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After Carl Kennedy graduated from law school, he applied for a car loan. The reality of his financial situation hit home when he was told that he had a bad credit rating because he had not yet begun to pay off his education debt. Now a first-year associate with Montgomery McCracken Walker & Rhoads, Kennedy is just beginning to tackle paying off the $63,000 in debt he incurred to finance his law school education. Kennedy acknowledged that under the circumstances, working at a high-paying firm was a priority when he graduated. He is not alone. In a survey of 142 first-year associates in Philadelphia firms, published in the fall by The Legal Intelligencer, 22 percent believed they could be debt free in five years, 37 percent said it would take six to 10 years to pay back their loans, and 20 percent believed it would take 11 to 15 years. In the same survey, 37.3 percent of respondents reported graduating with law school loans of $75,000 or more — a daunting amount, even for those who are able to snag a high-salaried job. SIGN ON THE DOTTED LINE Debt burden continues to be a concern for associates after they have secured a job and completed their first year at a firm. Melissa Schwartz, a fourth-year associate with Naulty Scaricamazza & McDevitt, has racked up about $50,000 in debt financing both her undergraduate and law school education. “You have to invest in your education, and in the long run, it will pay off,” Schwartz said. “Loans are a big part of most people’s lives today.” Doug Frankenthaler, a third-year associate with Montgomery McCracken, said he believes the loans are worth it, if they allow law students to pursue their ideal career path. “But keep in mind you are going to have to pay them back one day,” he said. The reality of the repayment situation is often delayed, according to Frankenthaler. He said that when a student signs the papers committing himself to a loan, there is the idealistic sense that things will just “work themselves out.” CHARTING A PATH “Does debt burden speak to career choice? Sure it does,” said Jo-Ann Verrier, assistant dean for career planning and placement at the University of Pennsylvania School of Law. “But most of our students have factored that in to their decision all along, they have made the decision that an education they will gain here is worth the debt.” For the academic year, tuition and fees hit $29,722 at Penn Law School. The graduating law student has long battled over whether to follow passionate pursuits doing public interest work or to follow a more lucrative path by joining a large, private firm where salaries can balloon into six digits for first-years. The National Association of Law Placement reported that for those students graduating from law school in 2000, the median starting salary for full-time jobs in private practice was $85,000, compared with $37,500 per year for those taking jobs in the public sector. Elaine Petrossian, assistant dean for career services at the Villanova University School of Law, said she has observed many law students suppressing their passions, allowing debt burden to play a large role in career choice. “Every day, there are students who are going to large firms who are absolutely committed to having a good experience and making a contribution, but they are going because they need the money,” she said. “There are lawyers in these firms right now who, I guarantee, if you asked them if they would rather do something else, they would say yes.” Petrossian said some students have unrealistic expectations, often perpetuated by the media, about salaries in the private sector. “It crushes students,” she said, “The legal media trumpets big salaries.” Kennedy agreed that it affected his career choice. “Because of the debt I assumed, I made the choice to apply to jobs that would pay me a certain salary,” he said. “I tried to maintain a lifestyle that was consistent with the one I had before.” Verrier said schools are trying to put into place and promote programs that allow students to make career choices based on the best opportunity to suit their long-term goals, not necessarily the most financially lucrative opportunities at the start. Frankenthaler took advantage of the programs to promote public interest work, deferring his loans interest free while he spent his first years out of Tulane Law School working for Region 3 of the federal Environmental Protection Agency in Philadelphia. He said he went to law school with the understanding that he would graduate with loans and made the decision beforehand not to allow his debt dictate career choice. An added complication to many associates’ debt repayment plans is family. “If you are single, you can afford to be a little more carte blanche with expenses,” said Robert Logan, a financial adviser with Elko Fischer Investment and Financial Advisors in the Philadelphia suburbs. “If you have a family, you don’t want to be so cavalier.” Schwartz, who took a yearlong clerkship immediately after law school, said she had to rely on her husband to save money for their family at first. Frankenthaler, whose wife also took out a considerable amount of graduate school loans, now has twice as much debt to deal with, coupled with the financial responsibility of raising two children. But he said the debt, which has allowed him and his wife to pursue their desired goals, is worth it. He said he and his wife “both determined we wanted to have a particular type of career, and, unfortunately, that is not free.” WAS IT ALL REALLY WORTH IT? “People don’t come back and tell us, I’m starving. But they do come back and say, I’ve made the wrong choice,” said Verrier, who advises students to take into serious account where their passions lie. Following one’s passions does mean making some long-term sacrifices, as Frankenthaler has learned. “I sometimes think that if I didn’t have to pay off so many dollars every month, I would be able to put aside a down payment on a home one year quicker or to save up for that dream trip to South America,” he said. Kennedy’s financial adviser has helped him rationalize the debt he incurred because of law school. The key, his adviser said, is differentiating between good debt, which provides a return on the money, and bad debt, which often translates into credit card loans with high interest rates. Kennedy’s $63,000 debt burden has not scared him away from taking out loans in the future. When he is finished paying off his education loans, he said, he expects to incur more debt in the form of a home loan — good debt, that is. And when it all comes down to making a final decision, Petrossian said, she gives her students the same advice. “You can somehow work out the money,” she said. “But you cannot replace the experience.”

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