Law Schools

How To Explain Law School Loans To Fellow Millennials

With some strategies in mind, you can fully convey the realities of living with student debt to your peers.

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‘And then he tried to tell me that not all lawyers are rich!’

Several weeks ago, I discussed some strategies that can help anyone talk about law school loans with older people in their lives.  Individuals who are not burdened with student debt oftentimes have difficultly grasping what it is like to live with student loans, and it can be very frustrating to talk about law school debt with people who never had student loans.

Although my prior article only talked about discussing student debt with older individuals, we all undoubtedly have numerous peers who may not understand the difficulties of living with student loans.  Indeed, I have many friends around my age who despite growing up about the same time as me do not understand the complexities of living with student loans.  However, there are a few strategies you can use when discussing student debt which will ensure that fellow millennials who do not have student loans understand what it’s like to live with student debt.

At the onset of any conversation about law school loans, it is important to convey that not all attorneys make insane amounts of money.  Many of my peers have unrealistic expectations about how much money attorneys make, and as such, numerous individuals in my life underestimate how hard it is to pay off law school loans.  I am not sure why people assume all lawyers are rolling in it, and this false perception is probably a result of lawyer tropes we see in film and on TV, inflated law school salary statistics, and other reasons.  In any case, it is important to relate how only a small fraction of the legal community makes insane amounts of money, and most lawyers actually earn a modest income when compared to the debt that is usually borrowed to attend law school.

Many of my peers also try to equate student debt with other types of loans, and relate that student debt is an investment just like a mortgage. This argument is dead wrong!  When you have a mortgage, you are buying an asset that will likely increase in value.  Indeed, so long as the property does not decrease in value, you are never really in debt because you can always sell the property and pay off the mortgage.  With student loans, there is no tangible asset to speak of.  It is not like you can exchange the knowledge in your brain to cover the cost of student debt if you wanted too.  This disparity makes student debt far worse than the mortgages several of my friends borrowed to purchase property.

There are many other reasons why student debt is a horrible kind of debt, and these points can help anyone understand why student loans are so problematic.  Although many types of debt are dischargable in bankruptcy, student loans typically cannot be wiped out in a bankruptcy proceeding.  Furthermore, as I detailed on my own website, student debt typically has higher interest rates than other types of debt, which makes it more difficult to fully pay off these loans.  In addition, student debt can cause someone to lose professional licenses, not be eligible to borrow other types of debt, and has many other impacts that distinguishes this debt from other types of loans.  Never let a peer get away with saying that their debt is similar to student debt, since student loans have distinct burdens that makes dealing with this debt more challenging than other types of loans.

I also find that many people have a wildly inaccurate understanding of income-driven student loan repayment plans.  Most people realize that individuals in public service fields can take advantage of generous student debt forgiveness, but many do not understand that individuals in the private sector have different forgiveness options.  Most don’t realize that private-sector employees have to wait twice as long or longer than public-sector workers to obtain debt forgiveness.  In any case, when explaining student debt, it is important to stress that debt forgiveness is no “picnic,” and it could be decades until student loans are forgiven, if they are forgiven at all.

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I am also surprised at how many of my friends who don’t have student loans fail to understand the tax implications of having student debt.  Many people think that student loan interest is tax deductible, so the burden of having student debt is not as bad as it would be without this benefit.  However, this tax deduction is only available to individuals who earn less than $80,000 a year, and it is easy to see how many attorneys make more than this sum annually shortly after starting their careers.  Even if you are eligible for this tax deduction, you are only allowed to deduct $2,500 in student loan interest a year, so this deduction is not much of a benefit at all.  It is important to convey to friends how there are few tax benefits for having student loans so they can fully understand the burdens of living with student debt.

All told, it can be very frustrating to convey the realities of living with student loans to peers.  Many believe that student loans are like other kinds of debt, and do not understand the complexities of living with student loans.  However, with some strategies in mind, you can fully convey the realities of living with student debt.

Jordan Rothman is the founder of Student Debt Diaries, a personal finance website discussing how he paid off all $197,890.20 of his college and law school student loans over 46 months of his late 20s. You can reach him at Jordan@studentdebtdiaries.com.

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