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You may have heard that three law schools — Columbia, Stanford, and the University of Chicago — reported that their cost of attendance for the current academic year exceeds $100,000. And some of their peer schools are coming close.
Their numbers are based on tuition, fees, and estimated living expenses. These three schools are in some of the most expensive cities in the country. And since they attract students nationwide, I doubt many of them are living with nearby relatives who will provide free food and a place to sleep.
Assuming these students fully finance their law school education with federal loans at a 6-7 percent interest rate, along with undergraduate debt, they will likely graduate with $400,000 in debt. You will need to pay around $4,500 per month to pay it off in 10 years. Or around $2,600 per month to pay it off in 30 years.
The fact that these three schools cost this much shouldn’t be a cause for concern. A good portion of these students will not leave with debt that high. Some come from wealthy families who will pay the tuition up front. Others will have substantial scholarships. And others will pay down their debt with their summer associate salaries at a major law firm. Or all of the above.
Even if they have that level of debt, it is assumed that most will land a high-paying job at some point in their careers and will eventually pay it off while living comfortably.
And some people will gladly get into this level of debt as they consider a law degree from one of these schools to be a status symbol.
What is worrisome is that other law schools will follow suit because they can claim they have to in order to stay competitive. Most schools have been gradually (and quietly) raising tuition every year. And it’s not always the schools’ fault. There are some costs that schools cannot control such as off-campus housing. And inflation plays a role.
But when word gets out that a school costs six figures per year, it crosses a psychological line. People will talk about it. Applicants will think harder about whether they will get their money’s worth. Some schools don’t need to explain themselves, at least not yet. If my alma mater, the late Whittier Law School, cost that much, everyone, including some alumni, would be up in arms. Other schools will be ridiculed mercilessly so they will not dare unless they absolutely have to.
I wonder how law school administrators of the future are going to argue with a straight face that a six-figure cost of attendance is necessary to promote diversity in the legal profession. Does the grand diversity plan involve young lawyers of color being enslaved with $400,000 in nondischargeable student loan bondage? Is a $2,600 minimum monthly payment for 30 years going to encourage them to work in underserved areas? The way things are going now, Income Based Repayment plans, including the Public Service Loan Forgiveness program, are overdue for serious reform and are likely to be very different in a few years. And I think that half of Americans are hostile to forgiving student loans in any form and will make their anger known at the voting booth.
I will close by sharing that I have been contacted by young lawyers who are owing over $400,000 in student loans. They have high salaries but they also live in expensive cities. After their expenses, they are basically living paycheck to paycheck. If they can stay at their high-salary firm for five years, they will then be in a position to pay off the loans quickly. Otherwise they will likely be on an income-based repayment plan with a huge tax bomb at the end. Needless to say, they are not happy people.
They haven’t told their friends and family that they owe so much because of the shock factor. No one is “supposed” to owe that much. When I graduated law school many years ago, owing $100,000 in student loans would be considered shocking. Nowadays, owing “only” $100,000 is considered low. Sadly, recent law school graduates feel somewhat comfortable admitting that they owe $300,000.
One day, law school will cost more than $100,000 per year. I am hoping that people from inside the academy will figure out a way to delay the inevitable for the sake of their students. But in the meantime, it is the student’s responsibility to control their costs so they won’t have to pay $2,600 per month for 30 years.
Steven Chung is a tax attorney in Los Angeles, California. He helps people with basic tax planning and resolve tax disputes. He is also sympathetic to people with large student loans. He can be reached via email at sachimalbe@excite.com. Or you can connect with him on Twitter (@stevenchung) and connect with him on LinkedIn.