Why Law School Students Need a Financial Education, Too
Everyone knows the cost of education has been soaring. The student loan burden can be crushing, even for newly minted lawyers. So much so, in fact, that many experts believe offering specific financial education for law school students is needed to help the new grads thrive.
Why is it needed? According to a survey by AccessLex Institute, a nonprofit that tries to help lawyers succeed, 70 percent of law school students feel stressed about personal finances, 77 percent worry about their growing student loan debt, and 85 percent give themselves a B minus or lower grade on their knowledge of personal finance.
Tyler Mandroian of Miller & Steiert PC says many things have changed about the profession, but ongoing education remains critical for lawyers – even those straight from law school. Mandroian added, “This commitment is not to be taken lightly, and it will take an abundance of time, money, sweat and blood to prepare students for this profession.”
True cost of education
Before being accepted into law school, a student must first receive his or her undergraduate degree. The American Bar Association does not recommend a specific undergraduate major, but common undergrad degrees for law school applicants include English, political science, history, philosophy, business, or economics.
Those undergraduate degrees, of course, come with a cost. And then there’s law school tuition. Recent research tabs the average cost of tuition and related fees for the country’s top 10 law schools at slightly more than $60,000 per year. But other universities can offer a much lower cost:
- Private: Average cost of $46,164 per year with the lowest annual tuition found at Brigham Young University for $24,620.
- Public in-state: Average cost of $$26,264 per year with the lowest annual tuition found at the University of North Dakota for $11,434.
- Public out-of-state: Average cost of $39,612 per year with the lowest annual tuition found at CUNY for $23,983.
The ABA says the average debt of law school graduates is $84,000 for public schools and $122,158 for private schools. Understanding the pricing options available is the first step in creating a realistic picture of the true cost of obtaining the degree and a necessary component in the financial education of law school students.
Realistic income projections
The second step for law school students to understand the financial side of their education is a realistic expectation of their potential income upon graduation. Many seem to believe earning a degree and passing the bar exam will land an immediate position at a legal firm and make repaying their accumulated student debt easy. Unfortunately, this is frequently not reality.
According to PayScale, the average salary for an attorney is $81,112 – the median is slightly lower at $81,706. The lower end of the scale is about $49,000 while the higher end exceeds $160,000.
Of course, the higher end of the salary spectrum doesn’t reflect what a new law school graduate could expect; it is reserved for those with the most experience and specialists in the more profitable niches such as contract negotiation, intellectual property, regulatory compliance, and litigation case management.
That’s why it’s important for students to explore the true earning potential of the branch of law they are considering and compare it to the cost of their education to avoid accumulating excessive student loan debt while attending law school.
Financial literacy and law school
Once students have a truly realistic understanding of law school tuition and how much they can expect to earn in the first few years of their practice, it is important for them to also have a solid financial education.
Brian Morris, the communications coordinator for Direct Textbook, notes, “Budgeting is a critical step toward financial independence.” His company offers a free student budget tool to make the process easier and help students graduate from their academic program with less debt.
AccessLex Institute counts failure to budget and track personal spending while still in school as major factors in later financial struggles for lawyers. To address problems it identified in the survey and the lack of financial education in the field, it recently rolled out its MAX program.
The nonprofit says the program is the first of its kind – a comprehensive financial education and loan counseling program created specifically for law students. More than 100 ABA-approved, state-affiliated nonprofit schools have signed up for the program for first year law students – at no cost to the university or student. AccessLex plans to roll out MAX programs for second- and third-year students as participants advance through law school.