Paul L. Caron

Monday, December 2, 2019

WSJ: New Lawyers Are Swimming in Debt

Following up on my previous post, Is Your Law School Worth It? Law School Debt-to-Income Ratios:  Wall Street Journal, New Lawyers Are Swimming in Debt:

WSJ 5The vast majority of law-school graduates carry debt loads that exceed their initial earnings, new federal data shows, the latest sign a law degree isn’t a sure path to immediate financial success.

Median earnings a year after graduation topped the federal-loan figure for graduates from just 11 of about 200 law schools for which the U.S. Department of Education released data. The favorable ratios were largely for elite private institutions—including Cornell University, the University of Pennsylvania, Yale University, Northwestern University and Stanford University—that send many graduates into high-paying law firms. The list also included one public school, the University of Iowa.

For the rest of the law schools, graduates’ debt loads surpass earnings, in some cases by many multiples. ... Graduates of the six schools at the bottom of the ranking carried debt that was more than five times earnings. ...

The debt level exceeded $100,000 for graduates of more than half of the law schools on the Education Department list, with three dozen mostly private schools topping $150,000. Three schools had graduates with debt below $60,000. Annual tuition for three-year programs at the most selective law schools is nearing $70,000, not including living expenses. ...

Some law schools whose numbers look unfavorable say they view themselves as places of opportunity for first-generation law students and minorities who may have to rely more heavily on loans compared with better-off classmates “We borrow our asses off, there’s just really no other way,” said Hillary Kane, the chief communications and marketing officer at Southwestern Law School in Los Angeles, where she earned a degree.

Southwestern’s median debt was the fifth-highest nationwide at $193,653, compared with median income of $45,000. “We do care and are counseling students to not borrow so much,” Ms. Kane said, adding that most graduates don’t land a law job until after taking the bar exam.

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There is almost a bifurcated market for law schools. Income in the first calendar year after graduation is closely correlated with the average LSAT scores for the schools' graduates. Debt is high at a few elite law schools, whose graduates are well compensated for taking on this debt, as well as some of the least elite private schools, especially the few for-profits, whose graduates see little or no economic advantage from having gone to law school. To get a better handle on how LSAT scores relate to income out of law school, I have produced some color graphics, shown on my blog (linked from my name). Bottom line: If you can't get into a top-20 (or so) law school, go to a state school and consider law like an advanced degree in English Literature or History -- do it only if you love it and don't need the salary bump.

Posted by: David Pittelli | Dec 3, 2019 7:10:14 AM

A lot of that data is even worse than I feared. There are more law schools with median earnings UNDER $40,000 than there are law schools with median earnings higher than the median student loan debt (which doesn't even tabulate undergrad loans, I believe). There's even one law school under $30k median starting earnings. $30k. For a JD. In 2019. It's tragic.

And yet we can count on the usual lobbyist(s) to make the usual not-believable excuses: my, I mean this, study of graduates from the 1990s proves that all law grads are successful immediately and forever. All law grads get six-figure offers the day after the reporting requirement ends. This data is flawed (even though it is by far the most comprehensive we have).

It also bears mentioning that even though most elite and semi-elite law schools claims median starting salaries of $180k, the tax data says only one (1) actually achieves it. And it's one of the handful that cracked the $100,000 per year cost of attendance ceiling this fall.

Interesting thought experiment for the strong-stomached: compare these tax returns' salary medians, at the school level or in aggregate, with the law schools' own claims in NALP and/or US News. Then think about ABA Accreditation Regulation Standard 509(a).

Posted by: Unemployed Northeastern | Dec 2, 2019 8:30:00 AM