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.

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