New Lawyers Are Swimming in Debt

lunes, 2 de diciembre de 2019

Most law-school alumni have federal loans that amount to more than their earnings one year after graduation

The Wall Street Journal

The vast majority of law-school graduates carry debt loads that exceed their initial earnings, new federal data shows, the latest sign a law degree isn’t a sure path to immediate financial success.

Median earnings a year after graduation topped the federal-loan figure for graduates from just 11 of about 200 law schools for which the U.S. Department of Education released data. The favorable ratios were largely for elite private institutions—including Cornell University, the University of Pennsylvania, Yale University, Northwestern University and Stanford University—that send many graduates into high-paying law firms. The list also included one public school, the University of Iowa.

For the rest of the law schools, graduates’ debt loads surpass earnings, in some cases by many multiples. For instance, at Barry University Dwayne O. Andreas School of Law in Orlando, Fla., median debt of $168,309 eclipsed first-year earnings of $36,200. The school declined to comment.

Young and Indebted
While students from some elite law schools have earnings that exceed their student debt, those at other schools can have more than five times as much debt as income.

While students from some elite law schools have earnings that exceed their student debt, those at other schools can have more than five times as much debt as income.

“We are pricing future members of the profession out,” said Kyle McEntee, the executive director of Law School Transparency, a consumer advocacy group focused on legal education. “That negatively impacts diversity, access to justice and ultimately the rule of law.”

The Education Department released the data last week for graduates of hundreds of college and graduate-level programs. The numbers capture federal debt loads at graduation for students who finished programs in the 2016 and 2017 school years and earnings one year after leaving school for those who graduated in 2015 and 2016.

Median debt loads topped median earnings for about 15% of all programs in the Education Department’s data, across all degree levels.

School administrators say the metric is potentially useful for assessing law-school performance, but should be weighed against a slew of other available data.

The debt level exceeded $100,000 for graduates of more than half of the law schools on the Education Department list, with three dozen mostly private schools topping $150,000. Three schools had graduates with debt below $60,000. Annual tuition for three-year programs at the most selective law schools is nearing $70,000, not including living expenses.

Three of the law schools with the highest debt-to-income ratios have closed or lost national accreditation since the data was collected. Some legal observers see that as a sign of market forces at work.

At schools with the most favorable ratios, administrators say they have focused on funneling as much money as possible into scholarships and financial aid, while at the same time landing a majority of graduates in well-paying, private-sector jobs. Top law firms pay starting salaries as high as $190,000 in major markets, a financial pull that debt-burdened law-school graduates can find hard to resist

A breakdown of first-year salaries resembles a dumbbell; there is a cluster around the $190,000 and another below $75,000, and not much in between. Some schools say median earnings for their graduates are bent lower by those who choose government jobs or land clerkships for federal judges, a prestigious position that pays less upfront but often leads to a lucrative private-sector job.

“We want our students to be able to reach their career goals and not be constrained by law-school debt,” said Lois Casaleggi, the associate dean of career services at University of Chicago Law School, where federal data showed graduates with debt of $146,806 and earnings of $170,500. The law school, like many others, helps graduates repay loans if they go into public-service jobs.

Debt loads are most onerous for students who want to work in private-sector jobs in smaller, underserved markets or start their own law firms. “That’s just not going to happen unless you’ve managed to make your education quite affordable,” said Derek Muller, a Pepperdine Caruso School of Law professor who tracks the legal-education market.

Some law schools whose numbers look unfavorable say they view themselves as places of opportunity for first-generation law students and minorities who may have to rely more heavily on loans compared with better-off classmates.

“We borrow our asses off, there’s just really no other way,” said Hillary Kane, the chief communications and marketing officer at Southwestern Law School in Los Angeles, where she earned a degree.

Southwestern’s median debt was the fifth-highest nationwide at $193,653, compared with median income of $45,000. “We do care and are counseling students to not borrow so much,” Ms. Kane said, adding that most graduates don’t land a law job until after taking the bar exam.

Law schools nationwide faced a crisis in the years following the last recession as applicant numbers and bar-passage rates plummeted. Both have been rebounding in recent years, though schools are still looking for ways to lure high-quality students.

“There is competition up and down the range for good students and good professors,” said Kevin Washburn, dean of the University of Iowa College of Law. Graduates there had median debt of $62,249 and earnings of $62,700.

By Sara Randazzo — Andrea Fuller contributed to this article.

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