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.