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When is enough enough?

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Matt Leichter has crunched a bunch more numbers at Law School Tuition Bubble, and is projecting what private law school tuition will be four and nine years from now. Notes:

(1) These projections are in current dollars, so if these projections are correct, the nominal dollar figures will be even higher.

(2) MT is projecting that in 2017 (the year in which people applying now will be graduating), average private law school annual tuition will be just about $50,000. This means that somebody who borrows the full cost of tuition but nothing at all for living expenses will have around $180,000 in law school debt by the time the first payment comes due six months after graduation.

(3) Over the past decade, the percentage of law students paying full sticker tuition at any one time has declined a bit, from 55% to 48% (the percentage of students who pay full sticker at some point in their law school careers is higher, because many scholarships are conditional on grades).

To put $50,000 per year tuition prices in perspective,here’s Harvard’s tuition in 2013 dollars:

1971: $13,150

1981: $16,300

1991: $28,750

2001: $37,000

(Historically, Harvard’s annual tuition has tended to run about 20% higher than that of average private law school tuition).

(4) Nine years from now private law school tuition will be over $70,000 at several schools, and the average will be nearly $58,000.

The answer to the question of how this happened, and continues to happen, is complex, but probably the single most important direct cause of the increasingly preposterous tuition structure of legal education is a massive decline in student-faculty ratio, which has gone from about 30 to 1 in the late 1970s to around 14.5 to 1 today.

Those are averages, but the relative percentage decline tends to be quite consistent across the legal academic hierarchy, i.e., elite schools that had 20 to 1 ratios a couple of decades ago are at 9 to 1 today, etc.

Now within legal academia all of this is predictably enough defended on the grounds of quality. A first-rate legal education, we are told, is “inherently” expensive. This is of course classic cartel behavior: if car companies could operate like law schools they would sell nothing but luxury models, because luxury models have much higher profit margins than other cars.

This analogy also requires hypothesizing a federal government program that loans the full cost of purchasing a luxury car to anyone a car company deigns to anoint worthy of luxury car ownership, with the cost of the default on those loans falling on taxpayers. To make the analogy complete, we must also hypothesize that half the cars turn out not to have engines in them, that it is illegal to sell a luxury car on the secondary market, and that car loans can’t be discharged in bankruptcy.

In any case, a question I find particularly interesting is, when is enough enough? From one perspective, the “quality” rationale for constantly raising prices is a straight-up scam. On this view, legal education isn’t any better than it was a generation ago, and thus the tripling of the price of a law degree over that time is simply straightforward rent extraction on the part of law schools and their host universities.

If one takes that view, then all the talk of smaller classes and more clinics and fancier facilities, and more administrative services, and a more productive faculty (“productive” in this context means “more law review articles”) is just an ideological smokescreen for paying people employed by law school higher salaries to do less real work.

I certainly don’t want to discount that perspective, given that there is obviously a great deal of self-dealing going on inside America’s law schools, although, precisely because the ideology of “quality education” is so pervasive and successful, much of that self-dealing remains invisible even — or perhaps especially — to its direct beneficiaries.

But here I’d like, for the purposes of argument, to assume both that the motivations of the purveyors of higher cost/higher putative quality are pure, and that the radical increase in the cost of legal education has indeed produced significant improvements in the quality of that education. Even assuming this, two questions would seem important to answer:

(1) Does this hypothetical increase in quality justify the very non-hypothetical increase in cost; and

(2) Is there any rational and/or foreseeable end point to this process? Should we be aiming to lower average student-faculty ratios to what they now are at the most elite schools, thus replicating the process that took place over the previous generation? Should the average school have twelve clinics, instead of the six it currently has, or the three it had 30 years ago? Should the average law professor’s compensation be doubled again over the next 30 years, as it more or less was over the past 30? All these things would surely improve the quality of legal education. They merely require having the will to raise tuition to $75,000 or $100,000 per year, which in percentage terms is actually a modest increase, in comparison to that which took place over the last three decades.

Or could it be that our methods have become unsound?

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