Is law school worth it? Rapid rises in tuition, dramatic growth in average debt levels in recent years, and a weakening of the job market for lawyers all raise questions about whether and for whom going to law school is a sound financial decision.
By Sandy Baum, Ph.D.
Regardless of their motivation for studying law, people enroll expecting to be able to live at a higher standard of living than would have been possible without this education, even after repaying the debt they incur. Understanding what makes law school “affordable” for students in different circumstances requires thinking about how well the investment in this professional training pays off.
Law school affordability cannot be evaluated through simple metrics like tuition prices and debt levels. Rather, the lifetime value of the investment—based on the earnings premium generated and net of both direct costs and forgone earnings—is the best measure of whether or not going to law school is “affordable.” But there is no guarantee that even with a positive net present value, the investment in law school will be sufficiently financially rewarding to satisfy students making sacrifices to pay off their debts.
The complexity of evaluating the “affordability” of a law school education is multiplied many times by the extreme variation in prices, job opportunities, and earnings in this market. Knowing that on average a law degree pays off means little for those for whom the payoff turns out to be relatively small. On the other hand, high prices and debt levels should not deter students whose chances of having successful careers that are personally and financially rewarding are high.
Lawyers’ earnings are a function of the law schools they attended, geographical location, and type of employment, in addition to personal characteristics. Most lawyers earn much less than the salaries enjoyed by successful lawyers in large urban firms and the significant variation in earnings within the profession makes it impossible to set general benchmarks related to prices or debt levels for potential law students. For example, the amount of debt that can be supported at the 75th percentile of lawyers’ 2014 earnings is about three times as high as at the 25th percentile.
Guiding students about reasonable amounts to spend— and law schools about reasonable amount to charge— requires understanding of the wide range of law school outcomes and of the significant differences associated with individual law schools. While there is considerable uncertainty, some of the indicators of future earnings are available before enrollment and both students and institutions should consider these signals. Prospective students surely overestimate lawyers’ earnings and just clarifying and highlighting the actual distribution of earnings could provide a constructive caution to aspiring lawyers.
All law schools should focus on increasing efficiency and providing quality education at a lower cost. But law schools educating students who tend to have earnings over their career at or below the average for the profession should be particularly concerned about finding ways to cut their costs and their prices. Current prices not only lead to debt levels not sustainable at typical earnings levels, but likely generate earnings premiums for many students that do not support the investment.