In Professor Paul Campos’s new book, Don’t Go To Law School (Unless) (affiliate link) — a book I’d recommend to anyone thinking seriously about law school — he shares an email from an individual who, after much research and thought, decides to enroll in law school. The email sheds some light on why people continue to sign up for law school despite all the warnings (from folks like Professor Campos, my colleague Elie Mystal, and many others). The law student writes:

[Prospective law students] think: debt doesn’t matter. There is no penalty for defaulting on the debt, except the relinquishment of the privileges of an advanced financial life. . . Students evaluating the horrible deal in question believe they have no access anyway to those privileges (e.g. a retirement account, a home purchase, a start-up business). For the student in question, all law school has to do is provide some potential benefit, and it becomes a rational choice.

After acknowledging that “[t]here’s a lot of force in this line of argument,” Professor Campos tries to refute it, basically arguing that many who go to law school based on such reasoning are “making a difficult situation worse.” But maybe the argument is not so easily refuted.

After all, what else are you going to do with yourself? Before you criticize law schools and those who matriculate at them, please familiarize yourself with the grim economic realities of twenty-first century America….

Unemployment still hovers around 8 percent. That’s for the overall population. For those under 25, the unemployment rate may run as high as 54 percent. This explains why some 85 percent of recent college graduates wind up moving back in with their parents. What used to be regarded as a failure to launch is now merely a rite of passage without a clear ending date.

Let’s say you graduate from college in 2013. If you’re good at math and science and if you can stand the sight of blood, then you should probably go to medical school. How many unemployed doctors do you know? How many unhappy doctors do you know? How many doctors do you know who earn less than six figures? I know a lot of doctors — my parents are both doctors, most of their friends are doctors, many of my relatives are doctors, and many of my college classmates (including my roommate and his wife) are doctors — and my answers to the questions I just posed are zero, zero, and zero.

Okay, let’s say you’re good at math but not at science, or you can’t stand the sight of blood. Then you should go to business school, right? It’s just two years, compared to three for law school, and it’s mostly networking and schmoozing, as opposed to hard-core academic work. After you get your M.B.A. degree, you can waltz into a lucrative position in banking, consulting, or industry. What could be easier?

Alas, it appears that the bloom is off the b-school rose. From the Wall Street Journal (sub. req.):

Like many students, Steve Vonderweidt hoped that a master’s degree in business administration would open doors to a new job with a higher paycheck. But now, about eight months after receiving his M.B.A. from the University of Louisville, Mr. Vonderweidt, 36 years old, hasn’t been able to find a job in the private sector, and continues to work as an administrator at a social-service agency that helps Louisville residents obtain food stamps, health care and other assistance. He is saddled with about $75,000 in student-loan debt — much of it from graduate school. “It was a really great program,” says Mr. Vonderweidt. “But the job part has been atrocious.”

I’ve heard essentially the same thing from the many law students I’ve met while speaking at different law schools around the country. These students often report enjoying law school, praising their professors, courses, and classmates. They just wish that finding a job wasn’t so insanely hard.

Back to B-school. Even if you do find a job after getting your M.B.A., there’s no guarantee that it will come with a decent salary, to say nothing of a salary that would justify the debt taken on to acquire your degree:

[R]ecruiters’ expected median salary for newly hired M.B.A.s was essentially flat between 2008 and 2011, not adjusting for inflation, according to a survey by the Graduate Management Admission Council. For graduates with minimal experience — three years or less — median pay was $53,900 in 2012, down 4.6% from 2007-08, according to an analysis conducted for The Wall Street Journal by PayScale.com. Pay fell at 62% of the 186 schools examined. Even for more seasoned grads the trend is similar, says Katie Bardaro, lead economist for PayScale.com. “In general, it seems that M.B.A. pay is either stagnant or falling,” she says.

That’s depressing. Although $54K isn’t a bad salary in the grand scheme of things — by journalism standards, it’s quite good, actually — it’s much lower than one would expect from an M.B.A. holder.

Defenders of law school, including law professors and deans, often ask why people aren’t complaining about the ranks of unemployed, underemployed, or economically challenged journalists or Ph.D. holders. But if you go to J-school or to grad school in the humanities, you take a vow of poverty resign yourself to financial misery and career uncertainty; in fact, there’s a certain romance and noble suffering in it. If you go to law school or to B-school, you generally go expecting to improve your financial lot. That’s why it’s not a completely fair comparison (although the difficulties faced by journalists and academics in finding employment should be noted when evaluating law school; journalism and academia are two common alternatives to legal careers, at least for humanities types who like to write).

Also, many Ph.D. programs don’t involve taking on crushing amounts of debt. A fair number of Ph.D. candidates pay no tuition and even receive stipends during grad school for teaching undergraduates. So a Ph.D. recipient might have a hard time finding a job after graduation, when she competes with 400 other people for that one entry-level, tenure-track teaching position in western Nebraska — but at least she’s not $150,000 in debt.

Speaking of debt, that’s something else that business school graduates share in common with their law school counterparts, according to the Journal:

Nearly 60% of graduating M.B.A.s said they expected to repay some loans after graduation, according to a 2012 GMAC survey. Among households headed by people with student debt who attended graduate school and are under 35, average student loan debt climbed to $81,758 in 2010 according a Wall Street Journal analysis of Federal Reserve data. That figure is up from $55,594 in 2007.

Additional commonalities between the M.B.A. and the J.D.: rising supply, fueling a glut of degree holders, and rising tuition. It’s a toxic combination:

U.S. schools granted a record 126,214 masters degrees in business and administration in the 2010-2011 academic year, a 74% jump from 2000-2001, according to the Department of Education. The M.B.A. march is part of an overall boom in advanced degrees that took on added steam as some recent college graduates and others sought refuge from the recession by pursuing advanced degrees. Tuition and fees for full-time M.B.A. programs has risen 24% over the past three years, according to the main body that accredits U.S. business schools.

Just like law school tuition, business school tuition is definitely outpacing inflation. Schools are taking these tuition dollars and plowing them into all sorts of new course offerings and initiatives, which they tout enthusiastically in the WSJ piece, but it’s not clear that any of these enhancements are translating into improved job prospects or starting salaries for graduates. Again, sound familiar?

So business school is no longer a golden ticket (assuming it ever was). What does that mean for prospective law students?

In light of the diminishing career opportunities for, well, almost everyone — everyone from unskilled labor to graduates of professional schools, including B-school — is it really that irrational to go to law school? Think about these two possibilities:

1. The student enrolls in law school and ends up as one of the lottery winners: a member of the minority of law school graduates who wind up with lucrative, long-term employment in the legal profession. The student lives happily ever after (e.g., works at a firm for a few years, pays off her debt, and then goes in-house or into government work).

2. The student enrolls in law school and ends up working retail (and no, we’re not talking in-house counsel for Gucci). What happens then?

Well, see, there’s this nifty thing out there called income-based repayment. Your income from your retail job might be small, but under IBR, the amount you have to pay on your loans is limited to an even smaller amount, generally 10 or 15 percent of current discretionary income. After a certain number of years — 10 years or 25 years, depending on whether you go into public service work — the remaining balance is forgiven. What’s not to like? (From the point of the view of the borrower, that is; not from the perspective of the American taxpayer who ultimately foots the bill.)

Yes, there are caveats. IBR doesn’t apply to all loans; it’s focused on federal student loans, and they can’t be in default. When your loan balance is forgiven, you might get stuck with a big tax bill. The IBR program might be modified or canceled at any time. Being on IBR could also affect your credit rating and your ability to borrow for a car or a home mortgage, according to Professor Campos and to Professor Brian Tamanaha (in his own excellent book on the crisis in legal education, Failing Law Schools (affiliate link)). [FN1]

But seriously — worrying about a good credit rating, or a car loan, or a home mortgage? Sadly, in the United States in 2013, these are high-class problems. People just want jobs, and they’re willing to do (or pay) whatever it takes for even a marginally improved chance at landing decent employment.

As the great Avenue Q song goes, What can you do with a B.A. in English? In a world where your B.A. — or, as discussed, even your M.B.A. — won’t get you very far, borrowing $150,000 for just a chance at a $160,000 law firm starting salary isn’t that bad an idea. And when you take into account IBR and how effectively it insulates the borrower from the consequences of losing out in the job hunt, going to law school starts to look pretty attractive — or, if not attractive, at least not repellent (i.e., law school hot).

Let’s look back at the wise words of Professor Campos’s correspondent, who’s now enrolled in law school:

[Prospective law students] think: debt doesn’t matter. There is no penalty for defaulting on the debt, except the relinquishment of the privileges of an advanced financial life. . . Students evaluating the horrible deal in question believe they have no access anyway to those privileges (e.g. a retirement account, a home purchase, a start-up business). For the student in question, all law school has to do is provide some potential benefit, and it becomes a rational choice.

Current law students: some observers criticize you for your “stupid” decision to go to law school, but it wasn’t a stupid decision at all. You’re far more intelligent than people give you credit for. In going to law school, you were just trying to make the best of a terrible situation. And there’s nothing wrong with that; in fact, for much of the world’s population, it’s called “living.”

When fate deals you a bad hand, you just play it out as best as you can.

[FN1] UPDATE (8:30 PM): Actually, on the issue of credit scores and access to loans, Professor Philip Schrag argues in this paper that Professor Tamanaha “understates the benefits offered by the federal income-based repayment plan” and that his points about credit are wrong (mainly because credit scorers and lenders focus more on a borrower’s required monthly payments, which are quite low under IBR, and not on aggregate nominal indebtedness). Professor Tamanaha, responding to Professor Schrag’s “strong critique,” actually concedes many of these points.

Professor Schrag also disagrees with Professor Campos’s claim that IBR could be “changed or eliminated at any time.” According to Professor Schrag, the IBR plan “is in fact built into the master promissory note that a borrower signs and its terms thereby become federal contractual obligations.”

For Newly Minted M.B.A.s, a Smaller Paycheck Awaits [Wall Street Journal]

WSJ: The M.B.A. Crisis [TaxProf Blog]

Don’t Go To Law School (Unless) [Amazon (affiliate link)]

Failing Law Schools [Amazon (affiliate link)]

Earlier: In Defense of Going to Law School

Law School Success Stories: High Risk, High Reward

Medical Schools Make Reforms While Law Schools Make Excuses