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Scope: Debt-to-Income

Law School Costs

Tip On the left panelAt the top of the page, you can change the data scope to view student loan burden from different angles.

One common-sense rule in student lending, expressed through a debt-to-income ratio that compares total outstanding debt to earnings, provides that students should not borrow more than they expect to earn after their first year. Law schools of all types make observing that rule difficult. According to data released by the U.S. Department of Education in 2019, the median earnings exceeds the median amount borrowed at 11 law schools (i.e. 94.% of law schools exceeded a ratio of 1.00) for 2015 and 2016 graduates in the first full year after graduation. The median school ratio was 1.86, which means that the median amount borrowed exceeded the median earnings by 86%.

A few caveats: First, the earnings median reflects only graduates who borrowed. Second, the amount borrowed is not the same as the amount of debt. Interest accumulates during law school, even though loan payments are not yet due. Accordingly, debt-to-income ratio is a misnomer with this dataset, although it has already become convention. You can read more details on the underlying data and assumptions here. Finally, debt:income is only one metric. Because loan terms extend beyond one year, it is also helpful to look at the percentage of income devoted to debt service. You can read about the debt service ratio, which mortgage lenders consider, here.

The chart below plots median earnings vs. the median amount borrowed for 197 law schools. The schools are color-coded by type. At first impression, it may seem there is a weak-to-moderate positive relationship between median amount borrowed and median earnings (r=.2322; p<.01). But a closer look shows more complexity.

The reality is that there are two stories: the top 15 schools with median earnings above $100,000 and everyone else. The top 15 schools place a substantial percentage of their graduates in large firms jobs that pay the highest salaries. Graduates of other schools have much less access to those firms. If we divide the law schools into two groups, the top 15 and all other schools, there is no correlation between median amount borrowed and median earnings for either group.

Medians are not everything, especially when the entry-level legal salaries fall into a bi-modal distribution and when different groups pay different amounts within each law school. But these numbers do provide a jumping off point with appropriate context. Prospective and current law students planning their financial futures should consider the Education Department earnings data along with voluntary disclosures made by law schools on the LST Reports.

The chart to the rightbelow shows how debt-to-income ratios vary across law schools. The ratios cluster around the median school (1.86 ratio), with 78% of law schools within the range of .86 to 2.86 and a long tail that extends all the way to 5.63. However, the variance in quality of life should not be underestimated due to small numbers. A graduate with a debt-to-income ratio of 2.86 has borrowed almost three times as much as they earn and reflects significant financial hardship.

The chart to the leftabove shows how the median amount borrowed varies across law schools. The median school's median borrower took out $109,510. On the standard 10-year plan, the graduate pays an estimated $1276 per month. At the 75th percentile, the median borrower took out $140,818 ($1641 per month). Unlike the earnings distribution below, the amount borrowed is more spread out. This can be explained by, among other factors, tuition discounting practices, state subsidies, and variable cost of living.

The chart to the rightbelow shows how the median amount earned varies across law schools. The median school's median earner made $52,600. At the 25th percentile, the median earner made $46,700. At the top end, 15 schools saw their median earner make at least $100,000. At the very top, 6 schools saw their median earner make at least $170,000.

Highs and Lows

About the Data

School-specific borrowing and earnings data on this page come from the United States Department of Education.