If you are a law professor, do you know what percentage of your students borrow money to attend your classes? Do you know the average amount of their loans? Do you know the interest rate on those loans or how much interest accumulates during law school?
If you're a student or prospective student, do you know these facts about your school or your loans? If not, how would you find them out?
School-specific loan information is difficult to find publicly. Schools do not brag about these statistics in the same way they tout their employment numbers. It's surprising, actually, that they haven't thought to do so. UC Davis's eager dean, for example, could tell prospective students: "86.2% of our students receive prestigious loans from two different federal government programs. For recent graduates, the average amount of those awards was $100,517!" And Case Western's dean could back up his claim that law school is worth the money by telling students, "90.1% of our students take advantage of their unique opportunity to participate in the supportive federal loan program. These students borrow an average of $98,900 for three years of law school--an average of just $90.32 per day. Where else can you obtain so much value for such a small investment?"
But at least for now, schools are refraining from that puffery. So where would you get loan information? Each year, schools tell the ABA the percentage of their students who borrowed federal loan money and the average (mean) amount borrowed. But the ABA doesn't publish the loan information in its Official Guide or anywhere else on its site. I wonder why not? You can read about each school's tuition, estimated living expenses, and scholarship aid--but not about the average amounts that students borrowed to make up the gap between their expenses and any scholarships. (The ABA does publish a list of general resources on loans and repayment, as well as an obscurely placed list of average amounts borrowed by all law students over the last ten years, but I couldn't find anything more specific about loan amounts.)
U.S. News gathers the same loan data from each school, but you'll have to purchase a premium online subscription for $29.95 if you want to see that information. Law school loans seem to be a highly guarded secret.
I'll be posting some sample figures soon, but I think all law professors should know about the debt their students are incurring. Federal loans, together with student willingness to borrow, keep our schools in operation. Shouldn't we know the cost to our consumers? If you want to know more about debt among your students and graduates, here's how to find out:
1. Ask your dean's office for the percentage of students who borrowed federal funds over the last ten years, together with the average amount borrowed. Those numbers should be readily accessible, since they are reported to the ABA.
2. For a more nuanced picture, ask the dean's office to request a breakdown of loan amounts by range. E.g., how many students borrowed $20,000 to $40,000? How many borrowed $220,000 to $240,000? The office that calculates averages for the ABA should be able to produce ranges as well. You will end up with a table that looks like this (note, these are hypothetical figures--NOT ones from my school or any other):
Amounts Borrowed from Federal Loan Program
Your Law School
|Average||$ 100,209||$ 89,230||$ 85,954|
|Percentage of class w/ debt||91%||88%||89%|
|Amt Borrowed Ranges:|
|$1 - $20,000||3||9||11|
|$20,001 - $40,000||13||18||18|
|$40,001 - $60,000||12||12||19|
|$60,001 - $80,000||26||26||44|
|$80,001 - $100,000||29||39||39|
|$100,001 - $120,000||37||41||28|
|$120,001 - $140,000||39||19||18|
|$140,001 - $160,000||20||9||5|
|Highest amt borrowed||$223,412||$209,473||$201,478|
|Percent of class borrowing more than $100,000||49.50%||38.90%||26.00%|
It makes a difference to see that half of all students borrowed more than $100,000, while only a handful borrowed less than $20,000. That's a very different picture than a simple average: the ranges more readily demonstrate the different burdens that students assume to attend law school. The students with high debt usually are ones who lost the LSAT-based scholarship game, or who come from families with insufficient wealth to contribute to their legal education.
3. Recall that "amounts borrowed" are just that--the raw amounts a student borrowed, without accumulated interest. How much interest do students pay on federal loans? 6.8% on the first $20,500 they borrow each year, and 7.9% on everything else borrowed that year. The government disburses loans at the beginning of each semester (or quarter, for schools on that system) and interest accumulates from the day of disbursal. The interest does not compound, but it accumulates.
Oh, and the government also charges origination fees for these loans. That will add 1% to the first $20,500 borrowed each year, and 4% to amounts borrowed above that amount.
If you want to calculate how much one of your students will actually owe six months after graduation (when most students begin repaying their debt), here's a quick-and-dirty way to make that calculation: Go to Georgetown Law School's handy loan calculator. Take the "amount borrowed" you want to evaluate, and divide it by three. Place that one-third figure into the "Year 1" Cost of Attendance at the top of the page. Then change "annual increase" to 0% and press enter. Scroll down to see how much a student with that amount borrowed will actually owe when she starts repayment.
A student who borrows $150,000 (like two dozen of the 2012 grads from the hypothetical school described above) will owe $178,260 at graduation. One who borrows a more humble $90,000 will owe $105,513. These amounts modestly overstate accrued interest for 2010-2012 grads, because the government subsidized some accumulating interest for those students, but the Georgetown calculator gives excellent approximations. For today's 1Ls and 0Ls, it is dead on.
* * *What should you do with this information, now that you have it? Think about it, and discuss it with your colleagues. It's hard to realize that public school attendance can generate more than $100,000 of debt, but it does--even for students with scholarships. Students at private schools usually accumulate even more debt. Remember that almost everything we do at law schools rests on the personal debt of our students. Pay particular attention, finally, to the number of students at your school who fall in the highest debt ranges: They are the ones who are sacrificing the most to keep our institutions afloat.
Update: A commenter points out that the University of Akron's Law School publishes fairly comprehensive loan figures for its recent graduates. Paralleling my sample table, Akron's website shows how many students borrowed amounts falling in particular ranges. It's a helpful table, and I encourage other schools to offer the same information. Akron has an incentive to publish this type of data, because its loan amounts are lower than national averages. But there are other schools with similar incentives. The push could come from relatively low-cost schools on this issue, but higher-cost schools would begin to feel that pressure. The ABA could also use sites like Akron's as an example of what schools must disclose.
I do have one suggestion for Akron's graphs: I'd like to see students separated by full-time and part-time status. I think that would be helpful for prospective students and, as a policy matter, I'm curious about indebtedness among part-time students. Are those students better able to avoid debt?