Recent law school graduates on average have more disposable income than they did ten years ago, this despite higher student loan debt and a worsened job market, according to an exclusive study by National Jurist magazine.
Graduates employed by law firms have seen their standard of living improve by 59 percent since 1998 — and 74 percent when recent graduates take advantage of the most flexible debt repayment options.
It also improved for graduates headed into public service — albeit by a more modest 6 percent, based on the standard 10-year loan repayment plan. But when using a new income-based repayment plan, graduates see their standard of living improve by 45 percent from 1998 — or an extra $1,000 a month.
To determine standard of living, The National Jurist used median starting salaries, average debt payments, estimated taxes and then factored in inflation over the period of the study. The magazine did the analysis on a national basis and on a school-by-school basis.
The findings seem to run counter to conventional wisdom that law school is a worse investment than it was in the past.
“While the data shows that the Class of 2009 was worse off than the previous class, it fares very well when compared to historical numbers,” said Jack Crittenden, editor of The National Jurist. “Recent graduates enjoy a similar, if not better, quality of life upon graduation.”
But that is not true for graduates who get jobs at the smallest law firms, or for those underemployed or unemployed. Students entering private practice with a law firm between two and ten attorneys saw an 8 percent decline in standard of living from 1998 — largely because salaries dropped from the Class of 2008 to 2009. But, if the students take advantage of the income-based loan repayment plan that took effect in 2009, their standard of living actually increases by 26 percent.
Law firms with 11 to 100 attorneys averaged between 6 and 15 percent growth over the eleven-year period of the study. It was growth in salary at the largest firms that fueled most of the improvement. More students today get jobs at big firms — from 15 to more than 22 percent. Also, the salaries have increased from a median of $90,000 in 1998 to $160,000, according to NALP data.
The National Jurist first did the standard of living study in 1999 and at that time reported that the standard of living was declining. Graduates who entered private practice at six law schools at that time had a lower standard of living than they did as students.
But soon thereafter, salaries began to grow — outpacing student debt. The average law firm salary increased from $60,000 for the class of 1998 to $120,000 in 2009.
Salaries, however, hit a high water mark in 2008 and dropped for the class of 2009. If that trend continues, the average standard of living could erode further for the class of 2010 and 2011. Still, more flexible debt repayment plans make it much easier for recent graduates than at almost any time in the past 15 years.
Data for the study was used from NALP, U.S. News & World Report and the American Bar Association.