Enter the BIDER
Via Nicole Battles in JDs Rising, we have Andrea Hable’s, “Law School Debt Survey Results,” in the Minnesota State Bar Association’s Practice Blawg. Ms. Hable conducted an unofficial and admittedly unrepresentative sample of Minnesota lawyers’ debt situations. Minnesota (my home state) as I frequently point out, is one of the most attorney oversaturated states in the country. Expecting 100 responses, Hable received more than 300, and the survey is still open, so if you’re a Minnesota lawyer (all are welcome actually), fill it out. Interestingly, it separates “new lawyers” (licensed 0-5 years) from all lawyers, with older practitioners experiencing many of the same problems the new lawyers do. We should expect as much since the national legal sector has been in an intra-economic recession since 2005.
Hable’s research verifies the BIDER sentiment out there:
One-third of respondents left comments. The overwhelming sense from the comments is that many new lawyers feel like they are out of options, not just with money but with life. Their language shows frustration, worry, lack of control, and a feeling that the loans will never be paid off. All of this on top of an already stressful profession. With or without regret, new lawyers are scared…
Many felt taken advantage of, either by their law school or the system. People are terrified of losing their jobs. One person moved out of state for better job prospects and was not admitted due to “irresponsible” loans (amounting to about the average student loan debt).
There was also a sense of frustration from several people who felt like they “did everything right” and were still falling on hard times (and being unfairly blamed for being irresponsible): top of the class, law review, moot court, working during school, etc.
I don’t know where to begin with this. Like almost everyone else, I’m aghast at the idea of legal educators charging so much tuition that graduates would be unable to obtain a law license due to “irresponsible” debt levels. Beyond that, nothing ruins democracy quite like a government that alienates its own people by delivering them to permanent poverty. As the government loses credibility and inclusiveness, expect willful defaults and tax evasion to increase.
Law School = Disinflation
The survey results don’t bode well for law schools’ contributions to our economy. Without criticizing Hable’s work, allow me to translate some of the terms into pidgin macroeconomicese.
Many commented on the impact of their debt on family. Most of them talked about:
- significantly (or indefinitely) pushing back plans to get married, have children, buy a house/condo, or even a car…
Pushing back family planning means these lawyers are spending money on debt service rather than houses, cars, and toys from FAO Schwarz in the Mall of America. That retards any economic recovery and clearly demonstrates a decline in living standards.
- moving from government or non-profit to private practice when they started a family
- wanting to move to non-profit or pro bono work but can’t afford to
- wanting to go solo but can’t afford to leave their jobs
Hmm. I thought public service and nonprofit work was supposed to be a noble endeavor, yet it appears open only to the wealthy few.
The people who are managing thanked income-based repayment programs, LRAP, scholarships, using savings instead of taking out loans, and being “lucky.” I especially liked the commenter who said they were doing relatively well at staying on top of his debt, but that “at the end of the day, that is a lot like being the skinniest kid at a fat camp.”
A few people re-enrolled in school because it was the only option to further defer their loans or stand a chance at getting a better paying job. Others are considering starting nonprofits so they may be eligible for debt forgiveness in the future.
Doubling-down on an LL.M or taking on more student debt in another field to delay loan repayment isn’t good for the economy. It’s the educational equivalent to taking out a second mortgage on your house to maintain your standard of living. Both activities increase the country’s debt-to-GDP ratio rather than actually promote sustainable growth. Choosing more education out of desperation also smacks the people-go-into-law-for-the-wrong-reasons-and-don’t-do-the-math.-Don’t-they-realize-law-is-hard! blamers in the face.
Income-contingent repayment forgives student debt for those in the public or non-profit sector after ten years. I wonder how many people will see their loans forgiven ten years from now.
The actual survey asked:
35.41% of the new lawyers now live more frugally. Translation: people aren’t buying stuff. When stuff doesn’t get bought, businesses lose revenue. When businesses lose revenue, they cut prices, reduce their labor costs, and when those don’t work they then fail. Government loses revenue. Lather, rinse, repeat. Welcome to economic depression. Obviously we’re only talking about a few hundred lawyers, but given the high levels of youth unemployment, I don’t think it’s too far a stretch to assume this is a problem happening economy-wide. Nevertheless, if there’s any lesson we can take from the survey it’s that America’s law schools are hampering economic growth.
The surveys and the analysis are good reads. Check ‘em out.