Ashamed. Stressed. Hopeless. How debt is weighing on young lawyers

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REUTERS/Mario Anzuoni

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  • Among young lawyers surveyed by the ABA, 67% reported financial stress
  • Borrowers with debt loads of $200,000 or more reported the largest emotional strain

Sept 21 (Reuters) - Student loan debt isn't just a financial burden. A new survey found it's also a source of embarrassment and shame for many young lawyers, particularly those with large loan balances.

A survey of attorneys in their first decade of practice released Tuesday by the American Bar Association’s Young Lawyers Division and AccessLex Institute sheds further light on law school borrowing and how loans impact lawyers’ career and life decisions. The data — based on responses from 1,300 early career attorneys - indicates that the negative effects of student loans worsen among borrowers with debt loads of $200,000 or more, and that the impact of student loan debt varies by race. Black borrowers, for instance, reported higher loan balances than did borrowers of other races.

The study follows a first-of-its kind 2020 survey of ABA Young Lawyers Division members that found educational debt was prompting many young lawyers to delay or forego major life milestones such a getting married, having children or buying a home. The division has since made debt and financial wellness a major policy initiative.

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About 90% of the latest survey respondents took out loans to fund their education, with average debt of $108,000 for law school and $130,000 when combined with undergraduate loans. More than 40% of respondents said they had been unable to reduce their debt load since graduation, with 27% reporting their loan balance is higher now than it was when they graduated. About 80% of the respondents said their debt influenced their job or career choice in some way.

“Most borrowers reported that salary factored more heavily into their job selection than anticipated,” the report said. “Nearly a third of the sample indicated their position was less focused on public service or doing good than intended when they started law school.”

The survey traces worsening impacts of student loan debt based on how much people owe, with high-balance borrowers feeling the most pain. About 67% of all survey respondents reported feeling “high or overwhelming stress over finances in general.” That figure was 62% among borrowers who owe $100,000 or less, and nearly 83% among borrowers who owe upwards of $200,000.

Those discrepancies persisted when the survey delved into borrowers’ emotional well-being. Among borrowers with $100,000 or less in loans, 37% said they were “embarrassed and ashamed” by their debt. For borrowers with more than $200,000 in loans, that figure was 68%. When asked if they were “anxious or stressed,” nearly 84% of respondents with $200,00 or more in loans said yes, compared to 55% of borrowers with $100,000 or less in loans. And nearly 60% of survey respondents who owe $200,000 or more said they feel "depressed or hopeless."

Debt loads also influenced how survey respondents felt about their law school experience. Overall, 47% said that their law school education was worth the cost. But only 23% of borrowers who owe $200,000 agreed with that statement, compared to 55% of those with $100,000 or less in loans.

“In pursuing information on the scope and impact of law school debt on the career and life outcomes of young lawyers, the ABA [Young Lawyers Division] seeks to inform the profession on the current and emerging realities of the costs—financial, emotional, and otherwise—of earning a J.D.” the report reads.

The report recommends that federal student loan programs be reformed to make repayment more manageable, and to make it easier for student loans to be discharged through bankruptcy. (The ABA’s House of Delegates adopted a resolution to that effect on the bankruptcy issue in August.)

Additionally, pre-law students should have access to improved consumer information and more awareness of the cost of attending law school and a fuller understanding of the legal job market, the report said.

Read more:

'Debt transformed my life': Lawyers weigh in on student loan reprieve

Young lawyers ask ABA for help on student loan discharges

ABA will press Congress to ease student loan discharge in bankruptcy

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Reporting by Karen Sloan

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Karen Sloan reports on law firms, law schools, and the business of law. Reach her at