Living with credit

Law school: Is my dream worth the debt?

If you lose thousands of dollars in the game Monopoly, you may very well wind up bankrupt. However, all financial ruin abates when you put the pieces away, with no harm done to your actual assets. That’s not the case with an investment in graduate school.

I’m about to borrow $150,000 to pay for my legal education, and I’m doing it far away from the safety of a game board. I know I stand to lose a lot more from this transaction than a utilities or a railroads card.

Up to this point in my life, I have been debt free. My parents generously covered my undergraduate tuition expenses. I was able to pay most of my bills throughout college by working various part-time jobs and subsisting on eggs and pasta. Now that I’ve graduated, I am frequently queried about my future plans. When I mention that I’m starting law school in August, I almost always receive an incredulous look and a resounding “Why?”

Eek! I'm about to borrow $150,000!

Figuratively, I am getting the same reaction from much of the media. The New York Times ran an article earlier this year questioning whether earning a law degree is worth the time and expense. The reporter interviewed a law school graduate with $250,000 in debt whose only source of employment is the occasional low-paying temp job. The theme of the article seems to be that law students borrow hundreds of thousands of dollars, then they graduate and earn about as much as a barista. Almost every article I’ve seen lately regarding law school, and even graduate studies in general, reads similarly.

Here’s the thing, though; not all law degrees or graduate degrees are equally valuable.  For example, a law degree from a top school like Harvard University or a graduate degree from the preeminent institution in a particular field is almost always going to provide a recent graduate with more lucrative opportunities. But even students from less renowned schools, who often face more dismal job prospects, are straddling themselves with expensive debt. Law schools are especially insidious in this regard because the price tags of the lowest ranked schools may be just as steep as their higher ranked counterparts.

If only determining the value of a diploma was as easy as looking at the caliber of the institution. I don’t believe success only comes to those who graduate from the highest ranked schools, though it certainly helps. Even Harvard Law students don’t always get the job. Class rank, personal connections, extracurricular involvement and a host of other factors come into play.

So, it then becomes up to us as consumers to determine whether the degree we will earn warrants the amount of debt we will accumulate. This can be tricky because some people entering graduate school may not have a clear idea about their employment prospects or understand the consequences of owing large sums of money. Gail MarksJarvis, a personal finance columnist at the Chicago Tribune, phrases it nicely:

“One of the reasons students get into terrible debt is that they don’t know what terrible debt is,” she said at an April 2011 Society of American Business Editors and Writers’ convention.

She’s right. As I said, I’ve never taken out loans nor have I ever been in credit card debt. I have no idea what owing $150,000 means. At times it really does feel like I am playing with Monopoly money. I tried thinking of it in terms of how many mocha lattes (40,650) or Honda Civics (nine) I could buy. While that makes things a bit more tangible, it’s not a completely accurate representation. Some of my loans will accrue interest even while I’m in school, meaning the amount I’m borrowing will be ever increasing.

So, how do you know if your education is worth the debt? The general rule of thumb is that it is unwise to borrow more for your degree than your expected annual starting salary.

I will be attending a highly ranked university, but in my case, the field of law I am choosing to practice — low-paying public (nonprofit and government) versus high-paying private (corporate and law firms) — makes my investment a risky one.

I am going to borrow way more than I will earn. While I have considered working in the private sector at a big law firm to offset costs, I am instead trading cash and comfort for the chance to pursue my interests. I’m sure debt counselors everywhere are cringing. Believe me, I reconsider my path every time I look at my tuition bill. Will violating conventional financial wisdom work out well or will I instead become a law-savvy coffee maker? I’ll have to let you know on graduation day.

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  • You’re not alone 🙂 I’ve got similar public sector aspirations, and will end up with a similar debt load to you when all is said and done.
    I ran some tables back in November and figured you’ll still come out ahead even if you take a barebones govt job — and that’s not even counting the loan forgiveness programs and similar opportunities extended to public interest workers
    You can check out Part I (with the tables) at:
    And Part II (responding to the ppl in the Pt I comments) is at:
    Good luck! 🙂

  • Frank

    I’m currently carrying $110k from a failed business that we owned. “Why don’t you just bankrupt it?” I hear you asking. Because I personally guaranteed the loans. Because I believe in taking responsibility.
    You are getting ready to find out what it’s like to live with a 150,000 lb stone tied around your neck.
    Wanna go out to dinner? (that money could be spent paying back what you owe)
    Wanna go on vacation? (that money could be spent paying back what you owe)
    New car? (that money could be spent paying back what you owe)
    See what you will get to live with? It’s 24/7/365 until you’ve paid it back or bankrupted it.
    Be very, very careful with this decision. I am currently living with that level of debt, albeit from a different cause, but the effect is the same, especially if you’re saying your earning power after completing this degree isn’t going to enable you to pay this back **quickly**.
    Go carefully here – this will affect the rest of your life.

  • James

    I just turned down an offer to a law school because I came to the conclusion that the job market for attorneys after graduation is bleak, and that my monthly payment would be roughly $2200/month. Even with all the loan forgiveness programs available (10 yr forgiveness for public interest commitments, 25 yr forgiveness for poverty level salary) I would be 55 or 70 years old by the time I would be debt free from these obligations. Even if I did find a well paying job after graduation the volatile economic conditions do not guarantee job security with any firm or practice, so it would still roughly rake 10 or more years to pay off my debt WITH a job. As much as I would like to be an attorney, it is just not a financially sound decision. I could work a $40k/yr job and have more savings for a downpayment on a house than an attorney making $100k/yr who still has to pay off over $180,000 in law school loans.