Thinking of Becoming a Lawyer? You're Seriously Gambling Your Financial Future

[ArcticSplash]

http://www.nytimes.com/2011/01/09/business/09law.html

The exploitation of law schools bilking thousands of weary students out of their Federally-funded student loan dollars continues unabated after Obama's Sallie Mae reform.


Oh by the way, student loan debt is only easily dischargeable if you put a gun to your head and kill yourself, get deployed in the military (and it will be waiting for you when you return), become a deaf-mute cripple, or you have to move into a homeless shelter for years.

Unless either of those things happens to you, then this debt will follow you around UNTIL YOU DIE. That's what non-dischargeable debt is all about. Mortgages are dischargeable in bankruptcy. Credit cards. Payday loans. Car loans. Signature loans. Everything is.

Except this type of debt.


So if you are going to take on hundreds of thousands of dollars to do Law School, you better land that 100K+ job right out of the gate.

And from the looks of it, with the legal industry having shrunk recently, your odds don't look promising.


I have found some strategies for dealing with student loan debt---which could be classified as borderline illegal. The most popular one is to convert student loan debt from a recourse type debt to a non-recourse, dischargeable type debt. This was a lot easier to do before the credit crisis.

The idea behind that one is to boost your FICO and apply for as many credit cards as you can at lenders known to give out high credit limits, or take out a HELOC. Pay off your S/L debt in one shot and clear this debt off. Now it's all revolving debt. If you have a mortgage, then refinance it for full value and burn all of your equity down, using the cash out to service the revolving debt. Try to service this debt for at least one year, so none of your creditors can come after you and claim your bankruptcy was made in bad faith; as many creditors try to get bankruptcies canceled to keep consumers from getting them discharged.

If you have a house and some equity in it, you can recycle your S/L debt through refinancings.

Keep this cycle going for as long as you can (for some older students, they can do this for nearly a decade).

This tactic will make your credit score go through the roof as long as you keep the payments on time. Now you have an insurance policy against default.


How is this insurance? Your house. If you can't keep up the income, you can stay in the house and just keep doing the re-fis, the house is collateral and you can ditch it if you run into a problem.

In about 4 years you'll qualify for FHA and can get back into another house, AND all your student loan debt is gone. Sure you have a BK on your credit, but if you've ever seen someone who has had student loan collectors on their @$$ for over 15 years.... the BK is a much nicer option.

There's several credit card lenders who will lend to post-BK consumers.

[Insoluble]

I really feel bad for any law school student in a 2nd tier or below school that graduates in the bottom 50%. Higher Ed is on a collision course for disaster if something isn't done soon. It's completely unsustainable.

[annie]

I don't think people realize how cutthroat the lower tiers can be with the schools trying to increase their rankings. I'm a para and volunteered at a non-profit with a student at a 3rd tier law school. She was doing an unpaid internship over the summer after her second year because she couldn't find a paid position. Her school would cull a percentage of the lowest performing students every year. The first year, maybe it just identifying the idiots but by second and third year those not at the top of the class would freak out. She would talk about people that left their laptops unlocked in the library getting their Word document notes deleted and something about notebooks getting stolen out of backpacks. All that to make on average about the same as an experienced paralegal upon graduation. For some reason, she still really wanted that Esq.

I also temped briefly on a document review project with some recent Temple Law grads. That's a special circle of hell.

Any yet people still ask WHEN (not if) I'm going to law school.

[robot]

I really feel bad for any law school student in a 2nd tier or below school that graduates in the bottom 50%. Higher Ed is on a collision course for disaster if something isn't done soon. It's completely unsustainable.

This is true. I'd even say that outside of the top ten law schools in the country it is really hard to get a high paying job if you aren't in the top ten percent of your class and/or law review.

Law schools are a cash cows for universities. Why do you think Drexel opened one recently? God help the suckers who pay full tuition to go there.

[robot]

I don't think people realize how cutthroat the lower tiers can be with the schools trying to increase their rankings.

The top tier schools aren't above playing games to up their rankings. When I was applying to law school ten years ago, a week or so after the filing deadline had passed I recieved letters from a few top ten law schools inviting me to apply and waiving the application fee. My Lsat and GPA were not good enough for any of these schools, so I can only assume that they were trying to attifiically raise their denial rate which was a big factor in the US News ranking at the time.

[toxigal]

or you could just pay off the SL debt. I have over 100K in SL debt and make less than 100K a year and can manage the payments.

[Insoluble]

The top tier schools aren't above playing games to up their rankings. When I was applying to law school ten years ago, a week or so after the filing deadline had passed I recieved letters from a few top ten law schools inviting me to apply and waiving the application fee. My Lsat and GPA were not good enough for any of these schools, so I can only assume that they were trying to attifiically raise their denial rate which was a big factor in the US News ranking at the time.

It's not just law schools. A lot of undergraduate programs spend a good deal of effort recruiting students that they know won't make the cut just so that they can improve their US News ranking. Why do we let a 3rd rate infotainment rag use sketchy methodology to decide which schools are the best?

[OldMama]

Totally agree about the US News ranking. My kid went to a "top 20" (as per USN&WR) national LAC. He's just been out a short time, is in grad school, and has no job and no money. The pressure to give to the annual fund is enormous, with letters, calls from classmates, and emails. It FAR exceeds what I get from my alma maters, even what my husband got from the Naval Academy (and I thought they were obnoxious). I mentioned this to a friend and she told me that alumni giving is one of the factors go into the US News rankings. So what does this do? Do these schools give preference to rich applicants who will be potential donors down the line? And. really, what does alumni giving really have to do with the academic quality of the institution?

[robot]

It's not just law schools. A lot of undergraduate programs spend a good deal of effort recruiting students that they know won't make the cut just so that they can improve their US News ranking. Why do we let a 3rd rate infotainment rag use sketchy methodology to decide which schools are the best?

I don't know why the US News ranking is so important. I guess they were the first? Who knows.

Slightly off topic, but I always wondered why pretty much all private 4 year colleges and universities are around the same price. I always hear that outside of the top 30 or so private undergraduate schools, competition is pretty fierce for students, yet they all cost the same price. Does everyone who goes to these schools get scholarships?

[Joe_Doherty]

And. really, what does alumni giving really have to do with the academic quality of the institution?

I believe alumni giving rate is used as a proxy for showing that graduates are satisfied with the education they received. That's obviously an imprecise method of measuring satisfaction, but satisfaction ought to be a factor in ranking universities.

[phillycat]

people think that just making it through school should be enough to guarantee them a good job. it just doesn't work that way, unless it is harvard you are sliding through...then employers are often just buying the name. other than that, you have to work just as hard on your networking, your professional presentation, internships, etc, etc...in fact these things are often more important than grades. your tuition is an investment... like starting a business, it puts you in the right direction, but no one guarantees that you will have a successful outcome. but I do think the schools are to blame because they happily perpetuate the fiction that going to law school or any other professional school will be enough to make sure you pay back whatever loan you take out.

the schools are the same price because if one was cheaper than the others in their category students and parents would think there was something wrong with it. it sounds crazy, but market research backs this up.

[Lakey]

Totally agree about the US News ranking. My kid went to a "top 20" (as per USN&WR) national LAC. He's just been out a short time, is in grad school, and has no job and no money. The pressure to give to the annual fund is enormous, with letters, calls from classmates, and emails. It FAR exceeds what I get from my alma maters, even what my husband got from the Naval Academy (and I thought they were obnoxious). I mentioned this to a friend and she told me that alumni giving is one of the factors go into the US News rankings. So what does this do? Do these schools give preference to rich applicants who will be potential donors down the line? And. really, what does alumni giving really have to do with the academic quality of the institution?

They absolutely do. One way to significantly imrpove your chances of being admitted to Ivies or other highly selective schools, is to be the child of an alumnus/a who has a good record of donating money. The difference in your odds of being admitted as a legacy vs someone who isn't are not small.

Regarding the OP. It wasn't a good idea to go deeply into debt to attend a third-rate law school twenty-five years ago. Your job prospects after graduation weren't good then either. It's unfortunate, but it seems as though there are still a lot people out there who go to law school without having a good understanding of the realities of the legal labor market, or what the practice of law is actually like for that matter. Of course there are many people who think that USNW's rankings are essential to choosing the "right" school, so I suppose it's no suprise that people are still making bad decisions about attending law school.

[Insoluble]

Regarding the OP. It wasn't a good idea to go deeply into debt to attend a third-rate law school twenty-five years ago.

This is true. But with the disproportionate rate of inflation in Higher Ed, it is becoming a bad idea with worse and worse consequences.

[ArcticSplash]

It is totally unsustainable.

The ED market is going to get screwed in the ass one day. Hard.


And this will NOT be good for Philadelphia which heavily depends on Eds in our local economy.

[ShoshTrvls]

I believe alumni giving rate is used as a proxy for showing that graduates are satisfied with the education they received. That's obviously an imprecise method of measuring satisfaction, but satisfaction ought to be a factor in ranking universities.

It (percentage of alumni giving) is also a factor in grant applications/decisions. So, if you're broke but love your school, even giving $5 will benefit the school.

[phillycat]

well, a lot of this kind of coverage is the sky is falling type stuff. many regular law students do fine. a friend of mine put herself through Temple Law (a good but not Ivy League school), got the good job right out of school (this was a couple of years ago but not "back in the day"), and paid back her loans with her first bonus check. and now makes a tidy six figure salary. she was a good student though not the top of her class and is very smart and professional. There are also plenty of stories like that. There's no actual data that says that most law school grads can't find a job or pay their loans -- it's just as much anecdotal as the success stories.

I always wonder what happens to people who decide they don't want to be doctors halfway through the process...at least law school is only 2-3 years. Medical training is far longer and much more expensive if you include the very low paid residency years.

[OldMama]

To answer robot's question, most of the top tier schools give need-based aid, many guaranteeing to meet 100% of your need as measured by FAFSA (that's another story). Some, but not all, have "need-blind" admission and don't look at a prospective students need for aid when making acceptance decisions. Others do not make need-blind decisions; that is, they have to consider a student's financial need and whether they can offer them aid when they make acceptance decisions.

A really bright student will get unsolicited offers of merit aid from perfectly good second tier schools who want to raise the caliber of their student body. Some free rides are available there.