If there is one factor that ties most attorneys into the current market crisis: it’s called “law school debt.” Almost every young associate has a significant amount of money they still owe their hyper-expensive professional school (and if you don’t, I hope your trust fund is tanking right now). For many, that debt drives them into the open arms of Biglaw.
The National Law Journal reports that current and prospective law students are about to get credit-crunched:
But because banks are doling out less money to lenders, private loans are getting harder to come by, said New York Law School Dean Richard Matasar, who is also chairman of the board of directors of education lender Access Group.
That means it will be more difficult for law school graduates to secure private loans, and graduates will likely pay higher interest rates if they do get a private loan to bridge the gap between graduation and the bar.
Recent law graduates also will be entering the workforce during a slow economy, which means they may spend more time in the job search process.
We’ve reported that some firms have pushed back their starting dates, which will likely cause recent graduates to rely even more heavily on loans.
But as with everything else going on in the markets right now, nobody really knows what is going to happen. The WSJ Law Blog asks a pertinent question:
We know that those bar-takers with BigLaw jobs lined up can ask their firms for a hefty advance on their first year salaries. But others must rely on private loans to fund the two or three month stretch between graduation and the bar exam. We’re curious: Have rates on those loans gone up? Are post-grads still relying on them?
After the jump, it’s time to talk about solutions:
The NLJ urges caution:
It’s complicated to predict how the current changes in the economy will impact law students, Matasar said.
“It’s a time for caution. It’s a time for students to plan well for how much debt they are taking on and how they will pay for it,” he said.
But what does “caution” actually mean? Should students not go to the best school they can get into? Everybody wants to be debt free, but unemployment is a bitch.
For associates already working and paying off their debt, the only thing one can really hope for is the successful completion of Project Mayhem. If the bad investments of some are going to be forgiven, why not the bad investments of all? Take everybody’s credit back to zero and just start over:
An entire generation pumping gas, waiting tables; slaves with white collars. Advertising has us chasing cars and clothes, working jobs we hate so we can buy shit we don’t need. We’re the middle children of history, man. No purpose or place. We have no Great War. No Great Depression. Our Great War’s a spiritual war… our Great Depression is our lives. We’ve all been raised on television to believe that one day we’d all be millionaires, and movie gods, and rock stars. But we won’t. And we’re slowly learning that fact. And we’re very, very pissed off.
Wall Street meltdown could affect law students nearing graduation [National Law Journal]
The Credit Crisis and Law School Loans: Take One [WSJ Law Blog]