High tuition prices, poor job prospects, and rising levels of student loan debt have caused many to question whether it’s worth the financial investment to get a college degree. But that dilemma is not unique to undergraduate studies – individuals who have considered attending or graduated from law school also question whether there’s a valuable return on investment.
In fact, law schools have come under increasing scrutiny in recent years, as applications have consistently declined over the last several years, and hit a 15-year low last year.
In a new report released by the Access Group Center for Research & Policy Analysis, author Sandy Baum discusses what exactly makes law school “affordable.” Affordability, she writes, is not just the consideration of tuition, debt, and future earnings.
“There are good reasons other than money to go to law school, and it is important to take them into account when assessing the value of a law degree,” Baum said in a statement. “But law school is not just a purchase. It is an investment. Whether or not it is affordable requires thinking about how well the investment in this professional training pays off.”
Baum explains that going to law school is “not just a purchase.” It is an investment, she writes. That distinction matters when talking about affordability. It’s not a matter of whether students currently have the money to pay for law school upfront, but whether future earnings will outweigh the relative cost.
Christopher Chapman, president and chief executive officer of Access Group, said in a statement that “whether or not law school is affordable is not a simple yes or no question; it is unique to the individual and depends on a variety of factors that make a static, aggregate analysis or other generalization at the school or industry level meaningless.”
Baum also describes various financial factors that influence the affordability discussion in law school, including changes in tuition prices, the average aid students receive, and how much debt they take on to finance their educations.
In comparison to undergraduate tuition, law school tuition has grown much more substantially. Between 1993 and 2013, for example, in-state tuition for undergraduates more than doubled, while law school tuition more than tripled. However, more than half of all law school students receive some type of institutional grant aid, which has also grown over time.
During the height of the recession, between 2008 and 2012, the average debt per borrower for law school students grew about 45 percent, from $84,230 in 2008 to $121,890 in 2012. Between 2004 and 2008, the average debt per borrower decreased slightly. At the same time, the percentage of law students with debt has held relatively steady, from 87 percent in 2004, to 89 percent in 2008 and 86 percent in 2012.
“Law school debt is frequently accumulated on top of undergraduate debt,” Baum writes. “Although undergraduate debt does not directly affect the value of the investment in law school, it does have implications for how much discretionary income lawyers have after meeting their debt obligations.”
It’s also important to consider the variety of occupations law school graduates may choose. While salaries for those working in large law firms may easily climb above $100,000 per year, some law school graduates who work in civil legal service fields might have annual salaries that never surpass $80,000.
The Bureau of Labor Statistics found that in 2014, the median annual salary of lawyers was just under $115,000.
“These figures may be surprising to those who have heard about the $160,000 common starting base salary for associates in major urban firms,” Baum writes. “By their eighth year, associates in firms of 251-500 lawyers see median earnings rising to $235,000. In contrast, after 11 to 15 years civil legal services lawyers have median earnings of $65,000—and these salary differences are exacerbated by the generous bonuses frequently offered by large firms.”
Much like those who debate the value or return on investment of an undergraduate education, those debating the affordability of law school question what metrics are best to use – such as debt-to-income ratios, earnings premiums, starting salaries, or a combination of median prices, debt levels, and earnings, according to Baum’s report.
“Discussions of law school affordability, like discussions of college affordability, tend to focus on the indicators that are easiest to measure, frequently either prices or debt levels,” Baum writes. “Equating affordability with low sticker prices is simplistic and misleading. Most obvious is that this approach ignores the discounts many law schools offer. But it is also bad advice to suggest that students should choose the cheapest school they can find, without regard to what they will learn, how likely they will be to find a job, and how much they can expect to earn.”
Baum stresses that to determine the affordability and worth of investment in attending law school, it’s important to take a more sophisticated look at the data available that also considers the variations between law students, law schools, and future earnings, which can all change over time and between sectors.
“Predicting the vicissitudes of the economy and the legal market is a challenge, but acknowledging the disconnect between prices, debt levels, and typical earnings is fairly straightforward,” Baum writes. “Providing institution-specific information to potential students along with reliable debt counseling is important. But seeking solutions that will cut the cost and the price of legal education is also critical.”
Publication Date: 1/11/2016