Student Debts

Law school tuition goes up. That’s just what it does. It goes up during boom times, it went up during the recession. It goes up when lots of people apply to law school, it goes up when applications are at historic lows. If they could distill law school tuition into a pill, it would replace Viagra.

Law schools seem very good at estimating how much law school should cost. But are they as good at telling you how much you’ll need to spend while you’re in school besides tuition? Room and board, living expenses and transportation costs, these things go up too. But some students argue that when it comes time to estimating these costs — costs that are the basis for the federal loans that students take out in order to shelter themselves and eat while they’re in school — law schools set the bar unreasonably low. From the law school’s perspective, student expenses are relatively flat… it’s only the tuition that needs to go up.

Tipsters pointed out one school for a case study of this phenomenon….

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Earlier this week, we asked readers to submit possible captions for this photo:

On Thursday, you voted on the finalists, and now it’s time to announce the winner of our caption contest…

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Earlier this week, we asked readers to submit possible captions for this photo:

Let’s have a look at what our readers came up with, and vote on the finalists…

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You’ve graduated from law school. Congratulations! There’s just one small problem: you’ve now got six figures of debt attached to your name, and you have absolutely no idea how to pay it all off. You’re determined to do it, though, come hell or high water.

Having a modest income, you signed yourself up for income-based repayment. You thought (perhaps mistakenly) that it would be the best option for you. You want to get all of your financial ducks in a row so that you’ll be able to make the most of your future.

Alas, your Mint account just told you that you’re doomed…

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Earlier this month, the National Jurist released its first-ever ranking of the private law schools with the “best value.” We found it odd, of course, that the “best value” designation was awarded to schools where less than half of students (and in some cases, less than a third of students) are able to retain their merit scholarships, but we tried to give the magazine the benefit of the doubt. After all, this is the same publication that used incorrect indebtedness figures to crown at least three schools as offering the “best value” in the nation, as recently as last year.

We thought that maybe things would be better when National Jurist rolled out its seventh annual Best Value rankings, for both public and private law schools. The Best Value ranking system takes into account a law school’s tuition (25% of study), students’ cost of living expenses (10%), students’ average indebtedness upon graduation (15%), the percentage of graduates who got a job after graduation (35%), and bar passage rates (15%). As in years past, National Jurist ranked only the top 20 schools, and gave letter grades to the rest of the schools on the list, ranging from A- to F.

So were this year’s Best Value rankings as fraught with error as last year’s? Continue reading to find out…

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Three of your Above the Law editors — David Lat, Elie Mystal, and Joe Patrice — met up in the ATL offices earlier this week to discuss whether going to business school is a better financial decision than going to law school.

Spoiler alert: Elie thinks law schools cost too much.

The gang weighs in, after the jump….

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I’ve liked working in law and am taking the LSAT next month despite law school being mostly a really poor decision (especially for someone like me who doesn’t like debt).

– Meghan, a young American woman working at a boutique law firm in Istanbul, Turkey, discussing her plans for the future in an interview with Mike Dang of The Billfold. Meghan claims that if she doesn’t perform well on the LSAT, she won’t apply to law school.

These days, when we speak about new lawyers, we tend to focus less on the mere accomplishment of graduating from law school, mainly because the only admissions requirement at some institutions is a pulse, and more on sobering topics like incredibly high student debt loads and rampant joblessness. This is the “new normal” for law school graduates, and it isn’t as appealing as deans would have you believe.

Given the fact that the market for legal employment dropped out from underneath those who graduated between 2009 and 2011 (and continues to falter to this day), servicing high amounts of law school debt is more difficult than ever before. Declaring bankruptcy isn’t a real option for many, and enrolling in income-based repayment is a temporary solution that has been called a ticking time bomb. You just can’t win.

Unwelcome debt situations usually go hand in hand with law degrees, and they can happen to the best of us — even those who were once lauded as geniuses, like Andrew Carmichael Post. In America, even if you graduate from college at 17, enroll in law school at 18, and pass one of the most difficult bar exams in the nation at 22, you’ll still be saddled with unmanageable debt — in this case, to the tune of $215,000.

How in the world will Post be able to shoulder such a heavy debt burden?

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Andrew Kravis, recent Columbia Law School grad and new millionaire.

Congratulations to Andrew Kravis. He graduated from Columbia Law School this past May, but he’s already earned enough money to pay off all his student loans.

And no, he doesn’t work at a hedge fund or private equity firm. He doesn’t even work in Biglaw. He’s a public interest lawyer, about to start a fellowship at Lambda Legal, the nation’s oldest and largest legal organization working for LGBT civil rights. He was honored upon graduating from CLS as one of two students “who have demonstrated outstanding achievement in the furtherance of lesbian, gay, bisexual, and transgender rights.”

So how did this outstanding do-gooder also do so well? How did he earn enough money to pay off all his student loans, and then some — a cool $2.6 million, to be exact?

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As we mentioned in Non-Sequiturs last night, JPMorgan Chase is getting out of the student loan business. The bank will stop accepting new student loan applications this October.

A spokesperson for the bank said: “Students and their families are increasingly relying on government-backed loans rather than private student loans, and as a result the market has declined by 75% in the last five years.”

My friends, this is a bad sign. JPM is just a minor player in the student loan game, but the fact that they don’t think lending money to students for education is a good business anymore should make us worried. The fact that the federal government has crowded out this private lender is not good.

It means that we’re one step closer to the whole student loan bubble bursting…

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