Wednesday, June 26, 2013

5 Websites Every Pre-Law Student Should Bookmark…Besides Mine

Barrister on a Budget is the only blog (and book) that offers financial strategy, budgeting tips, and cost-saving measures related to law school.  If you continue to visit this website and the five recommended below, you will be in great shape for law school success.  Click on the title of the website to visit it directly.

1. This is the website for Federal Student Aid, but the specific page that should be bookmarked is the glossary.  Far too often students do not understand the financial obligations they are undertaking when signing for a loan (federal or private).  Keep the glossary open while you read the terms of the agreement and then decide whether you are willing to take on the responsibilities.
2.     The National Association for Law Placement:  The page most helpful to law students is the research page.  Here, you can review the statistics on job placement, salaries, industry trends, and other important aspects that pre-law students should research when deciding on a career in the law.  While there are some in the industry who find the reports controversial, these reports are a great starting point to help you in your research.
3.     Above the Law: This website offers articles on current events, tips, changes in the industry, and for general legal entertainment.  Above the Law provides information on the industry, but in a way that is fun to read and memorable.  Prospective law students can glean insight from a perspective closer to theirs rather than other stuffy, lecturing mediums.  Above the Law recently created its own law school rank list as an alternative to the sometimes controversial U.S. News & World Report rank list.
4.     The American Bar Association:  The ABA website is a one-stop shop for everything law.  There is a great page for pre-law students to explain admissions and what to expect and gain from law school as well as offers recommended reading, statistics, and information on student loans.
5.     The Fine Print Press:  The Fine Print Press publishes a wide assortment of law school guidebooks.  Any subject or sub-subject on attending law school can be found in one of their books.  Additionally, it provides an extensive book list – including books published elsewhere – for pre-law inquisitors. 

Happy web surfing!

Wednesday, June 19, 2013

How Law Schools Are Hurting Your Employment Prospects

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If you are in law school or have been paying attention to the legal industry, then you know that employment for new grads is difficult to come by.  It was recently reported by the National Association of Law Placement (NALP) that only 56% of the class of 2012 secured employment in a full-time, long-term job requiring bar passage nine months after graduation.  Most new grads are finding employment in non-lawyering roles.

As applications to enroll in law school decrease, law schools have decided to look elsewhere in order to keep business strong…for themselves.  Thirty law schools are now creating programs for the “non-lawyer.”  For this program, law schools are recruiting mid-career professionals who have no intention to practice law, but feel it would benefit them in their current job or for a promotion.

Students who are paying hundreds of thousands of dollars for a law degree in order to get a job as a lawyer, and are struggling even to do that, will now have stronger competition for those non-legal, back-up positions where the degree gave them an advantage before.  Providing legal education to the masses devalues the degree, and further floods a market that has already had its levies broken.  Additionally, with more non-lawyers solving their own legal problems, the need to hire attorneys and in-house counsel will lessen, withering the job market even more.  Students, new grads, and prospective law students should be petitioning local bar associations, state bar associations and other law organizations to get support on this issue and talk down law schools from damaging the industry.

As to the mid-career professionals that may be lured by the idea of a non-legal law degree, think twice.  You are mid-career and likely with a family, a mortgage, and other financial obligations.  Are you able to step away from your current job to take on the demands of law school?  Will stepping away, switching to part-time or attending work sleep deprived from enrolling in night school prevent you from the promotion you are hoping to acquire with your edification?  Can you get the schooling without taking on thousands in student loan debt?  The slight leverage to your career may not be worth the costs and time required to get the education.

To read more about how law schools are making up for the loss of applicants, read this article:  “Schools market to mid-career professionals as fewer traditional students seek law degrees” by Martha Neil in the ABA Journal.

Wednesday, June 12, 2013

Dropping Out of Law School: Is it the Fiscally Responsible Thing to Do?

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This week’s post is inspired by a fellow law blogger, Alison Monahan of The Girl’s Guide to Law School.  Alison’s article “Should You Drop Out of Law School?” weighs the different moments when a student may consider that question and when the question becomes the answer.  While her article gives a lot of introspective help with arriving at a decision, I think a major contributing factor to this discussion was omitted – finances.  I’ll follow Alison’s scenario plots.

    1. You’ve just finished 1L and your grades are terrible/you hated it/both.  This may be the most fiscally advantageous time period for dropping out of law school.  In economics, sunk costs are part of the business decision-making process.  A sunk cost is a past cost that has already been incurred and cannot be recovered.  Here, the sunk costs are your first year of tuition, any other extraneous loan debt acquired, and the loss of a year in the job market where you could’ve potentially been making an income.  If you drop out at this point, you avoid two more years of these costs and, hopefully, acquire gainful employment where you can earn money instead of building up debt.  Besides, with the poor legal job market, someone with terrible grades is unlikely to get a job.  Adding the two years of costs wouldn’t be worth it and could be financially crippling when those debt obligations become due.
a.       Losing a Scholarship.  Alison mentions the temptation to “prove” something when a student loses a scholarship.  If you narrowly missed your requirement to renew your scholarship, you may consider staying to raise your GPA enough to acquire a scholarship in the third year, but do your research and make sure it is possible.  If you missed the mark by a lot and also were in Scenario 1, dropping out may be the right thing for you to do.  Just consider yourself lucky that you didn’t have to pay as much as the ones who dropped out after year one without scholarships.

2. You’ve just finished 1L and hated it, but are doing well.  As Alison mentions, hopefully you have a summer associate position where you can test the waters.  Here, you can get paid to consider dropping out of law school.  If you still hate it after your position ends and decide to quit school, make sure that you drop out before classes begin.  As your lender may have already prepared your loan by this time, you should review your loan agreement, focusing on the return policies, penalties and grace period in order to avoid any extra costs.
     3. You’ve just finished 2L and are having doubts about carrying on.  I agree with Alison that you should finish.  It’s financially irresponsible to quit at this point.  You may ask – by continuing wouldn’t you add on that third year of costs?  Yes, but look at the result.  If you have two years complete with two years of costs, but nothing to show for it, then you’ve wasted a ton of money.  With only one year left, you add a year of costs, but also get the degree.  Whether or not you decide to practice afterward, you have gained something of value that you can’t claim if you quit.  We all know that the job market for new graduates is poor, but we also know that the jobs recent grads are acquiring do not require bar passage, but the degree gave them the advantage.  It opens doors for nontraditional lawyering positions and in an array of other industries that lawyering skills can transfer.  Use your last year to apply for jobs instead of applying for the bar.  If you don’t intend to practice in a job requiring bar passage, then you can avoid the costs of bar courses and application fees and start earning money when you would’ve likely spent the summer studying and without an income.

Quitting something is never an easy decision and probably shouldn’t be.  If you are honest with yourself, use Alison’s considerations and keep your financial consequences in mind, you should be able to arrive at the best conclusion for your situation.

Wednesday, June 5, 2013

The House Passes Student Loan Bill

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On May 23, 2013, the U.S. House of Representatives passed H.R. 1911, the Smarter Solutions for Students Act (sponsored by Rep. Kline) in order to prevent the present interest rates on certain federal loans from doubling in July.

What H.R. 1911 intends:  

  • Generally: to tie the interest rates to the market, removing the government from determining the rates.
  • Direct subsidized and Direct unsubsidized Federal Stafford Loans will match the rate of a high-yield ten-year Treasury note plus 2.5% and the rate would be capped at 8.5%.
  • PLUS loans will match the rate of a high-yield ten-year Treasury note plus 4.5% and capped at 10.5%.
  • These rates only apply to loans first disbursed on or after July 1, 2013.
  • Applications for Government Consolidation Loans on or after July 1, 2013, will take the weighted average of the interest rates for the loans consolidated, rounded to the nearest one-eighth of 1%.

What this means for you:

  •  Pros:  If passed before July, the interest rate will not double and will still be less than if it were to double.  Your rates will go from fixed rates (meaning they never change) to variable rates (meaning the rates fluctuate) – by having variable rates, if the market dips, then you have an opportunity to pay less interest than you may have had to pay with a fixed rate.
  • Cons:  Your rates will go from fixed rates to variable rates – this can also be a con because if the market improves you may pay more than what you agreed to pay when you signed for the loan.  The payments could be more than what you budgeted for or what your income can handle.

A White House Veto:  Currently, President Obama is threatening to veto the bill (kill it) if it passes the Senate and reaches his desk.  The plan he would like to have enacted would also have the rates tied to the market, matching the high-yield ten-year Treasury note.  The difference is that he would make the rates fixed instead of varied, which means whatever the treasury note happens to be at the time of signing your loan agreement will be the rate at which you pay for the life of that loan.  Additionally, he also plans to cap student-borrowing costs at 10% of the student’s income; meaning monthly payments made on the loan would not be more than 10% of the borrower’s income.

The issue of student loans has become a hot-button topic on The Hill not only because of the pressing July deadline, but also because of a recently released report stating that the government has profited a record $51billion from student-borrowers under the Obama Administration.  Both sides of the aisle believe that the government shouldn’t be profiting off of students who are presently struggling with finances and who are the future of a (hopefully) stronger economy.

All students – pre-law and law – should be keeping a close eye on this issue as it will affect your future debt obligations and ability to sustain your livelihood.  Check back for updates on this issue.