In 'Perfect Storm' of Hard-to-Find Jobs and Stagnant Pay, Law Grads Can't Escape Hefty Student Loans
Given the gloomy economy and a lack of jobs for recent law graduates, it’s likely that more are filing for bankruptcy.
But doing so offers little relief for many struggling primarily under a heavy burden of student loans, since it’s difficult or impossible for many law grads to persuade a bankruptcy court that their cases satisfy stringent standards for the discharge of educational debt.
Diana Valle, a 26-year-old University of Maryland law grad, learned this the hard way, reports Reuters.
She found her law school bankruptcy class helpful when making her personal Chapter 7 filing. However, it’s notoriously difficult to establish financial circumstances so dire that student loan debt is discharged.
With law school debt up 50 percent in the last decade or so, the number of legal jobs shrinking and salaries stagnant, a “perfect storm” has put even those fortunate enough to find jobs in a tough situation, the news agency reports.
Average debt for lawyers after graduation is now $106,000 for those who attended private schools and $70,000 for those who went to public schools. The median starting salary in 2010, of about $63,000, isn’t enough to cover this kind of debt, says James Leipold. He serves as executive director of the National Association for Law Placement.
“There’s a mismatch between the amounts law schools charge and the pay most graduates receive,” he tells Reuters. “It doesn’t work.”
A number of parents are struggling under a hefty student loan burden too, after helping children attend an expensive college or university, a Bloomberg article reports.
“I don’t see a time when I’m not going to work,” said Pamela Lauzau, 63. Her husband has dementia and she has a job as a school bus driver, for the medical insurance it offers, in addition to selling real estate.
She is selling her home in Alexandria, Va. The proceeds should pay back the $400,000 she borrowed, via a second mortgage, to put three children through Boston College. However, it won’t put any additional cash in her account at closing, the article notes.
ABAJournal.com: “8th Circuit Says Lawyer Can’t Discharge $360K in Student Debt”
ABAJournal.com: “Irked Judge Discharges Law Grad’s Student Loans, Critiques Senior Jurist”
ABAJournal.com: “Supreme Court Rules for Student Seeking Discharge of Loan Debt”
ABAJournal.com: “Ex-BigLaw Associate Faces Ethics Case Over Alleged Nonpayment of $78K Student Loan”