Academic journal article Stanford Law & Policy Review

The Economics of Legal Education: A Concern of Colleagues

Academic journal article Stanford Law & Policy Review

The Economics of Legal Education: A Concern of Colleagues

Article excerpt

May 2012

The recent chorus of complaints about the "crisis" in legal education has brought new urgency to longstanding concerns. While "crisis" may not be the most appropriate term, law schools are operating in a difficult climate, characterized by rising costs, falling endowments, reduced governmental assistance, disaffected students, and declining applications. The undersigned Coalition of Concerned Colleagues seeks to draw attention to the problems confronting legal education, and to identify potential responses.

Over the last three decades, the price of a legal education has increased approximately three times faster than the average household income. With the help of the federal guaranteed student loan fund, some ninety percent of law students borrow to finance their legal education and the average debt now exceeds $100,000. More than one third of current students will graduate with debt above $120,000. Overall, law students in 2010 borrowed at least $3.7 billion to pay for their legal education. Unsurprisingly, debt burdens are unevenly spread and amplify racial and class disadvantages

The price of legal education has risen as the job market for lawyers has declined. Over one third of law graduates in 2010 did not obtain jobs as lawyers; the median starting salary of the class was $63,000. The problematic economics are captured by this fundamental mismatch: a graduate who earns the median salary cannot afford to make the monthly loan payments on the average debt. Thousands of law students are forced to enter Income Based Repayment (IBR), a federal debt relief program that allows reduced monthly payments, but with significant negative consequences for debtors and taxpayers. A substantial default rate may cause Congress to rethink the provision of easy credit to law students.

The price of legal education substantially affects access to the profession. The out-of-pocket cost of obtaining a law degree ranges from $150,000 to $200,000 or more for many law students. This erects a formidable economic barrier to becoming a lawyer and restricts the career choices of those who do enter the bar. Although the federal government and most law schools offer some loan repayment assistance to graduates who take public interest jobs, law school programs are often insufficiently funded and the federal programs do not provide full discharge until after 10 years of public interest employment.

Nor do these programs address the fundamental problem of lack of jobs, public interest or otherwise, that make law school a questionable investment. A recent report found only half as many entry level job openings as individuals passing the bar. Most knowledgeable observers believe that the situation is unlikely to improve even if the economy fully rebounds. More employers are relying on paralegals, technology and contract attorneys to do work previously performed by recent graduates, and cash-strapped public sector agencies are facing pressure to curtail legal expenditures.

Law schools are themselves in an increasingly difficult financial position. After years of uninterrupted increases in enrollment and tuition, they now face a sharp decline in applicants. As it becomes harder for law schools to fill classes with quality students, all but the wealthiest institutions will face pressure to cut expenses. Yet at the same time, preoccupation with the annual ranking of schools by U.S. News and World Reports gives schools a perverse incentive to spend more in areas rewarded by the U.S. News formula. Two examples are expenditures per student and faculty- student ratios, which have risen dramatically in the decades since the rankings went into effect. …

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