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What Do Student Loan Default Rates Say About Law Schools?

By George Khoury, Esq. | Last updated on

The data recently released from the Department of Education tracking student loan default rates has produced some concerns for those trying to analyze the data specifically for law schools.

The student loan default rate tracks how many students fall into default on their loans by school and year. If the rate goes above the 30 percent mark, then a school risks losing its ability to receive federal money. Fortunately, according to the data, no law school is even remotely close to that mark, but as the ABA Journal noted, the data may be wildly inaccurate.

What's Wrong With the Data?

The problem with the DoE data is that it combines the student loan default rates at universities that are more than just law schools. Meaning, for example, that at big four year universities with multiple undergraduate and graduate programs and a law school, the default rate for the university combines all the programs. This makes it difficult to extrapolate the necessary data for prospective law students to analyze one of the most important school-related statistics.

Why Is the Loan Default Rate Important?

Law school is really expensive. On average, students at public law schools incur just under $100K in debt, while private law school students incur over $130K in debt. The loan default rate is important because it is a strong indicator of a school that fails to place its graduates in satisfactory post-graduate employment. While post-graduate employment statistics can be spun to favor a university seven ways from Sunday, the loan default rate is less spin-able.

So ... What's the Point?

Knowing that the data is flawed due to the aggregation of non-law school debt with law school debt begs the question: Is this data significant?

If you are considering going to a "freestanding" law school, you probably want to check the loan default rates against their stated post-graduate employment numbers. A short list of these freestanding law schools were called out for having a loan default rate over 2%. However, the highest reported rate of 4.8% is based upon 12 out of 250 students that entered loan repayment. Without seeing a wider array of data, there's no way to know where the schools on this short list fall compared to their non-freestanding law school counterparts.

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