Student debt: seeking out the truth, the whole truth, and nothing but the truth

Gavels falling on graduates
Illustration by Kendra Yee

For those outside the legal community, lawyers might not be the first profession people think of when it comes to the student debt crisis. Don’t they make enough money not to worry about it? In fact, those who are critical of student debt relief tend to bring up one of two stereotypes: the wealthy doctor or lawyer who doesn’t need financial help, or the philosophy-grad barista who should have made better choices to begin with. 

Besides oversimplifying the issue (and being more than a little bit callous about it), this type of attitude frames the crisis as an individual problem—you made your bed, now lie in it—while ignoring the real causes and effects of rising debt loads. In the context of the legal community, this big-picture discussion means taking an honest look at how student debt affects career choices, and how these career choices are shaping our justice system at large. You ready?

Banished to Bay Street

There are almost 40 billion dollars' worth of outstanding student loans in Canada, and the average student across all disciplines owes $28,000.1 The average law student, however, owes more than double this amount at $71,444.2 In Ontario, the most expensive province in which to study law, the average new call graduates with more than $83,000 of student loans.3

It’s hard to overstate the impact of this kind of debt. In their article, “Back to law school 2022: Law students’ financial burden,” authors Monica Santos and Cayley Kavanagh cite findings from the 2022 National Tuition Study where more than half of respondents said that law school expenses have negatively impacted their mental health.

“It definitely influences us personally,” says Santos, who’s also the outgoing president of the Law Students Society of Ontario (LSSO). “There’s pressure to do interviews with big firms, even if that’s not really what you want to do. Then you end up jumping straight into the workforce at a place you might not want to be just because debt is at the top of your mind.”

“On average,” adds former LSSO president, Ocean Enbar, “there’s this perception that the profession can withstand a lot of debt, which may be true, but the average can be misleading and is often bloated by higher Bay Street salaries.” For lawyers who don’t work at this type of big firm, the path out of debt may not be so straightforward. There are also significantly more hurdles for young lawyers who finance their own education without family support or who lack the financial literacy to understand the loans they’re agreeing to in the first place.

Get to know your debt

“Lawyers don’t have a business background and promoting financial literacy isn’t an area covered in law school,” says Zach Shaver, a lawyer who’s practiced in corporate and small business law and is the author of “Escaping the Weight of Debt” for CBA National Magazine. “People don’t have that knowledge, yet they’re expected to be responsible for tremendous debt burdens.” He cites the importance of educating yourself as early as possible about personal finance. It’s a crucial part of the solution, especially considering that the steps students and young lawyers can take to understand and manage their debt are relatively simple (at least compared to the structural changes that would be required for full-scale tuition reform).

While some may find talking about money intimidating, crass, or boring, it doesn’t have to be. For example, solutions could include simply creating a monthly budget, or sitting down with a financial planner who can explain in plain language exactly how the interest rates on your loans may work. Ok, fine, not exactly the stuff of blockbuster movies, but you won’t regret it, especially considering that the professional support available to you is often free.

Not your average four-letter word

Shaver adds that there’s not necessarily anything bad about taking out a loan to finance something as important as your education. “The experience can actually serve as good practice for future financial transactions,” he says. “I see people who are loyal to certain banks because it’s where they took out their student loan, so they go back to apply for a mortgage.”

“The key,” he says, “is that people need to know what they’re getting into and plan in advance. Avoid reasons to take on more debt than you have to. When we don’t talk about these things, that’s when problems arise.”

Whose degree is it, anyway?

Tempting as it might be to just throw some budgeting tips at the problem and hope for the best, anyone who is invested in the health of Canada’s legal community needs to pay attention to how student debt loads are shaping our legal system at large.

It’s actually pretty simple. If students can pay off their loans only by working at a certain type of firm, then who’s left to work at smaller firms, in less lucrative fields, or for clients outside of major cities? In British Columbia, for example, 75% of lawyers work in Vancouver, Victoria, or Surrey.4 This creates a lack of legal resources in already underserved communities where many young lawyers would be happy to practice if the lower salaries were enough to tackle their enormous loans.

Shaver draws a comparison between Ontario, where the 2021-2022 school year saw University of Toronto students paying $22,053.81 in tuition and related fees, to Quebec, where permanent residents pay around $2,500 for a year of legal study at the Université de Montréal.5 “In Quebec,” he says, “the majority of lawyers don’t have debt, so they can take jobs that pay less, and take more risks and pursue career paths they’re actually interested in.”

Class examination

Of course, for some graduates, debt isn’t debilitating at all. In their article “The Debt Burden,” Canadian Lawyer Magazine reports that “61% percent of students surveyed entered law school with no prior debt and 30% would leave with nothing owing to the government or banks. The implication here is that a not-insignificant number of students have no financial woes, at least when it comes to paying for law school.”
This means that the cost of law school has become so prohibitive that, in many cases, the only people who enter the profession are those whose backgrounds assure them a debt-free education. The result, says Heather Donkers, former president of the LSSO, “is classes … filled with people who have had lawyers as either parents or family members.” While no one’s doubting anyone’s ability or work ethic based on their background, it’s worth thinking about what this trend could mean for the legal community. Shouldn’t we value a diversity of experiences and perspectives informing our justice system?  

Not much ado about a whole lotta debt

Debt forgiveness is the solution that dominates headlines in the U.S., but Shaver thinks it’s too political to be a feasible option in Canada. It’s also not the one-size-fits-all solution that people might think it is, as forgiveness only targets federal or provincial loans, while most law students also carry a line of private credit that wouldn’t be affected.

Shaver’s article, “Escaping the Weight of Debt,” proposes various other options inspired by programs in the States, including a loan forgiveness program for lawyers who work in public service, and another program that would allow law firms to buy a portion of their associate’s loan and convert it to a taxable benefit. But for Enbar, this second solution raises certain issues. “Usually this is coming from Bay Street firms that already have a lot of money,” he says, expressing concerns that it would limit new lawyers’ freedom in choosing an employer. 

Collecting receipts 

For members of the LSSO, there are still too many aspects of the problem that aren’t clear enough to see a way forward. That’s why they’re working on the National Tuition Study, a multi-year project that looks at the rising costs of legal education across Canada and its impact on students’ financial outlook. “We want to know where our tuition dollars go,” says Enbar, who reiterates the especially high costs in Ontario. “Is there a justification for why it’s costing us so much?” Once they have this information, they’ll know where to go with their ideas about reform and they’ll have the data to back it up.

“The differences between provinces are huge and nobody really knows why,” adds Santos. She says that while students are aware that the three major groups involved in setting Ontario tuition costs are the federal and provincial governments, the province’s law society, and the universities themselves, they’re unsure exactly who’s making these big financial decisions. “Most of the time we turn to the law society for answers, but it’s not necessarily up to them. That’s why there’s a need to create transparency about what’s going on. People start to feel hopeless when they don’t know where the problem is coming from because they don’t know where to turn to for answers. We’re frustrated, but we don’t know who to be frustrated with.” 

Closing arguments

The results of the survey haven’t been published as of August 2023, but it’s safe to say that there’s enough evidence to establish that these are issues we should be paying attention to. While individual aspects of the crisis are easier to tackle than the structural ones—Just go to law school in Quebec! Stop buying lattes!—it’s crucial to remember that personal debt and rising tuition are closely entwined. One can’t really be solved without the other. 

A common theme that arose in our various discussions was transparency. It’s just as important for students to be open and honest about money on their journey to financial literacy as it is for institutions to reveal where and how tuition dollars are being spent. Fear, stress, and anxiety are key aspects of what makes finances intimidating when they should be empowering. After all, for better or worse, most of us can’t get very far in life without a little bit of money to our name, and new lawyers have worked hard for the chance to earn their share of it. What would it look like if we—lawyers and non-lawyers alike—saw money not as a burden placed on us by faceless and untouchable institutions, but as a tool to use as we saw fit to shape our lives, professions, and communities? Maybe it sounds naïve, but a little idealism isn’t anything to be afraid of. It’s probably part of what drew you to law in the first place. 

We can help. 

CBIA/Lawyers Financial is a not-for-profit organization for lawyers by lawyers. That gives us the freedom to support you in ways that promote your financial well-being, not our bottom line. Book a free financial planning meeting to learn strategies for managing your debt—and start planning for a financial future where your choices are based on your ideals, not your burdens. 

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Sources: 1. Gitnux Market Data, “The most surprising student debt in Canada statistics and trends in 2023,” March 2023. 2. Canadian Lawyer Magazine, “The debt burden,” August 2018. 3. CBA National Magazine, “Escaping the weight of debt,” October 2019. CBA, “Law grads’ student loan burden is an access-to-justice issue,” April 2019. 5. Canadian Lawyer Magazine, “Canadian law schools 2021/2022: Resources if you’re considering whether, and where, to become a lawyer,” September 2021. 

August 31, 2023