Reducing Law Students’ Debt?

I’ve heard rumors that the legal job market is a little tight these days. Have you heard about that? Is that really true? I find that hard to believe. I mean law school is basically a guarantee of making serious bank. Isn’t it?

But evidently, the job market is so tight that the ABA is lobbying the Obama Administration to give law students who have been unable to find a job because of the recession  some debt relief:

The American Bar Association is lobbying the Obama administration and Congress to extend relief to recent law school graduates who went into debt to finance their legal educations but haven’t been able to find a job because of the recession.

The ABA wants the government to let unemployed graduates convert private loans into federal ones. The change could allow them to defer repaying those loans for as long as three years.

The effort is in its early stages — executives of the largest provider of private law school loans, Access Group Inc., weren’t even aware of it, according to spokeswoman Linda Smith.

Okay so it’s not debt forgiveness, but it is a form of relief.

The proposal, developed by the curiously-named Commission on the Impact of the Economic Crisis on the Profession and Legal Needs, would allow law school grads to borrow from the federal government to immediately pay off private student loans in order to take advantage of the government loan programs’ flexible repayment options.

And with that note, I mount my high horse of the day…

Law school drama notwithstanding, law students are grown ass men and women. They can make their own decisions and face the consequences of such decisions?

There’s an inherent risk in taking on debt that you’ll never be able to pay it off. If you need to take out private loans and you think that’s a good decision, by all means do it, but that’s between you and your lender. If the loan process was fair and you understood the terms, the government should have nothing to do with helping you get out of it.

Law school does not guarantee that you will draw down a job paying 160K upon graduation, despite what you may assume or have been negligently (intentionally?) led to believe by law school admissions and career offices. If you can’t find a job upon graduation you better figure something else out or put somethings together to make it work temporarily or try to renegotiate your loan terms.

If you want more favorable debt terms you have any number of choices: go to a cheaper school, go part-time, work at the university you’re attending (if they offer tuition discounts), work at job that will pay your way, or, and get this… don’t go to law school.

I’m not immune to the idea that the information prospective law students is shockingly minimal and therefore it is difficult, perhaps impossible, to have a clear picture of the risk you’re taking on the various factors you need to consider when selecting a law school and determining whether you can or should take on the debt that school requires. I would support something like what Indiana University Law  School Professor Bill Henderson has proposed:

If we evaluate outcome measures from the perspective of law students rather than law schools, there are at least three pieces of information that the [ABA Section on Legal Education and Admission to the Bar] should collect and publish annually in a format that facilitates school-to-school comparisons:

1. Bar Passage. Working in conjunction with the Law School Admissions Council (LSAC) and the National Conference of Bar Examiners (NCBE), the Section should construct a database that compares scores on the Multistate Bar Exam after controlling for entering credentials, jurisdiction, and law school attended.  Preliminary evidence suggests large variations–above and beyond entering credentials–in law schools’ ability to get their students over the bar exam hurdle. See Henderson Letter to Special Committee (January 30, 2008).  This information is crucial to diversifying the bar because minority students historically have significantly lower bar passage rates. Both educators and students need to know which schools are most effective at erasing this gap.  Principled objections to the bar exam as an outcome (so often voiced by professors) need to be squared with the practical realities faced by students.
2. Employment Outcomes.  How many graduates are working in non-legal settings?  What are the salary ranges and distributions within legal and non-legal practice settings? Is there any evidence that some schools have better placement records as a result of curricular initiatives?  Remarkably, no one in legal education knows the answers to these questions. Schools should be required to submit a list of the employers and job titles for all of its graduates, and the Section should then code and compile these lists in a way that reveals the full range of outcomes, thus enabling meaningful school-to-school comparisons.  The lists themselves need not be published; the binning process would capture the useful information while also ensuring student anonymity.  There is a high probability that the current ABA coding system (e.g., “academia”, “business”) contains outcomes that make $120K in legal education look like a bad investment.  The Section should follow up with these graduates to better understand their circumstances, including the decision-making process that the graduates relied upon.
3. Debt Loads. Because of the scholarship process used by virtually all law students, tuition is a misleading indicator of law school cost.  Debt is a more accurate measure.  But means and medians are not enough; students need to see full distributions. Specifically, they should have access to a histogram of a school’s debt loads at graduation. And not just law school debt, but also total educational debt and consumer debt.

If the Section focused on the above approach, they will not need to develop the thousand-flowers-bloom approach embodied in the Special Committee’s Final Report.  In a market will better information, law schools will find and leverage their own competitive advantage in order to survive–and let’s be honest, some schools won’t.  From a societal perspective that is okay.  The Section on Legal Education and Admission to the Bar needs to wake up to the fact that is is regulator with a fiduciary responsibility to law students, not law schools.

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