Paul L. Caron

Thursday, September 23, 2021

Student Debt: The Holistic Impact On Today’s Young Lawyer

ABA Young Lawyers Division & AccessLex Institute, Student Debt: the Holistic Impact on Today’s Young Lawyer:

Student Debt 2Executive Summary
In Spring 2020, the ABA Young Lawyers Division (YLD) and ABA Media Relations launched a survey to understand the impact of student loan debt on the personal and professional lives of relatively new lawyers—ABA members who had been licensed or graduated law school in the last 10 years. The results were illuminating—roughly half of the respondents indicated postponing or foregoing investing in their local community through purchasing a home and starting a family due their debt, over half reported having accumulated more than $150,000 in debt upon graduating law school, and 40 percent reported their student loan debt balance had actually increased since graduation, despite payments. The report revealed several other key insights, but also raised additional questions about the impact of student loan debt on the overall financial and emotional well-being of young lawyers.

To pursue these additional questions, we collaborated with AccessLex Institute to conduct another ABA YLD member survey in May 2021, targeting members under age 36 who earned a law degree or who were licensed in the last 10 years. Over 1,300 members representing attorneys and law school graduates in big law, solo practice, government, industry, non-profit settings, and JD-advantage positions, among others, completed the 44-item questionnaire. In addition to seeking information about the impact of student loan debt on their ability to reach traditional life milestones that previous generations regularly attained, we also posed questions meant to assess how student loan debt influences career decisions, overall financial stability, and emotional well-being. Additionally, we examined young lawyers’ experiences and satisfaction with seeking financial advice and support, as well as their pre-law awareness of the cost and potential value of J.D. attainment.

In contrast to the 2020 survey, this year’s survey was administered against the backdrop of the COVID-19 pandemic, subsequent and ongoing efforts to rebound from its negative impacts, and related events such as the temporary suspension of student loan payments, distance learning and remote bar examinations, as well as the reopening of businesses and other operations. Although the survey does not directly address or measure the impact of these events, it is likely they influenced the mindset of those responding to the questionnaire. Our analysis of the results showed that:

  • Ninety percent of respondents borrowed education loans for their J.D. or prior degrees. Of those who borrowed, between 80-90 percent indicated their student debt has in some way disrupted the trajectory of their career or personal life, or negatively impacted their financial well-being. Most borrowers reported their debt caused them to weigh salary more heavily in their job selection than they anticipated upon entering law school.
  • Borrowing levels varied by race/ethnicity. Black borrowers reported higher J.D. debt balances than any other racial/ ethnic group and were most likely to report their current debt balance is higher now than at graduation. Like all borrowers with higher balances, most Black borrowers reported their balance grew because they were enrolled in an incomedriven repayment plan where their payments did not cover the principal. However, Black borrowers were more likely than other racial/ethnic groups to cite faster than expected interest accrual or loans placed in deferment or forbearance as reasons for their balance growth.
  • The perceived impact of debt varied by debt balance. Those with more than $100,000 in debt were more likely to report experiencing the negative effects of student loan debt.
  • Most young lawyers who borrowed for their education report their debt has caused them to delay or forego pursuit of traditional life milestones that were commonplace in the past, such as purchasing a home, marriage, and starting a family. However, achievement of these milestones increases with time, suggesting that most decided to consciously delay these decisions.
  • More than half of respondents reported feeling financially insecure, either some or all the time. While most young lawyers report they could find the money to cover a $1,000 financial emergency, Black, Hispanic/Latino, and Indigenous respondents were less confident in their ability to do so.
  • About two-thirds of all respondents reported high or overwhelming stress over finances in general. Respondents with higher loan balances were more likely to show signs of stress – over 70 percent of those with $100,000-$200,000, and over 80 percent of those with over $200,000 reported high or overwhelming stress.
  • Sixty-five percent reported their total student loan debt or monthly loan debt obligation has caused them to feel anxious or stressed, and a little over half reported it has caused them to feel regret or guilt. These percentages also increased for respondents who reported higher levels of debt, including a majority of those with debt over $100,000 who agreed that their loan obligation has caused them to feel depressed or hopeless.
  • The Public Service Loan Forgiveness (PSLF) program appears to effectively support young lawyers seeking to pursue careers in government, nonprofit organizations, and public service. Seventy percent of those pursuing PSLF report it allows them to work in their chosen profession, and 73 percent plan to continue working in public service after fulfilling their forgiveness term.
  • Although a majority of respondents reported they lacked a clear understanding of the legal job market and the cost/ debt associated with law school attendance prior to enrolling, 61 percent reported they would still pursue a J.D. if they could do it again and 55 percent would attend the same law school. However, rates of pre-law understanding and satisfaction with the decision to attend law school declined as debt balances increased.

These results demonstrate the need for greater understanding and improvement upon the career, financial, and well-being outcomes of law students and graduates who seek loans to finance their legal education. The complete report expands upon these highlighted findings and shares recommendations for how policymakers and legal education stakeholders can work to advance law school affordability and financial education among prospective and current law students.

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