Yesterday, I posted some data on the maximum amount students pursuing careers in the 10 fast-growing occupations could have borrowed if the Department of Education's (ED) proposed metric to define gainful employment were retro-acted prior to 2003. Then I read an interesting blog by Brandon Platt over at Career College Central in which he suggests that a:
growing number of law graduates...can’t find the employment they felt they were promised, or even...able to find employment and begin paying back [their] loans at graduationThis got me to thinking about all of the horror stories about law school graduates having six figures of debt and unable to find job, and what the ED's proposed metric for gainful would imply for law schools. So, I returned to the BLS site and collected occupations data at the 25th percentile for lawyers in 2003 and 2008 and applied the same methodology that I used yesterday to calculate the max debt that a student could borrow for 3 years of law school.
In 2008, the 25th percentile earnings for lawyers was just under $75,000, an inflation-adjusted increase of 2.3% from 2003. Given this earnings figure, and assuming a 6.8 percent fixed loan rate (which is very conservative considering that many law students take out private loans with much higher interest rates), I calculated that the maximum total debt a law student could borrow would have been just under $44,000, or 2.3% more than he/she could have borrowed in 2003 after adjusting for inflation. Given the ED's proposal, this would also include any debt incurred as an undergrad, unless the student managed to pay it off before starting law school. FYI, the average law school tuition was just under $28,000 in 2007-08.
What this little comparison tells us is that the ED's proposal is unrealistic and way off base. A better idea than implementing some arbitrary metric that even the preferred public and not-for profit sectors could not pass, would be to require colleges to collect and publicize student outcomes data, such as job placement and average earnings, as well as program completion and loan default rates, so that students have enough information to make intelligent decisions.