Student Debt? What Student Debt?

With the downturn in the economy and the upturn in law school tuition, the perfect storm was created for a bumper crop of extremely dissatisfied law school grads, saddled with debt and finding only poor job prospects.  On my Internet Defamation Blog, I wrote about the law student from Thomas M. Cooley Law School who was not happy with that institution, and started a blog called Thomas M. Cooley Law School Scam, telling tales of wrongdoing.  (The school is not happy and is attempting to sue the student for defamation.)  Like many newly minted lawyers, he feels the law school lied about the employment opportunities he would find after graduation.  (Resentment toward your school after running up big debt and not being able to do anything with the degree is not limited to law school.  Read the insightful article, How a Dog Walker Paid off a 37K Student Loan in 6 Years, about the author’s “naïve mistake of getting an MFA in creative writing . . . .”)

Today I came across another posting on the topic, although far less vitriolic, on the Above the Law blog, which was in turn reporting on an article in the National Law Journal by Jim Chen.  Chen, Dean of the Louisville School of Law, has come up with a formula for determining whether law school was a wise investment.  Chen uses qualification for a home loan while paying off student debt as his criteria for “financial viability”.  He suggests that your starting salary at your first position after law school should be no less than three times your annual law school tuition if you want “adequate financial viability”. If you want to achieve a “good” level of financial viability, then you need to land a job paying six times the annual tuition.  If your job only pays twice your annual tuition, then you have only “marginal” financial viability, according to Chen.  All of these calculations are based only on your law school debt; if you have undergraduate debt, then you need to adjust accordingly.

I can only chuckle when I read articles such as this, because they are based on what I consider to be false assumptions.  Far too many students base their career aspirations on the Big Firm model – attend an impressive and expensive law school in order to get a job at a big firm that will pay a high enough salary to pay off the staggering debt incurred in pursuing that route.  (Although to his credit, Chen recognizes that financial viability can be achieved with a lower paying job if the tuition is kept low — what a concept!)  Here are the fallacies to that Big Firm mentality:

You don’t need (or want) to work at a big firm.  I went the big firm route, and hated every minute of it.  After six months I was already putting together my escape plan, which was to start my own firm.  But assume for a minute that you would be happy working as a drone at a big firm with a starting salary of $180,000.  (Be sure to read my article Fun With Numbers to understand how that works out to about $37.14 per hour.)  The big firms employ only a tiny fraction of all working attorneys.  For the rest of the working attorneys, the average salary for first year associates is $68,500.  Don’t assume that you will land at a big firm, but even if that is your plan  . . .

You don’t need to go to an expensive law school to land a job at a big firm.  There are many impressive schools that won’t leave you with $250,000 in student loans (the figure that everyone is using to argue why law schools are a scam).  And don’t get caught up in the ivy league mentality.  I imagine there are some career paths that benefit from an ivy league education. It seems to be pretty important if you hope to be POTUS, and some firms only hire from those schools. But if your goal is to practice law, big firm or not, then distinguishing yourself at your school is far more important than being just another student at an expensive school.  My main criteria for choosing a law school was that it had to be relatively close to a beach, and yet I ended up at the biggest law firm in the world.  And finally . . .

You don’t need to pay for law school.  My law partner and I both followed the same law school model.  We got into a law school that met our criteria (for me, close to a beach, for her, close to home, work and family), worked our butts off to excel the first year, and then enjoyed a full ride scholarship.  I was third in my class after the first semester.  Of the top five, two eschewed the scholarships and instead used their success to transfer to “better” schools.  They graduated with large student debts, while the three of us that stayed graduated with virtually none.  We all went to big firms,  and ultimately we all ended up quitting those firms to start our own or to go in-house. In other words, we all ended up in about the same place, the only difference being the cost of getting there. Of course, an even better technique is do really well in your undergraduate studies and start law school with a scholarship.

Maybe the grousing students and graduates were mislead by their schools with overly optimistic employment figures, but I think that the problem first arose from misleading themselves into thinking that a successful law career follows a defined path and requires big debt.

[Update] I was on a news website, and I happened to notice an ad for Ottawa University. The school’s trademarked slogan is “Prepare for a Life of Significance.”

Note to Ottawa University. With all the lawsuits against law schools for making false representations about job opportunities, you may want to rethink that slogan. It’s only a matter of time until one of your graduates realizes his life is not significant and comes after you.

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