STUDENT AND TRAINEE DEBT

This is a real problem facing the TSG membership today.  It is a problem which does not face only trainee solicitors and law students.  However, it is a problem that is perhaps most acutely felt by those entering a profession where an extra 1-2 years' additional training is required.  Faced with large debts on completing an undergraduate degree, the prospect of incurring further debt to complete the CPE/PGDL/GDL and/or LPC courses is an extremely unattractive option.

This page is dedicated to giving some background on student and trainee debt itself, tips of avoiding or limiting it and some information about the work the TSG does on the subject from a national perspective.

LEVELS OF DEBT

With the advent of university "top-up" fees, the amount of debt facing each law student will rise dramatically.  This illustration uses both "pre top-up fee" and "post top-up fee" information, to assist both levels of student in assessing the likely level of debt they will face to face on entry to the profession.

CASE STUDY

Taking an average student embarking on a 3-4 year degree (either in law or another discipline), tuition fees will be £3,750 or £5,000 (if 4 year course).  Post top-up fees, this rises to £9,000 or £12,000 (for a red-brick university).  On a very very modest estimation, this requires an extra £5,000 per year for living expenses.  This gives a 3-year total of £15,000 and four years at £20,000.  This makes the cost of a degree somewhere in the region of £18,750 - 25,000 pre top-up fees; and £24,000 - 32,000 post top-up fees.

It is at this point that a student must decide if they wish to start on the path of a legal career via law school, or chose an alternative career.  It may be that you have a debt of up to £32,000 at this point.

The alternative option of a career starting immediately on leaving university would present the average student with a very realistic choice rather than incurring further debt.  For example, a career as a management consultant would yield a starting salary of around £25,000.  By the time that a law student has finished 1 or 2 years law school, their contempories who opted to go directly into work would be in established positions earning salaries much more than the Law Society minimum. 

Please see the table below:

LEVELS OF TRAINEE DEBT
The figures below indicate the possible debt levels which may be incurred up to the stage of obtaining a training contract in the process of qualification as a solicitor.
Course	Duration	Pre Top-Up	Post Top Up
3 YEAR QUALIFYING LAW DEGREE	3 YEARS	£3,750.00	£9,000.00
LPC	1 YEAR	£8,225.00	£8,225.00
TOTAL		£11,975.00	£17,225.00
PLUS MAINTENANCE	4 YEARS	£20,000.00	£20,000.00
TOTAL		£31,975.00	£37,225.00
3 YEAR NON QUALIFYING DEGREE	3 YEARS	£3,750.00	£9,000.00
CPE/PGDL/GDL	1 YEAR	£5,687.50	£5,687.50
LPC	1 YEAR	£8,225.00	£8,225.00
TOTAL		£17,662.50	£22,912.50
PLUS MAINTENANCE	5 YEARS	£25,000.00	£25,000.00
TOTAL		£42,662.50	£47,912.50
4 YEAR QUALIFYING LAW DEGREE	4 YEARS	£5,000.00	£12,000.00
LPC	1 YEAR	£8,225.00	£8,225.00
TOTAL		£13,225.00	£20,225.00
PLUS MAINTENANCE	5 YEARS	£25,000.00	£25,000.00
TOTAL		£38,225.00	£45,225.00
4 YEAR NON QUALIFYING DEGREE	4 YEARS	£5,000.00	£12,000.00
CPE/PGDL/GDL	1 YEAR	£5,687.50	£5,687.50
LPC	1 YEAR	£8,225.00	£8,225.00
TOTAL		£18,912.50	£25,912.50
PLUS MAINTENANCE	6 YEARS	£30,000.00	£30,000.00
TOTAL		£48,912.50	£55,912.50
MAINTENANCE IS CALCULATED AT £5,000 PER YEAR
*  LPC AND GDL FEES ARE AVERAGES ACROSS THE COUNTRY.  THIS DOES NOT INCLUDE, FOR EXAMPLE, THE LONDON UPLIFT.

REPAYMENT

Re-payment of educational loans is in accordance with the terms and conditions of the Student Loan Company or the relevant bank.  The repayments are likely to start in the region of 12 months following the completion of the LPC course, and typically last over five years.  The amount of the repayments will vary from loan to loan, but you can expect them to be over £200 a month.

For the two years of the Training Contract following the academic training, you may earn only the Law Society minimum salary.  This is currently £14,720.00 per year for those working outside London, and £16,450.00 for trainees in London.  This works out (after tax) to approximately £972.44 and £1,069.03 a month, respectively.

These figures have to cover the loan repayments above, and maintenance and living costs.  Don't forget to add to this the cost of a professional image - suits, shirts, shoes etc - and the often hidden costs of post-work entertainment.

WHAT TO DO

The problem is obvious.  Trainees and student shave to pay a lot of money out at the beginning of their careers, simply to get them off the ground!  This is a huge problem and it affects everyone entering the profession. 

So, what can you do to counter this?  How can you start down the career path, without carrying this financial issue with you?

If you have any issues with managing your debt or your finances, you can contact the TSG Helpline on 08000 856 131.  The Helpline is confidential and anonymous, and may be able to provide the assistance you need.

Please see our handy Advice Sheet on FINANCIAL MANAGEMENT for some hints and tips about handling debt.

 

COMMON DEBT MYTHS…  BUSTED!
Budgeting is important	Planning and budgeting are two keys to developing a financial plan.  You can take charge of your finances and your life by setting financial goals, planning a budget - and sticking to it.
Becoming a solicitor means automatic "big bucks"	Some solicitors, depending on the kind of work they do, make no more than £25,000 p.a., even when qualified.  Being a solicitor can involve long hours and sometimes low pay.  Research your ideal role, and be prepared for the job.
Getting qualifications necessary to become a solicitor can be costly	An LPC can cost up to £10,000 nowadays.  You need to plan on where you are going to get the funds to do this.  Find out about the different types of funding.  See the FUNDING YOUR STUDY advice sheet (below) for more information.
You should use your summers effectively	If you are still a student, go ahead and get some legal experience AND GET PAID FOR IT!  It not only looks good on your CV and gets you some instant cash, but it can also lead to a future training contract.
You should plan your training contract	The longer you leave off planning your training contract, the more opportunities you will miss.  These can be training contract deadlines, scholarships and paid placements.  Some firms offer sponsorships, but you need to apply for these training contracts at least two years in advance!
Voluntary work is important	Pro bono work shows that you are committed to working as a lawyer and are willing to devote your own time to the profession.  It is great experience and will open up opportunities for you.  Check out the TSG Pro Bono pages to get an idea of how you can get involved.
You can talk to your bank	Many banks look positively on people who are going to become lawyers.  Don't be shy: ring the banks and be sure to set an appointment to discuss your finances with someone in the know.
You should be realistic about money	Being a lawyer is competitive, and you'll need to work hard to get what you want.  However, it means that if you realise this and prepare accordingly by getting your applications in before the deadlines, research the firm and plan your vocational courses accordingly, you should find a way to make it happen.  Follow a plan and stick to it - budgeting for your future becomes easier with a set timescale in mind.

 A printable version of this fact sheet is available here for you to download.  Please click here --> DEBT FACT SHEET

FUNDING THE LPC or GDL

The courses involved are expensive, as you will have realised by now!  For example, the cost of a 2005 LPC at the College of Law Guildford was £8,400.  Increases are being announced yearly.  This does not appear to be something that is likely to change at the moment.

The question therefore becomes - "how do I afford these course fees?" or, put more succinctly "where will I find the £9,000 it will cost me to study?".  The first recommendation is not to panic.  Surprisingly, there are many ways to get your hands on the cash.

Check out the FUNDING GUIDE available here.

THE TSG AND DEBT

The TSG is very concerned by the levels of debt that entrants to the profession are expected to accumulate.  This has been an issue that the TSG has been pressuring both the government and the Law Society on for some time.

Please see the TSG Student Debt and the Profession research proposal, which was created to counter student debt in 1999. 

Several ways of countering student/trainee debt were identified in this proposal.  These are as follows:

1. Increasing the salaries that trainees receive;
2. Reducing the cost of vocational training; and
3. Favourable tax treatment for loan repayments.

Unfortunately, to date, there has only been movement on the first of these initiatives.

THE MINIMUM SALARY

The TSG has been very vocal on the issue of the minimum salary.  This is the salary standard set by the Law Society to give firms guidance on what to pay their trainee solicitors. More information about the salary is contained in the SALARIES advice sheet. 

It should be noted that firms can waive the minimum salary, but only in certain circumstances and only on application to the Law Society.

The TSG puts forward the proposal every year to increase the minimum salary.  So far, this request has been approved.  The current feeling in Council appears to be that the minimum salary is a good thing.  However, this could all change following the Training Framework Review and the introduction of the Legal Standards Board. 

The TSG will keep you posted of any changes to the minimum salary or the way in which solicitors are trained.

DEBT

The current system, whereby most trainees are required to incur considerable debt in order to start their legal careers is not acceptable.  The cost of training and the associated living costs, and the debt that results from this, is effectively a barrier on entry to the profession.  Those choosing a career in law should not have to think about whether they can afford the training before starting out on the route.  The cost becomes a way of filtering out those who cannot afford the money for the course or the year or two years' study which is unpaid.  Mature students have mortgages to think about, whereas students from less wealthy backgrounds may be unable to consider it at all.

The TSG will continue to lobby both the Law Society and the government for ways to assist trainees and students in their early careers.

IF YOU REQUIRE ANY ADVICE OR SUPPORT CONCERNING DEBT OR FINANCES BEYOND THAT CONTAINED ON THIS PAGE, PLEASE CONTACT THE TSG HELPLINE ON 08000 856 131 OR BY EMAIL ON HELPLINE@TSG.ORG.