For love OR money?

[DTEJD1997]

Hey all:

 

I had a very unusual situation the other day...really made me think...

 

I had lunch with a younger attorney.  She is a nice looking woman in her early/mid 30's.  This was a "friendly" lunch, and we are platonic friends...

 

She is somewhat intelligent, well dressed, nice looking, good personality. 

 

After lunch, she told me of her situation, which she assured me is relatively common amongst her compatriots.

 

So her is her story...

 

She went to a small, well regarded, regional liberal arts school.  She majored in journalism.  After graduating, she had a good amount of student debt, and tried to get a job as journalist.  That didn't happen.  The closest she got were a few unpaid internships.

 

She worked a few odd jobs, but could not get any traction.  After a few years, she decided to go to law school.  She went to a lower ranked school in the Mid-West.

 

While in law school, she had an unpaid clerking position.  She also had an unpaid internship with a couple of different law firms.  She worked hard, networked, and graduated on time.  After passing the bar, she continued to look for a paid position.  After a year or so of this, she simply could not find one.  She then decided to open her own criminal defense practice.  She is now chasing criminal appointments in various courts.

 

She has a small amount of success and gets some appointments and a few retainers.  The problem is that she is not really getting enough work.  She gets MAYBE 2 days of paid work per week.  Without any partner/associate, she has to do all the research herself and has a steep learning curve.  She frequently works 3-4 hours for every 1 that she gets paid.  The end result is that she is making about $25k a year!

 

She took out student loans to go to law school.  She is on "income based repayment" for her loans.  The payments she is making do not even cover the interest expense, so the principal goes up every year.  The balance of her student loans are now just over $250,000.

 

She lives at home.

 

She drives a late model junker.

 

She recently broke up with her long term boyfriend.  She admits that her debt played a MAJOR factor in the breakup.  Now she is worried that she will not have a serious, long term relationship.  She thinks most men will take a pass when they learn of the amount of debt she has.  She is worried that she will not be able to get married and start/have a family.

 

I am not sure what to think.  I would never have thought that debt would make a big deal in a relationship.  HOWEVER, the amount of her debt is simply staggering.  In her area of the country, that could EASILY buy a tremendous house.  I doubt she will ever be able to be hired on in a law firm.  I doubt that she will EVER be able to earn her way out of her situation working as an attorney.  The legal market in her area is simply terrible, and it is rapidly getting worse.  Bankruptcy is simply not an option as student loans are not discharged in bankruptcy.  At the end of 20 years on IBR, her loans will be discharged.  She will be in her early/mid 50's when this happens.

 

So I've been thinking about her situation.  I think she is in a very difficult spot.  Also made me wonder just how many others are like her...

 

So my question to the board:

 

Would the debt and earning ability of your girlfriend/boyfriend/fiancee play a role in deciding to have a relationship with them?

[JBird]

If the debt load had a significant effect on my standard of living, then absolutely yes. There are a lot of fish in the sea. If I can choose between several girls who are very similar in character and quality to me, I wouldn't choose the one with debt that would materially affect my life. That being said, if my spouse went into debt chasing her dream job, basically I can live with that.

[NormR]

Yes, although it depends on how the debt was accumulated.  Is it a sign that they're a spendthrift, etc. 

[CONeal]

It would not play a factor.  I've actually been on a couple of dates where one was upwards of 300k in student debt (doctor) and it seems like they all discose it to see if they would run away.

 

  My theory is if they are working on trying to pay it off then its good enough for me.  If it got to a point where we were going to get married then I would get rid of the debt myself to take that stress out of the relationship.

[DTEJD1997]

Yes, although it depends on how the debt was accumulated.  Is it a sign that they're a spendthrift, etc.

 

I am unsure that this woman is a spendthrift, EXCEPT perhaps in regards to education...

 

She lives at home still, and drives a Toyota from the mid 90's?

 

Her clothes are nice, but what do I know about how much that would cost?

 

She hasn't told me any stories of how she goes on crazy vacations or anything like that.

 

It is her student loans that are just over $250k.  I don't about her other debt, if any...

 

So I don't she is a spendthrift per se...just has a mortgage sized+ student loan debt.  The student loan debt is much WORSE than credit card debt, as she can't get it discharged in bankruptcy.

[writser]

I read an article about this a couple of months ago. Did some digging and found it back: http://www.nytimes.com/2012/12/26/business/even-cupid-wants-to-know-your-credit-score.html?_r=0

 

“Credit scores are like the dating equivalent of a sexually transmitted disease test,” said Manisha Thakor, the founder and chief executive of MoneyZen Wealth Management, a financial advisory firm. “It’s a shorthand way to get a sense of someone’s financial past the same way an S.T.D. test gives some information about a person’s sexual past.”

 

A handful of small, online dating Web sites have sprung up to cater specifically to singles looking for a partner with a tiptop credit score. “Good Credit Is Sexy,” says one site, Creditscoredating.com, which allows members to view the credit scores of potential dates who agree to provide the numbers.

 

Only in America :P

[DTEJD1997]

It would not play a factor.  I've actually been on a couple of dates where one was upwards of 300k in student debt (doctor) and it seems like they all discose it to see if they would run away.

 

  My theory is if they are working on trying to pay it off then its good enough for me.  If it got to a point where we were going to get married then I would get rid of the debt myself to take that stress out of the relationship.

 

Well, there is a BIG difference in the situation you described...The doctor is likely to be able to pay that debt off.

 

This poor woman is not likely to make any significant progress on her loans.  She is not even paying the INTEREST on them now.

 

She is most likely NOT going to be able to earn her way out as an attorney.  As time progresses, she MIGHT be able to make more than $25k a year, but the odds are stacked against her.

 

Every six months there are more attorneys entering the market.

 

This jurisdiction also will changes made to the appointment system in the new year.  The changes will result in the same amount of work being handed out to more attorneys.  Thus, her work level might eventually go to one day a week average (for appointments).

 

The only way out of her debt is if she maybe got into a different field.  Unfortunately, her education is law and journalism, not medicine or business...

[Palantir]

Can't resist making inappropriate puns....  >:( ;D

[gg]

The investor in me says there must be a value opportunity in acquiring attractive, but heavily indebted women.....

 

Seriously though, this is a really unfortunate situation that exists for many right now in the US. For your friend, it's impacting her relationships. For others, it stunts different areas. For instance, if a young analyst had a new business idea he wanted to pursue, the decision to go after that dream will be greatly influenced by the fact that they will have to continue paying massively monthly payments on their student loans. Job quitting and business starting is not always the right decision for everyone, but I think the hurdle that student debt places on entrepreneurism is definitely an enormous cost that society takes on unknowingly. I know this is just one specific example, but I know several that have been affected by it, and I think there are a lot of negative repercussions student debt that most people do not consider.

[CONeal]

One thing to keep in mind of how the debt balloons to such a high amount is needing to take unpaid internships thus having to defer the loan.  Also, having to defer loans while your still in school, so you can finish school.  The fees the banks charge are damn near next to taking out a loan from the local mob. 

[rkbabang]

If the debt load had a significant effect on my standard of living, then absolutely yes. There are a lot of fish in the sea. If I can choose between several girls who are very similar in character and quality to me, I wouldn't choose the one with debt that would materially affect my life. That being said, if my spouse went into debt chasing her dream job, basically I can live with that.

 

+1  I was going to write almost exactly what you did.  I wouldn't leave my wife if she wanted to go back to school and accumulate debt, but if I was single I'd steer clear of that situation.  There is no need to saddle yourself with someone elses baggage.

 

[Kraven]

I think it depends on one's personal financial situation and expectation for the future.  If one expects that they will be able to pay off the other person's debt without changing their lifestyle, then it shouldn't matter.  But someone with a lower paying job might think twice about taking on this kind of financial burden.  $250k in debt without an ability to pay it off is a life changing amount.  It will have a definite impact on one's future.  At some point though there will likely be some kind of student loan bailout as amounts are reaching levels that can never hope to be repaid so maybe it doesn't really matter one way or the other.

[Guest wellmont]

there are plenty of guys out there who will bail her out. they will rescue her. she just hasn't imposed that option yet. there is book smart and there is street smart. she is book smart. were she street smart she would have realized debt is harmful. She would move to a big city like nyc la or washington dc. I would think a lawyer would find some work these days. I think she epitomizes a failed notion that any college education is worth going into massive debt for. that idea is in the process of being repudiated. Anybody who has $200k+ of education debt has not thought through the implications. And yes I definitely would put debt into the equation of who I would pair up with.

 

do you see her as a potential GF or more?

[merkhet]

This is actually a pretty common and serious problem for students that attend lower ranked law schools.

 

Legal education is not priced on quality for the most part -- pricing does not change as you go down the rankings. For better or for worse, legal employment is a very prestige heavy recruitment process. The vast majority of the six-figure type jobs go to the best 25 schools or so. Everyone else is going to be working a much worse paying job and will not see a very good ROIC on their legal education.

 

This is really the fault of the American Bar Association for accrediting too many law schools.

[CONeal]

It would not play a factor.  I've actually been on a couple of dates where one was upwards of 300k in student debt (doctor) and it seems like they all discose it to see if they would run away.

 

  My theory is if they are working on trying to pay it off then its good enough for me.  If it got to a point where we were going to get married then I would get rid of the debt myself to take that stress out of the relationship.

 

Well, there is a BIG difference in the situation you described...The doctor is likely to be able to pay that debt off.

 

This poor woman is not likely to make any significant progress on her loans.  She is not even paying the INTEREST on them now.

 

She is most likely NOT going to be able to earn her way out as an attorney.  As time progresses, she MIGHT be able to make more than $25k a year, but the odds are stacked against her.

 

Every six months there are more attorneys entering the market.

 

This jurisdiction also will changes made to the appointment system in the new year.  The changes will result in the same amount of work being handed out to more attorneys.  Thus, her work level might eventually go to one day a week average (for appointments).

 

The only way out of her debt is if she maybe got into a different field.  Unfortunately, her education is law and journalism, not medicine or business...

 

I have to disagree to an extent.  Right now the doctor is not covering covering the interest charges each year.  They don't make 200k right off the bat.  They have to get through fellowhips and what not that really pays crap.  Doctors always flood to the field that is in need with doctors thus pushing down the payscale.

[zarley]

Am I understanding correctly that the market for attorneys is such that a reasonably intelligent graduate of a low to mid-level law school should not expect to make more than $25-30,000 per year starting out, and have limited expectations for that to improve?  And that one could rack up in excess of $200,000 in student debt on their way to an annual salary that is meaningfully less than my first job out of school as a project manager at a small nondescript market research company close to 20 years ago?  Am I getting that right?

 

WTF would anyone go to law school under those circumstances?

[merkhet]

 

WTF would anyone go to law school under those circumstances?

 

 

Optimism and a willful ignorance of the base rate.

[Guest wellmont]

Am I understanding correctly that the market for attorneys is such that a reasonably intelligent graduate of a low to mid-level law school should not expect to make more than $25-30,000 per year starting out, and have limited expectations for that to improve?  And that one could rack up in excess of $200,000 in student debt on their way to an annual salary that is meaningfully less than my first job out of school as a project manager at a small nondescript market research company close to 20 years ago?  Am I getting that right?

 

WTF would anyone go to law school under those circumstances?

 

lets just say she has a college degree + and could be doing better for herself. there are other problems here. probably numerous.

[zarley]

The whole notion of considering ROI on education spending is an interesting one.  I had a GF back in the day who decided she needed a PhD in Psychology.  She wound up going to a private college in Southern California where she was on track to rack up something like $150-200k in student loans while she got her degree.  While she conceptually understood what she was doing, she knew so many people who had gone that path that it seemed reasonable to her even though she could do the math on debt repayments and her likely salary range.  We "broke up" during her first year (not for financial reasons), so I don't know how that all worked out for her.  Would I have broken it off for financial reasons at some point?  I don't know.

 

Things worked out fine for me, as a soon met the girl who would become my wife.  She was, and still is, a gainfully employed civil engineer with no school debt.

 

 

[SharperDingaan]

Seems show (prestige) is important .... only she cant pay for it .....

Not the brightest .... will not move to a better locale, because bank of dad will not fund it (closet brat?) ...

 

Cant declare bankruptcy.... so marrying out is the next highest & best use of depreciating age & looks ....

Optimal if hubby is a rain-making sugar daddy, with the good taste to croak out within 5-10 years ?

Expensive to terminate early.

High risk, low return.

 

If you're really so inclined, just buy a good hooker ....

or set her up as a madam!

 

[gfp]

The above post is kind of offensive.

 

It shouldn't make a difference that she is female.  Same advice applies to anyone in that situation.  Increase your income by either developing a side business or switching to a higher paying career, or, preferably - both.  Pay off the debt at quickly as you are able.  Stop worrying about a debt repayment that is based on income and will eventually be charged off if your income doesn't increase.

 

Just earn more income.  If you can't do it as a lawyer in the middle of nowhere, do it somewhere else or do something else.  If you make earning a higher income a priority you will earn a higher income.  $25k is poverty.  People with no degrees can make much more than that right out of high school.

[Hielko]

She recently broke up with her long term boyfriend.  She admits that her debt played a MAJOR factor in the breakup.  Now she is worried that she will not have a serious, long term relationship.  She thinks most men will take a pass when they learn of the amount of debt she has.  She is worried that she will not be able to get married and start/have a family.

Getting married wouldn't be a smart move if that would imply that the partner would also become liable for the student debt. But don't see why starting a family wouldn't be an option. I assume she can keep a part of her income, and you just have to keep assets and liabilities separated until her loans will be discharged.

 

Would the debt and earning ability of your girlfriend/boyfriend/fiancee play a role in deciding to have a relationship with them?

Do you think it would be smart to enter a relation when there is huge inequality?

[Palantir]

Maybe you should hire her.  ;)

[rpadebet]

 

There seems to be fallacy in her approach to her career. And I am afraid to say that it is all too common. Why did she only try to be a journalist earlier and why is she trying to be only a lawyer now? You don't have to have a career exactly matching your educational qualifications. You have to look at skills earned during an education as transferable

 

She must know the basics of journalism and given her law degree she must also be adept at going through and understanding legalese. I see three outs for her.

 

1. Combine the skills you learnt from both your degrees and try becoming an investigative journalist focusing on crimes happening near her. It could be a freelance blog site, but if she is any good at it, in this day and age somebody might hire her. She might have to do a lot good work, but if she demonstrates competence and builds a record of her work that might open doors for her.

 

2. Consider the education she got as a sunk cost and focus on acquiring skills which are actually in demand in this market. Pick up a few books and maybe learn some software skills like building a website. Do some freelance work on the side to gain experience. I hear healthcare.gov is hiring  ;)

 

3. More in line with the spirit of this board, take one year's salary of 25K and invest it at a 26% rate of return. In 10 years she will be debt free!

 

250K debt is not a problem. How she thinks about repaying it is. The reason one might not want to get into a long term relationship with her would not be her debt, but what she "not" doing about it.

[DTEJD1997]

Am I understanding correctly that the market for attorneys is such that a reasonably intelligent graduate of a low to mid-level law school should not expect to make more than $25-30,000 per year starting out, and have limited expectations for that to improve?  And that one could rack up in excess of $200,000 in student debt on their way to an annual salary that is meaningfully less than my first job out of school as a project manager at a small nondescript market research company close to 20 years ago?  Am I getting that right?

 

WTF would anyone go to law school under those circumstances?

 

Hmmm....yes, you are largely correct...

 

There are a few wrinkles on this woman's situation though....

 

A lot of people, even those who attend law school do not the true situation before they attend.  Additionally, a lot of people see "working attorneys" and automatically assume they are successful.  The reality is that a good percentage of them are SEVERELY underemployed and scraping by on $20k, $30k, $40k a year.  The other facet not widely understood is the debt that a lot of them are carrying.  $40k is a livable wage in a low COL area.  It is NOT a livable wage when you have $200k in student loan debt.

 

She is a graduate from a very low ranked school.  Not the worst, but in the bottom quartile, probably something like 175 out of 200.  As such, very few firms will even CONSIDER somebody from a school like this, especially after 2008. 

 

Then you have a problem that schools are not accurately reporting what incomes are like for their graduates.  There is a fair amount of controversy over this.  The fellow alumni of this woman have very mixed outcomes.  The top 10% or so are generally doing reasonably well.  Those that have VERY solid family connections are doing somewhat less well...Another 20% are doing OK, and a third are really scraping by, but are attorneys.  Another 1/3 are just wipe outs.  They have not passed the bar exam, OR if they have, they are not employed, OR if they are employed, they are not even making $25k a year.

 

The next wrinkle or problem is that her region is FLOODED with attorneys.  I know that there are AT LEAST 7 law schools in her state, maybe 8?  The neighboring states have more than 5 schools in them too.

 

Her county is also changing the system for assignment of work in the upcoming year.  It will become MORE difficult for her to make money doing what she is doing.  This is a certainty even without new attorneys coming into the workforce.  2014 will certainly see more attorneys coming online...More workers chasing the same pie (or even slightly smaller pie).

 

She has no money to relocate.  She lives at home.  Where would she go?  She has no connections in other states, she would have to pass another state's bar exam (time consuming & expensive & chance of failure).  I know other markets such as NYC & DC are very bad...

 

She has little business sense and for a couple of years simply did not think of the consequences of her loans/debt.

 

She is starting to think about it now that it is having some severe complications on her life.

 

As for a man bailing her out?  Maybe? Who knows?  The cynic in me thinks that a man who has enough capital/earnings that $250k is not a significant factor is going to get a younger/less indebted woman?

 

Conversely, the same thing would probably go for a woman...there are lots of men out there, why would you date one that makes a low wage AND has a huge debt, AND does not have any realistic prospect of paying it back?

 

I don't know....just curious...thought it would be a good topic for conversation...