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Law School Grads Face Tougher Economic Times

Law students have to understand the new economic situation, and the salaries that come with it.

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When Viraj Parmar graduated with a political science degree from Furman University in 2006, law school seemed like the logical next step. He wasn't seduced by the potential for a sky-high income or the allure of courtroom drama. Rather, he assumed that as a lawyer he could address the public-interest issues that resonated with him: human rights and the environment. 

[See our Best Law Schools rankings.] 

But now, $140,000 in school-related debt later, the Vermont Law School graduate worries that public-interest work may not pay enough. While the recession spurred layoffs and hiring freezes throughout the legal industry, law school tuition kept skyrocketing. For students like Parmar, the gap between reality and expectations may now be greater than ever: Jobs are no longer a sure thing, and loans are harder to pay back. Although the job market is improving, experts caution that law school hopefuls need to carefully weigh the costs and benefits of a law degree and, whether aiming for big law or Legal Aid, estimate their personal return on investment.

[Student profile: Learning the Ropes in Alaska.]

With tuition at an all-time high, more and more lawyers worry about finding work that will enable them to repay their loans. The American Bar Association reports that from 2007 to 2008, average tuition rose 6 percent at private law schools, to $34,298, and 9 percent at in-state public schools, to $16,836. Add in living expenses and pricey books, and at least 80 percent of students now rely on student loans to fund their law education.

It may seem out of touch for law schools to be raising prices in a lousy economy, but it's a reflection of supply and demand. Indeed, an increasing number of people appear willing to take on six-figure debt to get a law degree. In 2009, the number of people who took the Law School Admission Test hit a decade high, up 6.4 percent from the year before. "As long as people keep applying to law schools in record numbers, (a) there's no incentive at all for the universities to charge less for the law schools that are already established, and (b) there's every incentive for other universities to open new law schools," says Elie Mystal, editor of the popular legal blog Above the Law.

The good news for incoming students is that job prospects are improving. Carolyn Lamm, president of the ABA and a partner at White & Case, says the legal industry is showing signs of a turnaround. Big firms are beginning to hire again and are bringing back associates whom they had previously hired and then deferred when the market went south. "It's not as dead as it was in late '08 and early '09," Lamm says. "Things are moving forward."

Return on investment. While Secretary of Education Arne Duncan has complained that some schools of education serve as university "cash cows" that help subsidize other school departments, some, like Mystal, think the same could be said of law schools. But Claudio Grossman, dean of the Washington College of Law at American University, says law schools are integral to universities apart from the money that they bring in. At many universities, he says, law students often pursue joint or dual degrees in fields like business or international affairs, contributing to research in other subjects.

Tuition raises have become necessary at many universities, especially top ones competing for higher rankings, according to the Government Accountability Office. The heated competition induces schools to ramp up their programs by hiring better faculty, reducing class sizes, providing enhanced student services, and offering more practical coursework.

Expanded programs increase budgets, and tuition revenue must make up most of the difference, says Christopher Edley, dean and professor at University of California–Berkeley School of Law. With recent losses in private universities' endowments, reduced state funding at the public level, and fundraising difficulties across the board, law students now take on a much greater financial burden than before. Edley says that although tuition is rising swiftly at public law schools—especially in states where public funding has been gradually reduced—students are still willing to incur extra costs for a better education. "[Provided] we demonstrate that the tuition hikes are improving the experience in very apparent ways, from construction to faculty to research, they're generally quite supportive and excited about our progress," he says.

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