Everyone has a friend or family member that’s a lawyer, and most people assume all lawyers are the same. This is flat-out wrong.
When you look at a construction site, does everyone wearing an orange shirt do the same thing? Of course not! Some are welders, plumbers, painters, HVAC specialists, masons, large machine operators, etc. Each one of those specialties requires a different skill set.
Attorneys are the same way. Some help with business, estate, tax, real estate, divorce, bankruptcy, employment, etc. And each concentration has a different demand, pay structure and complexity to the work.
The average lawyer salary is $120,000, but that doesn’t tell the whole story. There are more than 800,000 attorneys out there with many different areas of specialty and varying lawyer salaries. This can also affect student loan repayment.
Lawyer salary by practice area
According to PayScale, here are the median lawyer salaries for the more well-known concentrations, including bonuses, profit-sharing and commission:
- Patent attorney: $180,000
- Intellectual property (IP) attorney: $162,000
- Trial lawyer: $134,000
- Tax attorney: $122,000
- Corporate lawyer: $115,000
- Employment lawyer: $87,000
- Real Estate attorney: $86,000
- Divorce attorney: $84,000
- Immigration attorney: $84,000
- Estate attorney: $83,000
- Public Defender: $63,000
As you can see, there’s a large variance in lawyer salary by practice area, especially as you get about halfway down the list.
These are the median lawyer salaries and obviously don’t reflect everyone, just the midpoint salary. Lawyer salaries can vary depending on whether the attorney is self-employed or working for a firm; in BigLaw or at a smaller firm; in-house; public or private sector; etc. For real estate attorneys, it depends on whether they’re commercial or residential. Trial lawyers in particular can be sink or swim.
Compensation has changed over time for these fields of law, too. Estate attorneys used to be higher on the list, and compensation for IP attorneys has grown tremendously over the years due to high demand.
Your chosen field of law can have a big impact on income, as well as on loan repayment. But there’s another major factor, too.
BigLaw salary vs. smaller law firm salary
The size of the law firm is one of the biggest factors in a lawyer salary.
BigLaw is generally defined as the group of private law firms with more than 500 attorneys. It represents roughly 20% of lawyers working for private firms. These are highly coveted jobs that are extremely competitive and greatly rewarding financially.
The BigLaw pay scale in major cities starts at $190,000, while the average starting lawyer salary outside of BigLaw is $73,000. That means the starting BigLaw salary can be 2.6 times the average and nearly $10,000 per month more!
The quality of life isn’t pretty for BigLaw layers, but that’s why they get paid “the big bucks.” As you can see, the disparity there is greater than the median salary between a patent attorney and a divorce attorney.
This compensation disparity and the law school loans it takes to get there can dramatically change student loan repayment.
Average law school debt
The average lawyer we’ve worked with here at Student Loan Planner has about $225,000 in law school debt, but it varies depending on where the lawyer went to school.
There are four categories of law school based on the cost to earn a Juris Doctor (J.D.) degree. Here are the categories and average annual tuition, according to data from U.S. News and World Report:
- In-state law school: $27,000 per year
- Out-of-state law school: $40,000 per year
- Private law school: $47,000 per year
- Top-25 law school: $55,000 per year.
Remember that this doesn’t include living expenses, tuition inflation or the undergrad student loans.
Based on both our research and work with lawyers who graduated with law school debt, there’s not much difference in lawyer salary if they went to a law school in the first three categories. Same pay but drastically different student debt.
What the research shows, though, is that although a top-25 law school is by far the most expensive, it typically leads to much-higher-paying jobs. Conversely, if a non-top-25 school lawyer is going to end up with the same job, then the difference between exiting law school with $100,000 vs. $200,000 in debt is a no-brainer. They should choose the lower-cost education.
If you want more detail, check out an article I wrote earlier where I ranked law schools based on how much they destroy lawyers’ finances.
Best (and worst) student loans for law school
Law students have many options for their student loans, but let’s break it down into two main categories of law school debt.
Federal student loans for law school
These student loans are issued by the government and include Stafford Loans (subsidized or unsubsidized) and Grad PLUS Loans.
Law school grads have very flexible repayment options. They can pay them back based on how much they owe (Standard, Graduated, or Extended Repayment plans) or based on their income (income-driven repayment).
These loans are also eligible for taxable loan forgiveness, as well as tax-free loan forgiveness with Public Service Loan Forgiveness (PSLF). A lawyer who knows they’re either going to be working in public service or going into a lower-compensating field of law should explore federal loans.
The main problem with federal loans, especially Grad PLUS, is that the interest rates can be high. A law student who knows with confidence that they’ll either be entering a higher-paying field of law or attending an inexpensive law school could explore private student loans instead.
Private student loans for law school
Private law school loans are issued through a bank and not the federal government. These loans aren’t eligible for income-driven repayment or loan forgiveness (taxable or PSLF). The upside is that the interest rate could be much lower for those who know they’ll be paying back their loans in full. For example, CommonBond offers a law school loan that’s worth looking into.
Lawyers who go to a top-25 law school, are planning to go into a field of law with a high salary or won’t be working for a PSLF-qualifying employer like the government or a nonprofit might want to explore this option.
Again, private loans should be avoided if PSLF is in the cards or if a lawyer thinks they’ll graduate with twice their income (or greater) in law school student loans.
Student loan repayment for law school debt
We’ve done nearly 3,000 student loan consults advising on more than $700,000,000 in student loans. In our experience, there are three definitive ways to pay back law school debt based on career, income and law school debt.
1. Aggressive law school loan repayment
For lawyers who owe 1.5 times their income or less (e.g., $150,000 or less in student debt making $100,000) and aren’t planning to work for a PSLF-qualifying employer, their best bet is to refinance to a lower interest rate and pay back these loans in 10 years or less.
If a law student is on track for a large salary — either because they go to a top-25 law school or are planning to specialize in one of the top-paying practice areas for lawyers — they might want to explore taking out private loans in the first place.
2. Income-driven repayment with taxable loan forgiveness
This strategy is for lawyers who owe more than twice their income (e.g., $200,000 in law school debt and earning $100,000 or less) and includes selecting an income-driven repayment plan that will keep law school loan payments to a minimum. These plans could include Pay As You Earn (PAYE), Revised Pay As You Earn (REPAYE) or Income-Based Repayment (IBR).
After making payments based on their income for 20 to 25 years, whatever loans are remaining would be forgiven. The lawyer would then owe taxes on the forgiven balance.
The best way to optimize this plan is to take advantage of the lower student loan payments to save aggressively on the side by maxing out pretax retirement accounts. This will help them to both reduce their student loan payments and save up for the tax bomb over time.
This is for lawyers who plan to work full time for a nonprofit or the government.
The lawyer would first make sure they have Direct federal student loans, then choose an income-driven repayment plan and work full time for a PSLF-qualifying employer. Once they reach 120 months of qualifying payments, the balance is forgiven tax-free through PSLF.
How to pay back law school student loans
The good news is that lawyers can build their student loan repayment strategy around their chosen field of law.
Lawyers can save a bunch of money paying back their law school debt if they pick the right strategy based on their field of law, where they choose to practice and the amount of law school debt they have relative to their income.
The good news is that there’s a plan that will work for you specific to your situation.
If you have six figures of law school debt and want to be on an optimal course, we can help you design a custom plan that will fit around your chosen career path and law specialty.
Don’t let your law school loans get in the way of pursuing the path you set out for during law school. Find the best way to pay back your loans and get clarity on the path ahead. Learn more about getting a custom student loan plan for your law school debt here.
If you have any questions about taking out loans for law school or the best way to pay them back, feel free to reach out to me directly at email@example.com.