GAO Report On Increased Cost Of Law School

As you may have heard from the ABA Journal or from AboveTheLaw, the non-partisan Government Accountability Office (GAO) recently released a report that has some interesting finding about the increased cost of law school.  More specifically, it identifies the following factors on slide 19 as affecting cost:

• increased emphasis on hands-on clinical experiences, and smaller skills-based courses
• increased diversity of course offerings–e.g., international law and environmental law; and
• increased student support–e.g., academic support, career services, and admissions support

Admittedly these may represent some small impact, but we take a look at the bigger factors below:

System For Savings Thousands Per Year On Your Student Loans

As you know, payments for both federal and private students loans are deferred while the students is in school.  That's great because it allows the student to complete their education without having to worry about making a loan payment until after they graduate - and those loan payments can be pretty big.   For most private loans, even though payments on the loan is deferred, the loan continues to accumulate interest during the deferral period.  However, federal student loans many be either subsidized or unsubsidized.  The unsubsidized student loans accumulate interest during the deferment period, but the subsidized student loans do no accumulate any interest.  This leads to an interesting strategy that may be helpful in your situation.  Keep reading to find out!

"Best Jobs In America" Data on Lawyer Salaries

Recently, CNNMoney did a report on careers that they identified as "The Best Jobs In America."  Number 18 on the list was "Lawyer."   The report provides useful data with regard to the median and "top" lawyer salaries for "experienced" attorneys.  In determining "experienced," it looks like they exclude all first year lawyers, exclude a certain percentage of years lawyers 2-7 years out, and then include all lawyer salaries for those at least 7 years out.

What's the bottom line?  Click to find out.

The Changing Cost Of Law School And The Impact On New Lawyers

I sometimes hear older lawyers talking about how they "worked their way through law school" by working at a fairly low-paying job, like working as a waiter or part time in a library.  More specifically, these older lawyers were able to make enough to pay for law school and their living expenses just by working those fairly low-paying jobs - and typically by working less than full time during the school year (although they would typically find another low-paying job to work at full time during the summer.)  The way in which these lawyers talk about their experience implies that they think that working your way through law school at a similar job is still a viable option today.  Mentally they realize that law school is more expensive now, but they also know that the minimum wage has gone up too.  Thus, they somehow think that law school costs the same relative to minimum wage today as it did back when they went to school - that is, that minimum wage has increased at the same rate as the cost of law school.

For these lawyers, when they hear about students who have taken out $200,000 in loans, they sometimes shake their heads and ask "why didn't they just work more hours during law school?"  or something along the lines of "I guess if they didn't want to work during law school, then they are going to have to pay for it now."

This is a massive disconnect and it serves to illustrate the vast differences in the experiences of these older lawyers in going to law school and being a young lawyer as opposed to those who are going to law school today.

Below, we try to get a vision of what going to law school looked like financially in the 1950s and how it compares to the experience of today.  This should be useful to give law students and young lawyers insight into the preconceived notions that senior partners have about law school - and to serve as a resource that young lawyers can send to senior counsel who are not comprehending the difference - or refuse to relinquish their assumption that the accumulation of loans is somehow a sign of laziness or lack of drive.

Buying A Law Degree At The Height Of The Bubble

The past few years have brought us the Tech Stock bubble that crashed the stock market and the housing bubble that almost crashed our entire economic system.  We are still recovering from the housing bubble and are likely to be doing so for the next several years.  Unfortunately, the same principles that led to the tech bubble and the housing bubble are currently at work in the field of law - and may cause the value of your law degree to "crash."  Analysis and what you can do about it after the fold.

A 529 Plan With A 300% Return

Caught your attention, didn't it!  The best part is that it is true.  More info below the fold-

Paying for Law School 1: How Much Does Law School Really Cost?

How much law school really costs is often not clear to potential law students.  In fact, most potential law students underestimate the cost of law school by tens of thousands of dollars.  However, the cost of law school and paying back the loans is a major financial aspect for most new lawyers.  Prospective law students need to have a clearer understanding of their true cost.  Let's take a look at some actual numbers and find out where people are making their mistakes.

How Much Will You Make As a Lawyer? Part 4

In Part 1 we noted how a potential law student may by misled about their career prospects by law school materials.  In Part 2 we noted the more realistic NALP numbers.  In Part 3 we discussed why even the NALP numbers may be a little high.

Here, in Part 4, we discuss a student who recognizes that the highly-compensated jobs represent 23% of law school graduates.  Thus, the law student figures that if she can be in the top 23% in terms of GPA, then a highly-compensated job will be hers!  However, the law student may still be in for a disappointment.

How Much Will You Make As a Lawyer? Part 3

In Part 1 of this series we took a look at average starting salary numbers as reported by law schools, and how they might create a misleading impression as to the average starting salary that a law student might expect upon graduation.

In Part 2, we reviewed the NALP curve of actual starting salary information for around 23 thousand lawyers that graduated in 2008.  We found that contrary to many law student's expectations of an average starting salary of around $135K, the actual average starting salary was only $72K.

Here, in Part 3, we will explore some reasons why an average starting salary of $72K may still be unrealistically high.

How Much Will You Make As a Lawyer? Part 2

In Part 1 of this series, we took a look at what Law Schools were actually reporting as their average starting salaries.  Further, we took a closer look at one Law School's "sales" material and reviewed what impressions it might engender in a reader, and why those impressions might not be accurate.

In Part 2, we take a look at starting salary information as reported by NALP, the National Association for Law Placement - salary information that paints a very different picture from that shown in law school sales material.

How Much Will You Make As a Lawyer? Part 1

Since we are going to examine personal finance for lawyers, and lawyers start as law students, it makes sense to take a look at what going to law school means as a personal finance decison.

If you are thinking of going to law school, you know that you will most likely have to spend huge money (in some cases upward of $200K these days) to get your law degree.  If you are paying the bill yourself, then it would be height of insanity not to consider what you will be making once you get into practice - you are going to have to pay for those loans somehow!

Welcome to The Legal Dollar

Welcome to the first post of The Legal Dollar (TLD). TLD is designed to discuss personal finance issues relating to lawyers and the practice of law and to provide lawyers and law students with some financial tips.