Wednesday, August 8, 2012

Law graduate debt: More on the real numbers

In the comments to DJM's latest post there are a couple of exhortations to law students to live simple and frugal lives, in order to avoid the sorrows of high debt.  For some reason this peculiarly American brand of secularized Calvinism is annoying me more than usual this morning, so I'm going to use a critique of it as a jumping-off point to discuss another way in which the "average" law graduate debt statistics collected by the ABA are deceptive.

Gaze for a moment upon Columbia Law School's average graduate debt, which for the class of 2011 was reported to the ABA as $133,000.  That sounds fairly daunting, but let us consider the following question: how much law school debt will the typical, modal, median CLS grad of the class of 2015 owe when that first loan payment comes due in December of that year?  The answer is about double that amount.

Why? For one thing CLS keeps jacking up the cost of attendance. When the class of 2011 matriculated its members paid $45,000 in tuition and fees.  This fall, the entering 1L class at CLS will pay $57,750 for the same services.  Columbia estimates the nine-month cost of attendance this year as fifty dollars short of $80,000.  But here's a fascinating little factoid: 23% -- nearly one in four graduates -- of the CLS class of 2011 graduated with no law school debt whatsoever.

How did this happen? It's not because CLS gives out huge amounts of scholarship money. I don't know what the law school uses its billion-dollar endowment for, but it's not that: In 2011, half the class got no grant money at all, and three-quarters of the half that did get grants still paid more than half sticker tuition.  Barely 10% of the class paid less than half tuition and only 1.6% got full tuition scholarships.  The median grant for the half of the class that got any money at all was $13,200.

If we apply these numbers to the entering 1L class, they can expect to pay an average real cost of attendance of more than $73,000. Assuming typical tuition increases, the total average real cost of attendance for the CLS entering class is going to end up in the neighborhood of $230,000.  And remember these number don't include a total of nine months worth of the cost of living during three summers for one of the most expensive cities in the world.  But let's be super optimistic and assume everybody in the class will get a 2L summer associate gig that will allow them to make $20K to $25K after taxes, and that these earnings will pay off their collective summer expenses while in law school.  So call it $230K. But of course it's not $230K to the people who have to debt finance this figure -- it'll be more like $267K when the first bill comes due (that tricky accruing interest again).

So where were we? Oh yes -- how is it that a quarter of the CLS class is graduating with no law school debt at all, despite the truly staggering cost of getting a degree from the school?  Do you suppose it was because these people were "frugal," and lived in a four-bedroom apartment in Queens, three quarters of which they subletted to their classmates or perhaps small brown people of extra-national provenance at exorbitant rents that would make a slum lord or a Randroid blush? No, I don't think that's it. Try again!

OK enough snark for the moment.  TL;DR: the median debt -- not the "average" -- incurred by entering CLS students is going to be around $265K (and this doesn't include other educational debt!).  If you're about to join that cohort of the blessed, keep in mind that a lot of your classmates come from families that are rich as hell and are therefore paying for either everything or a very large percentage of the cost of getting a Columbia law degree.  If you're not one of those people you're taking a huge financial gamble, by attending the fourth-ranked law school in the country.

This isn't really about Columbia though. It's about the fact that median law graduate debt is undoubtedly much higher than the reported averages. How much higher? Maybe some law professor or two who is more welcome in a financial aid office than your faithful correspondent could try to figure that out.

Now at this point some bright young thing is going to ask why we should care. After all, the prospective 1L should be able to calculate what his or her debt will be before taking the plunge. What relevance do averages or medians have to that anyway? Three things, in ascending order of importance:

(1) Figures like reported debt averages are important to the initial decision to consider law school at all. Once the prospective student has started down that psychological path in a serious way, a dozen rationalization mechanisms kick in to explain away the daunting debt figures.  If 0Ls had more accurate information about true median debt balances -- which were far higher than the reported numbers for the class of 2011, and will be higher still for current law students -- at least a few would not start down that path.

(2) If people inside legal academia actually knew both what the real debt loads of their graduates are, and how quickly they're going up for each successive class, more of them would begin to question this perverse and unsustainable system.

(3) Asking what relevance this sort of analysis has for individual prospective law students misses the real point, which is that the analysis is intended to be a structural critique of the system, not merely a guide to prospective students. If policy makers knew that half the Columbia law school class (Columbia is one of the half dozen richest universities in the world) is going to be graduating with something close to $300K of educational debt, that might get a few more people in positions of actual power to do something about our collective willingness to cast the best minds of our generation into perpetual debt servitude.


  1. "After all, the prospective 1L should be able what his or her situation is before taking the plunge."

    No idea what you were trying to say here.

  2. When you say they keep jacking up the cost of attendance am I correct to assume most of that increase comes from tuition or are they just allowing people to borrow more for living expenses?

    Also, it appears the average debt from CLS paints an inadequate picture. In a previous post about Phoenix you said they listed the median and not the mean. Are these two separate sources where the info is listed (school websites) or did it all come from U.S. News. Please keep in mind that most of your readers aren't as learned in this as you so it might help to connect the dots.

  3. 7:10 - he is saying that the individual student will make a decision on his or her needs, and the average won't apply. For example, if the average car loan in the US is $15,000 and I need to borrow $20,000 to buy the car I want, which figure is relevant.

    But I do agree on the policy side and it shows how law schools will bend data to make their case. As LawProf noted, if we are going to look at 9 month employment outcomes, we ought to look at 9 month loan balances.

  4. Fat guy: the public information on average graduate debt consists of the ABA numbers, which are disclosed to US News and are expressed as mean debt (it's actually the mean total of loans taken out, not counting accrued interest or origination fees).

    For some reason Phoenix put the median figure for its 2011 grads on its web site. It's just one data point, but the median figure is 30% higher than the mean reported by the school to the ABA.

  5. @ 7:10

    Oh c'mon, Leiter. A man of your intelligence should be able to figure it out. LP obviously left out an infinitive. Try plugging in something like "to assess" and it makes perfect sense.

  6. Got it, that makes sense now. Thank you.

  7. Edububble has been posting on this lately. The debt numbers leave out most of the "shadow debt" that's not part of the official stats because it's not official student debt. When people borrow from their retirement fund or their home equity, they're creating shadow student loan debt that doesn't show up in the official tallies.

    This is almost certainly how so many people pay for much of the tuition. They or their parents borrow from other sources with better rates and better terms. But it's still debt.

  8. The T14 is still pretty well protected from the cost-hate on TLS. The tide is turning a little on Georgetown.

    At some point, people are just gonna have to refuse to pay these outrageous amounts, even for elite schools. Personally, I'm a little pessimistic about that though, knowing that for all the hype about fewer LSAT takers, the T14 still kept dozens of people on waiting lists crossing their fingers for a chance to pay sticker.

  9. Re: The last few posts and Federal loans

    A lot of sleuth work and estimating, but

    Would or should the US Dept. of Ed have all the data on how much was loaned to, and now owed by law grads and other majors, and by school etc?

    If so, that info should be available to the public I would think?

  10. Would or should the US Dept. of Ed have all the data on how much was loaned to, and now owed by law grads and other majors, and by school etc?

    At some point the data should be available thought the Freedom of Information Act. I have only had passing dealings with FOIA, but it seems like a viable avenue.

  11. The interesting thing is that, as Law Prof says, there are people who pay full freight. I guess if loans disappeared, or were made more difficult to get, the very top schools could still create classes as they used to-- with people who could pay.

  12. Sorry, Paul, but I think that all 3 of your points at the end only apply in your fantasies.

    And while the "frugal living" argument might not apply today or tomorrow, it does apply to many of those who came before and lived extravagantly for their 7+ college years. Sure, it doesn't help to point out what they did wrong, but the farther back you go the more responsible the student is for his/her current financial mess.

  13. I suspect the "slum lord" commenter on DJM's last post was a troll. The only way to make significant money subletting to other JDs is to charge them above-market rents. Even JDs are smart enough to figure out what they should be paying per month for a share in a 4-bedroom apt. in a particular market. Overcharge them, they'll find something else.

    I knew plenty of folks who formed rooming groups in law school, and more often than not the person signing the lease was the one who got screwed, not the other way around.

  14. Out of curiosity, does anyone know how many students matriculated to ABA law schools last fall? The c/o 2015 profiles should be posted on law school websites within the next few weeks, and I will be curious to see if this number is significantly lower than the number who just graduated in 2011 (about 44,000). Maybe I should just assume the number was very close to 44K.

  15. When I called the US Dept of Ed. about my loan the woman on the phone told me: "Your loan earns seventeen dollars of interest a day"

    She said that rather quickly and I mused that she must have been looking at a screen with all sorts of data like daily interest etc.

    But yes, there must be a wealth of accurate stats in the Dept of Ed. database.

    However, if say, Sallie Mae is servicing the loans, then maybe Sallie Mae's data would not be in sync with the US Dept of Ed.

    But how does the ABA compile their figures?

  16. 7:53, what I think you mean is people who [i]can[/i] afford full freight and graduate with no debt.

  17. @7:58

    Premise: I think your points apply only in your fantasies.

    Conclusion: His points apply only in his fantasies???

    PS - Since the frugal living argument apparently applies only in your past...perhaps in applies only in your fantasies.


  18. Why isn't LawProf welcome in the financial aid office of his own school?

  19. @ 8:00-- yes, people who can pay full freight, and do.

  20. A lot of people can pay full freight. There is nothing wrong with this, and it doesn't take a person "rich as hell". 200K is NOT a lot of money, and a family with 200K in disposable income is in no way "rich as hell".

    Both this website and TLS are so dominated by poors whining ALL THE TIME. It's getting so annoying.

  21. A large reason this scam exists stems from two facts: 1) a misunderstanding by the lower class of the upper class’s motivations and 2) the partial myth of the American self-made success.

    The lower class doesn’t understand the upper class’s motivations. When you are born with money, the thing you want most is respect. In America, primarily, people will respect you only if you can establish that your wealth is linked to ability or otherwise, that you would have become rich irrespective of the fortunate circumstance of being born with money.

    Furthermore, the American self-made success is a partial (not a total) myth. There are many people that come from nothing and become exceedingly successful. This happens because many people, irrespective of their initial position on the social ladder, posses any variation of a combination formed from hard work, ability, and luck, which produces success. However, despite this fact, many people are rich because they are born with money (perhaps the majority of rich people). Nevertheless, because this country has permitted a degree of social mobility never seen before in human history, people sometimes automatically presume self-made success. This is especially true for members of the professional class, such as lawyers.

    This is what in large part fuels the law school scam, and Columbia’s numbers confirm this point. The members of the upper class want a law degree, especially a Columbia-like law degree, so they can acquire respect by taking advantage of the perceived social value of a law degree. The perceived social value stems from the perceived self-made merit involved in acquiring a law degree, which is reinforced by the partial myth of American self-made success.

    The members of the lower class fall prey to this. When the kid from Columbia, who is graduating with no debt because his/her parents paid sticker for school, buys the nice house/apartment, the nice car, and so on, the members of the lower class will think: “wow, this guy/gal is living such a good life because he/she is a lawyer.” Nothing is farther from the truth though. The truth is he/she is living well because he/she was born on third base, and there is nothing wrong with that. There is something wrong with creating an educational-loan complex that takes advantage of this fallacy, to the detriment of most students and the tax payer.

  22. A lot of people can pay full freight. There is nothing wrong with this, and it doesn't take a person "rich as hell". 200K is NOT a lot of money, and a family with 200K in disposable income is in no way "rich as hell".

    Both this website and TLS are so dominated by poors whining ALL THE TIME. It's getting so annoying.

  23. 9:07

    You forgot to mention the kid who got into Columbia who comes from nothing, gets a 4.0 and a 176, and gets a Hamilton or similar scholarship to cover all fees, a biglaw gig for a few years, and a nice landing in-house for a lower 6-figure job.

    He can also buy a nice apartment/car and he WILL BE self-made. This kind of case is not a rarity at Columbia.

  24. 9:09,

    Your shallow comment deserves a shallow response:

    Shut up, douchebag.

  25. 9:11 -- Where on the Columbia campus is your cubical?

  26. 9:16--

    I really wish people here would stop with the tunnel vision. Yes, everyone with a different opinion MUST be a law professor.

    The truth is, there are people who do everything right, get into HYSCC and MAKE IT. I know the existence of these people are detrimental to your "movement", but they DO EXIST, and not in small numbers.

  27. "The man knew what he wanted and went out and got it! Walked into a jungle and comes out, the age of twenty-one, and he's rich!"

    - Willie Lowman

    Lies the upper class tells to keep the peasants in line.

    1. I think another lie is that you have to work hard to make it. But that is missing the secret have to risks to make money. Taking calculated risks is more important than working hard!

  28. Whether or not 200K is "a lot" of money is beside the issue.

    The point is: how do you pay it back at 7%+ with your shitty law degree?

  29. "Never fight fair with a stranger. You'll never get out of the jungle that way."

    Uncle Ben

  30. When I entered Columbia Law School in the fall of 1977, tuition was $5032. The late seventies were a time of rampant inflation--7.6% in 1978, 11.3% in 1979, and 13.5% in 1980. Columbia's tuition rises very closely matched those inflationary increases. Tuition was $6,210 when I graduated in 1980, but that was the equivalent of $4,567.06 in 1977 dollars! In real dollars, tuition had actually decreased.

    For the last thirty years, law schools have inverted that ratio and gone wild. Tuition and fees of $57,750? That's the equivalent of $15,250.48 in 1977--more than three times what I paid.

    It's not a question of whether some students or families can make this work; it's a question of investing in the future. Rather than helping society and the legal profession invest in the future, law schools today are extracting as much money as they can from "price insensitive" students who want to play in the lawyer game. We sell the tickets to that game, and we have tremendous power to raise prices beyond the true cost of legal education.

  31. What kind of clueless fuck thinks that $200,000 in cash to just throw at a kid's educational costs isn't a lot of money? What percentage of American families have $200K lying around for something like that? And how many Hamiltons does Columbia give out each year, eight?

  32. So the most expensive purchase that one makes in life is no longer a home, it is spending at least 7 years in college and graduating with over 300k worth of debt.

    The house I grew up in the 1980s in SoCal cost about half of that amount.

  33. On TCM not too long ago I saw the old movie: "Mr. Blandings Builds His Dream House" from 1942 I think, with Carey Grant any Myrna Loy, and Melvin Douglas as their lawyer.

    Mr. Blandings, an Advertising Exec. bought 34 acres of land in Connecticut for 200 bucks an acre within train commuting distance to NY City and tore down the old house and built a new one for around 18 thousand dollars.

    I think the "Money Pit" with Tom Hanks was a remake of, or inspired by that old movie.

    Im not sure if the 18K included the demolition or not :)

  34. DJM- i think what you paid in the 70s is probably what a law degree is worth today. would anyone be on the law schools' jocks if it cost 15k/yr to attend? not me. cause then a kid can drop 15k, maybe do poorly, and drop out with some options. these days, the high price practically forces people to see the damn thing through or risk a prohibitively high amount of "sunk costs," as you wrote on earlier.

  35. Myrna Loy was also in: "The Best Years of Our Lives" directed by William Wilder.

    Melvyn Douglas was also in Ninotchka I think, with oh whats her name. Very lovely.

    And of Carey Grant everyone knows.

  36. lawprof is sticking it in, twisting it, and breaking it off today!

  37. DJM:

    A mordant joke: Your cost of attendance in real dollars at Columbia in the late 1970s is more or less the COA for New York state residents at CUNY today. CUNY is just about the cheapest law school in the country, and considered to be practically free in comparison to other NYC options.

  38. @9:09,

    I am not whining, I am explaining. If you want an ego boost, acquire paid companionship, but do not use my tax dollars to create a system that attempts to make things appear meritocratic, so guys/gals like you can fell you hit (or could hit) a triple when you were born on third. Get the Federal Government out of the loan business. Let the poors be, they have a better shot trying working their way up and starting a business than competing in a decked system.


    You forgot to mention the kid who drops out of college and starts a social media site and becomes a billionaire. How likely is that? Not likely at all. Similarly, if we accept Professor Campos’s stats, at best, 1.6% of Columbia’s class falls into the Hamilton Scholarship range. This does not justify the current educational system, where the Federal Government guarantees student loans so many (probably most) poor and middle class kids get destroyed and the tax payer gets fleeced. We should permit this because 1.6% of the class at Columbia and similarly situated schools have a shot?

    Not with my tax dollars. Let the poor and middle class kids open up enterprises and let the trust fund babies go to law school, as nature intended.

  39. @9:19

    I'm pretty sure LawProf has never said that taking a Hamilton is a suicidal move. If you've seen otherwise, please enlighten me.

    Meanwhile, saying "Sure, most musicians make less than minimum wage, but Justin Bieber is loaded!" isn't a very convincing argument for encouraging your kid to start a full-time career as a rock star.

  40. Random question: when people are using employment stats to calculate their odds of a Biglaw job, and they add together placement in A) firms of 100+ attorneys and B) fed. clerkships......isn't this a mistake?

    The argument goes that those in clerkships could have had biglaw, but if they would have taken biglaw, wouldn't that cut someone else out of the job? Or, do all fed. clerks secure an offer, do the clerkship, then head straight back to the large firm?

  41. Professor,

    The fact that these VERY PROFITABLE "non-profits" are unwilling to tap into their big-ass endowments shows conclusively that we are dealing with corporate pigs. They might use some funds for more capital improvements, which they see as investments - since they will presumably be able to use the new structures to house, feed and "educate" more students.

    Think of how many cities are struggling to meet payroll. These "universities" ought to be taxed on their property, holdings, and all other assets. We recognize that the term is a mere POLITICAL DESIGNATION for the purposes of allowing churches and "institutions of higher learning" to legally evade taxes. It is nothing more. Hence, it has no more validity than if someone issued a decree - or passed a law - saying that everyone with blue eyes is automatically 6' tall. It would still be utter nonsense.

  42. Before some law school shill or brainless defender points it out, I know that this political designation will continue to be enforced and "honored" by the state. However, it is a mere human construct, i.e. the pigs made it up, for their benefit, and that of their wealthy friends.

  43. If tuition keeps rising at the T14, at what price tag do people just stop getting enamored about the potential value of these schools. Students paying sticker are, at current tuition levels, acquiring a debt load greater than their first year's potential earnings at the most elite Big Law firms. At current rates, tuition alone at school's like Cornell will easily be hovering around $75,000 a year by the end of the decade.

    COA will likely be over six-figures a year. One would hope some of that T-14 luster wears off by then.

  44. Welcome to the USA.

  45. @ 9:19

    The existence of those people is not detrimental to our movement. Law schools market themselves as being a safe investment for the average applicant, whereas everything else is gravy. “Come to law school. If you do very well, you can get that BL/judicial clerkship/Federal Government job, but even if you do poorly, you will still do better than had you not attended.”

    The outliers in every field, from the guy in construction that can’t read who opens up a company and becomes a multi-millionaire to the woman who opens up a bunch of bakeries and does the same, make it.

    Evaluating law school based on the outliers is nonsensical given the nature of the sales-pitch. Showing the scarcity of the outliers, and showing that even some of said outliers have a problem, well, that just confirms and highlights the incredible problem faced by the overwhelming majority of law school graduates.

    None of you guys/gals who make the same argument, i.e. a handful make it, so the whole system is justified, explains to why the Federal Tax Payer should fund such abysmal results?

    We should let every shit box in America charge whatever they want in tuition, courtesy of the United States Tax Payer, so that 1.6% of the class at Columbia, assuming they are all lower class kids, can go to school for free? If this is the case, then why don’t we just pay for every single poor kid who can get into Columbia-like schools, instead of the absurdity we have now? Why should my tax dollars go to every Fourth Tier Shitter in America, so the overwhelming majority of attendees can have their lives destroyed?

  46. DJM & Law Prof: Another example. When I entered Penn as a second year in 1975 tuition was $3800. The next year it was $4200, an increase that more or less corresponded to inflation in the mid-70's. In real dollars it cost less to go to Penn then than to go to Temple as an in-state resident today, and Temple, while not CUNY, is a very reasonably priced state school.

  47. But wasn't the student lending system a good thing and not so corrupt at one time, and only started getting abused in, say, the mid 1990s?

    Is it accurate to say that things have gotten progressively worse in the last 15 years in the form of more schools opening up, huge tuition hikes and bankruptcy consumer rights taken away and the availability of even more of the federal coffers (spelling).

    With the worst abuses taking place in the last decade?

    I can swear I recall that there used to be a notion in the 1980's I think, that said that SL funds were limited, and that when one loan was paid off it made that money available for another to borrow.

  48. Ha! That is amusing about the CUNY tuition today. And I agree, 10:13, that the discussion about law school would be entirely different if law schools still charged what they did in the seventies and early eighties.

    But I apologize for something important that I left out of my earlier comment: I got distracted and posted before I had included this. As it happens, I didn't actually pay for my law school education. My father was a CLS professor and one of the faculty benefits, at that time, was free tuition for your kids. That benefit was one of the great compensations for faculty back in those days; the salaries were lower than they are today--although, I hasten to add, were more than fair then (even without the tuition benefit).

    I meant to add this as a final twist on the comment, but got distracted. And the reference to what I "paid" was a total mistake--I meant to say "what my classmates paid" and then add that final twist. Mea culpa--I wanted to also make that responsibility point and got distracted from my original focus.

    I don't think there are a lot of us who went through school tuition free (or with significant discounts) because we were faculty brats, but it's another advantage that a particular class of boomer students had. My husband and I started our adult lives with the blessing of no debt: His father was a lawyer who could pay for his college and law school, mine was a law professor who paid the half price college tuition I owed and gave me the benefit of free law school tuition. I could see from the beginning of our financial lives what that absence of debt--even 1980s debt--meant for our ability to save, purchase a house, cut back on work when our son was born, etc. More on this, perhaps, in a post.

  49. The way the original post is written suggests an imperfect understanding of how a median is derived, how it differs from what is "modal," and how it maps onto what is "typical." The numbers may be alarming in any event.

  50. Pretty terrible that CLS is charging so much and taking 90 transfers a year because they have a $10 million budgetary shortfall. They must be burning money at this rate. The Dean has a Chief of Staff. Maybe that person costs a few transfer students a year. Who heard of that. Sort of like a household with two in help. Law school has one relatively small building, and there is a cost for some dorms and an infrastructure to run the administration. This should not cost $74,000 a year per student. They must be overhiring, overstaffed and overpaying their employees. Not much they can do to improve the ugly building, so it should not be a cash drain. Hard to figure this out unless they have no one in charge of cost controls or are feeding other parts of the university.

  51. I agree on the shadow debt point. There are a lot less costly sources of financing than student loans. Parents who can second mortgage or parents or students that can borrow against a brokerage account at 1% or 2% in a low interest environment will be unlikely to take out student loans. This does not mean a quarter of the class is paying cash. It just means that there are other sources of financing. If a kid has $100,000 from grandparents, that kid can borrow a big chunk of it at 2% and hold on to the investment.

  52. The number of people who are "self-made" and on the Hamilton is probably one or zero per class at CLS. It's so low as to be a non-factor.

    The most common form of financial assistance I know about is loans for tuition, parent contributions for CoL. A few people also said they had "parent loans" that they would repay, but I'm not sure whether that would ever happen. I could see a parent sending a kid a bill every month. There were of course some uber wealthy with luxury off-campus apartments who were always suspiciously quiet when the topic of loan debt came up. The "median" family income seemed to be comfortably upper-middle class, like 300K or something. I came from a pretty middle class background and was probably around the bottom quartile in terms of my family's income and lifestyle.

  53. @ AUGUST 8, 2012 10:43 AM

    That is a great point. Biglaw base salaries have not increased since 2007. In the meantime, assuming 5% tuition hikes, 1.05^5 = 1.276 - 1 = 27.63% increase in tuition

  54. The value of a law degree is at this point a moving target.

    In principle the value would be the present value difference in a reasonably stable market between what a typical law student entering a given law school likely could earn over say 40 years without going to law school (or any graduate program) and what they will earn after spending 3 years in law school - less the opportunity cost of those 3 years. In other words

    cost = tuition plus 3 years earnings

    NPV is (present value (likely future earnings with JD - likely value of future earnings without.)

    If NPV < Cost then law school is a bad idea.

    The problems with putting a value on this are multifarious. First, you have the recognise that most Tier 1 law schools at least, and a proportion of Tier 2 are fishing at the top of the ability pool for college graduates - and yes I know that many law students seem kinda dumb, but objectively, compared to many of their peers, they are in the upper 1-10% of college graduates. That being the case, they likely would have done pretty well without going to law school. So the earning enhancement that law school gives them is small - and the 3-year income loss larger than the typical college graduate. There is relatively little data on what college graduates at the top of the ability range earn - it is mostly undifferentiated all college graduates, some college.

    At the other end of the problem is what a lawyer's expected earnings are over say the next 40 years. While this might have been somewhat predictable in the 1970s - at least as to what earnings quintile a lawyer might fall in (say upper 20% or upper 10%) etc. in the last 15-20 years lawyers, at least most lawyers, have been sliding down the earnings range - so from being in a position where they were one of the more highly paid groups, they are now probably just in the upper half of the earnings spectrum - so above the median, but not by much - and that position is sliding year-on-year - and will continue to slide as law schools pump out 50,000 odd graduates for 20,000 jobs.

    The result of this is that - while you cannot easily put a value on a law degree - it is hardly as high as people think it is. My back of the envelope calculation is that looking at Law Prof's $267k in student loans and allowing say $25k a year in foregone income over 3 years - post tax, the net financial impact is $342k - which means that the typical JD student needs to earn net between $17k and $27k per annum to justify the cost. Now that number should include the interest on their student loans - which I will for the sake of argument put at say $19k per annum.

    So to justify the cost of going to law school a college graduate with a high GPA, competed in 4 years and a high LSAT would need to be able to earn around $40-50k more per annum for 30-40 years than he/she would have earned with just the bachelors and their own abilities.

    Is a smart college graduate - leaving aside the current recession - over the next 40 odd years really going to earn $40,000 less per annum than an attorney? It seems unlikely to me

    Oh and these numbers are very much back-of-the-envelope guesswork - so feel free to tear them apart.

  55. 11:39,
    Agreed, HELOC is better for interest rate and tax advantages if you have that option.

  56. "and yes I know that many law students seem kinda dumb, but objectively, compared to many of their peers, they are in the upper 1-10% of college graduates."

    MacK - Thank You.

    The very fact one gets into a law school, especially a top one, has got to indicate something about the intelligence of the person, in spite of the razzies other law grads might heap upon their peers.

    Law school has a way of beating down one's self image and confidence if one allows it, and being in deep debt is probably the most difficult thing to overcome mentally and emotionally, for it leads to depression at times, and it is pretty hard to feel good about yourself when one is staring down a future of nothing but indentured, debt servitude.

  57. ^ Intelligence yes but many are lacking in common sense.


  59. "...I am comfortable telling our admitted students that
    if they come to NYU the high cost of attending law school will either be manageable (as they pay off their loans with their high private-sector salaries) or will be shouldered by the Law School but not by them (because of LRAP)."

    if you want to read it.

    letter i received from Richard L. Revesz
    Dean and Lawrence King Professor of Law.

  60. @ 12:45PM

    Since, in the tangle of your warped mind, you wish to talk about "common sense" so as to defend a corrupt and disgusting state of affairs.......

    Here is a quote from the author of a book about Common Sense.

    "A long habit of not thinking a thing (such as the law school criminal scam) wrong gives it a superficial appearance of being right.

    Thomas Paine

  61. 1:33,
    My comment relates only to 12:40's comment and MacK's comment above regarding the potential earnings of applicants admitted to law school.




    Bernanke Says Student Loans Won’t Cause Crisis
    Federal Reserve Chairman Ben S. Bernanke said record U.S. student loan debt doesn’t put the financial system at risk the way mortgages did because most educational borrowing is backed by the government.

    “I don’t think it’s a financial stability issue to the same extent that, say, mortgage debt was in the last crisis because most of it is held not by financial institutions but by the federal government,” Bernanke said today at a town hall meeting with teachers at the Fed in Washington.

  63. Will SL debt cause a financial crisis? I think Bernanke is right in that it probably won't. But it's still a trillion dollar pooch-screw that the taxpayers will have to swallow.

  64. How about the US "Government" offering a settlement to the most harmed by SL debt?

    A good political maneuver for all in that it would probably shut up the law bloggers who are most likely the most harmed and a minority (according to the most recent published accounts of the #1 US authority on SL debt--Kantrowitz) and who are the most likely to wail about Sl debt and from the most authoritative group position.

    Here, and listen: Settle all the Law School Debt loans for 10 cents on the dollar and shut the law school scambloggers up, along with all the other monetarily most harmed Sl debtors with debt over 100K, and then let the rest sort itself out over the next decade?

    Politics is the art of the possible after all.

    If the condition that 3 years of lost income and on top of that the JD or law license would be forfeited and exchanged for such a settlement I would bet that most would go for the deal and agree.

    Why should the law grads be the ones to go down first?

    If anything it will buy time for huge economic trends to correct themselves.

  65. ^^^Kantrowitz says that 6 figure Sl debt is unusual and not the norm BTW.

  66. I would rather pay for student debt than the trillions we have paid in Iraq. Taxpayers often pay for things we do not want to pay for.

  67. "Vociferous" is the word.

    The scammed law bloggers and supportive law school scam bloggers from academia are probably the most vociferous about the condition of the debt, as well as the most intelligent, legally savvy group most likely to demand change.

    So let us assume that Kantrowitz and Bernanke are 100%correct, and now we have to start picking this whole mess apart by sorting out who is the most harmed by the student lending system to the tune of 6 figures, and who is not.

    Or maybe all of us here are a bunch of misfits and we have been living in an entitled dream, in that there is no student loan scam, and there never has been a student loan scam?

    There is no Law school Scam and buyer beware to the miserable youth of America today, also referred to by cruel old boomer judges as: "Sophisticated Consumers" of what Benjamin Franklyn wanted to make available to the poor in the form of free public American Librarys: Human knowledge.

  68. "I would rather pay for student debt than the trillions we have paid in Iraq. Taxpayers often pay for things we do not want to pay for."

    Yeah, there were no WMD's in Iraq. Just a lot of WD-40. And maybe in the grand scheme and total of a national budget Sl debt is hardly worth a second glance by Congress.

    Maybe the only choice is to emigrate?

    6 figure Sl debtors have to make that choice. Stay and hope for so far no promise of change, or flee the USA

  69. I think the shadow debt point is somewhat interesting, but I'm curious whether many families are covering college costs through home equity loans any more, relative to past decades. It seems that taking out a home equity line instead of student loans is largely a 1% consideration at this point, given that the middle classes had their home equity (and retirement and other investments) wiped out a while back in this recession. Isn't this evaporation of other capital one of the reasons student loan spending has ballooned?

    My parents covered my undergrad tuition costs with the help of a HELOC in the late 90s--I think this was a pretty standard move for homeowning families who wanted to provide college support for their kids but couldn't cover tuition costs outright. I'd love to take out a low-interest home equity line/second mortgage to pay down my law school loans right now (plus get a meaningful tax deduction on the repayment), but whaddyouknow, my home has approximately zero equity in it these days. And, if my family members wanted to again offer me any financial assistance in this way, they couldn't--my parents' home is underwater; my fiance's home is underwater; even my grandmother's retirement condo is underwater.

  70. "For having lived long, I have experienced many instances of being obliged, by better information or fuller consideration, to change opinions, even on important subjects, which I once thought right but found to be otherwise."

    Benjamin Franklin

    I hope that Kantrowitz and Bernanke are at least as flexible.

  71. @12:40PM

    "The very fact one gets into a law school, especially a top one, has got to indicate something about the intelligence of the person, in spite of the razzies other law grads might heap upon their peers."

    Uhh yes, it probably does show that you are smarter than a lot of your peers - but taking the offer shows you to be more naïve, especially lately, than your peers of similar ability that did not.

  72. "peers of similar ability who did not"

  73. How's this for a one stop answer to the enormous and growing law school tuition bubble. Make an announcement that starting in the fall of 2015 that the maximum student loan per any one year will be $35,000. Apply it to entering 1Ls only if you will. This will cause some scrambling on the part of the law schools but it's less than the inflation adjusted costs from the mid 1990's so they can do it. William Ockham

  74. "Will SL debt cause a financial crisis? I think Bernanke is right in that it probably won't. But it's still a trillion dollar pooch-screw that the taxpayers will have to swallow."

    Probably not now that the government owns much of the worst debt. I have to think that as people reach the point of default on loans that are eligible for IBR, they're going to make the government take them.

    My concern is with the remaining private loan balances. In this case, whether or not there is something of a crisis depends what they're doing with the loans. Granted, no one is going to get out of these in bankruptcy, so in that sense, the securitized shit made from them is somewhat safe. However, for most borrowers, you can only use modified payment plans for so long, and once you've used them, you absolutely have to pay. That's just the way it is. With the economy over the last 5 years, many of us have already used up all the "generosity" and "patience" the fuckholes who answer phones at call centers are willing to give us. And the economy isn't much better, so there is really a brewing storm if things don't improve. My payments just doubled because I'm now on regular repayment. That doesn't bring a job any nearer. So what then? If I can pay, then I can't pay, and even though I can't discharge the debt in bankruptcy, I'm still going to default on it, which is going to trigger payment obligations on the derivatives. In that sense, it's just like mortgages.

    That's my understanding, anyway. It might be wrong, but if so, I'd be glad for someone with better knowledge to explain it.

  75. *"If I can pay, then I can't pay." = "If I can't pay, then I can't pay." Sorry.

  76. @BoredJD:

    "comfortably upper-middle class, like 300K"

    Seriously? 300k is ONLY upper-middle class? Do those households have 10 children or something? 300k is decidedly upper-class. Sure, it's not super-.00001%-ultra-wealthy-elite-oligarch-class, but still solidly upper class. I guess if 300k is the product of both parents working and if they have no extended family to fall back on, then it might be lower-upperclass.

  77. There will be no shortage of naive college grads this fall, nor any time in the future. I should also throw in clueless parents who, bless them, encourage their kids to follow their dreams, and even people within university administration who remain clueless about employment outcomes - faculty advisors, other profs who transfer outdated advice.

    For all the hype about fewer people registering for the LSAT, there will still be 125,000 tests administered this year, even if the 6% decline from the June test remains steady across the board.

    These declines are coming off of a record 171,000 tests administered in 2009. There will still be plenty of high scores to fill the T14 and happily pay sticker. And there will still be plenty of ignorant lemmings jumping into seats in the lower tiers.

    And part of the reason is because you could NEVER get a significant portion of these folks to sit down with a calculator and add up how much debt they will be facing when they graduate. And if you skipped that portion of the enlightening and just showed them a chart, you couldn't get them to use a loan calculator to show them how much their monthly payments will be or how much cash they would blow if they chose a 20-year repayment sked.

    Some of these students are going to law school knowing they are delaying bankruptcy, and relying quite literally on a prayer. Some law schools are aware of the fact that God wants you to be a lawyer:

  78. Paul,

    Isn't the average only for students who incur debt? If so, the 23% who don't borrow won't pull down the average.

  79. @ AUGUST 8, 2012 4:20 PM

    "These declines are coming off of a record 171,000 tests administered in 2009."

    That is a critical point. When I was looking at the LSAT breakdown chart, I also compared it with the hoopla on TLS about "easier" cycles. I noticed this was very similar to the sales pitch of "buy houses now, as they are more affordable" with the subtext being "more affordable using the 2006 housing price reference point."

  80. It's never really discussed, but I wonder what the debt load of CA only accredited schools and other schools that fall outside the ABA. I looked up a couple and calculated the tutition between 50-60k.

  81. Another thing about hype -- If you point out shady behavior on behalf of law deans (Illinois) or schools (cooley, et al.) it raises some brows, kindles a little outrage, the choir says amen.

    You even remotely suggest things might be picking up at the next OCI? Inspires waves of excitement in all the young T20 acceptees.

    People love to think things are turning around. And the damage this beautiful little piece did to efforts to warn potential law students is undoutedly immeasurable:

    (It's the article about law school being a "buyer's market,") a dumb, if off-handed word choice. And unfortunately the quote taken from a Wake Forest admin. happened to make its way into the title and is now googleable, and you can find references to it in still more articles that take it as Gospel - the direct takeaway is that now is a GREAT time to apply to law school.

    I would wager little tidbits like this go much further than even pointing someone to ABA employment pdfs.

    I guess applying is fine. Matriculating is the problem.

  82. 6:06 --

    The Massachusetts School of Law at Andover charges 17K per year, so 51K total, plus interest and COL, and is unaccredited, though they were involved in anti-trust litigation with the ABA in an attempt to gain it.

    The youtube video I posted above at 4:20 is a short little example of some of their marketing tactics. Reminds me of Joel Osteen or some other slick-haired, gold-chair sitting evangelical TV pastor selling prayer oils or whatever the hell they do.

    They even have purple drapes in the background. Welcome to the Kingdom.

  83. 5:15: The average is pulled down by the (probably considerable) proportion of graduates at a school like Columbia who get serious family help paying for law school, but still take out some debt. That's why the median debt at any law school is likely to be quite a bit higher than the mean. (All this is in addition to the points about how schools don't count accrued interest, which at a high cost school like CLS bumps the actual mean by about 15%).

  84. "This fall, the entering 1L class at CLS will pay $57,750 for the same services. Columbia estimates the nine-month cost of attendance this year as fifty dollars short of $80,000. But here's a fascinating little factoid: 23% -- nearly one in four graduates -- of the CLS class of 2011 graduated with no law school debt whatsoever."

    This is another thing about the "class mobility" issue. Don't get me wrong. I've benefitted from law school and though I have debt, it's manageable.

    But when you get to a pricy elite law school, you learn things, like the few dozen kids that don't show up at the mandatory student loan meeting. And the "inheritance" isn't always just monetary.

    Of my close friends in law school, several had fathers or mothers (or both) or other relatives that were judges or attornies. They had contact with the material very early on, and they weren't seeing these concepts for the first time.

    For me, a first generation college student, I was shocked to learn that most everyone else had taken an expensive private LSAT prep course (this was several years ago when they weren't as ubiquitous). My LSAT prep was a few practice tests. I naively felt like they wanted to have a general idea of intelligent I was, not how many hours or dollars I could spend to game the test.

    Of course, they went to expensive private high schools and expensive private colleges, with advisors that let them know that a grand or two in test prep might pay back ten fold in terms of scholarship money (or admittance into the elite school their parents really needed them to be able to attend).

    That's before you get to OCI (which some skip because the family firm doesn't really do interviews) and others don't sweat, because regardless of grades, if your father is a chief executive of a fortune 500 company, you're going to get some offers.

    These folks were almost universally polite, humble and were not arrogant or condescending. But there was no doubt they had a leg up on some of the rest of us.

    I'm not complaining. It's not their fault, and I'll likley try to give my kids every opportunity I can as well, but that's another part of the story that every aspiring starry-eyed son-or-daughter-of-the-night-janitor needs to know before plunking down a quarter of a million dollars. Especailly to compete with people that, while they're playing the same game, they aren't using the same equipment. It's akin to showing up at Wimbledon with a wooden tennis racket.

  85. Yes, I remember those kids from law school. They would all sit together and go to their private club to meet up after class. Those kids would be friends from their $35k a year prep school days. One boy's dad called a federal judge and got him a clerkship with a federal judge for summer after 1L. This led to Big Law after 2L. Then Big Law itself and partnership using dad's friends for clients. Law school is a good investment for offspring of the 1%.

  86. 6:26, yes. 6:40, While there were quite a few rich kids with nice cars I don't recall them excluding others from their group. It's no different than with me and people I meet now. Yeah I probably make a lot more than them but who cares. I do agree they had various advantages that I didn't though.

  87. There were rich kids at my Ivy League college who ran in clicks. That was not the case at my HYS law school. Some of the richest people were those who never gave a hint about their wealth. It wasn't they case with all of them, but I knew a number who were only interested in public interest work, or working in the government.

  88. Always rich people at elite schools. The ivies and little ivies undergrad are saturated with rich people. Some of them have dads who donate buildings to get them in. Sometimes having grandpa having donated one of the most expensive building on campus does not get them in and the student, who is actually a very good student and fully qualified, needs to attend a school a bit farther down on the food chain. I have seen it all at the undergrad level.

    CLS is more upper middle class. My guess - most of that 23% borrowed something to attend but just not on the student loan side. My class had one person that I knew and got the impression may have been admitted on family money, but I cannot be sure of this. Hard to tell whether the couple of other superrich got in on their own- may have. There are some people who attend law school when they have worked for a few years and have something saved. Some people can live at home and many have working spouses who foot at least the living expenses.

  89. Surely forming student groups is like bolting the barn door after the horse has bolted? We need to stop students enrolling, because the damage is already done by the time they set foot in law school.

    My suggestion for advocacy? Think big. Think on the scale of a national pledge by all applicants not to apply in 2014 to highlight the issues and, more importantly, to force change that will reset the system for every student by 2015 - lower tuition, cash-strapped law schools closed for good, a relative shortage of grads that will help alleviate many employment problems, etc.

    In other words, aim high, and then you might just hit the target. Suggesting student groups as a good solution is aiming very low!

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