As my Thinking LSAT Podcast listeners will know, I've been hard at work the past few weeks on my next book, titled Don't Pay for Law School. What follows is a horror story about a soon-to-be-lawyer whose plan includes paying at least a quarter of a million dollars—maybe four times that, when it's all said and done—for his J.D. It's a cautionary tale. —n
Many people are terrible at managing money—perhaps they learned bad habits from their parents—and maybe you’re one of them. Maybe you simply don’t care that you’ll graduate from law school into a lifetime of debt. I know people like this. My buddy Dwayne[i], for example. Dwayne racked up $180,000 in debt before the end of his second year of law school, and he’ll be well over a quarter of a million dollars when he graduates. Dwayne’s no dummy—he’s doing well at a regional law school in a major U.S. city, studies a very practical area of law in which he has worked before, and has several job offers waiting for him upon graduation. He’s not going to have a problem with the bar exam, and he’s not going to have trouble finding work that pays. He’ll wear a suit, and drive a nice car, and have every right to put “Esquire” after his name (if he wants to look like a douche). I love the guy. But he shocked me recently when we met up for beers. With a perfectly straight face and no sense of shame, he told me:
"I’m never paying it back, dude. I’ll die with these loans."
Unfortunately, this dire prediction has a very real possibility of coming true. It certainly will be true, if Dwayne doesn’t change course. Now, I’m not trying to shame Dwayne into paying back the government, or whatever bank holds Dwayne’s loans. Fuck those guys. This isn’t a moral argument, and I’m only concerned with the logic of the decision.
How can a guy who is otherwise so smart make such a terrible financial decision?
Dwayne’s plan: Go immediately into income-based repayment and never leave. Make the minimum payments, not a penny more. At first, his income-based payments won’t even cover the interest on the whopping balance, so the balance will climb even higher. In turn, the interest on the balance will climb higher. As Dwayne makes more money, the loan payments will adjust upward. But unless he makes a lot of money, and gets out of income-based repayment, the balance will never decrease. Imagine a gigantic elephant of debt sitting on his shoulders, eating and eating, getting fatter every day. Dwayne will keep paying, more and more each year, until he dies. In the end, Dwayne will have paid many hundreds of thousands of dollars—a million dollars or more is not out of the question—for his J.D.
Let me say it again: That’s what a successful lawyer with too much debt looks like. Can you imagine what happens if his legal career fails, for any reason?
I teach people how to take the LSAT, yes, so they can get their highest possible score. And yes, sometimes having a higher score not only leads to acceptance, but also scholarships. But there are other ways to avoid leaving law school with a ten-ton backpack of debt: checking yourself on what's driving your decision to attend a certain school, taking the extra time to apply for scholarships and grants you may not have considered, to name a few. I put value on my ability to teach the LSAT, but the real value comes in when I help students make the best possible long-term decisions about their future. The test is a moment in time; the rest of it lasts (potentially) forever.
[i]Not his real name