Thursday, December 29, 2011

Per ABA Journal: 2009 Tier 2 grad, law review, unemployed with 110k in loans and rising

For Andrea, a past decision to ensure her future in law has left her in a stressed and distressful present. Concerned over how it might affect her job prospects, she would not allow use of her real name. And there is reason for concern: She’s been laid off twice since her 2009 law school graduation, including from a position where she earned $20 an hour at a small firm practicing as a licensed attorney. For the 29-year-old, who’s supported herself since college, the financial repercussions of law school may amount to the worst investment of her life, despite a degree from a second-tier school and a resumé that boasts a position on law review and coveted summer associate positions.
“I deferred my loans because of economic hardship the first time,” says Andrea, who borrowed nearly $110,000 to finance her education. “After that,” she falters, “they might be in forbearance ... accruing interest ... I just don’t know.”

Andrea’s situation is far from unique. In 2010, 85 percent of law graduates from ABA-accredited schools boasted an average debt load of $98,500, according to data collected from law schools by U.S. News & World Report. At 29 schools, that amount exceeded $120,000. In contrast, only 68 percent of those grads reported employment in positions that require a JD nine months after commencement. Less than 51 percent found employment in private law firms.
The influx of so many law school graduates—44,258 in 2010 alone, according to the ABA—into a declining job market creates serious repercussions that will reverberate for decades to come.

Moreover, lawyer salaries vary greatly across the country, with the top 35 legal markets sucking up 75 percent of the payroll (see “What America’s Lawyers Earn,” ABA Journal, March 2011). And the number of law office jobs in private practice peaked at 1.23 million in 2004 (“Paradigm Shift,” July 2011).

Heavy loans now threaten to consume the future earnings and livelihood of the nation’s young lawyers. Yet, even as the legal market contracts, more than 87,900 potential candidates vied for 60,000 seats at 200 ABA-approved law schools in 2011, according to the Law School Admission Council.

More than 78,900 have applied for 2012 spots, according to preliminary LSAC counts in November.

Youthful overoptimism, bleak job prospects for college grads and the entry of several more universities and for-profit businesses into the legal education business are some of the root causes for the supply-and-demand imbalance in entry-level lawyers.

Very few critics, however, have examined the part played by the federal government through its student loan policies in creating a law school bubble that may be on the verge of bursting—one strikingly similar to the mortgage crisis that cratered the economy in 2008.

Direct federal loans have become the lifeblood of graduate education, and they shelter law schools financially from the structural changes affecting the profession. The bills are now coming due for many young lawyers, and their inability to pay will likely bring the scrutiny of lawmakers already moaning about government spending.

Read more here:

http://www.abajournal.com/magazine/article/the_law_school_bubble_how_long_will_it_last_if_law_grads_cant_pay_bills

Subprime:

Due to all the recent publicity of the law school bubble/scam/ripoff I have decreased my efforts. That said, there is still some scam blogging left in me. Stories like the one above should frighten any prospective law school applicant. Even a tier 2 grad with law review is finding herself in a absolutely fucked up situation. Again, this section of the article rings deep:

the financial repercussions of law school may amount to the worst investment of her life, despite a degree from a second-tier school and a resumé that boasts a position on law review and coveted summer associate positions.

The worst investment of her life. Read that over and over and let it sink in. So maybe after a few years she finally finds gainful non legal employment and can then begin her career. However, look at all the lost time from the moment she began studying for the LSAT to 3 years of law school, bar prep to graduating, working on and off for 2 years to being unemployed. We are talking 6 years wasted with a nasty nondischargeable debt pile to show for it. Assuming she finds nonlegal employment in 2012, that's at least 6 years wasted. As Gordon Gecko said in Wall Street, "time is the most valuable commodity." And he was absolutely correct on that.

Hopefully 2012 will show a even larger decrease in law school applications, more class action law suits, decreasing class sizes and possibly the closing of some TTT's but that will take some time. After all, the law school bug continues to infect many college grads. Back in 2005 when I began the application process the internet had very little information. Now, we even have the ABA Journal doing the scamblogging for us. Fuckin A, even the vaulted tier 14 grads are suffering in this environment.

For those that have immigrant parents that are pushing for you to go to law school, you have to fight them on this. I know many people that are first generation Americans that struggle with their parents on law school. Even in 2006 I struggled with them on this. If you have doubts about LS they will scream and yell and throw all kinds of antics but you must fight strong. In most cases our parents want what is best for us but be warned as the road to hell is paved on good intentions. Sure, they see it so prestigious that one of their children may become a lawyer and thats all they see. The bragging rights at parties with their ethnic community. This also applies to homegrown Americans but I've noticed the ethnic community is worse in this regard. Here is my message on this: forget what your family thinks. This is natural selection at play and those that fail to heed the warnings and go based on pressure from their familes will end up losing. And there is no get out of jail free card here. Maybe you make it, or maybe you end up like Andrea and thousands others. Economic Darwinism is at play here.

On a final note, I will add that I'm doing well with my career and have been very fortunate compared to my peers. 2011 was a stellar year for me and I hope that 2012 will be better. But I am fully aware of how bad it is out there and if something were to go wrong I could easily end up like countless of others. This isnt an industry where you can move from job to job in a matter of weeks. Unemployment can easily last for years.

Given the cost in terms of time and money it simply is not worth it.

8 comments:

  1. And that interest piles up pretty fast with every passing year!

    With NO consumer bankruptcy consumer protections either.

    Which all boils down to a lifetime of debt with Social Security likely garnished, and a spouse on the hook. etc.

    ReplyDelete
  2. It breaks my heart to read articles like this because I've been there. I graduated from a private law school with sizeable debt back in '94. Although I didn't have the amount that most grads seem to have today, my first legal salary wasn't enough to pay the bills AND eat. Fortunately, after a few years of struggling, I fell back on my undergraduate major and got a job overseas. I managed to pay off the debt in 10 years while saving a bit as well. Of course, not having to pay American taxes and getting free housing certainly helped. Anyway, I'm doing fine now but I didn't escape unscathed. As mentioned above, I lost five years of my life to the legal industry and had a huge debt hanging over my head for 10 years. Also, I now have a degree that I'm embarrassed to put on my resume. I am begging, absolutely begging, anyone out there who reads this not to go to law school. Yes, you may be the one but if you fail, the consequences are too horrid to think of.

    ReplyDelete
  3. I thought once I paid off my student loans (just a few weeks ago) I would quit reading the scam blogs. I thought my anger of wasting $100K for a worthless degree would go away once my student loans did, but it hasn't. When will this awful feeling ever go away? When will I be able to get over what happened to me (being swindled out of $100K) and move on with my life? I know I am one of the lucky ones to finally be out of Sallie Mae's clutches, but it still doesn't change the fact that law school ruined my life and now I have to try and pick up the pieces ten years later. I want to move on...I don't want to be bitter and angry all the time. but I am because I wasted so much money on something that never turned out. The article is right - law school was the worst investment ever. I would have been better off wasting $100K buying luxury jewelry and Chanel bags! At least those items still have value 30 years later!

    ReplyDelete
  4. Congrats to you for getting out of the student loan trap! As bitter as you may feel now you are well aware of the hundreds of thousands of student loan slaves that are buried in these loans. Surely you have heard the 50k loan that ballooned to a 120k loan due to penalties and accrued interest. At least you are free.

    I myself have caused serious damage to my student loan debt and am on my way to being free from this terrible trap. I know many borrowers that make decent money but have put their debt pile on the 25 yr plan which is fucking retarded. If possible pay as much as possible in the first few years.

    ReplyDelete
  5. I actually broke up with my gf of 5 years bc she graduates from a T4 school in May. I pleaded with her to not go to law school in 09 but she's smart and I'm stupid. I Accumulated 150k net worth working in oil 60-70 hours a week for 5 years after getting a bachelor's degree. I'm happy there is more information about the dangers of taking 100k+ in loans.

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  6. People who make good money should pay that bad boy off ASAP. All they see are the monthly payments and how that this leaves more disposable income to buy top shelf liquor and Tag Heuer watches. But why would you give the student loan people thousands of dollars that they didn't have to? They'll probably be able to buy a house with the interest that they spent.

    Not only that, it prolongs the length of time that disaster can strike. If you pay off the loan in 10 years, then those are the only 10 years that you need to worry about remaining healthy and employed to pay off the loans. If something happens to you or your family member about 15 years into it, and Tiny Tim needs surgery and therapy to stop using crutches (and your insurance sucks, like most insurance will likely suck by then), then you need to make the choice of where your income is going to go that month as well as the following month and the next month and the next.

    Also, the legal field is very volatile as far as remaining employed at the same place year after year. It's not like you can anticipate what your income will be like 3 years from now. Maybe it will go up. Maybe you will have to start all over again.

    ReplyDelete
  7. why was my comment deleted subprime jD? I wasn't being disrespectful at all.

    ReplyDelete
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