Saturday, April 6, 2013
Wall Street Journal: More than 50% of Graduates Aren’t Making a Living -- Study:
More than 50% of law school graduates from the 2011 class aren’t earning enough to buy a house, according to a new study [Jerry Organ (St. Thomas), Reflections on the Decreasing Affordability of Legal Education, 41 Wash. U. J.L. & Pol'y ___ (2013)]. ...
Mr. Organ took a formula for measuring a law school graduate’s economic viability developed by University of Louisville Law Professor Jim Chen [A Degree of Practical Wisdom: The Ratio of Educational Debt to Income as a Basic Measurement of Law School Graduates’ Economic Viability, 38 Wm. Mitchell L. Rev. 1185 (2012)] and applied it to employment outcome data published on a per school basis by the ABA for the class of 2011.
Graduates need to be earning an annual income that’s at least two times their annual tuition — or an income that’s at least two-thirds of their law school debt — to reach “marginal financial viability,” according to the formula. Those below the threshold can’t afford to buy a $100,000 house and struggle to retire their debt. ...
He concludes: Across all law schools and after accounting for scholarships in the manner described above, the estimated percentage of graduates from the Class of 2011 who have marginal financial viability increased from roughly 33% to roughly 46.5%, while the estimated percentage of such graduates who have less than marginal financial viability declined from roughly 67% to roughly 53.5%.
Those facing the bleakest prospects are graduates with lower LSAT scores and grade point averages who are more likely to pay full tutition, and those who went to school in places where legal education is more expensive, like California, Illinois, Massachusetts, and New York.
“Law schools are going to find themselves with fewer students to fill their seats unless costs come down or the job market improves significantly,” Mr. Organ told Law Blog by email.
See also Above the Law, If You Want to Own a Home, Don’t Borrow Money to Go to Law School
From Jim's article:
To offer good financial viability, defined as a ratio of education debt to annual income no greater than 0.5, post-law school salary must exceed annual tuition by a factor of 6 to 1. Adequate financial viability is realized when annual salary matches or exceeds three years of law school tuition. A marginal, arguably minimally acceptable level of financial viability requires a salary that is equal to two years’ tuition. The following table compares some tuition benchmarks with the salary needed to ensure the good, adequate, and marginal levels of financial viability identified in this article: