starbucks, where she buys her lattes.

The habit costs her nearly $3 a day, and it's one that her law school says she and legions like her cannot afford.

It borders on apostasy in this caffeine-driven town (home to more coffee shops per capita than any major U.S. city, as well as Starbucks corporate headquarters), but the law school is aggressively challenging the drinking habits of students such as Daniels.

This may sound rather inconsequential, especially to law schools, but they consider this to be a real threat to students and the law in the long run. Most students going to law school do so on student loans or other borrowed money that has to be repaid, with interest, after graduation. Tuition, books, and boarding cost enough as it is and already create post-graduate hurdles that impact career decisions afterwards. But if one adds a single three-dollar latte five days a week, the economic cost of repayment comes to over $4,000, according to Erika Lim, the law school's director of career services.

Even more troubling, she also calculates that simply drinking the cheaper, old-fashioned cup of coffee can save a person over $55,000 over a thirty-year period, with interest. That's a number that won't make the coffeehouses happy.

Why do law schools worry about the cost of a cup of coffee? They see many of their students adding unnecessary and significant amounts of debt to their post-graduate liabilities, and those liabilities impact the kind of law that its students will practice. Instead of pursuing careers as public defenders, whose salaries run in the $40-50K range, the economics of their debt will force them to focus on more lucrative areas such as corporate law. Eventually the extended competition for those positions will mean more will fail after graduation, and more loans will default. The decreased competition for the public-defender positions (and other lower-level positions) will create a need to pay more to compete for applicants -- and that cost will transfer to the communities which serve them, if they're willing to pay for them in the first place.

The basic problem, however, is the impulse to live like the rich while operating only on credit. It seems rather ironic that simple coffee should have become such a luxury that it creates this conundrum.

ADDENDUM: Good comments on this, and I should have made myself more clear. I'm not advocating for intervention, and I don't think the law school is arguing for it, either. What they want is for their students to understand the economic impact of their choices (smoking would be another bad and expensive habit). And I think the real point is the American bad habit of living like the rich while borrowing money like mad to keep up. Starbucks isn't the villain, but they could be just the latest enabler.

Sphere It Digg! View blog reactions
Posted by Ed Morrissey at June 18, 2005 9:17 AM

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