Graduate student debt and the one percent

The New America foundation has released a study of graduate and professional school debt, which features a bunch of interesting information. Unlike most reports regarding such debt, New America’s survey includes survey estimates of actual educational debt totals, not merely how much graduate and professional school students have borrowed while in post-undergrad programs (the latter figure excludes undergraduate debt and interest accrued on educational debt). It’s a longitudinal study, with numbers for 2004, 2008, and 2012 (all figures are reported in 2012 dollars).

Here are a few figures for the 50th and 75th percentiles of total educational debt in 2012 for

students with debt (approximately 87% of all students):

MBA 50th: $42,000 75th: $69,906

Master of Arts: 50th: $58,539 75th: $90,892

Master of Science: 50th: $50,400 75th: $84,808

JD: 50th: $140,616 75th: $193,823

The comparatively modest MBA figures no doubt reflect that employers often pay for part or even all of the tuition costs incurred by MBA students. I don’t know what to make of the MA and MS figures (How marketable are masters degrees? Note that these figures don’t include education masters, which are often obtained by teachers who are increasing their salaries via further credentialing, and which are listed separately).

The law school figures are both shocking and unsurprising. When I attempted to calculate average total educational debt for law graduates in an academic article in 2012, I used what I took to be a conservative estimate of $10,000 of undergraduate debt among the 87% or so of law graduates with debt. New America calculates the true figure as being $16,660 at the 50th percentile, and more than $35,000 at the 75th.

It’s still common to read statements from (usually older) legal academics, lamenting that some graduates now incur “as much as” $150,000 in debt, when in fact this will probably be the average figure for next month’s graduating class.

What has produced such numbers, which require 25 years of four figure per month debt payments — essentially the equivalent of a mortgage? Obviously skyrocketing tuition has played the most crucial role, but here I want to note another factor, which has more to do with the structure of the American economy as a whole than with the specific behavior of law schools.

These graduate debt figures help highlight how expensive it is to get an advanced degree even without regard to the tuition costs incurred by students. And that non-tuition expense is, in many instances, a direct product of America’s increasing economic stratification.

Consider what it now costs to attend law school in New York, or Washington, or Boston, or San Francisco, or Los Angeles, or Chicago. Over the past generation, each of these cities has to a greater or lesser extent been transformed into a playpen for the one percenters. The result is that UC-Hastings (located in the scenic Tenderloin district of San Francisco) estimates that a reasonably frugal law student will incur $23,616 in living expenses over the nine-month academic year, while Brooklyn Law School (Brooklyn Heights) estimates that student will spend $28,225, and Whittier (Costa Mesa CA) calculates its nine month cost of attendance as $27,796.

Since full-time law students must normally take 36 months to cover the distance from the first day of classes until the bar exam two months after graduation, all these figures need to be multiplied by four to estimate student living expenses. In other words, students are incurring $100,000 or more in attendance costs without regard to tuition (sticker tuition price at these schools is over $50,000 per year at Brooklyn and Hastings, and a mere $41,460 at Whittier, where a total of 56 of 210 2013 graduates had full-time non-temp jobs requiring law degrees in February of this year, while more than 40% of the graduating class was completely unemployed nine months after graduation.)

Of course no-doc federal loans allow anybody these schools to enroll to borrow the full cost of attendance, most especially including the cost of living in places where people with household incomes of $400,000 per year consider themselves part of the struggling “upper middle class.”

The fact that the government will lend you the money to live in or perilously near an enclave of the hyper-wealthy for three years during which time you have taken yourself out of the paid labor force (law students at non-elite schools are expected to “intern,” aka, work for free, in order to get their feet inside rapidly slamming doors) doesn’t make it a good idea to borrow that money. In other words, a lot of law schools located in such places are no longer worth attending even for “free.”