For the past few weeks, I’ve been writing about law school hoping that it would help would-be law students make an informed decision. I exposed some misperceptions about law school that no one discussed. I also suggested some cost-effective and possibly lucrative alternatives to a legal education. And I wrote about some last-minute things to consider before going to law school.
But some of you will still go to law school for the wrong reasons and pay rip-off prices. Ego, familial expectations, and peer pressure may play a role in your decision. So I want to finish the law-school-themed posts by issuing a warning to students and their parents about the consequences of graduating without a meaningful job and with six figure, nearly nondischargeable student loan debt….
You cannot claim that law school “scammed” you. The “law school scam” movement began around 2007 and the mainstream media picked up on it in 2011. Nowadays, it is common for news outlets to warn students about the low starting salaries and high student loan debts of most new attorneys. Once the truth about law school was exposed, those who felt victimized took solace knowing that they were not alone and not failures at life. This realization helped almost all of them eventually suck it up and move on.
But now, things are different. Even the scamblogs believe that if you go to law school now, you cannot complain that you were scammed if things don’t work out. There is enough information out there for you to do your own damn research. The fact that law school enrollment has been dropping in the last few years should tell you something. If you graduate in three years with high debt and a low-paying job, very few people will take pity on you.
You may put your newly minted law license at risk by working for a shady firm. When the Great Recession began in 2008, many homeowners unable to make their McMansion mortgage payments were threatened with foreclosure. In response, a number of high-volume loan modification and foreclosure defense operations set up shop and heavily advertised on television and the internet. Their ads promised principal reductions or even voiding the mortgage altogether! These firms usually signed up anyone with money regardless of whether the client’s home could have been saved. The government responded to multiple consumer complaints by shutting these operations down and punishing the key people. It turns out that some of them were new attorneys who did not know any better or had no other choice. Despite their novice lawyer status, a few of them had their licenses suspended or even got disbarred.
These high-volume mill firms usually deal with debt settlement cases. There are also smaller operations that target a large group of vulnerable people. For example, in immigration law, the courts and local bar associations have to deal with unscrupulous notarios engaging in unauthorized practice of law and some even hire contract attorneys to represent them in immigration court.
Most new attorneys looking for work accept offers from these disreputable firms not knowing what they are getting themselves into. Since many of these firms advertise anonymously through Craigslist, it is hard to discern the business’s identity until the interview or even until the first day of work. The case loads are high and the pay is low. Promotions and career advancements are a joke. Nonlawyers — typically commission-based salesmen — routinely tell lawyers what to do. At these places, the lawyer’s primary job is to do whatever it takes to prevent a client from demanding a refund. Because of their inexperience, new lawyers may not learn about the fraudulent nature of their employers for months, and by then it may be too late. The new attorney will be in so deep that he will face numerous bar complaints and malpractice lawsuits. His name will be plastered all over internet consumer-complaint websites.
Some lawyers will quit as soon as they discover the firm’s fraudulent activity. But for others, quitting is easier said than done. It took months to find even this job and it is hard to give up a steady paycheck. Also, the “special snowflake” may naively think that she can set the owners straight and stop their fraudulent practices. And then there are those who stay solely because they want to prove themselves and show certain people that they do not have a sense of entitlement.
When you graduate from your average law school without a job, you run the risk of working for a shady firm. If you stay there long enough and something goes wrong, it can kill your career before it begins.
Good luck getting married with your large student loan debt. In the good old days, love conquered all. But today, love is a necessary but not sufficient condition for a lasting relationship. Now that student loan debt exceeds $1.2 trillion and shows no signs of stopping, it is probable that your future spouse will have considerable student loan debt. And you may have to face the possibility that by getting married, you may have to pay your spouse’s student loan debt — possibly for life.
It is common knowledge that large student loan debt is forcing young people to delay getting married and starting families. If both partners have small to moderate student loan debt, they can find a way to deal with it eventually. But those who paid off their student loans will be reluctant to marry someone with large student loan debt unless they have a good job and a realistic plan for paying it off in a short period of time.
If you are stuck with a low-paying, dead-end, JD-disadvantage job after graduation and have six-figure student loan debt, your best bet is to marry someone in a similar situation and strive to PAYE it off together. And speaking of PAYE….
Don’t expect income-based repayment plans to stay in its current form. Income-based repayment plans like IBR and PAYE were introduced with the purpose of temporarily helping people minimize or defer their payment obligations until they found a decent job. And PSLF was introduced to provide loan forgiveness to those who work for a tax-exempt organization or in public service for ten years. Nowadays, people are going to school with no intention of paying the loans back in full and banking on eventual loan forgiveness. Enrollment in IBR/PAYE has grown year after year.
The federal government has noticed this and changes may be made in the future to prevent abuses. As part of the 2015 budget, the president has proposed capping PSLF loan forgiveness to $57,500 with any amount above that being subject to a 25-year payment plan. Also, Marco Rubio has proposed an alternative income-based plan:
Essentially, the bill would enroll all borrowers into an income-based repayment program that would put 10 percent of their post-graduation earnings towards debt repayment, with payments being automatically deducted from a borrower’s paycheck, much as payroll taxes are today.
For those earning less than $10,000, no payment at all will be expected, and after 20 years debt amounts of less than $57,500 will be entirely forgiven. For amounts greater than that, 30 years will be required, a provision that should discourage people from intentionally taking on large loans.
Right now, both of these proposals are not likely to gain traction politically. But it is a signal that student loan reform is coming and not in a good way. So if your financial plan is to take out a large student loan and hope to PAYE it off in 20 years or work for your mother’s almost defunct tax-exempt entity and bank on PSLF forgiveness, you may want to think it over. If you take out a large student loan now and in the future, you will either pay the loan back in full or go through many years of financial pain in order to qualify for loan forgiveness.
I will conclude with some words to parents who may be pressuring their children to go to law school against their will. We know you mean well. And I suppose it’s still nice to tell your social circle that you have a lawyer in the family. But you may also have to explain to them why your child is still single and living with you during their twenties and even their thirties. If your child is on the 30-year student loan repayment plan and is living paycheck to paycheck, it is very likely that you will live your golden years in senior housing and only on your Social Security and pension income. And if you co-signed your child’s student loans and he ends up defaulting or dead, the student loan company will be more than happy to call you and bring back some old memories. Frequently.
Right now is not a good time to go to an average law school, even with a substantial scholarship. This is because too many changes are taking place. Going to law school now is almost analogous to being a test subject for a new Ebola vaccine. Some law schools are changing their curriculum to promote entrepreneurship and innovation. While this is noble, it also implies that the schools’ graduates are not doing well in the job market. The ABA is also proposing changes to the law school curriculum. And maybe someday they will get it right.
That’s it. Go at your own risk. Now it’s time to get back to my job search.
Shannon Achimalbe was a former solo practitioner for five years before deciding to sell out and get back on the corporate ladder. Shannon can be reached at email@example.com.