Home / General / How much has law school tuition really gone up?

How much has law school tuition really gone up?

Comments
/
/
/
166 Views

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].

FacebookTwitterGoogle+Share
  • Facebook
  • Twitter
  • Google+
  • Linkedin
  • Pinterest
  • randy khan

    One note on how discounts work. At the top schools, admissions are need-blind and there are relatively few scholarships awarded based on merit. (For instance, at NYU School of Law, with an admission class of about 450 students, the principal merit scholarship is Root-Tilden-Kern, which goes to 20 students.) Typically the bulk of the discounts on tuition at these schools, then, come in the form of grants based on need.

    Of course, these schools don’t need to attract better applicants to boost their rankings, so they can afford to do things this way. It just highlights a point that has been made on LG&M before – if you’re a marginal law school candidate, you’re probably much better off not going to law school unless you can pay for it without student loans.

    These schools also generally have the best loan forgiveness programs, which highlights that point even more. (I’m fairly confident, without checking, that most of the low-ranked schools have no loan forgiveness programs to speak of.)

    • Paul Campos

      Only Harvard, Yale, and Stanford give their law students any significant amount of need-based aid. These three schools don’t give merit aid, because they don’t need to. All other law schools distribute all or almost all of their discounts on tuition on the basis of “merit,” i.e., in order to buy test scores and to a lesser extent GPAs. For example, while NYU has only a few endowed scholarships (real scholarships in other words), it discounts sticker tuition to a large percentage of its students (37% this year). Those discounts are designed as strategically as possible to protect the school’s LSAT and GPA medians.

      You’re right that only the very top schools have meaningful loan forgiveness programs (which with the exception of HYS they’ve all now bootstrapped to IBR/PAYE).

      • randy_khan

        I guess I’m not entirely sure how to tell if a school is giving grants based on need or merit. I don’t think the 37% percentage tells me much unless I know what percentage is awarded based on merit and what percentage is awarded based on need. In NYU’s case, the Root-Tilden-Kern scholarships clearly are merit-based (and awarded, at least in part, based on the prospective student’s interest in a public interest practice), but after that it’s not clear how much of a role the desire to convince prospective students to attend plays in aid decisions, and I don’t know how one can tell for sure.

        I have very little doubt that schools below a certain point target a lot of their aid offers to entice students at the higher end to enroll, but it seems it’s likely that the percentage of students who are made such offers varies with the school’s relative standing, and the higher a school is ranked, the less it does such things.

        (Full disclosure: I am (as you may have guessed) an NYU School of Law alum, albeit more than 25 years ago. I have no special knowledge of the school and its policies today.)

        • sigh

          What you mean to say is, “I don’t know what the hell I am talking about.”

          • randy_khan

            No, what I mean is that I would like to understand how you can determine what proportion of a school’s financial aid is need-based and what proportion is not based merely on the percentage of its students who receive grants.

            To be clear, I agree with a lot of what Campos says about law schools, and see what’s happened with law school tuition as a particularly good example of a broader issue in higher education. I think it’s okay, though, to ask questions about the analysis to understand it better. I’m sorry if you disagree.

      • NYUStudent

        Just to weigh in on this – I’m an NYU Law student. I have a full tuition scholarship, which is funny, since I didn’t apply for any of their named offers. They just sent me a letter in January, before I even submitted any financial information to the school. Now this could be because they were just super impressed with my social science degree and my administrative assistant experience, but I’m guessing it’s more likely that it was the 174 LSAT that did it.

    • T.E. Shaw

      Merit scholarships are not uncommon in the bottom half of the T14. Things are a little different in the T6, but it should be noted that RTK scholarships are full tuition, and that there are smaller unnamed scholarships that go out to NYU admits in increments of roughly 15k, all the way up to 90k over three years.

    • sort of

      Are you sure there are need-blind admissions at any top law schools? There are only very few undergraduate schools where need-blind admissions truly remain. In some ways, the concept doesn’t even apply due to the availability of unlimited federal loans – anybody they admit can ‘pay’ for it.

      • randy_khan

        NYU explicitly says its admissions are need-blind. It’s on the admissions page of its website.

        • Whiskers

          NYU is the biggest for-profit, not-for-profit, bs scam, corporate fraud going in higher education.

      • Bloix

        “Admissions are need-blind” means that the decision to admit or deny does not depend on ability to pay. It doesn’t mean that the school commits to provide financial aid to all those who are admitted.

    • BoredJD

      Admissions at CLS, from the Hamilton on down to the 5K teasers, were merit-based. I assume that NYU is the same.

  • Darkrose

    Completely Off-Topic:

    Tim Lincecum just became one of two Giants pitchers in 130+ years to throw two no-hitters.

    TIMMMMYYYYYYY!

    • Both of them against the Padres, too.

    • Manju

      But he has a mustache. Do you know who else had a mustache?

      • hey so

        Raul Grijalva?

  • Samuel Browning

    Paul, do these figures mean a 0L has a way of looking at a particular school and figuring out how much of a merit based scholarship they should be offered based on their income LSAT or GPA? That would be quite useful information. Plus it would make many law school admission deans scream in pain.

    • antiro

      There’s no exact science, but by looking at the LSAT/GPA medians as well as considering the 0L’s race can give you a rough proxy of what the school should be offering. A website called law school numbers has self-reported data of students who post their acceptances/scholarships/gpa/lsat numbers.

      Whether or not the particular law school is “worth it” at the particular price with the discount is a wholly different discussion. The school I went to probably isn’t even worth it for free, and I went there for free.

    • BoredJD

      http://lawschoolnumbers.com/

      This and the hivemind over at Top Law Schools forum are probably the closest you’ll get.

  • Boro

    NYU when I applied had several other full scholarships. One was called the law and economic scholarship. Another one was a full or partial “Dean’s Scholarship.” These were not based on need, but were purely to improve admit numbers and ranking.

  • Boro

    I am not so sure this cross subsidy hits poor kids as much as Campos thinks. Basically most law students face a choice of going to the best school they are admitted to for full tuition, a school in the next tier for half tuition, or a school two tiers down for free.

    I assume the free tuition offers are mostly taken by those without a lot of family resources.

    That also explains why HYS don’t need to play the “merit aid” game. Rich HYS admits aren’t tempted by scholarships are lower tier schools, while the middle class admits are offered need based tuition discounts that partially match the “merit scholarships” at lower ranked schools.

    To put it another way, price discrimination is aimed at charging more to those who can pay more.

    • BoredJD

      You don’t understand how legal hiring works.

      Legal hiring, at least for the federal bar, is extremely prestige conscious. Obsessively so. Once you get outside the top 13 law schools, your chances of getting a biglaw job (which opens up other opportunities down the road) goes down considerably.

      So a student considering Duke at sticker, versus say, WUSTL at a full scholarship has a tough decision to make. They can go to a school with a 60% placement into biglaw+AIII, or a school with a 30% placement. You can argue that the full scholarship student would end up at the top of the class at WUSTL, but that’s a huge assumption, and not a very smart one given the idiosyncratic nature of law school grading.

      You can see how, in the aggregate, having the poorer student choosing the lower ranked school over the higher ranked one leads to students of higher means being over-represented at top school and thus at the top echelons of the bar.

  • spencer neal

    I graduated from the University of Washington Law School in 1977. My quarterly tuition was $300.00 per quarter and I got that waiver as a scholarship. What happened since then???

    • Whiskers

      Being a greedy pig got elevated to a patriotic duty.

    • Samuel Browning

      1) Law schools realized they could charge more, much more. Tution rose at a rate of twice the rate of inflation over a 30 year period.

      2) Law deans and faculty wanted more deans and more faculty, better pay, and new buildings.

      3) Most the law schools realized that they could charge students Harvard like rates even if they were not Harvard and people would still apply and attend.

      4) Changes were made in the bankruptcy codes so you could not discharge federal student loan debt, and then private loan debt. This encouraged law school loans regardless of the employment outcomes of students.

      5) The federal government came in and agreed to loan anyone the full amount they needed to attend any ABA accredited law school without imposing any needed cost controls.

      6) IBR and the PAYE was created so that people who couldn’t pay the face value of their law school loans were able to pay something and were not technically in “default”. This allowed the law schools to prop up the system into the indefinite future.

      7) The deans and the law professors made bank.

      • CSI

        There seems to be a genuine, widespread, belief that universities and colleges, especially “non profit” ones are inherently noble and will only charge what they absolutely have to.

        It seems to be related to the reverence towards higher education which is a part of American culture.

      • Unemployed Northeastern

        Don’t forget that the ~200 or so accredited law schools jointly freaking owned the largest FFEL and private lender to graduate students, the non-profit AccessGroup.* While law school were running up tuition at unprecedented rates in the 2000’s, Access was, despite its non-profit status, originating about $11 billion in SLABS (Student Loan Asset-Backed Securities) to sell on Wall Street. It still sits on about $300 million in cash, according to its 990’s, even though it doesn’t really conduct any business anymore.

        *For the period in question, the chair of its board of directors was also the dean of New York Law School, Richard Matasar.

        • CSI

          This would have been before GradPlus was implemented I suppose. I guess this federal government intervention plus the GFC would have mostly killed off private graduate student lending.

          Anyhow I’m no lawyer (just interested in the American education industry) but this sounds possibly illegal to me.

          • Unemployed Northeastern

            Yeah, the $11 billion figure is what Access originated from 2000 through 2008, from various filings I’ve come across. I suspect not everyone in grad schools jumped to GradPLUS right away; after all, it came out a year before the first IBR plan, and switching financial aid providers mid-school sounds like the biggest a**ache in the world.

  • GFW

    Off the direct topic, but on the general “value of law school” topic, take a look at http://www.slate.com/articles/business/moneybox/2014/06/apply_to_law_school_now_yes_we_re_serious.html
    #Slatepitch or somewhat reasonable extrapolation? I’m thinking they’re excessively discounting the existing overhang of underemployed J.D.s, but OTOH law firms may prefer new grads, treating underemployed J.D.s much like the general economy is treating the longer-term unemployed. (I.e. if you had bad luck in timing, you’re screwed.)

    • mike in dc

      Law firms, that is, the top 350 or so, are only going to hire a few thousand law school grads every year, at best. If you attend a law school ranked outside the top 50, your odds of getting into a big firm are slim to none, and Slim just left town.

  • How about the trend (in law schools and in universities in general) of admitting larger and larger numbers of foreign students who pay full tuition in order to discount tuition for U.S. students? This allows the schools to admit higher GPA/LSAT applicants, boosting rankings. Of course the entire curriculum is designed for the U.S. students, not for the foreign JDs and LLMs who make up larger and larger portions of the classes. No one blinks an eye on moral or ethical grounds.

  • anon

    The law schools are stealing from people of color and giving money to the well off. Liberals are not liberals; they are thieves.

    • Lee Rudolph

      You seem to have forgotten to state one premise, that “the law schools are run by liberals (or, on liberal principles)”.

  • The last king of Portugal, King Manuel II, spent his life in exile
    in Twickenham on the outskirts of London after being deposed in 1910.
    Did you ever notice how Messi and his Barcelona teammates effortlessly
    respond to quick short passes. Of their ninety two games vie they need accomplished sixty four victories, fourteen attracts and fourteen defeats.

  • Pingback: Sometimes you just can't reach a man - Lawyers, Guns & Money : Lawyers, Guns & Money()

  • Pingback: Another comment on legal scholarship - Lawyers, Guns & Money : Lawyers, Guns & Money()

It is main inner container footer text