Real people, real numbers

A student from a public law school contacted me recently.  He attends a tier-one school, which is also the best school in his state.  He has done relatively well in law school, ranking in the second quarter of the class.  And he would like to work as a prosecutor, public defender, or other government lawyer.  That's why he came to law school, and why he chose a public school with “low” tuition and a public service mission.

As he enters his third year, this student already owes more than $80,000 in law school loans.  By the time this student graduates next May, he will owe over $125,000.  How could that happen at a public law school?  Isn’t the “average debt load” for graduates of public law schools just $75,700?  Has this student been jetting off to Europe or stashing loan money in the Cayman Islands?

Hardly.  This student is living frugally, below the estimated cost of living for his school.  He also received the median scholarship from his school, so he’s not paying list-price tuition.  But he came to law school without savings or family support:  He worked part-time during college, and his family put in everything they had, just to get him through college debt-free.  The student assumed that attending his state’s flagship law school—with a scholarship—was a fiscally sound choice, and that it would be safe to borrow the necessary funds.

Here’s how the numbers add up.  I’m altering some facts and figures to disguise the particular school and student, but the outline and bottom-line numbers reflect this student's story.  It's a story, I suspect, that could come from many students at public law schools around the country:

• First-year tuition (at discount), $18,500.
• First-year living expenses for nine months, $16,000 (the school budget estimated $19,000). Note that this included $2,300 of mandatory health insurance and about $1,500 in books and supplies, leaving $12,200 for nine months of food, housing, and everything else.
• Summer living expenses after first year, $4,000.
• Second-year tuition, $20,705.  The school raised tuition 9%, but the scholarship was for a set dollar amount, so the student's effective tuition rose 11.9%.
• Second-year living expenses, $16,000 for nine months (again, well under the estimated budget).
• Summer living expenses after second year, $4,000.

That's $79,205 in expenses so far.  The killer, according to this student, is that it's so hard to earn money while in law school.  Of course, he wasn't allowed to work during his first year.  During his two summers, he had these options:

• Work as a faculty research assistant, earning $8.75/hour.  As the student noted to me, a full summer of this work (40 hours a week for 12 weeks) would yield $4,200--even less after social security taxes.
• Work for a prosecutor's office, public defender's office, legal aid, or other government office.  Most of these jobs pay nothing--they are volunteer positions.  But they are essential to land a post-JD job in one of these offices; students need the experience, connections, and "seniority" to get many of these positions.
• Tutor high school and college students for $25/hour, one of the ways this student earned money in college.  This is more lucrative than working as a faculty RA, but it yields no law-related experience or connections (unless one of the kid's parents is a lawyer).  It's also hard to count on 40 hours/week.
• Work for a small law firm for $15-20/hour.  These jobs would give some legal experience, although not in the area this student planned to work.  And it turned out that even these jobs were challenging to find.  This student opted not to look for this type of work, but many of his classmates searched for these positions and struck out.  It's an employer's market:  With fully licensed recent graduates working on an hourly basis for small and medium-sized firms, how many summer positions are left?  

What about those summer jobs at big law firms, paying $2,500/week?  The student laughed.  Maybe for the top 10% at this tier-one-but-not-T14 school, but not for the rest of the class.

Over the two summers, this student chose a combination of research for a professor, volunteering for a prosecutor's office, and tutoring.  He needed the volunteer position with the prosecutor's office to compete for a full-time job after graduation; the CSO told him that working for a faculty member was prestigious, would give him good legal experience, and would lock up a faculty reference; and the tutoring job was the best way to make ends meet.  Over the two summers combined, he cleared about $8,000 after taxes.

During his second year, the student thought about continuing the tutoring to bring in some more cash.  But he needed to keep the volunteer position in the prosecutor's office to preserve his career prospects.  He also wanted to maintain his position in the top half of the class academically, and his professors demanded regular class attendance.  A few faculty members advised him that it would be better to invest his time in studies and extracurricular activities, rather than in a part-time job unrelated to law, so he took their advice.  In addition to the volunteer position with the prosecutor's office, he devoted himself to classes, joined one of the school's secondary journals, and assumed a leadership position in a student organization. 

So during two years of law school, this student accumulated $71,205 in debt:  $79,205 in expenses minus the $8,000 of income.  He took out direct federal loans to cover his debt.  Interest starting accruing immediately on most of the debt, adding about $11,400 to the total.  Then there were the loan origination fees, although those were only 1/2 of 1% for this student's first two years.  After adding $356 for those fees, the student's debt reached $82,961 for two years of law school.  That total, again, is for two years as an in-state student at a public law school, with a median scholarship, living on significantly less than the school's budgeted cost of living, and with a mixture of part-time jobs, volunteer internships, dedication to classwork, and extracurricular activities.  

But this student still has a year to go--and the coming year will be even worse financially.  The school has raised tuition again, by 5%.  The scholarship dollars are still constant, so this student's effective tuition will go up another 6.4% to $22,040.  The student knows he won't be able to work a paying job next summer, while studying for the bar, and he will have to pay at least $1,500 for a bar prep course.  He will continue to keep living expenses down as much as possible during the school year, but he plans to borrow the full "cost of living" estimated by his school to tide him through the year and first part of next summer.  That amount is $19,500.

Meanwhile, as this student borrows money for his third year, interest will continue accruing on the loans from his first two years.  And his final year's loan will be more costly than the other two:  Congress eliminated the subsidy that previously shielded part of each loan from accruing immediate interest, and the government dramatically upped the origination fees for this year's loans:  The student will pay a 1% fee on the first $20,500 and a 4% fee on the rest.  Adding it all up, it looks like this student will owe $132,398 by the time he graduates in May.

The student is in despair.  How did he possibly accumulate this much debt at a public law school?  And how will he possibly repay it?  The student will try to work part-time for pay during his third year in order to borrow less, but there aren't a lot of options for lucrative part-time work.  Any work he does obtain, like the tutoring, might limit his volunteer work with the prosecutor's office, his class preparation, or further involvement with a journal or other extracurricular activities.

What about that average debt of $75,700 for graduates of public law schools?  It seems to be as misleading as the average salaries published by schools:  It's already two years out of date (loans have already been approved for the academic year that starts later this month); it includes underreporting from some schools; and it's an average that apparently masks considerable variation.  Students from upper-middle-class backgrounds may borrow modest amounts, while students with no family resources must borrow much more.

Public law schools were created, in part, to serve the latter group of students:  One of our missions is to allow students of modest means to become lawyers.  Another one of our goals is to support students who want to serve the public as prosecutors, public defenders, or other government officers.  But we're failing miserably at those aims.  Instead, we're saddling at least some of our students with a debt that is almost three times larger than our country's median family income ($45,800 in 2010).  We're not just destroying dreams; we're creating nightmares.