Law school applications are falling to 30-year lows. The concern of course comes from a weak employment market but also the crushing amount of debt required to complete a law degree. Many prospective students evaluate their decisions based on this and plan accordingly. Also with information being readily available, students can also compare notes very quickly and adjust their future educational goals. Back in 2004 there were 100,000 applicants to law schools while this year it is down to 54,000. This is a dramatic trend change but also reflects something that is rarely talked about. Many parts of higher education have entered into bubble territory. That is, prices simply do not justify the actual program. Where do things go from here? Can law school applications continue to fall?
Number of law school applicants heads to 30-year low
Source: New York Times
The chart above shows an unmistakable trend. Of course all of this comes in the face of extremely expensive degrees. Many students are finding that they are landing jobs that don’t even require a law degree:
“(NY Times) In recent years there has also been publicity about the debt load and declining job prospects for law graduates, especially of schools that do not generally provide employees to elite firms in major cities. Last spring, the American Bar Association released a study showing that within nine months of graduation in 2011, only 55 percent of those who finished law school found full-time jobs that required passage of the bar exam.
“Students are doing the math,” said Michelle J. Anderson, dean of the City University of New York School of Law. “Most law schools are too expensive, the debt coming out is too high and the prospect of attaining a six-figure-income job is limited.”
This is only the tip of the iceberg here. Many other high cost programs will see similar changes as the country edges to an economy where the majority of jobs are low wage and a handful of high paying positions. This was the case in law in previous decades as well but the amount of debt taken on to finance these ventures was never so dramatic.
The fact that law applications are so low should tell you something. Prospective law students are smart and they are starting to figure it out.
For a lot of young people the burden of student debt is quite simply overwhelming, and many youngsters, who are just starting their working life, wonder if they will ever be able to pay off the seemingly huge debt they have amassed. Fortunately, the position is not normally quite as bad as it seems at first, and there are a number of steps that can be taken to reduce student debt.
Although many students will move straight from college into employment, others will not yet have found employment, or may not even have finally decided what they wish to do. Finding yourself out of college and with time on your hands, might just provide the perfect opportunity to try something new, and reduce your student debt at the same time.
If you perform volunteer work, for organizations such as AmeriCorps, the Peace Corps or Volunteers in Service to America, the federal government will forgive part of your student loan. This can also happen if you perform military service in the Army National Guard, become a full-time teacher in certain schools, or practice medicine in certain communities. These are just some of the many ways in which you can help in your own personal development by serving others, and lower your student debt while you are doing so.
You will rarely finish your education with just a single student loan, and will often have several loans from both government and private sources. Each of these loans will have interest applied to the principle and will come with its own repayment schedule, so that you making multiple payments each month, often for loans at differing rates of interest.
Consolidating your government loans and private loans into a single loan for each type of lender will make life much easier, but it might also reduce your overall level of debt. Student loan consolidation needs to be undertaken carefully, and is something for which you should seek professional advice. However, combining loans will frequently result in lower interest payments, and thus in lower overall debt.
Pay Off Your Most Expensive Loans First
In some cases it may not be possible, or simply not financial advantageous, to consolidate your student loans and, in these circumstances, it may be possible to reduce your total debt over time by paying down your most expensive loans first.
As a rule, private loans attract the highest rates of interest and often allow little or no flexibility in terms of repayment. Federal loans, however, often attract lower rates of interest and give you choices in terms of how, and when, they are repaid. If your combination of loans allows you to do so, consider slowing down the repayment of government loans at first, so that you can channel as much money as you can afford into clearing your more expensive private loans as quickly as possible. This will have the effect of reducing the total amount paid in interest over the life of your student loans.
Pay Down The Principle
If you are in a position to do so you should always consider paying off the principle on your loan, either on a regular basis or as lump sum payments when available.
Although you will have agreed a repayment schedule for your loans, you may find yourself in a position to make higher monthly payments than are required, and this gives you an opportunity to not only clear your loans more quickly, but also to save on interest charges at the same time. Be careful though, as any additional monies paid, over and above that required, will normally be set against the interest due on the loan, and not the underlying principle. To correct this you will need to write to your lender and make it clear that the additional monies you are paying is to be used to reduce the principle of the loan.
If you are lucky enough to come into a lump sum while you are paying off your student loans then, before you rush out and buy yourself something nice, but expensive, consider using that money to reduce the principle on your debt. Remember that paying $5000 today will reduce your overall repayment by considerably more than $5000, when you take into account the interest payments that you will no longer have to make.
Make A Plan
The secret to reducing your overall level of student debt lies in examining all of the different avenues open to you, and then sitting down and writing out a plan to clear your debt in the most cost effective manner. This plan, though vitally important, should not be set in concrete, because conditions will change over time. So, at least once a year, and preferably every six months, pull out your plan and revise it where necessary. In almost every case where this is done you will find that you can save yourself some money. In many cases, that does not just mean a few dollars, but many hundreds of dollars.
Guest Post: Author bio
Julia Evans is a freelance writer covering the education sector, amongst others. She provides informative articles on all aspects of student help, tips, techniques and everything else that helps students to get the grade that they deserve. She is currently working as a freelance writer for Oxbridge writers who are a specialist Oxbridge writing service.
Americans are accustomed to saving up for an emergency fund. It is ingrained in our blood. We are always told to save up to 3 to 6 months for good measure. Emergency funds are a critical component of financial well being. It is a protection clause for any unforeseen circumstances that may come our way in life. A new roof might be needed. An old car may need to be replaced. You might even need the funding for a medical emergency. So we understand that having an emergency fund is a necessary component of life in our economy. But what is the difference between a US and British emergency fund? Are the differences that big? Are they important to understand?
The difference between US and British Emergency Funds
One of the big differences of course is with healthcare. While in the US many have to think about their healthcare insurance this is something that isn’t necessarily thought about in Britain. However given the challenges of global competition it is crucial that people begin an emergency fund in both nations. While there are many options for saving your money, where will people store their funds? It can be stored in a cash isa account in the UK or another similar bank option. These individual savings accounts provide quick access to your funds in case of an emergency and also provide an interest return. These are similar to your regular savings accounts here in the US.
In the end, you need to be proactive when it comes to planning for your financial future. Emergency funds are definitely one thing that is a must regardless of your country.