Wednesday, May 2, 2018

The hidden costs of a legal education and what it means for rural America.

A few days ago, Vermont Digger published an article written by a young law school graduate who is living in South Burlington, Vermont and finding the cost of living rather cost prohibitive. While the article clearly wants us to focus on the $200,000 student debt, I believe that it is more important to focus on the substantial amount of consumer debt that he has incurred, much of it due to his time in law school and his bar exam prep afterwards. While there are government programs to help indebted graduates manage federal student loan debt (which the author indicates is the entirety of his debt), there aren't programs that help with consumer debt that you accumulate in association with your studies.

The author is a young law school graduate with a public interest job and spouse attending the University of Vermont. In addition to $200,000 in student debt, he has $30,000 in consumer debt, split between credit cards and a bar study loan. The author attributes his credit card debt to the cost of moving for school and living there. He attended Dartmouth College and Vermont Law school, both rural schools in New England. After graduation, he got married and opted to remain in Vermont, possibly with the intention of raising his family and living there indefinitely. In this space, I have previously covered the role that rural law schools can play in attracting people to rural areas and the author of this piece is a shining example of my desired outcome.  What I find troubling however is his contention that living in Vermont is cost prohibitive and that it may drive him away from the state entirely.

Even if the author lives in a more urban part of Vermont, he is still living in a predominantly rural state that is facing a severe brain drain and aging issue. In fact, Governor Phil Scott has made it a priority to attract and retain young people in Vermont. We can set aside the more nuanced arguments about whether or not Vermont actually as expensive as the author claims. Though, South Burlington is certainly more expensive than Rutland or St. Johnsbury, for example. It is important however to focus on the fact that this person wants to make Vermont his home but feels he may have to move to an urban area where he can command a higher salary in order to pay down his debt.

According to data from the Bureau of Labor Statistics, lawyer salaries in rural areas are lower than urban areas and this divide can often be very wide. However, these lower salaries are often partially off-set by a lower cost of living. In a situation like the author's however, there may be pressure to find a higher paying job so he can pay the debt off as quickly as possible.

You may wonder how a person could incur $15,000 in credit card debt through three years of law school. It starts before day one. What may surprise you is that there is often no funding for a person to move to law school so students often have to pay the cost of securing an apartment and moving their belongings entirely on their own. While students are typically eligible for federal student aid (often in the form of loans) in order to defray the cost of living, it is often not enough and does not cover relocation. Here is a copy of Vermont Law School's current cost of living estimates. As you can see, the cost of relocation is not included in the budget. This cost increases even more if a student does not stay in the area for the summer since they often have to vacate their properties and move their stuff to a different location, either to their summer destinations or into storage, another expense that is not accounted for in a cost of living budget. For many students, particularly low-income students, this puts them at an immediate deficit.

Further - health insurance is also not apart of the budget so if a student opts to buy health insurance, they'll incur a significant cost there as well. While some students may be eligible for Medicaid or other government subsidized health care, many either do not learn of their eligibility and think that they aren't eligible because of their status as students. Students who are not eligible for Medicaid have to either hope that they do not have a medical emergency or make the decision to incur the costs of health insurance.

Of course, I just discussed predictable costs. Imagine the extra debt that a student could incur if they have an emergency. A law student may, for example, need a car to get to their externships. If the car breaks down, they would likely have to finance the repair on a credit card, which will add to their debt load.

There is also the aforementioned $15,000 in bar study loans, which are used to finance the cost of studying for the bar exam and not being able to work until the results come in. As you might imagine, students who have little to no parental support may need this money in order to pay their bills while they wait for bar results. With graduation in May, the exam in July, and the results coming in at any time between September and December, access to that money may be a lifeline.

Why do I focus on the consumer debt so heavily and not the $200,000 in student debt? The federal government, through the Pay as You Earn program, has already devised a way to deal with the author's situation.  Under current guidelines, the author is able to only pay 10% of his discretionary income (which is calculated as household income minus the poverty line) with forgiveness coming in 25 years. If the author stays in his current state government job, he would qualify to have it forgiven in 10 years under the Public Service Loan Forgiveness Program. What this says is that the federal government has recognized the need for people with high debt loads to be able to serve disadvantaged communities and has provided a way to make high student debt affordable to the debtor. These protections however do not extend to the private consumer debt that one incurs through their law school studies.

For rural communities, which are often unable to offer high salaries, the fact that students are coming out severely indebted is a particularly major issue. Students are going to feel compelled to get rid of the debt and know that they can often find a higher paying job in an urban area, even if it means possibly leaving the legal field. Furthermore, a lot of the jobs in rural spaces are going to carry some amount of risk or at least lack of certainty. Rural legal practice may involve small firm work where your pay will fluctuate based on your case load in a given month or it may even involve hanging up a shingle and going it solo. Both of these options may be unappealing or prohibitive to someone with a high debt load.

Most jurisdictions that have attempted to address the lawyer shortage have included some financial incentives so it is recognized that low wages are an issue. I am not entirely sure what the solution would be to help those with high consumer debt loads. Perhaps we could include a relocation grant in student aid packages, subsidize licensing fees for low-income students, and increase funding for the social safety net so students are less reliant on debt to finance their way through schools. Perhaps schools could also offer financial assistance if a student has an emergency that interferes with their ability to complete their degree requirements or attend opportunities that will increase their marketability after graduation. There are many potential options that could be tried.

It would be a shame if the author of the article were to leave Vermont for a place like New York or Boston. Places like Vermont need the author in order to continue to grow and thrive.

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