A good legal education costs money. A lot of money. Going to law school, for most people, means digging yourself into a hole. So there are two questions: How deep is the hole? And how fast can you fill it in to raise yourself onto higher ground?
Now, student loan firm M7 Financial has rated law schools according to how far they put students in debt, and how quickly students can dig themselves out of that hole – based on rates of post-graduation employment and starting salaries. But be warned, it’s not a pretty picture. Only three schools receive As, while many are concentrated in the B ratings, with debt commonly $100,000 or more and payments of around $20,000 per year – close to $1,700 per month.
”You better love this as a profession, because if you’re going into this for money it’s going to be tough, other than for a few select students,” says Cory Pollock, M7 co-president. “If you’re not sure you’re going to (love it) you should think twice.
“There’s a misperception out there among a lot of people of what their disposable income will be as a lawyer.
“If you’re going to love practicing law you might not care. You should make sure when you’re undertaking that kind of loan obligation that this is a career that you really want. It’s not a burden to be undertaken lightly.”
STUDENT DEBT NOT THE ONLY BURDEN FOR EARLY CAREER LAWYERS
The debt burden can represent a key concern for law students just starting out in the career world, who may also be faced before long with costs of buying a home and raising a family, Pollock says.
M7’s report rates 47 schools by letter grade, based on average student debt versus average starting salary. Two ratios are provided: a leverage ratio and a coverage ratio. The leverage ratio represents average debt at graduation divided by average starting salary and bonus – a higher ratio number indicates higher relative indebtedness. Thus A-rated Yale Law School, with average debt of around $112,000 and average starting compensation of $160,000, receives a .7 leverage ratio, compared to B-rated Arizona State, with average debt of around $108,000 and average starting compensation of $100,000, which receives a 1.08.
The coverage ratio represents average starting salary and bonus divided by estimated annual principal and interest payments – the lower the ratio number, the heavier the debt-service obligation. Thus, A- school UCLA, with $160,000 compensation and annual payments of around $16,000, receives a 9.9 coverage ratio, compared to B-rated Georgetown, with equivalent $160,000 compensation but more than $20,000 in annual payments, which receives a 7.82.
The three schools rated with As – Stanford, Yale, and Harvard – are all private, with median private sector starting salaries of $160,000 and average indebtedness ranging from Stanford’s $108,391 to Harvard’s $123,673 and annual payments of around $15,000 to $17,000. These schools achieve high ratings because of graduates’ earning power (starting salaries averaging $160,000), rates of employment (more than 90% of grads employed in law nine months after graduation), and relatively low debt (less than $125,000, compared to more than $140,000 at a number of other schools).
SALARY’S NICE, IF YOU CAN GET ONE
“When you’re looking at an A (school), your student loan obligations are manageable, very manageable, it’s just another bill to pay,” Pollock says. “It shouldn’t be something that keeps you from doing something that you want to do. Your income is more than sufficient to cover it.”
Thirteen schools receive an A- rating, including Brigham Young University. Law school at BYU comes with a low average debt load of $56,000 and decent starting salary at $100,000, but missed an A rating because of its nine-months-after-graduation employment rate of 78%.
“It lowers the probability of you earning that income, so therefore the employment was not commensurate with an A rating so we gave it an A-,” Pollock says.
For the 25 schools given a B rating, Pollock characterizes debt repayment as demanding, but “not very.”
“You definitely have to make note of it. You’re also going to have to budget for it, but it’s not going to prevent you as much (compared to C-rated schools) from undertaking other aspects of your life,” Pollock says.