We know about the debt burden saddling many new lawyers, so back in January I decided to ask our readers: What is your law school debt story? Hoping for at least 100 responses to my unofficial survey, I was blown away to receive nearly 300. As a 2008 grad I was not surprised by the results. Hard data now affirms the stories we’re hearing about the effects of debt and the poor job market on new grads.

The Basics

Read a full report on the survey results here, and a report on just 0-5 year lawyers here.The full survey results are here. The survey remains open and the results will automatically update with new entries, but the numbers below are as of the posting date. Even though we targeted new lawyers in Minnesota, the survey was open to all lawyers. 7% of respondents graduated more than ten years ago. Surprisingly (or not?) many of the >10 years people were not much better off than the newbies, so their responses are included in the numbers below, even though I may refer to the respondents as “new lawyers.” Here is the data for just 0-5 year lawyers.

The Analysis

Debt

94% of respondents graduated with debt. Of these, 54% had debt exceeding $100,000. Of just the 0-5 year lawyers with debt, 62% had more than $100,000. This includes undergraduate debt. Making matters worse, 23% of those with student loans have additional debt, such as an underwater mortgage or substantial credit card debt.

A common perception is that people making a lot of money are most able to pay off their debt. Isn’t that the gamble highlighted in the NY Times article? While that may be true, the most obvious category of people with paid off debt are those who started out with the least debt.

Of new lawyers who haven’t paid off their loans yet:

• 21% haven’t been able to repay much of anything yet on their loans.
• 56% have been paying consistently.
• 23% have paid inconsistently, paying some but then going through additional periods of deferral or forbearance.

• 20% feel comfortable with their repayment plan.
• 30% don’t feel like they are managing their loans well.
• Half indicated that they are “managing, but it has been burdensome.”

The biggest help in repayment?

• Living more frugally (35%)
• Enrolling in automatic payments to reduce interest rate or principal (25%)
• Consolidation (24%)

Anecdotally, I know many people rely on their spouse’s job or have even moved in with their parents. A combined 20% of respondents said they rely on their spouse or family support to pay their loans.

The biggest obstacles to repayment?

• Job situation (53%)
• Other debt (23%)
• Being able to pay some but not regularly enough to come out of deferment (e.g., self-employed or contract work) (12%)

Law School Employment Statistics. The 9.83% of all respondents who reported being unemployed is not too far off from the 9-month employment statistics at the local law schools. But the real question isn’t just “employed or not.” For law school employment statistics, anything counts as employed, whether it’s Faegre or Starbucks.

Here’s some fun math: 9.83% unemployed + 6.44% working part-time + 10.51% working contract or irregular positions = 26.78% not in the kind of job one typically goes into $100,000 of debt for. People who temp might only get work a few weeks out of a month, if that, even if it is full-time JD-required work. In fact, 100% of respondents who reported working contract or irregular positions said that they were actively looking for other work or were underemployed. 83% of part-time respondents were actively looking for other employment or were self-employed.

Another big number? 59% of respondents are “unsatisfied” with their job situation. That wasn’t a direct question on the survey, but 174 of 295 people reported being unemployed, underemployed, actively looking for other employment, are only at their current job because of the economy, not practicing law but would like to be, or would like to take a lower paying job but can’t afford it. And that does not take into account more people who may be satisfied with their jobs but are unduly burdened with their debt load.

Spanning all categories, 16% of all respondents report being self-employed. Some full-time, some part-time, and some contract. Some are actively looking for work, others aren’t. But I do wonder how many of them would be self-employed were it not for the poor job market. 49% report being underemployed, which is expected for anyone with a new business, but also financially burdensome. Interestingly, the 3-5 year grads have the most self-employed.

Bottom line? Lawyers work hard. We went to school for a long time. We don’t like being unemployed or undervalued. It seems far more likely that we’ll find work — whatever kind of work it may be — rather than be unemployed, and that is not reflected in law school statistics.

Employer Beware. Prepare thyself for a massive shift in your workforce should the economy rebound with any speed. 42% of respondents are employed but also looking for other employment, would be looking if the economy were better, aren’t practicing law and want to be, or are underemployed (below skill level or not full time). If you aren’t making your employees happy now, you might want to start if you intend to keep them around.

The Profession

The most concerning statistics? Of new lawyers still paying on their loans (92% of those surveyed):

• 13% felt pressure to “take clients I don’t want to work with or make bad decisions in order to get paid.” OLPR has warned that we may see an increase in ethics complaints for new lawyers who have such strong financial pressure that they may behave unethically, and the survey bears that out.
• 13% would like to take a lower paying job but can’t afford it.
• 27% reported that their student loan debt has significantly impacted their personal relationships, stress level, or mental health.
• 58% reported that their student loan debt had either moderately or significantly impacted their personal relationships or stress level. (Inclusive of the 27%; many people marked both moderate and significant impact.)

Life Impact

One-third of respondents left comments. The overwhelming sense from the comments is that many new lawyers feel like they are out of options, not just with money but with life. Their language shows frustration, worry, lack of control, and a feeling that the loans will never be paid off. All of this on top of an already stressful profession. With or without regret, new lawyers are scared.

Federal loans have some deferment and repayment flexibility, but it often doesn’t go far enough. Private loans give few options.  Many felt taken advantage of, either by their law school or the system. People are terrified of losing their jobs. One person moved out of state for better job prospects and was not admitted due to “irresponsible” loans (amounting to about the average student loan debt).

Many commented on the impact of their debt on family. Most of them talked about:

• significantly (or indefinitely) pushing back plans to get married, have children, buy a house/condo, or even a car
• moving from government or non-profit to private practice when they started a family
• wanting to move to non-profit or pro bono work but can’t afford to
• wanting to go solo but can’t afford to leave their jobs

A few people said that lack of affordable healthcare or childcare is another obstacle toward managing their debt.

The people who are managing thanked income-based repayment programs, LRAP, scholarships, using savings instead of taking out loans, and being “lucky.”  I especially liked the commenter who said they were doing relatively well at staying on top of his debt, but that “at the end of the day, that is a lot like being the skinniest kid at a fat camp.”

A few people re-enrolled in school because it was the only option to further defer their loans or stand a chance at getting a better paying job. Others are considering starting nonprofits so they may be eligible for debt forgiveness in the future.

There was also a sense of frustration from several people who felt like they “did everything right” and were still falling on hard times (and being unfairly blamed for being irresponsible): top of the class, law review, moot court, working during school, etc.

Solutions

Some solutions were offered: 1) allow refinancing; 2) modify debt “forgiveness” programs that are really loan acceleration programs; 3) allow student debt to be “foreclosed” or dischargeable in bankruptcy; 4) better access to low interest loans; 5) control the number of students graduating (students won’t self-regulate in the face of misleading statistics); 6) assistance for students who enroll in law school to help the less fortunate, but then can’t afford to do public interest work; 7) help students simplify – too many loan servicers makes it difficult to keep track of payments; 8) allow interest rate to be tax-deductible regardless of gross income; 9) allow loan repayment with pre-tax dollars; 10) raise the cap on the tax credit allowed for interest rate payments (currently at $2,500, when the standard repayment plan on a $100,000 loan would be approximately $14,000 annually, mostly interest for the first several years)

The refinancing idea makes a lot of sense. Right now, when interest rates are so low, and many have interest rates on our student loans pushing 10% (some up to 14%), why can’t we refinance? Almost anything else can be refinanced. Consolidation is an option, but that doesn’t generally get you a better interest rate. And even now consolidation is not widely available.

Conclusion

Wish I asked one of the really obvious questions: Does your current job situation match your expectations when you enrolled in law school? Was law school worth the cost? This is really the heart of the debt debate.

But these are tricky questions, not simply answered by a checkbox survey. I’m not even sure how to answer them. Am I doing what I expected to do when I graduated? Absolutely not. Am I happy anyway? Yes. If I had known when I enrolled what I would be doing now, would I have gone to law school? Not given the debt load, but Yes given the career.  If I could return my law degree for a full refund with interest, would I? Maybe.