TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Monday, March 31, 2014

More Depressing Law Student Loan News

U.S. News & World Report, Which Law School Graduates Have the Most Debt?:

The states of the 25 law schools with the highest average debt of 2013 graduates with debt:  California (10), Florida (4), New York (4), Washington, D.C. (3), Illinois (2), South Carolina (1), Vermont (1):


Law School (US News Rank)

Ave. Debt 2013 Grads With Debt

2013 Grads With Debt


Thomas Jefferson (Tier 2)




New York Law School (140)




American (72)




Cal-Western (Tier 2)




Northwestern (12)




Whittier (Tier 2)




Chicago (4)




Florida Coastal (Tier 2)




St. Thomas (FL) (Tier 2)




Miami (61)




NYU (6)




USC (20)




San Francisco (Tier 2)




Charleston (Tier 2)




Pepperdine (54)




Georgetown (13)




Catholic (107)




Golden Gate (Tier 2)




McGeorge (146)




Fordham (36)




Loyola-L.A. (87)




Columbia (4)




UC-Berkeley (9)




Vermont (129)




Stetson (93)



New America Education Policy Program, The Graduate Student Debt Review:


Wall Street Journal, Grad Students Driving the Growing Debt Burden:

 Huffington Post, Student Loan Crisis Is Making Inequality Worse: Experts:

Every month that Gregory Zbylut pays $1,300 toward his law school loans is another month of not qualifying for a decent mortgage.

Every payment toward their student loans is $900 Dr. Nida Degesys and her husband aren't putting in their retirement savings account.

They believe they'll eventually climb from debt and begin using their earnings to build assets rather than fill holes. But, like the roughly 37 million others in the U.S. saddled with $1 trillion in student debt, they may never catch up with wealthy peers who began life after college free from the burden.

The disparity, experts say, is contributing to the widening of the gap between rich and everyone else in the country. ...

Zbylut, an accountant-turned-attorney in Glendale, Calif. He's been chipping away at nearly $160,000 in student debt since graduating in 2005 from law school at Loyola University in Chicago. Now 48, the tax attorney estimates he could have $150,000 to $200,000 in a 401(k) had the money he's paid toward loans gone there.

"I'm sitting here in traffic. I've got a Mercedes behind me and an Audi in front of me and I'm thinking, 'What did they do that I didn't do?'" Zbylut said by cellphone from his Chevrolet. He's been turned down twice for the type of mortgage he needs to buy a home big enough for himself, the fiancee he would have married already if not for his debts and her 10-year-old son.

"I have more education and more degrees than my father, as does she than her parents, and yet our parents are better off than we are. What's wrong with this picture?" he said.

Matt Leichter, New America Foundation Discovers Law School Debt Disaster:

The point of the policy brief is to show that graduate and professional students are borrowing more than a few years ago and that their borrowing accounts for a large portion of total federal student loans (40 percent of the evil $1 trillion+ figure). Therefore, we should separate trends in college borrowing from post-college borrowing. As evidence, the NAF sampled a dataset of people who finished several types of graduate and professional programs in 2004, 2008, and 2012 and displayed their median, 75th percentile, and 90th percentile debt levels.

The tables the NAF provides are interesting for what they are, and along with data provided elsewhere they do show that typical grad students’ debt levels are growing more than undergrads’. However, the tables don’t really answer the questions the NAF is asking. If 40 percent of all student loans are owed by graduates and professionals, we’d want to know the distribution of that 40 percent aggregate by course of study. (How much of it went to med school students? Is it really as bad as those law school scambloggers say? Etc.) That way, we’d know if the growth seen in the tables is systemic as the NAF asserts or isolated to a handful of degree fields.

Update:  Above the Law, The Law Schools With The Most Heavily Indebted Graduates, by Staci Zaretsky:

As we’ve noted previously, going to a low-ranked law school is like “playing Russian Roulette with your financial future.” As you can see, the differences between having high debt from a T14 law school and high debt from a second-tier law school are quite stark in terms of employment outlooks. The odds aren’t on your side when you’ve got more than $180K in student debt and a less than 30 percent chance of securing employment as a lawyer. But once again, if you’re willing to bite that bullet, then by all means, please do.

Legal Education | Permalink


These numbers are screwy. Median debt increased by under $2k from 2004-2008, then increased by about $50k from 2008-2012? I don't buy it. I think schools have found it harder to lie about the figures since the movement for transparency. That 2008 figure must be fraudulent.

Separately, all of these numbers are likely understated by 10-20% because they don't include origination fees, accrued interest and undergrad debt ($30k median).

Can you spell disaster?

Posted by: JM | Mar 31, 2014 6:03:39 AM

Who benefits from this increase in debt? Along with financial industry folk, whose retirement is funded because of law schools' salesmanship?

Posted by: Tenn Volunteer | Mar 31, 2014 6:07:32 AM

A few notes regarding all this:

- JM, I suspect the reason the debt totals were largely stagnant in 04-08 and then rocketed upwards is because they are only measuring federal student loans. Remember, GradPLUS loans only came around in 2006, and there was not the immediate recognition that they would be eligible for nonexistent-to-nascent income-based repayment plans that private loans could not use. A lot of that 04-08 cohort will have very significant private student loans, but at a maximum, about $61.5k in Stafford loans. Once GradPLUS became the go-to loan for law students, the federal student loan totals for them began their rise.

- Re: New America Foundation. Jason Delisle is a former staffer for Rep. Thomas Petri of Wisconsin (R), who has been trying to kill PSLF pretty much since it was introduced under Bush 43. So take his protégé's conclusions with at least several grains of salt. Last year, they were trying to kill GradPLUS. This year, PSLF. Next year, who knows. One might additionally point out that New America got a very healthy part of its funding for this study from the Lumina Foundation, which was cofounded and solely funded to the tune of $700 million by Sallie Mae, inventor of the Student Loan Asset-Backed Security - think of the inscrutable bundled mortgage instruments, but with private student loans. Killing either GradPLUS or PSLF would drive law students back to the private student loan market out of necessity.

Now, whether Lumina's money/influence placed a finger on the scale of the study is, of course, impossible to know, but I will say this: having read a lot of studies on the financial outcomes and returns for college graduates, the studies funded by Lumina always, always have much more optimistic conclusions than the studies not funded by Lumina. Indeed, Lumina's public goal is to boost the % of college grads in the US from the current ~32% or so to 60% by 2025; a goal that would provide years of increased revenue streams to Sallie Mae via student lending, administration, collection, SLABS origination, etc. Time after time, they will advocate for whatever boosts enrollment and student lending: competency-based education, expanded online programs, MOOC eligibility for loans, etc. So it would certainly track that they would advocate for ending PSLF, for PSLF ultimately lessens the amount of specie that the DOE collects, and thereby Sallie's cut as the largest federal loan administrator.

One might also add that Deslisle has a Masters in Public Policy from George Washington University, a degree neither particularly useful nor elite, but still one that stickers over $100,000 - - so it is fairly likely that he comes from financial resources sufficient enough for him to go through life debt-free, because there is no way in h*ll he would propose these things if that degree cost him money.

Posted by: Unemployed Northeastern | Mar 31, 2014 9:54:58 AM