Debt to Income Ratio
student loans, value of a law degree, legal market, lawyer salaries
One common-sense rule in student lending, expressed through a debt-to-income ratio, 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 amount borrowed exceeds the median earnings 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 gradutes 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. 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.
School-specific borrowing and earnings data on this page come from the United States Department of Education.
Law School Transparency, "Debt to Income Ratio" (2018). Tuition and Financial Aid. 11.