For the Best Pay Relative to Education Cost, Choose Technical College over Law School, Analysts Say
Hedge fund managers evaluating likely default rates on student loans say law school debt is a bad investment. Their analysis translates to this advice for students: It may be better to go to technical college than law school.
Hedge fund managers expect default rates on loans for all 2010 and 2011 grads to jump, but they say law school debt will be a particular problem, the Wall Street Journal (sub. req.) reports. The Wall Street Journal Law Blog summarizes the story.
In the past, analysts expected 25 to 30 percent of securitized student loan to default. Now they expect a minimum default rate of 30 to 40 percent. “This analysis translates into some surprising insights for students and policy makers,” the Wall Street Journal says. “For example, in the current economy, it may make more sense to enter a technical college than to go to law school.”
Hedge fund manager Daniel Ades of Kawa Capital Management tells the Wall Street Journal that students should seek an education that pays the highest salaries relative to the cost of education. According to that analysis, technical colleges are the best. “We’re in a skills based economy and what we need is more computer programmers, more [nurses],” he tells the newspaper. “It’s less glamorous but it’s what we need.”
What about law school? Analysts say it’s “a sucker’s bet,” the story says.
The reason: In recessions, law grads have a harder time finding work than grads from other professional programs and are more likely to default on student loans. And law grads are financing their educations with ever higher debt. The story cites ABA figures showing law students this year are borrowing an average $68,827 to attend public schools and $106,249 to attend private schools.