The Worst Law Schools for Student Debt
“You get what you pay for.”
That adage has been slapped on everything from insurance to cars. It is a brand manager’s dream. It embodies the sentiment that price reflects quality. By spending more now, you can enjoy a higher return later. Since it pays for itself, you can justify that you really aren’t out anything.
And we all know where that logic leads. Eventually, consumers adopt a different adage: “Buyer beware.” Value is perception. And that’s particularly true in education, where recruiters associate aptitude with alma mater. Just look at law schools. Want to clerk? Go to Yale. Hoping for a big law paycheck? Columbia is your best bet. True, these views are grounded in statistics. But plenty of federal judges have matriculated at Temple and Tulane. And some of the wealthiest attorneys earned their J.D.s from schools like Southern Methodist, Wayne State, and American University.
But a good school does give you a head start at graduation. These days, only 57% of graduates find full-time legal work within nine months of graduation. Just compare the nine-month placement rates of an L14 program like Stanford (92.8%) with a second-tier program like Georgia (76.1%). In private sector starting salaries, Stanford grads average $160,000 against $94,000 for Georgia grads. True, Georgia in-state students pay $35,000 less per year than those from Stanford. However, that $105,000 in tuition savings will evaporate within three to four years after graduation. All things being equal, Stanford Law is the clear choice.
RANKINGS DON’T ALWAYS CORRELATE TO VALUE
But a high ranking doesn’t necessarily reflect the best value. And that’s why Law School Transparency recently constructed a table that estimates the projected debt owed by law graduates at their first loan payment. And it’s an eye-opener.
How about this for a stat? Yale Law ranks only 27th in debt ($283,388) when no tuition discounts are applied. To put it another way, 2015 graduates from programs like Southwestern Law, Hofstra, Brooklyn Law, Arizona Summit, and the University of San Francisco will incur more debt than Yalies by graduation. Not to mention, Yale grads, who will make $160,000 to start in the private sector, actually earn two to three times more than graduates from these schools as well. In other words, Yale provides a lower cost and a higher immediate return.
But don’t get too excited. Branding matters – and students at the highest-ranked schools are generally accruing the highest debt. Columbia Law is a case in point. At $317,249 in debt, Columbia Law grads are the most burdened. That said, the debt differences aren’t as pronounced as you might expect. For example, Columbia Law’s average debt (without tuition discounts) is only $34,100 more than Yale’s when student loans come due. For Yale grads, that translates to a $3,269 monthly payment over 10 years (just $397 less per month than their counterparts at Columbia).
At the same time, students at lower-tier programs are piling up debt loads that you’d expect from Ivy League institutions. New York’s Touro College is a prime example. Here, law grads rank 45th in debt, yet carry only $50,000 less debt than Columbia Law. At the same time, Touro’s nine-month placement rate and first-time bar passage rates are nearly 40% and 30% below Columbia’s. As noted earlier, their starting salaries are completely divergent. Private sector Touro grads can expect a $55,000 salary, nearly three times lower than Columbia Law grads. Guess which grads are better able to afford housing and families? Talk about a case of buyer beware!
A TRUE MEASURE OF LAW SCHOOL COSTS
Every law school has a brand. Yale and Harvard can sell prestige. New York University can tout its expertise in specialties like tax and international law. State schools can market their local networks. Eventually, students must factor in tuition costs, placement, and earnings.
And Law School Transparency targets the first two, using a unique formula that incorporates interest rates and cost of living. According to the site, “all projections apply annual tuition increases based on prior years, unless a school guarantees tuition for three years for incoming students, as well as a 2% annual increase in cost of living (room, board, books, etc.).” Regarding interest, the site adds that “the rate for the first 10.25k each semester is 6.1% (Stafford Rate) [and] 7.1% (GradPLUS rate) for the rest. Interest accrues upon disbursement and capitalizes six months after graduation when the first loan payment is due. Monthly payments use a blended interest rate.”
In short, the methodology provides a more holistic snapshot of tuition and living costs during law school. It offers two different debt models. The first, as cited earlier, assumes no discounts such as scholarships or family assistance (which Kyle McEntee, Law School Transparency’s executive director, pegs as the situation for 43% of the student population). The second integrates “a three-year discount of the median discount from the 2013-14 academic year.”
That said, the formula struggles on two accounts. First, it doesn’t project out the true costs of the degree – the interest that accumulates over a 10-year loan period. It also doesn’t account for average starting salaries (as well as increased earning after 10 years of practicing law. According to PayScale, Columbia Law grads land the biggest starting salaries at $146,900 (a different number than the $160,000 average that U.S. News posits). By mid-career, law grads from Stanford ($217,000), Northwestern ($210,000), Duke ($206,900), and Harvard ($201,400) are all clearing $200K. In other words, you can’t cross-reference wage increases to better differentiate a school’s overall value. Then again, incorporating earnings into the formula, while helping to better clarify value, would have no impact on debt.