How much has law school tuition really gone up?

A point sometimes made by defenders of the legal academic status quo is that while nominally tuition has gone up a lot, actual tuition increases have been much more moderate, because of the increasing prevalence of tuition discounting. Note that even to the extent that this claim were true, it would still be a very problematic defense of the price structure of law school, since tuition discounting shifts the costs of law school onto precisely those students who can least afford to pay a high price for their law degrees.

This is because tuition discounts go to students with better entrance credentials, with schools buying better entrance credentials as a consequence of their obsession (and to be fair, the obsession of clueless prospective law students) with the rankings nonsense. Those credentials correlate significantly — with an average positive correlation between LSAT/GPA and 1L grades of around .5 — with better grades, which in turn correlate with both high-paid employment and legal employment of any kind. Since for what ought to be obvious reasons better entrance credentials themselves correlate with higher SES, this system results in lower SES law students with worse long-term job prospects subsidizing the education of their higher SES classmates with better job prospects: the so-called “reverse Robin Hood” effect. And of course to the extent that high-paying or any legal employment is distributed on the basis of non-grade-based factors, this system is even more disadvantageous to lower SES law students, who don’t have comparable social connections and cultural capital on which to trade while hunting for jobs.

But exactly how much stealing from the poor to give to the richoptimizing of admissions outcomes on the basis of “merit” has been going on in American law schools over the past couple of decades, as cross-subsidizing of tuition through discounting has become more common? To my knowledge nobody has calculated the answer to that question. This post attempts to do so.

The ABA collects information on discounting, and now requires schools to report on their 509 disclosure forms what percentage of students get discounts, along with some rather fragmentary information regarding how large those discounts are. Until this year schools had to publish how large the discount was at the 50th percentile among students receiving discounts. (This year the ABA required schools to reveal the 75th and 25th percentile totals as well.)

Now the ABA has published total aggregated tuition discounts for all ABA law schools going back to 1991, which makes it possible to calculate fairly closely the relationship between average nominal tuition for law schools, average effective tuition for all schools (that is, nominal tuition minus discounts), and the change in these figures over time, at least in recent years. (Again, as I’ve mentioned elsewhere, it’s important not to lose sight of the fact that there had already been a massive run-up in law school tuition between the 1960s and the 1980s, so the relatively “low” tuition of the 1991 baseline in this analysis is low only relative to current prices — tuition was from a historical perspective already extremely high in 1991).

In any case, here are the figures. (All dollar amounts are adjusted for inflation, and expressed in constant 2012 dollars).

1991

Total nominal law school tuition collected: $2.286 billion
Total effective tuition: $2.05 billion

1997

Total nominal tuition: $2.85 billion
Total effective tuition: $2.49 billion

2002

Total nominal tuition: $3.55 billion
Total effective tuition: $2.96 billion

2007

Total nominal tuition: $4.58 billion
Total effective tuition: $3.78 billion

2012

Total nominal tuition: $5.35 billion
Total effective tuition: $4.27 billion

Average nominal tuition:

1991: $16,908
1997: $21,598
2002: $25,262
2007: $30,562
2012: $35,643

Average effective tuition:

1991: $15,183
1997: $18,905
2002: $21,046
2007: $25,239
2012: $28,454

Effective tuition as a percentage of nominal tuition:

1991: 89.8%
1997: 87.5%
2002: 83.3%
2007: 82.6%
2012: 79.8%

Between 1991 and 2012, average nominal tuition increased by 110.3% in constant dollars, while average effective tuition increased by 87.4%.

TL;DR for the iphone generation:

Expressed in percentage terms, the extent to which nominal law school tuition was discounted via cross-subsidization doubled between 1991 and 2012. Yet because discount rates were very low in 1991, this increase had a modest overall effect on the rate at which real tuition increased, as it still nearly doubled in real terms on average, and more than doubled for those students (about half) who received no discount at all.

While total law school enrollment increased by 11% between 1991 and 2012, total law school tuition revenues increased by 108% in real terms during this time.

On the other hand, this more than doubling of tuition revenue produced the following improvements in legal education over the past two decades: [Data missing].