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The tuition puzzle

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This is the first of what will probably be several posts about the extraordinary increases in law school tuition over the past half century (In this as in so many other respects, law school is merely a particularly extreme version of something that has happened all across higher education in America).

First, some numbers:

Law School Transparency has done a nice job graphing what has happened to law school tuition since 1985, in both current and inflation-adjusted dollars. Private law school tuition has gone from just over $16K to just under $42K in 2013 dollars. Public resident tuition has gone up even more sharply, from $4,300 to $23,000, again in constant inflation-adjusted dollars.

These numbers are startling enough, but they obscure the extent to which by the mid-1980s tuition had already skyrocketed over the course of the previous 25 years. LST is using data the ABA posts on its web site, which only go back to 1985. Looking back to 1960, private law school tuition averaged around $7000 in 2013 dollars, while public law school tuition was perhaps a third of that, i.e., essentially nominal (These estimates are based on Harvard’s and Michigan’s law school tuition at the time. They assume that tuition at HLS was around 20% higher than at the average private law school, which has been the norm over the past three decades, and that Michigan’s resident tuition was typical of state law school resident tuition. If anything this latter estimate probably overstates public law school resident tuition in the 1960s).

This is, in the context of normal economic activity, a remarkable situation. People often speak these days of a “tuition bubble,” but a classic price bubble involves a sharp short-term run-up in prices, followed by an even more sudden collapse when the bubble bursts. For example, the US housing market was relatively stable between 1970 and 2000, with median home prices staying between $150,000 and $180,000 in real terms. The housing bubble featured a five-year run up, during which the median price rose by nearly 70%, before falling back to pre-bubble levels just three years after the peak.

By contrast, the law school (and to a somewhat lesser extent, the higher ed) tuition “bubble” has now featured more than 50 years of basically continual real price increases, with essentially no retrenchment. This has led to prices rising in real terms not by 70% in the short term, but rather by 500% for private law schools and 900% for public law schools — and in the long and continuous term.

Is there anything else in the contemporary economy that has featured similar sustained price increases? The only examples I can think of are the ownership interests in certain professional sports teams, some extreme high end luxury goods —paintings by famous artists and the like — and of course health care, in regard to which spending per American increased by 7.6 times in real terms between 1960 and 2009.

The markets in NBA teams and Klimt paintings involve a few dozen extremely rich buyers, whose behavior can be explained readily enough by concepts such as the declining marginal utility of income and the perverse attractions of Veblen goods. The market for law degrees involves more than 100,000 people at any one time, while that for higher education in general involves more than ten million simultaneous purchasers. Why are Americans willing to pay literally five or ten times as much, in real terms, as people paid two and three and five decades ago for essentially the same thing?

In the case of health care, the answers are by now well known, involving the profound distortions created by third party payment systems, in the context of the purchase of a good that often doesn’t allow for any meaningful price competition. Indeed it’s now universally acknowledged by disinterested observers that the American medical system is a textbook example of massive market dysfunction, leading to severe overpayment for a good that is provided by the medical systems of every other developed economy for a small fraction of the price, with little or no loss of quality.

In the case of higher education in general, and law school in particular, the answers are not as well understood, in part because until very recently the American higher education establishment had done a masterful job of selling the idea that higher ed was a “great investment” at almost literally any price. Only in the last few years has that idea begun to be questioned in any serious and sustained way.

In subsequent posts I’m going to look at some of the factors that have produced this increasingly destructive social situation.

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  • It is true that provider induced demand and other factors cause us to pay more for health care than people do in other countries, and get less for it. However, the increase in spending over the years is another matter — that has happened in single payer and socialized systems as well, it’s just that the more or less parallel lines are lower. While higher education is pretty much the same thing now as it used to be, health care is not. Much of the secular increase in spending is because there is a lot more expensive technology available now than there once was. Fifty years ago there was no such thing as a heart transplant or a PET scan or a monoclonal antibody. Also, the population was much younger, which has a modest but noticeable effect. Yes, if it some sort of medical intervention is available we have to buy it, whether it really does us any good or not. But some of it does do good, and either way, we couldn’t buy it if it didn’t exist.

    So this is not really a comparable story.

    • Downpuppy

      I’ve seen other graphs that are clearer, but these show the basic picture that health costs were comparable (as a % of GDP) until the early 1980s. At the point other countries said Enough, while the US said Oh no, mustn’t interfere with THE MARKET.

      • Right, but per capita spending has increased everywhere, and since about 1990 the U.S. divergence has been small. In other words, Prof. Campos is talking here about increase over time, not U.S. vs. other countries, and I am simply saying that health care is not an appropriate comparator, it has entirely different drivers.

        • Unemployed Northeastern

          Of course, tuition partly incorporates health care, since colleges and universities have to provide health care for (some of) their employees. As a matter of fact, I recently read in Jeff Selingo’s “College (Un)bound” that ten cents of every tuition dollar goes to fund employee health care.

  • J

    I’m sure, by now, that everyone has seen the story of the 4 professors willing to split the ~$370,000 vice-chancellor’s job for a university in Canada between themselves?

    • Warren Terra

      Besides its effectiveness as a rhetorical tactic, I actually think their proposal has some real merit and should be seriously considered.

      • J

        An op/ed (which was meant as a well-meaning response to the story) said “I wouldn’t hire anyone who was willing to do the job for only a hundred grand.”

        I wonder how far back you’d have to go to find univerity presidents’ salaries that were around ~$100,000 (at a comparable university). And who benefits from this whole arrangement exactly? In other words, why is it a good thing that a university president should act as a CEO?

  • MacK

    One additional issue – in STEM there may be some justification for rising tuition – labs, equipment, rising technology means that what needs to be taught has itself risen, become more specialised, required more equipment and become, perhaps, more substantial and expensive. But legal education is broadly unchanged today from 29-30-40-50 years ago, taught using the same approaches, techniques and outcomes (bar exams) as before – new technology – computers, Westlaw, lexis etc. have lowered not raised costs – but tuition has soared. Liberal arts courses too have had falling direct costs (adjuncts, TAs, etc) yet tuition has soared.

    • MacK

      I’d add that to at least elite and more selective schools the intake is better educated – AP is a lot tougher than SAT was in the 70s and 80s, top college graduates are better educated and skilled (harrumphing aside) so the intake is better.

    • Snarki, child of Loki

      The cost of equipment (which lasts for years, if not decades) is minor compared to the salary and benefits for a single Vice-Assistant-Auxiliary Vice President of Telephone Sanitization. Not counting their minions (and they have to have minions).

      Sure, it’s still about 100x what is spent on chalk and copy paper in other fields, but it’s not like any of that stuff is mil-spec.

      • postmodulator

        The cost of equipment (which lasts for years, if not decades) is minor compared to the salary and benefits for a single Vice-Assistant-Auxiliary Vice President of Telephone Sanitization. Not counting their minions (and they have to have minions).

        This is my absolute deadest horse at this point, but: not true in the case of IT stuff. I’ve seen million-dollar purchases for software packages.

        • Bob Munck

          I’ve seen million-dollar purchases for software packages.

          Good grief, a million dollars for what? Name some packages. Given the robust open-source community, I can’t imagine any such purchase being necessary. (I suspect it might be rapacious companies like Oracle and IBM romancing the department chairman to sell their hugely overpriced IT support systems.)

          • Marc

            Yes, equipment in the sciences (including IT) is extremely expensive and has a short lifespan. Ditto computers (essential for students now). There are a lot of factors – but tuition would have risen faster than inflation for a lot of reasons.

            I do also wonder if Paul is ever going to get around to the defunding of state universities as a factor. I suspect not, as his axe-grinding doesn’t go in that direction here.

            • Snarki, child of Loki

              “Yes, equipment in the sciences (including IT) is extremely expensive and has a short lifespan.”

              Disagree. #1, the “equipment in the sciences (that) is extremely expensive”? You don’t let undergrads play with. Well, I guess if you do it’ll have a short lifespan, but you don’t. RESEARCH equipment is a different matter, but it’s not funded by tuition.

              You have to put some numbers to the cost if you want to compare. A $1000 pH meter? Okay, it might have to be replaced in 5 years (and maintenance along the way). Might need 100 of them. How many upper-level-useless admin salaries is that? 0.1 ?

              Expendables/consumables is similar: yes, the undergrads will break the occasional flask, but they’re not using up tanks of 3He or super-specialized bio reagents.

              At this point, if you still want to claim that STEM equipment used in teaching is expensive, post the goddamd POs, or STFU.

            • Fat Guy

              I thought Paul wrote a few articles on this on ITLSS. IIRC, his position was that while funding decreased somewhat, the dramatic increases in expenditures were the primary driver behind the decline state funding as a % of the total budget. So, even if state funding had remained constant, the % of the budget funded by the state would have gone down.

        • Anonymous

          One million is not much in higher administration. Take a quarter-million salary + benefits and office to match + secretary, assistant vice-whatevers, offices, misc budget,…

  • NewishLawyer

    Kevin Starr is the author of a monumental history of California that spans from 1850 and is still ongoing. The last volume covered the 1950s until the early 60s.

    His volume on California Entering the 1940s states that USF once supplied the Bay Area with the majority or at least a good chunk of their bar and bench. Boalt and Stanford were around of course and many people always loved settling in the Bay Area but USF was a solid, local, and respected institution.

    I think USF has become one of the worst victims of the law school crisis.

    This is what the US News Rankings have wrought. They have essentially destroyed the idea of a commuter school. A place where locals could get a solid education for a reasonable tuition and then get employment. There were potential downsides to the system but USF used to be well-respected in the Bay Area and USF Law grads staffed the small and medium sized firms of the Bay Area. Now the school might get mocked.

    Everyone needs to compete on the global stage now. There is no place for schools like Suffolk, or Brooklyn, or USF which took a mission of educating locals to be lawyers in a journey person kind of way.

    • BoredJD

      Maybe the problem is that Brooklyn, Suffolk, and USF got taken over by the graduates of Columbia, Harvard, and Stanford, who look at law school like a continuation of the prestige rat race they’ve been playing all their lives.

      • Unemployed Northeastern

        In the case of Suffolk Law, at least, the man most directly responsible for

        – “transforming” it from an inexpensive commuter college to a wildly overpriced would-be national college,

        – “transforming” the law school from a wonderful, inexpensive institution that made politicians and big-time attorneys into just another >$200,000, T^4 pit where barely 1 in 3 grads can find legal jobs of any sort,

        – using the school as a personal ATM

        is one David Sargent, alumnus of… Suffolk Law School. He began his career at Suffolk just two years after graduation. You may remember him from his nearly $3 million salary a few years ago, though I think Northeastern’s Joseph Aoun has since blown past that threshold.

  • Anon

    A large portion of the problem for public institutions is that states have had to divert funds from higher education to pay for Medicaid.

    • Warren Terra

      Play around with this website for awhile. Medical spending has definitely gone up over time, but take for example California: over the last thirty years, spending on medical care is up almost by half, but spending on education is only slightly down, from 20% to 18%.

      One possibility is that we’re placing too many people in post-secondary education for such historical perspectives to apply. State funding may have stayed fairly level with funding-per-student dropping significantly. This may apply especially to the rapid increase in law school slots in the last decade, before the 2008 economic kerfuffle.

    • Snarki, child of Loki

      A large portion of the problem for public institutions is that states have had to divert funds from higher education to pay for Medicaid tax cuts.

      FIFY

      • Sheik Al Sheeshkabob

        I’d like to know more about how the states were forced to divert funds from higher education to pay for tax cuts.

        Could you provide us a link?

      • ChrisS

        I know that Community ccolleges in NY were designed and charted with budget revenue from three equal sources: state, county, and tuition.

        It’s not anything remotely equal these days and I’ll give you one guess as to who is not paying a smaller percentage.

  • Ns

    I think at least a small part of the picture is that the supply has decreased, at least in relative terms? The number if seats at good schools has not kept up with population growth. So maybe now you have kids who would’ve gone to Stanford and paying bidding up seats at ucsb.

  • Joseph Slater

    I’m looking forward to this series. Among many things I’m curious about, do you know how law school tuition increases compare to, say, undergraduate institution tuition increases and increases at other types of professional schools (business, medicine, etc.)?

    Also, I know that one problem at many public institutions is declines in public funding. But that doesn’t explain private institutions (or, probably, not all of public institutions).

    • Snarki, child of Loki

      Public institutions (used to) provide the “public option” that keeps prices down by competition.

    • Mark Field

      I can give you one data point. I graduated UC undergrad in 1974. My tuition was $215/trimester (1974 dollars). I started UC law school in the Fall of that year. Annual tuition was $725.

      Someone else can do the work to compare inflation-adjusted costs and compare to present-day costs.

    • Unemployed Northeastern

      I don’t have the link for you offhand, Joseph (man, a lot of VC’ers are on this thread!), but from what I have seen, law school tuition has outstripped every other branch of higher education. It has definitely outpaced undergrad tuition growth by a healthy measure. Try looking at Law School Tuition Bubble or Brian Tamanaha’s “Failing Law Schools” or similar.

      • Joseph Slater

        Thanks (I’m amused to be considered a VC’er, although I know I have sometimes posted there). If you recall anything more specific, let me know (an e-mail would be fine). Undergrad tuition has certainly radically outpaced inflation, but maybe not by as much as law schools. . . .

        • Unemployed Northeastern

          I recall your name as another Michigan Law grad from your comments regarding one of the battles in the great Campos-Leiter War of 1988 – 201x. I’m not sure why you think I’d have your email, though (and don’t give it out online!). Haven’t been to VC since it went out of business went to the Washington Post. I try not to stray to far from my stupid Disqus profile; just makes it easier to keep track of responses.

          I do know that undergrad tuition, on average (public & private) has increased 650% over inflation since 1978, when federal student loans were first made nondischargeable in bankruptcy. Not that there could ever be a connection between the removal of the need for due diligence and responsible lending and a debt bubble…

        • Orin Kerr

          Wait, Slater isn’t a co-blogger? I could have sworn I saw him at the last meeting of the vast right-wing conspiracy.

          • Unemployed Northeastern

            If you want me back to troll the libertarian prawfs (whose salaries are almost entirely due to unlimited federal student lending) over on VC, you gotta restore Disqus. It’s not that I’m a fan of Disqus – it gets worse with each revision – but I’m not setting up another online account to monitor. Besides, from the few times I’ve been to the Washokh Conspirapost, the quality of the comment threads was considerably lacking. This site and TaxProf are pretty much the only non-Disqus sites where I contribute my ruminations and ruin.

            • Orin Kerr

              Yes, the commenting over there, both technically and substantively, has taken a serious nosedive.

              • Unemployed Northeastern

                The commenting sections of major newspapers all resemble Trollheim, or whatever nerd city trolls come from in Tolkien or Rowling. But I’m sure Eugene’s new summer house is amazing;-)

  • Law Prof kudos

    The tuition’s increased because it could increase. Law school doesn’t cost $200,000. It costs 10% of your income for 20 years. We’ve bought into educational debt as “good debt.” We’ve bought into the notion that the solution to higher education expense is to have the federal flipping government fund (read “distort”) the market for education.

    Where you once had a relatively rational set of players decide if they could pay for junior’s tuition with a combination of mom and dad, junior’s savings or part time work, and perhaps some small loan from a private source, we’ve not decided that economics should not be a barrier to education. This does not mean that school will be publicly funded or that grants will be made to poor people. No, in Americanese “economic status not a barrier” is code for “lots of debt.”

    Try it yourself. No longer will the dream of home ownership be denied to hard working Americans because of economic status. We will work to bring down the barriers with my new plan. Meaning – “more dough for homes, more debt for homeowners, more expensive homes.”

    • Ns

      I think initially be idea made sense, in the same way the govt subsidizing home loans and thus driving down interest rates and the barriers to ownership made sense. Now that college education looks like a much shakier investment than property, maybe it doesn’t make sense in its current form. But that doesn’t mean it was an inherently stupid idea.

    • Snarki, child of Loki

      Once upon a time, state legislators thought that supporting public institutions of higher-ed was beneficial to their citizens and also provided a benefit to the general welfare of the state.

      Then they said “screw it, we’ll get the benefit anyway, even if we’re moochers and free-riders no one will dare to call us that, so let the kids pay for it themselves”, took that money and distributed as tax-cuts to their buddies.

  • Business guy

    tuition “bubble” has now featured more than 50 years of basically continual real price increases

    Yeah, well, that’s just about the time the federal government got involved in guaranteeing student loans. Of course, loans from privates sources were always available, but with the Higher Education Act of 1965 and subsequent government programs, ability to pay back the loans was never used as a criteria for approval.

    Tons of additional money has been pouring into the system ever since. Not too surprising that the price goes up when money pours in. Not a surprise to anyone with eyes.

    • Malaclypse

      I like the way you pretend that state aid to public colleges has been cut for the last 40 years. If people pretend that didn’t happen, then they might think you had a point.

    • Unemployed Northeastern

      Tuition growth was fairly flat from 1965 through 1978. What happened in 1978? Federal student loans were made pseudo-nondischargeable in bankruptcy, later fully nondischargeable. It is at that point, when all need for due diligence or lender responsibility disappeared, that tuition began its climb up the old hockey stick.

      • Business guy

        When the gummit guarantees loans, there never was any lender responsibility.

  • Orin Kerr

    I would guess that both the U.S. News rankings and rising biglaw salaries for first-year associates played a significant role.

    First, consider the impact of the U.S. News ranking on both the school perspective and the applicant perspective. From the school perspective, most law school communities really want to improve their rank in the pecking order. But U.S. News-boosting efforts are often very expensive. Think more faculty, bigger libraries, more spending per student, “merit” scholarships to optimize numbers, etc. In that environment, schools have the incentive to charge as much as they can to afford as many U.S.-News boosters as they can. From the student perspective, before numbers went south starting around 2010, lots of applicants simply wanted to go to the school with the best U.S. News ranking that would admit them. As a result, they weren’t particularly sensitive to tuition, a situation facilitated by the easy availability of loans. The two perspectives encouraged schools to match tuition increases of schools that they considered competitors — that is, the schools immediately above them in the U.S. News pecking order.

    So the question is, what factors helped set salaries at the top U.S. news schools like Harvard, Yale, and Stanford? Here it’s worth noting that the tuition increases at the HYS schools largely tracked increases in the salaries of entry-level associates at large law firms. As I wrote in 2011, in 1995 the tuition at Harvard Law was $20K and the standard salary of a biglaw associate in DC was $74k. By 2011, the tuition was $45K and the standard salary was $160k. I suspect that, at the top schools, the phenomenal increase in the salaries available to its graduates prompted equally strong tuition increases. As salary increases made debt easier to pay off, the top schools raised their tuitions accordingly.

    Putting the two pieces together, my hypothesis is that quickly rising biglaw salaries pushed the top schools to raise their tuitions, and then that high tuition propagated downwards under pressure from the U.S. News ranking. That’s my guess, anyway.

    • NewishLawyer

      This is partially what I was getting at. HYS Law was always HYS Law but there was a place for a school to be a NYLS or a Suffolk or a USF or any other regional law school here.

      Until the rankings came along.

      • Marc

        I’d add in that public universities historically served to moderate costs at private ones. Once we shifted to a philosophical model where students were supposed to pay for their own tuition, rather than it being a good provided by the state, an important moderating factor in tuition costs was removed (and replaced with an accelerant.)

        • NewishLawyer

          That too.

    • Unemployed Northeastern

      There is no shortage of law schools where, if one fully finances their education & living expenses, will run $250,000 before we even get to the 4.3% origination fee and the fact that no graduate loans are subsidized anymore.* If I am not mistaken (and I did just look it up), GW would be one of those schools. $78k per year cost of attendance, isn’t it? And tuition goes up nearly 5% per year? Throw in bar expenses and even the average undergrad balance of $33,000, and we are talking $300,000 or more by the time one is able to practice law.

      So if someone were to fully finance GW Law, where you teach, and managed to be one of the lucky 2.8 students out of 10 who land a job at a law firm with more than 100 lawyers – not all of which pay $160k, of course – then they will still be eligible for IBR or PAYE (depending on when they took their first loans out). In fact, they’d be eligible for those programs for longer than they are likely to last in those firms; I think the cutoff for someone with $300k in student loans is about $315,000 in salary (though with the new Obama changes to income-based repayment plans, household income is the benchmark even if you are married-filing-separately. If only they could attack tax loopholes as capably as student loan loopholes!).

      If one felt the need to make their standard payments, again assuming they are one of the lucky few with a NYC market-rate salary, well, it would be about $3600/month, or a shade over $43,000 per annum. After taxes. In other words, getting close to half of one’s takehome income living in NYC.

      So let’s not pretend there is a perfect equivalence between law school tuition and law firm salaries.

      Did I mention that after 2015, and for anyone who is now eligible for the expanded PAYE program and enrolls in it, PSLF loan forgiveness will be capped at $57,500? Pretty raw deal for any of your current would-be public servants or NPO warriors.

      • BoredJD

        There is absolutely an equivalence between law firm salaries and law school tuition, but it has nothing to do with entry-level salaries for associates. It reflects the “seven-figure salaries” jackoff law professors think that they’d be earning in the private sector, and how they feel their students should compensate them for their noble sacrifice.

        • Unemployed Northeastern

          Even when the firm where they actually worked only has a PPP mid-six figures, amirite??

          • BoredJD

            Well of course somebody who could have become a law professor is going to walk right into a rainmaking role instead of drafting motions or negotiating minor deal points with the other 13th year associates.

            • Unemployed Northeastern

              I don’t always practice law, but when I do, I prefer Dos Equis charge $1500/hour.

      • Orin Kerr

        You misunderstand the argument, UN. I’m not saying that every school sends most of its graduates to work at biglaw. I’m saying that the very top schools traditionally do so, and the U.S. News rankings create a strong pressure at the schools down the pecking order to match the tuition numbers at the schools immediately above them. The result is a domino effect, with top school tuition tracking biglaw salaries and then all the schools below them matching what the top schools do. That’s my guess, at least.

        • Unemployed Northeastern

          “Here it’s worth noting that the tuition increases at the HYS schools largely tracked increases in the salaries of entry-level associates at large law firms.”

          I’m saying that at several top law schools, including your own, the sticker cost is now so tremendous that it makes relative paupers even out of Biglaw associates, and renders them eligible for IBR plans. It’s a bit much to swallow that tuition merely tracked Biglaw salaries, especially since they have been on divergent paths for what, six years now? Seven years?

          Speaking of IBR plans, the high-salary, IBR-eligible law school grad is the poster child for the growing movements among Republicans to roll back and/or repeal PSLF and PAYE.

          And you forget that the “very top schools” were not coronated by US News, but by the Cravath System of Hiring a century prior. US News merely codified the schools long favored by the elite.

          • Orin Kerr

            UN, I’m explaining how something came to be over 30 years. You’re saying that you don’t think what has happened over the last five or so years offers a sufficient explanation. Those two positions are not at all incompatible.

            • Unemployed Northeastern

              Perhaps, but now that salaries are declining and jobs are far fewer while tuition continues to climb 5% per year (or more), too many prawfs are just rehashing Million Dollar Degree and other relics detailing the lost world of law school outcomes from past that aren’t coming back.* So have the admissions and financial aid folk at GW Law started telling the public interest-minded 0L’s that they will only be able to get $57,500 of loans forgiven under PSLF, or are they going to wait until the end of 2015 when Obama’s executive action is implemented (and the 0L’s are halfway through law school) to tell them? That’s a serious question. Are they aware of the changes?

              *As even the ABA and NALP admit.

              • Orin Kerr

                UN, before you change the topic, does “perhaps” mean “yes, that’s correct”? I’m interested in the topic of this thread, and I want to make sure I understand your view of it before we move on to other things that are generally on your mind.

                • Unemployed Northeastern

                  Yes, perhaps law school tuition more accurately tracked BigLaw salaries in the 1990’s or early-mid 2000’s, as you aver. But that hasn’t been the case in some time, and as I pointed upthread, even NYC market rate can shrivel up awfully quickly in the face of a potential $3000 to $3500/month after-tax student loan payment. And I very seriously doubt Cravath or S&C will arbitrarily raise first year salaries to $200k or $215k or whatever threshold would *restore balance* under your model anytime soon.

                  One can analogize to the larger world of college graduates. Salaries are down, in real dollars, since 2000, and barely above where they were in 1978, yet the cost of college has increased hundreds of percent over inflation during that time – and folk have the temerity to say the college premium has never been greater, based on a cohort of college degree holders aged 25 to 65, just to get all of the Boomer-era premiums included.

                • Orin Kerr

                  Thanks for your reply. I don’t know what the admissions/financial aid people are telling the 0Ls about this. They don’t inform the faculty of such things, and I haven’t specifically asked anyone about the timing of such information. I would guess the students are following this, but that’s just my speculation.

                • Unemployed Northeastern

                  Do you really think the prospective law students are keeping up with all the changes? I gotta tell you, I am in regular contact with a few financial aid professionals in this college and that, and they find this stuff confusing as hell. Because it is confusing as hell. I rather doubt the 0L’s are entirely up on it.

                  Did I mention that they’re getting rid of the “married but separate filing” loophole for determining PAYE & PSLF payments? If only the Obama administration could go after tax loopholes as adroitly as it goes after the precious few strings keeping unemployed/underemployed/underpaid college graduates afloat.

    • JM

      Orin is correct. The US News rankings have introduced an illusion of superiority where none really exists. Thus, students pay full price to attend #55 where they could attend #73 in the same region for half. For a while, they didn’t do any meaningful price comparision.

      Schools are businesses. They saw that they could get away with charging $55k/yr in tuition and did it. Just like a beer at Fenway park is now $9, and I have no doubt that it will be $10 next year.

      However, the tide as turned. Prospectives now routinely put similarly situated schools in a price war, and the results have been dramatic. In reality, most schools would take another marginal prospective with median credentials for $5,000 in tuition, so the undercutting will be pretty severe.

    • ichininosan

      When I attended law school, first year salaries for Biglaw associates jumped nearly 40% in three years, prompting one of my professors to remark, apropos of nothing other than dreams of rapacious opportunity, that students would be earning a better salary than a new professor. This observation surely found a home in the dean’s office and faculty committee meetings as a rationale for the sordid kind of spending increases that brought us to where we are now.

      Harvard charges twice what it charged 15-20 years ago. That’s terrible. But what is much worse is that there are literally only nine law schools in which more than half of graduates secure the kinds of high-salary jobs that ostensibly justify the rapacious spending increases that got us here, yet there are nearly 200 law schools that charge tuition rates which presume their graduates secure those high-salary jobs. From the most pollyannaesque standpoint it is a strong bit of cognitive dissonance that got us to where we are now (tuition at Cooley is now over $43K). From every other standpoint, it is something worse.

      • Templar

        From 2008-11, when I graduated, starting salaries dropped 40% with tuition continuing to increase. Further, given the bimodal distributions of attorney salaries, the increases reflected BigLaw starting salaries that are, what 5-10% of law school graduates who will likely only have those positions for 5 years or less.

    • JM

      Two points regarding the relationship between high starting salaries in Biglaw and tuition increases:

      1. Major law firms do not receive any money from schools, therefore they have no incentive whatsoever to keep salaries high because tuition has risen accordingly. In fact, the $160k starting salary is just as economically questionable as $50k/year in tuition. Some firms have already reset down to $145k, but, for the most part, the correction will take place in the form of no 1st year salary increases for probably the next 20 years. If schools continue to increase tuition during this time, the economic proposition of law school, even assuming a big law job, becomes very weak.

      2. The $160k salary has hurt schools in the top 25 but outside of the top 14, and even some schools in the top 14, because it has forced firms to higher fewer associates and to diversify the workforce into sub-associate level tiers. GW, for example, would be better off with 250 students getting hired for $135k/yr than 110 hired for $165k/yr.

  • Anon

    From the Brookings Institute 2003: “The American system of financing higher education is based upon large state operating subsidies to public higher education that have traditionally been used to keep tuition low for all students, regardless of need. Over the past two decades, state budgets have come under increasing pressure in part because of greater state financial obligations to programs like Medicaid. The most visible result has been an increase in tuition. A less visible result, because such tuition increases are politically difficult to implement, has been a slow deterioration in the quality of public higher education, relative to private higher education. Since roughly three-quarters of college students are enrolled at public institutions, the implications could have substantial negative effects on the overall quality of higher education in the United States.” http://www.brookings.edu/research/papers/2003/09/useconomics-kane

    • Bloix

      “California spends more than 10 percent of its budget on prisons, and less than 8 percent on higher education. Thirty years ago, it spend 10 percent on higher education and just 3 percent on prisons.”
      http://thinkprogress.org/justice/2012/12/13/1324891/state-prison-spending-is-the-fastest-growing-budgetary-item-after-medicaid/

    • CSI

      Is decreased state expenditure really the main reason for skyrocketing tuition? It seems to be an excuse offered by defenders of the education industry.

      • ChrisS

        I think it’s the impetus. Once school started receiving less funding from the public, they were reluctant to raise tuition. But once they went to that well, they discovered, much to their delight, that 18 year olds had little sense of economics and nearly unlimited access to funds. These kids didn’t care if college was 7-10% more a semester this year than last year. Multiply over 30 years and voila.

  • Manta

    “This increasingly destructive social situation.”

    Why is it increasingly destructive?
    If, as you seem to imply, higher education is grossly overpriced, the obvious solution is not to get one.
    If, on the other hand, not going to college is a terrible option even at the present price, then higher education is not overpriced.

    • Manju

      Why is it increasingly destructive?

      Because “prices are rising on the very things that are essential for climbing out of poverty”

      http://dish.andrewsullivan.com/2014/05/05/you-cant-feed-your-family-with-a-new-tv/

    • Manju

      If, as you seem to imply, higher education is grossly overpriced, the obvious solution is not to get one.

      Your scenarios assumes two actors…producer and consumer. But there is an important 3rd one who affects the price.

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