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Wednesday, March 13, 2013

Tamanaha: The Law Graduate Debt Disaster Goes Critical

In The Law Graduate Debt Disaster Goes Critical, Brian Tamanaha (Washington U.) lists the 20 law schools with average student loan indebtedness of $140,000 or more (and the percentage of graduates with "J.D. required" jobs).  17 of the 20 schools are in California (6), New York (4), Washington, D.C. (3), Chicago (2), and Florida (2):

California
1.    Thomas Jefferson $168,800 (26.7%)
2.    California Western $167,867 (39.3%)
8.    Southwestern $147,976 (34.6%)
10.  Whittier $143,536 (17.1%)
15.  Loyola-L.A. $141,936 (42.7%)
18.  McGeorge $140,566 (43.6%)

New York
5.    New York Law School $154,647 (35.5%)
7.    New York University $149,336 (90.1%)
16.  Columbia $141,607 (94.1%)
20.  Cornell $140,000 (76.1%)

Washington, D.C.
6.    American University $152,659 (35.8%)
9.    Georgetown $146,169 (62.6%)
14.  Catholic $142,115 (43.7%)

Chicago
4.  Northwestern University $156,791 (77%)
12.  John Marshall $142,587 (43.4%)

Florida
11.  Florida Coastal $143,111 (36.6%)
19.  Miami $140,032 (55.1%)

Brian concludes:

Not only are many graduates from law schools on this list not landing full time jobs as lawyers, at lower ranked law schools even the fortunate graduates who get lawyer jobs do not earn enough to manage the standard monthly loan payments, which at these debt levels range from $1,700 to $2,000, and up. The bulk of graduates from low ranked law schools with lawyer jobs work in firms of 2-10, which typically pay between $40,000 and $60,000. This is not enough to manage the monthly loan payments even on the extended 25 year repayment plan. Thousands of law school graduates will be forced by financial necessity to enter IBR, a federal program designed to assist graduates in "partial financial hardship." (I will post a paper analyzing the implications of IBR shortly.)

Law graduate debt has been increasing by remarkable amounts on a yearly basis: going up at private law schools from $92,000 in 2009, to $106,000 in 2010, to $125,000 in 2011. Average debt for private law grads in 2012 will likely reach $135,000, and average debt for public law grads, which has also gone up rapidly, will likely exceed $80,000. Again, these figures do not count undergraduate debt and accrued interest.

One last piece of bad news: the upcoming JD graduating class of 2013 will be the largest ever, with the highest debt ever, flooding into a dismal job market.

Deborah Jones Merritt (Ohio State), Deluged by Debt:

As Brian’s post shows, the job outcomes at five of these schools (all but Northwestern) are dismal. Less than 40% of the students at these schools obtained full-time jobs that required bar admission and would last at least one year. Even at Northwestern, only 77% of the class met that mark. How can all of the graduates with part-time, temporary, or non-lawyering jobs possibly pay off more than $150,000 in debt–plus all of the accrued interest on that debt? What calculations can justify attending most law schools at that debt-to-outcome ratio?

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Comments

Curious silence in the comments here...Hard to argue the facts, inconvenient as they may be, I guess?

I would just love to hear a value proposition from someone on the faculty/administration of any of the non-top 15 schools listed above...Maybe one of the schools whose professors have been promoting the school as a Los Angeles Biglaw partner jugernnaut (notwithstanding the fact that it placed less than 25% of its class in longterm full time jobs requiring bar admission at graduation)?

Granted, the longitudinal data don't exist to suggest that non-elite law schools are not good investments, BUT, that also means that the data also don't exist to show that they ARE good investments, so why the hell should a bright-eyed bushy tailed young buck dive in, in light of the uncertainty, lost opportunity costs, and crippling debt required to play?

Bill Henderson, among others, have presented credible analyses suggesting that there are long term structural issues in the legal employment market. Such analyses make clear that holding off on incurring 100k+ in debt to attend MOST law schools is probably prudent.

Seriously: could someone from one of the non-elite schools above explain why anyone hoping to become a real practicing lawyer, at a real law firm consiting of, say, 25 or more attorneys, should incurr over 100k in debt to attend their school right now, for the entering class of 2013, instead of just waiting a bit, in the absence of good longitudinal data, to see if the legal job market improves?

YOU CAN'T!

Ships. Sinking. Arrrrr mate!

Posted by: Anon | Mar 15, 2013 9:02:41 PM