Average debt coming out of law school?

[QueensDenning]

As the title suggests, I'm wondering what the average (or anecdotally common) debt load is for new grads (PSLOC + OSAP). These things can be awkward to talk about in a non-anonymous in-person setting.

I've been frugal over the past few years, but less so this year as a result of securing a well paying articling position, and getting tired of, well, being frugal. This has me thinking about what sort of debt load is manageable for new grad. The Biglaw salaries seem like a crazy amount of money (coming from the perspective of never making more than $20 or so an hour in previous jobs). However Toronto rent, cost of living, etc. is starting to get me a bit worried.

Some information about myself and the type of lifestyle I'd like to live: Male, single (well, girlfriend but we are nowhere near the point of moving in together, and I'm young so I would like to live alone for the foreseeable future). I'd like to get an apartment once I'm articling (Toronto core, or maybe Ossington/St Lawrence Market area) - I'm open to having a roommate or two but would definitely prefer living alone if thats financially feasible. I have fairly expensive tastes and hobbies, so I guess that will factor into the equation as well. I'll be graduating with ~30K in OSAP debt, and ~20-30 on the PSLOC. So around 50-60K total debt. 

Part of why i'm posting this is to get some realistic advice in terms of how I should manage my PSLOC spending. On the one hand, I know I'll be working my ass off once articling starts and figure I should use some of the PSLOC to enjoy going on vacations and the like before all the work-related stress and time commitments get in the way. On the other hand, I really don't know how far a 100K articling salary goes in Toronto these days, and I'm aware of the fact that hire back isn't guaranteed (especially in this economy!). 

Any advice and/or anecdotes are welcome! 

[Turtles]

I was making ~100k in Toronto before law school. It sounds great until you deduct taxes, EI, and CPP and pay your rent and other expenses. Lifestyle inflation can eat away very quickly if you don't rein in spending. Living alone also makes things more expensive, but having a partner that has their own place makes it even worse -- date night and holidays can make your wallet cry in a way that doesn't happen when you share finances such that neither party wants money to be wasted. My advice is to focus on the things you really care about and not to waste money on things that don't matter.  

So that you don't have a big surprise, I suggest building out a budget. Google the CRA payroll deductions calculator, input your information, and figure out your take-home pay. Then deduct your rent or expected rent, electrical, internet, and other expenses (many big law pay mobile phone, but only up to $65 ish). Then deduct your anticipated minimum payments for OSAP and what you intend to pay down on your PSLOC (assuming minimum payments are not yet required under your agreement, most include articling or articling + 1 year). The remaining money is the money you can use to pay down debt, save, and live life -- you probably want to do a bit of all three each month. The benefit of government loans is you have a grace period for a few months after graduation, but payments will become required shortly after you start articling. Also keep in mind there's something you can do with OSAP to make a one-time payment on only your provincial loan rather than both provincial and federal, as the federal is 0% interest you don't want to pay down the federal portion while you have high interest loans from the LOC and province.

That said, while being aware of your financial situation is important and all, you also need to live a little. The time before articling will be one of the last opportunities you have to take a significant amount of time away from work to go do something. Don't rent a yacht, but enjoy your life a bit. We work so that we can live comfortably, we don't live so that we can work comfortably. 

I've heard average debt to be around the $80k mark (maybe from the old Toronto Star article?) so you seem to be slightly better than average, but benchmarking against others isn't too useful. Build a plan to pay off your high interest loans as quickly as you can without forgoing too much quality of life. Burning out isn't worth it. Sometimes it's a longer-term investment to buy the pre-shredded cheese and give yourself 6 more minutes to sleep. 

Also don't forget to enjoy the big law job. Network events? Free food, free booze. Working late? Free food, uber home. You might not need to pay for your own takeout if your articling hours are rough.

Edited November 23, 2022 by Turtles

[LMP]

The only thing keeping my debt manageable is having worked before law school. If I was coming in as a K-JD I think I'd probably be around the 50K mark. Even while working part-time during school and working legal jobs each summer there is only so much you can chip away at rent and tuition. 

[ZukoJD]

I don't have a great answer to your budgeting question, but I just want to point something out. According to Statscan you'll be in about the 90th percentile of income earners in Toronto at that salary. Assuming you're the typical age of a graduating law student, I believe you're clear of the 95th percentile of income earners (in Canada) at your age. 

https://www12.statcan.gc.ca/census-recensement/2016/dp-pd/dv-vd/inc-rev/index-eng.cfm

Basically, if you can't manage to make this work reasonably well then we're in a lot of trouble.

[CleanHands]

1 minute ago, ZukoJD said:

I don't have a great answer to your budgeting question, but I just want to point something out. According to Statscan you'll be in about the 90th percentile of income earners in Toronto at that salary. Assuming you're the typical age of a graduating law student, I believe you're clear of the 95th percentile of income earners (in Canada) at your age. 

https://www12.statcan.gc.ca/census-recensement/2016/dp-pd/dv-vd/inc-rev/index-eng.cfm

Basically, if you can't manage to make this work reasonably well then we're in a lot of trouble.

But whenever income comes up, most people on this forum like to bitch about how they are impoverished and horrifically mistreated and abused because they don't make Sullivan & Cromwell salaries despite their big brains. How dare you interject facts and statistics. 

7 minutes ago, LMP said:

The only thing keeping my debt manageable is having worked before law school. If I was coming in as a K-JD I think I'd probably be around the 50K mark. Even while working part-time during school and working legal jobs each summer there is only so much you can chip away at rent and tuition. 

I'm highly concerned that you class $50k as not manageable.

[LMP]

4 minutes ago, CleanHands said:

But whenever income comes up, most people on this forum like to bitch about how they are impoverished and horrifically mistreated and abused because they don't make Sullivan & Cromwell salaries despite their big brains. How dare you interject facts and statistics. 

I'm highly concerned that you class $50k as not manageable.

Maybe, manageable was the wrong word. Comfortable? I'm not sure, but I've always been pretty debt adverse, I worked through undergrad so jumping from 0 - 50k is a lot for me. 

[Phaedrus]

Non-Ontario. I graduated with ~$110k in debt, with ~$35k of that on PSLOC. 70% (including all line of credit) of that is law-school related. 

This debt level was not at all uncommon for people from similar situations

Probably could have shaved debt by penny pinching, never eating out, living with 5 others, etc. but it was hard to see the value in saving $100/mo when I was paying $20k+ year in tuition and textbooks alone. I intentionally chose to enjoy a few meals out, going to the movies, etc. guilt-free as a sanity investment. Life sucked enough in law school, I didn't need to make it worse by surviving on ramen and food court spice packets. 

I practice rurally and enjoy financial comfort while in repayment.  I'm somewhat aggressively tackling the PSLOC (tied to prime, aiming to be paid in 3.5 years), and making bare minimums on provincial/federal loans as long as I can while 0% interest is in effect. Inflation eats away at the value of that loan. I don't travel and hardly ever splurge on unnecessary bullshit. My 10-year-old Timex works just fine. 

I knew what I was doing when I was spending loans in school, and I don't regret paying it back now (even if it hurts). Given the salary projections for our profession, it's short term pain. And I reflect on the fact that what I consider "pain" is still being able to spot my parents money when they need it. A lot of people don't have that luxury, and have to decide whether to go without food, medication or shelter. 

[QueensDenning]

15 hours ago, ZukoJD said:

I don't have a great answer to your budgeting question, but I just want to point something out. According to Statscan you'll be in about the 90th percentile of income earners in Toronto at that salary. Assuming you're the typical age of a graduating law student, I believe you're clear of the 95th percentile of income earners (in Canada) at your age. 

https://www12.statcan.gc.ca/census-recensement/2016/dp-pd/dv-vd/inc-rev/index-eng.cfm

Basically, if you can't manage to make this work reasonably well then we're in a lot of trouble.

To be clear, I'm well aware of how fortunate I am to be in this position. I worked damn hard for it, and certainly don't come from wealth, but my debt could easily 20K-20K higher without any sort of family assistance. And I know I could've easily been in a position where I'm making half of what I will be during articling.

It's just the whole financial management thing that I haven't had much experience with. I like nice things, nice clothes, nice vacations. I genuinely enjoy law and I'm very interested in the practice area I intend on going into, but money is the reason I went to law school at the end of the day - or more so the lifestyle that money can provide. 

My parents are suggesting I stay at home for articling and move out after I know I'm getting re-hired, so thats the main thing I'm concerned about at this point. I.e., am I making a dumb financial decision to spend ~24K on Toronto rent when I have the option of living at home - which would probably be like a 50-ish min commute to the office. 

 

Edited November 23, 2022 by QueensDenning

[Icarus]

1 hour ago, QueensDenning said:

To be clear, I'm well aware of how fortunate I am to be in this position. I worked damn hard for it, and certainly don't come from wealth, but my debt could easily 20K-20K higher without any sort of family assistance. And I know I could've easily been in a position where I'm making half of what I will be during articling.

It's just the whole financial management thing that I haven't had much experience with. I like nice things, nice clothes, nice vacations. I genuinely enjoy law and I'm very interested in the practice area I intend on going into, but money is the reason I went to law school at the end of the day - or more so the lifestyle that money can provide. 

My parents are suggesting I stay at home for articling and move out after I know I'm getting re-hired, so thats the main thing I'm concerned about at this point. I.e., am I making a dumb financial decision to spend ~24K on Toronto rent when I have the option of living at home - which would probably be like a 50-ish min commute to the office. 

 

I had a fair amount of debt coming out of law school, though not quite that much. My articling salary was more in the 70k range. I lived at home, about 50 min- 1hr away during competitive articles. My principal was dubious about that commute, but I made it work, saved a lot of money on rent, paid down my debt fast, and articling was as successful as I could have hoped. Not saying that you should do that, but just saying that it can work and I don't regret sticking it out at home to save the money. 

[Garfield]

I have a lot of debt coming out of law school. As someone who is currently articling with a commute that is approximately 45 minutes and who frequently has to work a lot of hours (but a little shy of what some of my Bay Street friends work), I strongly suggest that if you will make as much as $100k for articling that you live closer to work. Due to the hours you will be expected to work, imho you should live closer to work. 50 minutes sucks and it will suck even more in the winter (and this is without getting into the specifics of the number of transfers and whether it’s bus or train etc). There might also be social opportunities that are easier to partake in by living closer to work. 
 

I would not have the same advice for someone who will be expected to work less hours and for little pay. (And yes, I’ve considered what 100k is annualized and after tax.) Put differently, it’s worth it to spend more to make your (likely very difficult) articling experience less hellish and it will pay dividends in other ways (you have capacity to do more and you will probably be happier - and in my opinion that is worth paying for if you can and I think you can). 

However, one thing you want to consider - and that I have heard from my full service firm friends on 100k salaries commuting for 1 hour ish - is that their firms allow quite a bit of WFH. Because of the lenient WFH policies coupled with living so far, my friends find themselves often inclined to stay home more frequently than they otherwise would. if you think there is a lot of value to spending time in the office (I think there is and I’m not in the minority in thinking that face time is valuable) then you might want to live closer. 
 

touggh but very imp decision to make, I wish u all the best!

[WhoKnows]

100K is roughly 73 post-tax. I assume you'll get most if not all of your tax back due to tuition tax credits. But 73k/22 articling pay periods is about 6600 a month. 

If I were you, I'd grind your first 4-6 months of articling with that 50 minute commute, live on nothing, and pay the PSLOC off. Then I'd move out. From there, take as long as you want to pay off you federal loans, and make a lump sum payment to get rid of the Ontario ones. Save an take a nice vacation post-articling. 

I graduated with more than anyone in this thread thus far, and have managed on far less than you'll be making, though with a supportive now-fiancee. You'll be fine. 

Edited November 23, 2022 by WhoKnows

[Turtles]

1 hour ago, WhoKnows said:

100K is roughly 73 post-tax. I assume you'll get most if not all of your tax back due to tuition tax credits.

Ontario's provincial tuition and education tax credits were phased out in the 2016 budget. Federal tuition credits are still a thing, though, if OP's parents weren't getting them.

[WhoKnows]

16 minutes ago, Turtles said:

Ontario's provincial tuition and education tax credits were phased out in the 2016 budget. Federal tuition credits are still a thing, though, if OP's parents weren't getting them.

Yea, but some folks will still have banked provincial credits from before they were gone, and you can only transfer I think like 3500 a year to your parents in federal. 

Edited November 23, 2022 by WhoKnows

[QueensDenning]

1 hour ago, Turtles said:

Ontario's provincial tuition and education tax credits were phased out in the 2016 budget. Federal tuition credits are still a thing, though, if OP's parents weren't getting them.

Are you referring to law school tuition (as opposed to undergrad)? That I've been paying all myself (well, my debt has been paying it). How much should I expect to get in federal tax credits for law school tuition? I realize I should figure this out for myself, but if you know off the top of your head... would be appreciated. 

[WhoKnows]

1 hour ago, QueensDenning said:

Are you referring to law school tuition (as opposed to undergrad)? That I've been paying all myself (well, my debt has been paying it). How much should I expect to get in federal tax credits for law school tuition? I realize I should figure this out for myself, but if you know off the top of your head... would be appreciated. 

It's dollar for dollar. You can find the exact amount in your MYCRA account. If you paid 60K in tuition, you'll be able to deduct that from your taxable income. It's great when articling because your income is split over 2 years so you'll likely pay no federal tax your first 5 months of articles and little federal tax in your last 5 months plus stub year. 

They'll still withold it from your pay, but you'll get it as a return when you file. 

Also, unless when you've been filing your taxes you've been signing the credits over to your parents, they're yours regardless of who paid for your school. I signed the max to my parents every year in undergrad and still had almost 100K when they smoke cleared. 

Edited November 23, 2022 by WhoKnows

[QueensDenning]

2 minutes ago, WhoKnows said:

It's dollar for dollar. You can find the exact amount in your MYCRA account. If you paid 60K in tuition, you'll be able to deduct that from your taxable income. It's great when articling because your income is split over 2 years so you'll likely pay no federal tax your first 5 months of articles and little federal tax in your last 5 months plus stub year. 

They'll still withold it from your pay, but you'll get it as a return when you file. 

Wow, I didn't think about that. Very nice 😎

[Lilbb19]

I had 190K debt coming out 

[Talleyrandophile]

~$55k for me, non-Ontario, solely law school-related. 

[McLovin]

About $135k in govt student loans, but $125k in liquid assets. Worked for 2-3 years before law school, worked in big law over the summer, made good investments (+ a bit of speculation), moved out at 18 years old and lived with roommates ever since. No parental support, but full implicit financial backing if anything happened, so somewhat privileged. Never married, no dependents, and a pretty frugal lifestyle.

[Turtles]

1 hour ago, QueensDenning said:

Wow, I didn't think about that. Very nice 😎

Definitely check your CRA account under credits. You needed to declare your tuition every year you filed your taxes based off the tuition receipt issued by your school to accrue the credits (or would need to amend if you didn't).

[Pecan Boy]

10 hours ago, WhoKnows said:

100K is roughly 73 post-tax. I assume you'll get most if not all of your tax back due to tuition tax credits. But 73k/22 articling pay periods is about 6600 a month. 

To add another data point, I made ~$2900 per pay cycle (so ~$5800 per month) post-deductions this summer. I can only imagine it'll be identical for articling. Over a 10-month period, that'll add up to be quite a bit less money than what you've suggested. 

[WhoKnows]

10 hours ago, Pecan Boy said:

To add another data point, I made ~$2900 per pay cycle (so ~$5800 per month) post-deductions this summer. I can only imagine it'll be identical for articling. Over a 10-month period, that'll add up to be quite a bit less money than what you've suggested. 

Are you paid twice a month or every other week? Don't forget the two months a year where you get 3 pays. 

[Pecan Boy]

36 minutes ago, WhoKnows said:

Are you paid twice a month or every other week? Don't forget the two months a year where you get 3 pays. 

Ah, it's every two weeks. Good point. 

[Icarus]

On 11/23/2022 at 5:49 PM, WhoKnows said:

It's dollar for dollar. You can find the exact amount in your MYCRA account. If you paid 60K in tuition, you'll be able to deduct that from your taxable income. It's great when articling because your income is split over 2 years so you'll likely pay no federal tax your first 5 months of articles and little federal tax in your last 5 months plus stub year. 

They'll still withold it from your pay, but you'll get it as a return when you file. 

Also, if you're so inclined, there's a form you can file that authorizes your employer to not withhold it from your pay, and you can put it to your loans sooner than the end of the year. Not sure the form name of the top of my head.