Monday, May 7, 2012

The actual cost of law school

Georgetown’s law school has put a very useful calculator on the internet, that allows prospective law students to calculate how much debt they are likely to accumulate by the time they graduate, and what their monthly loan payments will look like afterwards.  It also includes a calculation of what students who qualify for the school’s LRAP program will pay.  (Georgetown has moved to a model in which the school requires LRAP-eligible graduates to enroll in the federal government’s Income-Based Repayment program.   Depending on the graduate’s income, Georgetown will then make some or all of the graduate’s IBR payments.  This appears to be the new wave in LRAP: for example, Michigan, Virginia, and UCLA have enacted similar programs).

It’s easy for prospective students to overlook – indeed I’ve tended to overlook this myself – that the current financial structure of legal education, which is based on students taking out high interest (6.8% Stafford and 7.9% GRADPLUS) loans, ensures that the actual debt loads of graduates will be, by the time they graduate, nearly 20% higher than the principal on the loans those graduates took out.  This is because interest on these loans begins to accumulate as soon as they are disbursed. The GULC calculator makes this easy to see, and the results, when combined with information it provides regarding repayment options, are startling.

Let’s look at three hypothetical law students, who will be enrolling at three different law schools this fall.  Kim will be attending a low-cost institution: a state law school with low resident tuition, for which Kim qualifies, and a low cost of living.  Kim’s cost of attendance for her first year will be $35,000. This represents roughly what the typical COA for state residents will be this fall at the less expensive public law schools, such as the Universities of Alabama, Florida, and Georgia.

Lamar will be attending a law school with what will be an average cost of attendance this fall, i.e., about $50,000.  This represents the typical COA at the cheapest private law schools, as well as the cost for state residents at some of the more expensive (but not the most expensive) public law schools.  Schools that will have a COA in this range this fall include the University of Texas, the University of Colorado, and the Thomas M. Cooley School of Law.

Meanwhile Khloe will be attending an expensive law school in a high-cost city. She will pay $75,000. Schools that will have a COA in this range this fall include Berkeley (for California residents; non-residents will pay about $80,000), George Washington, Cardozo, and New York Law School.

Now let’s look at what these prices will add up to for the graduating class of 2015.  We’ll assume Kim, Lamar, and Khloe are borrowing the cost of attendance courtesy of U.S. taxpayers, and that the COA at their law schools sees only cost of living increases during their attendance.  (Until this year this would have been an unduly optimistic projection, but there are growing signs that even university administrators are coming to understand that law school tuition can’t continue to rise in real dollar terms).

Kim will graduate with a total law school debt of $122,434.  If she opts to pay this off via the standard ten-year repayment option, she will make 120 payments of $1,441, meaning that she will end up paying $172,931 for her law degree in the decade after graduating.  If she opts for the government’s extended 25-year repayment plan she’ll be sending in her final $889 check in the fall of 2040, after having paid a total of $266,849 for what is one of the least expensive legal educations obtainable at an ABA-accredited law school in A.D. 2012, at least in terms of advertised prices (about which more shortly).

Lamar will conclude his moderately-priced legal education with a total law school debt load of $177,896. He’ll either be paying $2,112 per month for ten years ($253,480 total) or $1,315 per month for 25 years ($394,373 total).

As for Khloe, she will owe $270,572 at graduation, and will be paying $3,231 per month for ten years, or $2,023 per month until 2040.  In the latter case, she will have obtained her law degree at what according to Dean Christopher Edley is now the minimum price at which a “first-rate” legal education can be provided, that is, $606,913 over 25 years.  (Note that none of these figures take into account opportunity cost.)

Now consider these prices in the context of what lawyers in America actually earn.  Despite their best efforts ABA law schools were only able to confirm that 20.8% of their 2010 graduates had acquired salaries of as much as $63,000 per year by the winter of 2011.  It’s a highly problematic question whether such a salary justifies the debt load generated by borrowing the cost of attendance at the least expensive law schools, given that the latter figure nearly doubles the 80th percentile of salary for the class of 2010.   

By contrast, it’s easy to answer whether these salary figures come close to justifying the cost of “moderately priced” -- let alone expensive -- law schools:  it would be an understatement to say they do not.

(As for the projected long-term earning potential of people with law degrees, keep in mind that roughly half of the practicing lawyers in America are sole practitioners, while seven out of ten work for firms of less than 20 attorneys. Furthermore there’s evidence that the long-term earnings of attorneys have been deteriorating for at least two decades now).

One consequence of all this is, as prospective law students and their families ever-so slowly come to appreciate that the advertised price of law school has now come to be in no kind of rational relationship whatsoever with the net present value of a law degree, law schools are being forced to offer increasingly steep discounts on that price.   That development will be the subject of my next post.


  1. Plus, opportunity costs could be tossed into the equation.

    Back in 2009, Herwig Schlunk authored an economics paper entitled "Mamas, Don't Let Your Babies Grow Up to be...Lawyers." His basic finding was that law school is a poor investment for most students.

    1. YES, in deeded a poor investment, the worse to come is if did not pass bar exam ,you just a JD grads only, who even can not give legal advice.
      THE RESTRICTION came from ABA/ STATE SUPREME COURT RULED --JD grads can not give legal advice.I say that restriction violated FIRST AMENDMENT US CONSTITUTION + MONOPOLIES.

  2. I make 62K a year. My take home pay each month is about 3,300.

  3. So with this information out there, if people still enroll, what do you say?

  4. I never thought I would live to the point where financing a law degree is just as or more expensive than paying off a mortgage. Can a Thomas M. Cooley law degree provide you with shelter? I hear their diploma is oversized.

  5. Why aren't we hearing from our most famous colleague, President Obama, our plight?

    Surely some readers know him personally or have a close connection.

    Outside of our relatively small group, nobody believes that lawyers suffering financially is anything but the lawyer's fault.

    But the president could perhpas put this in special context. After all, for all the liberal talk of justice and fairness, how is any of that to happen without lawyers? Broke and untrained is not the recipie for an effective advocate for anyone.

  6. @6:29 a.m.:

    It depends on what you mean by "out there." Technically, the news that law schools exaggerate their employment figures has been "out there" since the late 1970s, if you knew to compare NALP and DOL figures with USN&WR and/or schools' published employment figures. Meanwhile, this calculator is up on the website of one of the top 20 law schools in the country and none of the others. How likely is it that anybody who isn't (a) a likely matriculant to GULC or (b) a reader of this blog will see this calculator?

    A year after Segal started writing on this for the Times, law school applications are down 20%. Dissemination of the relevant information is far from complete, especially when almost all of the schools continue to publish employment rates without regard to the jobs held and salary medians without regard to the students reporting. You can't say that transparency has failed until transparency has actually been achieved, and law schools continuing to abuse their social capital on this issue means that it hasn't been.

  7. There's also the psychological cost o going to law school, but I think you already did a post on that.

  8. MorseCode - you are correct. Nothing even remotely close to transparency in the law school market has been achieved.

    This market is one of the least efficient markets I can imagine. Even with recent heroic efforts such as those undertaken by Professor Campos, the market remains woefully inefficient. Once a certain critical mass is somehow achieved in terms of market efficiency, however, I envision that far more than a handful of law schools will meet their demise.

  9. I did not check out the calculator but I do wonder about one thing: Does it take into account that come July 1 of this year, no more subsidized federal loans will be offered to law students?

  10. 6:29 here. I am being very specific. I should have been clear. If people interested in Georgetown use this calculator and still decide to go, what do you say?

  11. AtheistATLLawyerMay 7, 2012 at 7:37 AM

    So, I posted on Cooley's facebook wall about what a prestigious institution it is and how it is "totally worth" the 200k price tag.

    My comments were deleted over the weekend. Think I'll get a subpoena in the mail?

  12. The biggest crime.

    Look at Georgetown's numbers. The loan amount being forgiven in the calculator's model with an expected starting income of $62,000 -- roughly 150% of what the average american earns -- is $278,000.

    Who is the lender, or to use the parlance of our times the "counterparty", whose loan is being forgiven? Answer: Uncle Sam.

    I know a law professor now is President of the United States, but how in God's good name can we justify forgiving three-quarters of a million dollars in taxpayer money to finance the scam? And how is it fair to ask those who received no benefit from Khloe's, Lamar's or Kim's education to bear the cost?

    Is getting a law degree a public good? Even those in the ivory tower haven't quaffed that Kool Aid.

    Nuts. America is broken.

  13. In looking at the calculator these numbers are just mind-boggling. My kid makes 65,000 a year, how is he ever going to pay back these kinds of numbers. The scenario for Law School, just does not make economic sense.

  14. .
    Income based repayment is just a massive robbing of taxpayers to fund faculty and universities.

    Unlike funded research, which gets the public knowledge, etc., the public only gets the bill while students get their sheepskin. It also retards innovation as the percentage anchor weighs you down as you progress. It encourages individuals to take public sector or 501(c)(3) jobs, but not private sector jobs!!!??? Why? Because of that old and false canard that public sector jobs pay less. That is demonstrably untrue and has been proven untrue by multiple economists in the last 5 years.

    What is going on here? How is this fair? How is this a good system? And why do universities avoid sacrifice and responsibility altogether while taxpayers get the bill?

    1. SCAM ,ANOTHER SCAM BY THE POWER. Same as JD GRADS,no license,can not give legal advice ruled by ABA/ STATE COURT. SCAM by the power. No one has discovered this unthinkable ruling. It violated FIRST AMENDMENT US CONSTITUTIONS.


  15. If you can’t find a job after graduation, you paid a steep price even if you managed to avoid going into debt due to wealthy parents or scholarships. You wasted three years of your life. And having been played for a sucker, you will carry destructive feelings of shame and anger for years to come. The financial damages caused by the scam are awful. But there are other damages as well.

  16. Holy shit. The worst part is that the students have been brainwashed for their whole lives to trust authority, especially our educational institutions that are supposed to foster "critical thinking." It is very difficult for many to accept that these "enlightened" parasites are actually willing to ruins hundreds of thousands of lives for a fat paycheck. Like the housing scam, the higher education scam targets those who have the highest aspirations for the American Dream, those who are the most willing to work hard to achieve what they have been systematically conditioned to believe is real.

    But the ultimate effect of the education scam is in some ways far worse than the housing scam - permanent indentured servitude to the fascist bank-government alliance. The youth are always the most likely to start revolutions - see Arab Spring. Do you think that crippling them financially for life is an unfortunate accident, or a strategy?

  17. The effect of income based repayment is to insulate students from price. This is not a good thing if you accept that prices are a value revealing metric that allows consumers to compare values across products and services.

    What do I mean? Well, IBR will mean that law schools will all cost the same, regardless of sticker price. All will cost 15% of your income for 25 (or 20) years, unless you're in the politically-favored public sector, in which case it will cost 15% of your salary for 10 years.

    Law school will stopped being priced in money; it will be priced in time like any other indenture.

    Regardless of your politics, this is a dangerous precedent being set by the government. Maybe food can be 10% of your income. Taxes will be 45 percent of your income. Housing can be 25% of your above the poverty line income. In the home of the free, you can have 5% of your above the poverty line income to spend as you will.

    We won't have price controls, which are too "centrally planned" for America. So, we'll have percentage controls or indentures. These give the illusion of a free economy without the "problems" associated with a market economy.

  18. Wow.

    Just for giggles I input "$200,000" as a starting salary into the GULC calculator. I left all of the other data set at the default, including the 3.5 percent estimated annual income growth.

    Even with at 1 percenter level income, the calculator estimates that I will have $42,500 in debt discharged after 10 years.

    If I can't repay the cost of law school after a decade making that kind of bank, the system is just plain screwy.

  19. @7:25 a.m.:

    Again, it depends on what the school says its employment outcomes are, and how much one expects to make over the course of a career.

    In this case, look what Georgetown's CPO says. 51% of the class is placed in the private sector with a median salary of $160,000. They won't hesitate to tell students about the 10-year forgiveness option under IBR for the lower-paying government and public interest jobs, but you wouldn't be able to get them to admit that most of the $160,000 jobs end with up-or-out by the five-year mark - or that most big-firm lawyers will be lucky to make two-thirds of what they made in their first five years, let alone see a lifetime appreciation of income above inflation.

    I still don't feel that Georgetown's 0Ls are adequately warned about the real economic factors at work to make a good cost-benefit decision. But I will admit that they're better informed than most.

  20. When you premise your movement on (1) disclosure of information and (2) complaining about public loans rather than the entire system of education being too costly, it is pretty easy to see how this will turn out.

    Law schools will respond by providing more information. At some point, most of you will even say they provide sufficient information. The problem is that this isn't just about sufficient information. I agree fraud needs to be addressed. Its not enough.

    The government will respond by cutting public loans, and leaving us with private loans (which has no IBR repayment plan, no debt forgiveness, nothing). The "shielding" people are whining about is that at some point debt will be forgiven. The best complaint that can be made is that the program should forgive as one pays into the system (I agree that's a great reform idea) or that the system may one day end (which does not answer the question whether loan forgiving is a good idea or not given the debt load) and possibly a third, it should apply to private debt (with no reasoning about why other than it advantages the particular individual making the complaint).

    We will still be in as big a mess as we are now because none of the above solutions changes much, even IBR, about the cost of education. The movement relies on the belief that the market will correct the problem.

  21. Another excellent post. These are the nitty-gritty details and realities that are slowly sinking in for many people. For so many of us who didn't have our parents pay for law school (and that is most of us), we were told by our parents and, more generally, everyone in the 1990's and early 2000's that educational debt is GOOD DEBT, citing all of these outdated statistics that supposedly contemplate the long-term earning potential for college graduates.

    There are no absolutes. The old way of thinking is bullshit---at least when it comes to a law degree.

  22. @Morse Code for J:

    Taking a break here. I think this is an important issue that even the HYS students fail to grasp. The leverage model for law firms means that in BigLaw the focus is on getting associates to do financial work that for the most part a semi-house trained monkey could do - and a very high equity to non-equity lawyer ratio. This means in practice that BigLaw associates are very profitable from year 1.5 to year 5.5 - but then it is cheaper to cull them and waste the funds on getting a new associate to bill-abillity. The firms are not going to make 90% + of the associate hires, including the hires from HYS partner - and they will not be BigLaw partners - they will be ordinary lawyers doing probably sub-ordinary practices in small law. Their peak earnings are at 5-6 years - and then they are lucky to make what a first year makes. The Dewey associates, of counsel and non-equities are for the most part screwed as of the 15th of May, but they were going to be screwed sooner or later, the data has just been advanced. By the way, a few other firms are probably going to go the way of Dewey - while one or two who have been recruiting "rainmakers" like gangbusters will look very Dewey/Howrey in 3-3 years.

    However, it is no longer up-or-out at 5 years - partnership now is a 8 year to non-equity in the short track and 9+ in others as opposed to say 6 years in the 1980s. Equity partnership is rarer yet.

    BigLaw has a "thin bench" problem. So part of what put Howrey under was the death of Cecilia Gonzalez at 53 in 2009 (who was both charming, nice and brilliant (the nice was unusual for Howrey.)) She was on every good Tech GC's speed-dial especially for §337. Losing Cecelia was a disaster for the firm - and while Cecilia was unique - the big issue for Howrey was that it exposed their thin partner bench in IP - that a 53 year old partner (who made partner at 29) left them in such a bad position is in part because they made so few partners.

    Oddly enough, many senior lawyers - rainmakers - are beginning to look askance at being equity partners - and very happily at a guaranteed paycheck with an upside revenue share formula without equity. The reason is what happens when a firm goes down with $100mm plus in obligations. If you are in your late 40s to early 60s do you want a piece of that liability - especially if you spent your 30s paying off student loan debt (in the current regime it will be your 40s and 50s paying off the student loan debt)?

  23. This says so much about undergraduate education, particularly in the humanities. Here you have the best students, graduating with good grades from top undergraduate programs. But they can’t even do a basic amortization schedule (or google one for that matter). They cannot grasp the basic concepts of opportunity cost or a probability-weighted outcome. It is one thing for a TTT student not to understand these things, but what is the excuse for students going to Berkley, Penn, or Columbia Law? How are kids graduating from college unable to do these things?

    The law school scam is not unrelated to the fact that most undergraduates, even from top schools, are basically unemployable. Outside of STEM fields, an undergraduate education only teaches a rampant sense of entitlement, little else. The kids that have their personal finances obliterated by T14 schools deserve little sympathy.

  24. 9:47:

    I agree with what you wrote. One important thing to add: I think the assumption is made that those lawyers who drop out of Biglaw for whatever reason (laid off, fired, Dewey) know a lot about the law. The reality is that they spent most their time as an associate doing trained monkey work (as you said) but in essence, this shitty work never changed over the years they worked there. As such, they leave these firms not knowing much more than when they arrived. A lawyer working at a law firm making big money only sees one part of a case, never the whole case. When they leave they are useless. Many of them just join the ranks of the unemployed. Lateral hires are rare in this profession...unless of course you are HYS and/or at the higher end of the AM Law 100 firms. These associates are as fucked as everyone else.

    Just my opinion.

  25. @10:14 a.m.:

    I was wondering when the Personal Responsibility Fairy would make an appearance in this thread.

  26. @Morse Code for J-- I do not think the answer can always be that you, or I, or Law Prof are so much more savvy than all prospective law students and their families. There is enough information here for people to make a decision about Georgetown and to put people on notice to ask about the situation at other schools.The problem is that if people make a decision you would not make, or think unwise, I suspect you would insist that the person must be misinformed. Even with a salary of 160k, the debt we are talking about is enough to make a serious person take note. Of course not everyone is going to pay sticker price. So that is another part of the equation that will affect some people's judgment. This does give more information, and people will still go.

  27. @10:27

    Lateral hires at 6-7 associate/senior counsel are rare for even HYS without a book of business.


  28. @ MacK,

    The more I hear about the legal economy from my graduating class, the less I feel like a failure for becoming a Regulatory/Compliance guy. Five years in, I have an in demand and transferable skill set (at least it seems that way from the recruiter calls). The same can't be said for fifth years who did esoteric litigation support and got shown the door.

  29. @Mack,

    With regard to your point about salaries, what's so bad about making first year salary at one's next job? Let's say they make less than a first year ($120K perhaps), what's so bad about that? Working in an ordinary shop for what is still good pay but without the insane hours of Biglaw doesn't sound so bad to me.

  30. Not Mack, but to 11:19 - 120K is close to the best-case scenario, and it isn't enough to service the amount of debt that will likely remain 5 to 6 years out of school. My personal opinion is that practically no one should borrow more than 100K for ANY school (including HYS) and that practically no one should borrow more than about 40K for schools outside of the top 14. If you can't get scholarships, family help, or savings from a previous job, just don't go.

  31. Where is that 120k job? How about the 50K a year job? Show me where they are, 11:19.

  32. 11:24,
    I don't know much about the lateral market (4-6 years) is like, my response was based on Mack's comment.


  34. Taxpayers should not be on the hook for Cooley's loans. Nor any law school's loans, but especially the large, underperforming schools.

    That is all.

    7 campuses? $40k+ tuition in Uncle Sam backed loans? How is this a good public policy?

  35. This world is so remote from the world I knew as a GULC grad in the 80's. Tuition was around 12.5k. Two years between undergrad and law school working. Fortunate to be married to a woman who called DC home. Saved money. First year and half paid for up front. Check. Worked first year summer at a good firm, and worked during the second year clerking at Wall Street firm with a DC office. Then paid for second semester, second year, too - in full - no debt. Check. Second summer - overpaid as a summer associate. Used surplus to pay good chunk of third year tuition. Check. Continued work with Wall Street firm part time during the year - used money to pay off third year debt free and then to save money for a down payment on a house. Saved enough to avoid PMI. Put me on the real estate equity train to an eventual 15 year mortgage and a nice house, completely done and paid for. No debt, no sleepless nights, and a plausible scenario after graduation to return to my old industry (not the law) for employment if the law thing did not work out. Check, double check.

    Chances of anything like this happening today with tuition outpacing inflation by over 3X since the 1980? Zero, zero, zero. I am embarrassed for my generation, and am embarrassed for the law schools, who are now part of a fast failing business model and who are surviving off of loan proceeds from ill advised young people who truly do not understand the risks. What bothers me is that the beneficiaries of these practices are a group of professors and administrators, 90 percent plus who consider themselves enlightened progressives who care for the less fortunate. Really?

  36. Great post, as it shows the raw numbers.

    Keep up the good work, because the only way to destroy the Law Schools is to starve the monster of its food, 0Ls.

    Going to law school needs to become the butt of jokes throughout the land.

  37. I'm just a dumb, country lawyer, and down here in Tennessee, we have just corny, hick judges, so I could be wrong; after all, we aren't sophisticated like people in New York City, but I believe one of our dumb, hick judges would conclude its just common sense that s/he should let the plaintiffs try their case after a prima facie showing that a law school used employment numbers to mislead 22 year olds into borrowing $394,373 from the US Taxpayers.

    But then, like I said, what do I know---I wasn't no Loyal League Philanthropies scholar and a member of the Fordham National Moot Court Team, as was Judge Melvin L. Schweitzer.
    (Trying to understand the man's reasoning (assuming no nefarious motive on his part) when contemplating the combination of the above numbers, misleading employment stats, and the number of missing neural connections in the brain of a 22 year old beggars the imatingation.)

  38. tdennis239

    Instead of pontificating about Tennessee vs. New York, why don't you consider the possibility of corruption?

    Or do you believe in the myth of America being an uncorrupted society?

  39. Perhaps as a hat tip to Law Prof's using their names in his example, the Kardashians will set up a foundation from which law students can borrow cheaply to pay off their loans.

  40. I don't really get Law Prof's TV references. Lamar has plenty of money that he stole from the Dallas Mavericks and Mark Cuban this year, so he wouldn't need to take out student loans via the U.S. taxpayers.

  41. @Morse Code for J

    Say what you will, but OL's at T14's have no excuse. They are coming in with 3.5+ GPA's from elite schools, work experience, and 165+ on the LSAT. If there were ever an intellectual profile of a "sophisticated consumer," that would be it.

    If you can do 8th grade math, you can see law school is a financially risky investment, regardless of any fudged employment stats. The fact that these stats have recently been proven unreliable demonstrates that your 2012 T14 applicant is either clueless, can't use Google, or has no concept of money.

    If upon graduating, these kids want their law school tuition refunded, then you might as well refund them their undergrad and highschool tuition as well, because they obviously never learned critical thinking skills of any sort.

  42. Even intelligent and well-educated recent college grads often have little financial sense. It's hard for people who have never had to support themselves to truly understand how massive the cost of law school is today.

  43. I would require all JD applicants to complete accounting (as well as a few other classes) before beginning law school. Accounting knowledge is important preparation for law school; it would discourage applicants who go to law school simply for lack of a better idea; and it would help applicants understand the economics of law school itself.

    But the lack of accounting background and/or other sophistication among 0Ls does nothing to excuse the behavior of law schools. Educated Americans (and those who aspire to join that group) have deeply embedded beliefs that (a) education is a great investment, and (b) reputable institutions of higher education wouldn't dupe students. The latter is what "diploma mills" do to low-income people; 0Ls and their families find it virtually unthinkable that a well known university could be selling an overpriced product.

    These beliefs may be starting to fade, but law schools are trading on them--as well as on their economic position as gatekeepers to a desirable profession and on the ready availability of federal loans.

  44. he formula is (Pay politicians) V (Get Massive Votes for Politician)= Power= Get Stuff. For instance, let me show you the test involved to get 100k plus salary, retirement with a 75k a year pension (minimum)l, and health care for life:

    Now, you could try to break a 165 on the LSAT, kill it in UG, etc. all for a small opportunity to play a BL for a few years, while having no job security, stress, crazy work hours, etc. Of course, should anything go wrong, the public will clap and revel at your failure.

    Even as the tax payer is getting raped by these loans, this thing is going on because the majority of the population likes it that ambitious, motivated, and naïve people are getting pummeled.

    You could be part of that politically devoured group, of cours.e

    Or, you could take that extraordinarily difficult exam I supplied above, or others like it around the country, and become part of a group of people that influence elections. If you become part of that group, maybe you can get a taste of the declining middle class in this country.

    I know what you are thinking. How am I going to make 165k and live the Manhattan life style on a paltry 100k with pension equivalent to the same at 45? I mean, c’mon, you know you are going to be one of those special snow flakes banging out 165k right out of {Instert Law School that is not HYS here.} Did you know that a Captain makes 160k? Do you know that there are other jobs like this around America?

    Again, I know what you are thinking: what are the odds of becoming Captain? To which I ask: what are the odds of getting Big Law?

    Still maybe you are thinking about Lamborghinis and the Hamptons? Hell, even a Captain can’t have that, right? Wrong. Security consultants can make north of 700k, well into the seven figures. But hey, what are the odds of that happening? Slim to none, just like becoming a partner as a big law firm.

    The paths are there, if these kids do not want to understand that America is about voting people in to get you goodies, fuck em. Let them join the ranks of the desperate, the miserable, and the enslaved.

  45. Even if they took the accounting classes, there would be people who want to become lawyers. Perhaps not as many-- taking accounting and other courses would be an expense--a few more money added on-- that would deter some. But others would still go.

  46. "a few more dollars" I mean.

  47. "Chances of anything like this happening today with tuition outpacing inflation by over 3X since the 1980? Zero, zero, zero. I am embarrassed for my generation, and am embarrassed for the law schools, who are now part of a fast failing business model and who are surviving off of loan proceeds from ill advised young people who truly do not understand the risks. What bothers me is that the beneficiaries of these practices are a group of professors and administrators, 90 percent plus who consider themselves enlightened progressives who care for the less fortunate. Really?"


  48. Read the NALP figures. Minorities did better than whites. This should be front page news.

  49. Props to Campos for reffing Kardashians!!

  50. Might as well try to respond to @2:56. It's true that firefighters, police officers and the like are good jobs to have mainly because they have strong unions. Auto industry unions haven't been able to sustain themselves because the auto industry faces competition from auto companies outside the U.S. Governement employee unions have the good fortune of not having to face competition. Hence, they've been able to get benefits from themselves that no private company can afford.

    However, fiscal reality has to set in at some point, and with a lot of local government municipalities having severe budget crises (some to the point of bankruptcy), it's unlikely that the government employee unions can continue getting what they've gotten in the past.

  51. Accounting before law school? How about accounting in GRAMMAR school so that these kids understand the consequences of debt financing for anything. Education fucking stinks in the country. I think the reason why debt classes and interest accrual is not taught in the lower grades is because the powers-that-be in this country don't want the masses to understand the concept. Makes em more apt to borrow.

    My kid will be born later in the year and you bet your red, white, and blue ass that my kid will understand the concepts of borrowing, saving, debt financing, and living within their means. I don't want my kid going through this shitty student loan mess like I did. If the politicians can't get their shit together and fix their mess, eventually demand will dry up because our children will be told the truth by the parents who were fucked over.

  52. I recently read an interesting (unpublished but available on the net) paper which did a meta-analysis and found that while financial literacy correlated with fiscal behavior, interventions designed to improve financial literacy generally did not.

    Here's the abstract:

    We present a meta-analysis of research published in a broad array of disciplines about the effects of consumers’ financial literacy and financial education on downstream financial behaviors. We focus specifically on studies where the financial behaviors are measured at some delay from financial literacy. We find that correlational and econometric studies that measure literacy find moderate connections to subsequent financial behaviors, but studies of the effects of financial literacy interventions show weak and almost null effects.
    If it is so difficult to intervene to improve downstream financial behaviors, why is measured literacy such a potent predictor of healthy financial behaviors? We conjecture that in studies using measured financial literacy as an independent variable, the predictive effects may be due to the omission of other traits that are correlated with, but distinct from, financial literacy. We follow up our meta-analysis with primary research studies investigating the psychometric properties of measured financial literacy, its discriminant validity in relation to other constructs, and its nomological validity in predicting downstream financial behaviors. We develop a brief, unidimensional measure of financial literacy from a pool of items used in prior work and test its relation to other published constructs. We reproduce a number of published findings wherein measured literacy predicts financial behaviors when entered alone. However, we find that the predictive effects weaken dramatically when we include measures of other traits. We discuss the implications of our findings for research on financial literacy and for public policy and private investment in financial education.


    A Meta-Analytic and Psychometric Investigation of the Effect of Financial
    Literacy on Downstream Financial Behaviors

    Daniel Fernandes
    John G. Lynch, Jr.
    Richard G. Netemeyer

  53. Lawprof:

    How about a link to Alan Collinge's website, Student Loan Justice as a form of financial intervention? We, as a country, could test fifth graders on some of the horror stories in order to gain admittance to the sixth grade.

    You know....if Johnny borrows 100K in non-dischargeable student loan debt for a JD, will he:

    A) Never get laid again because he has no money for dates.
    B) Never have a family.
    C) Never make a dent in repayment because he can only find a $10.00 per hour part time job counting staples in the carpet,
    D) Contemplate suicide, or
    E) All of the above.

  54. @2:06 p.m.:

    What good is knowing the equation, if none of the sources one would trust will present the correct numbers?

    It's only recently that scambloggers have ceased to be cranks and failures of an otherwise successful system of legal education. Henderson, Tamanaha and Campos' most visible work on this subject have only come into being since I was in the middle of law school. David Segal's articles came out while I was a 3L. Chuck Grassley and Barbara Boxer's strongly worded letters to the ABA have only come out in the last year.

    Meanwhile, look at the whole industry of getting 0Ls to commit to law school. All of the books which tell you how to select law schools and highlight your cases in one color for the facts and another for the holdings. All of the school websites that make it seem as though a high employment rate and a high median salary mean that most graduates are making within a standard deviation of that salary at graduation. All of the employed lawyers who have no idea how hard it is in the present to get hired and build a practice expertise, like my father before I went.

    Whom do you believe? All of the optimistic data that comes to you as the top of every search for "law school" at Google or Amazon? Or blogs that feature pictorial comparisons of law schools to toilets with massive French-loaf shits poking up from the water?

  55. @11:23

    No disagreement - though it might be even less than $120k - which is a lot in the public sector


  56. I got into the Federal ICR (Income Contingent Repayments)program through default.

    I defaulted with Sallie Mae, and then a collection agency charged 18.25% interest, making my loan go from 220K to 260K in one fell swoop.

    In other words, the collection costs were forty thousand dollars, and that was added onto my loan.

    I never understood why I had to deal with the collection agency and could not call up the federal program and sign up for it myself, and thereby save myself that forty thousand dollar fee.

    It all took place in the fall of 2009, and that was when I finally realized that I will never pay off my student loan and will carry it to my grave.

  57. @6:52

    My contribution to the scamblog movement has been to ensure that the wikipedia entry for "law sccool" provides a fairly comprehensive "warning label." The talk section of the article makes for some interesting reading...

  58. edit: "law school." that would be funny if I spent all my time on "law sccool"

  59. I am trying to do my part of exposing the law school scam by making a Facebook page called Don't Go to Law School, it's nice to see that all this information is starting to make a difference. I like 7:50's Wikipedia entry.

  60. @ 5:14pm

    Of the answer choices you've listed in your hypothetical question, I personally find (B) to be the most true and most disturbing.

  61. People taking out $100k+ loans for school aren't being stupid, they're being rational.

    The government is giving away hundreds of thousands of dollars to people and paying it back is optional. The only foolish ones are the people NOT taking the money.

    I worked hard from 18 to 25, when I wasn't at one of my two jobs I was spending my free time rehabbing real estate. At 24 I had 3 mortgage-free properties, was pulling in about $40k/year in rent and had a SFH for myself, and with no mortgage to pay, a firm plan never to have kids, and no job to have to go to, was quite happy with that level of income.

    And I knew the whole time in the back of my head that once I was setup I could then go to school and study whatever I wanted, not worrying about my GPA, just enjoying life in and out of class, and expanding my mind. I'd have my tuition paid for plus the gov't would give me $15k-$20k/year for "living expenses", which allowed me to just bank the other $40k/year of rental income.

    7 years later I'm still living well off of rents, but I've also got the BA, JD and no more than about a $100/month IBR payment to make. I have to play games to keep my AGI low for the next 25 years, but it's not that hard if you get a little clever in utilizing retirement accounts, HSA's, and muni bonds. I enjoyed school for the most part. Especially knowing I was actually making money off of it.

  62. Here is the bottom line folks:

    If you love the law and want to become an attorney to practice law as a calling, go to law school. If you don't love the law--if you don't truly have a calling to it--then forget about it and do something else.

    1. Seriously, what does this even mean? I know it's something people love to say, but how is some 23-year-old supposed to know if he/she "loves the law" especially given that the practice of law involves a lot of different jobs that have very little to do with each other? I mean I doubt the average DA who likes his job just fine would be happy working for an insurance defense firm. Etc.

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