Law School Costs and Debt; the Law Employment Market
The Shrinking Law Employment Market
Since 2009, the law firm market has contracted significantly. Obtaining a legal job, much less a high-quality legal job, after law school is much harder than it used to be. Even if the economy improves and the legal market brightens, it's unlikely to return to the heady days of the middle of the last decade.
What the Current Market Means:
Fewer Jobs but Even More Candidates.
- Top School Dominance Will Increase. While the top law schools have long held a privileged place in the law employment market, the current turbulence in the legal market is likely to increase that dominance.
- Pressure Across the Market. There are fewer jobs at elite and large firms, and that is exerting pressure on the rest of the market (e.g., government, legal academics, smaller firms, public and private companies and public service). Whatever your career objective, there are fewer top-paying jobs, fewer jobs overall, and even more law school graduates wanting those jobs.
The Payoff Differential: Your Return on Your Law School Investment. The “payoff differential” is the earnings and career potential conferred by a law degree against what an applicant must pay to attend law school, including debt.
- Top Law School Dominance (Again). The payoff differential of elite law school degrees will increase relative to their competition, and graduates of lower-ranked law schools are likely to find it more difficult to find high-quality employment after law school and to comfortably service their student debt. In addition, a top law school degree confers vastly expanded career flexibility.
Law School Tuition. A large part of the reason for the wide payoff differential is that, no matter where you attend, the cost of law school is steep.
- It costs virtually the same to attend a law school ranked in the top 5 or top 10 by U.S. News as it does to attend a school ranked 11-25 ($1.06:$1).
- For law schools ranked 26-100, you will have to spend an average of about $104,000 in tuition alone for out-of-state students, against an average of $137,000 for top 5 and top 10 schools. That difference, according to 2007 median salary figures, was covered by less than three months of salary right out of law school by a median graduate earner from a top 10 school. And the student debt load is not appreciably different.
- Median Initial Earnings and Total Debt. The data for median (i.e., 50% above, 50% below) initial debt and salary after law school summarized below from NALP for 2007 demonstrate the significantly higher payoff differential for upper-tier law schools (a lot more earning power without substantially more debt):
3 years (2009-2010 average)*
First-Year Earnings (approximate)
|Median Debt (approximate)||Median Earnings Ratio||Median Debt Ratio|
|Top 10||$137,505||$135,000||$80,000||A median first-year top 10 graduate will earn $1.42 for every $1.00 earned by an 11-25 counterpart, and $2.21 for every $1.00 earned by a below 25 counterpart.||A median first-year top 10 graduate will have incurred only $1.14 for each $1.00 of debt incurred by 11-25 and below 25 counterparts.|
|11-25||$130,095||$95,000||$70,000||A median first-year 11-25 graduate will earn $1.56 for every $1.00 earned by a below 25 counterpart.||A median first-year 11-25 graduate will incur no more debt than a below 25 counterpart.|
* Assumes no increase over three-year period. However, tuition for 2010-2011 rose significantly, and further increases should be expected.
** Average of schools ranked 26-102; if schools in US News’ third and fourth tier are included, the average three-year tuition is approximately $96,847.
These earnings and debt statistics from 2007 show that even before the current downturn, the earnings potential:debt spreads were significantly higher for graduates of top 10 law schools than for others, and were significantly higher for graduates from schools ranked 11-25 than for those of "below 25" schools. Market contraction means that it is very likely that these spreads will increase in the next few years.
It is also important to remember that the difference in earnings is an annual difference. If a median top 10 graduate and a median “below 25” graduate keep their entering job for just three years, with no raises (which are generally proportionate to current salary), the top 10 graduate will earn $405,000 and the below 25 graduate $183,000, while servicing only a slightly different debt load.
Why Advise-In Solutions? Law school is an investment in flexibility and potential. The substantially enhanced career options and payoff differentials of higher-ranked law schools, and the high and relatively flat cost of law school education, magnify the importance of obtaining your best LSAT score, submitting your best law school application package and having a head start on law school. Advise-In Solutions’ personal, comprehensive programs give you the edge you need to compete successfully in today’s tighter law admission and legal employment environments.
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