Home / General / 60 years of law school tuition increases in the context of American family income

60 years of law school tuition increases in the context of American family income

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Note: All dollar figures in this post have been converted to constant 2014 dollars.

Yesterday I wrote about Greg Crespi’s paper regarding the financing what he refers to as “Harvard-style” legal education. Crespi describes this model:

By this phrase, I am referring generically to the instructional approach that originated at Harvard Law School in the late-19th century and since then has been very widely replicated. This approach requires three years of full-time legal study or the part-time equivalent thereof over a longer period, where the instruction is provided by research-oriented faculties comprised primarily of well-paid, mostly tenured scholars with relatively light teaching loads. It makes only relatively modest use of inexpensive adjunct instructors and online courses. It also includes large and expensive clinical programs, library facilities, and extensive student services. This expensive educational approach is designed primarily to prepare students for prestigious public sector positions, highly remunerative associate positions with prominent private law firms, or academic positions, often after a short-term judicial clerkship after graduation.

In the last few years there’s been some — although not nearly enough — discussion of how much law school tuition has risen since the mid-1980s. People probably focus on the last 30 years for two reasons:

(1) Many current legal academics attended law school in the 1980s, so that’s their natural baseline for comparison.

(2) The ABA publishes easily accessible statistics on changes in law school tuition starting in 1985.

In fact law school tuition started rising dramatically 30 years before that, in the mid-1950s. In what follows, I outline how at that time a Harvard-style legal education was, by contemporary standards, practically “free” even at private law schools, and indeed even at Harvard itself, let alone at public law schools. I place quotation marks around “free” because something that’s often under-appreciated is how higher education in general and post-graduate education in particular always involves very considerable opportunity costs, aside from the direct costs of tuition and other direct expenses.

For example, although resident tuition was nearly nominal at almost all public law schools well into the 1970s, and continued to be so at many even into the 1990s, the typical graduate of these schools probably incurred around $100,000 in opportunity costs by spending three postgraduate years in school rather than the workforce.

Postgraduate education, in other words, always involves a significant financial commitment/gamble, even if the student is paying little or no tuition. This only serves to highlight how utterly extraordinary the increases in law school tuition have been.

Here are tuition and fees for Harvard Law School, along with mean figures for private law schools, and resident tuition at public law schools, over the past 60 years:

Harvard Tuition and Fees (2014$)

1953: $5,586
1963: $10,243
1973: $13,703
1983: $19,985
1993: $30,455
2003: $41,676
2013: $54,173

Average Private Law School Tuition and Fees (2014$)

1953: $4,575
1963: $8,400
1973: $11,330
1983: $15,400
1993: $24,293
2003: $32,904
2013: $42,666

Average public law school resident tuition (2014$)

1953: $1,473
1963: $2,305
1973: $3.465
1983: $3,921
1993: $7,238
2003: $13,920
2013: $24,266

While the overall increase in tuition across these decades should astound us, note that the rate of increase is far from smooth. For example, in real dollars, law school tuition rose modestly – relatively speaking of course — from the early 1970s through the early 1980s, especially at public schools (A similar pattern obtains for undergraduate tuition over these same years). I suspect this has something to do with the fact that inflation was very high during these years, and that it’s more difficult to raise real prices quickly when nominal prices are doubling over the course of a decade, as they did during this time.

The massive jump in tuition during the 1950s may have been in part caused by the GI Bill, but I would have expected the original Higher Education Act, passed in 1965, to have an even greater effect. The demographics of the baby boom are no doubt also significant here (the first baby boomers started enrolling in law school in the late 1960s, and law school enrollment doubled between 1968 and 1980, in part because women began to enroll in significant numbers). It may be that per capita tuition rose relatively slowly in the 1970s and early 1980s because revenues were being driven up so quickly by larger enrollments (enrollments increased much faster than the number of law schools).

Of course it’s important to place the cost of attendance in the context of larger economic trends. Here the story is fairly straightforward:

(1) Median family income shot up between the early 1950s and the early 1970s, so much so that even though private law school tuition skyrocketed, it remained relatively affordable relative to the average family’s income (Note that in the figures below I’m using family rather than household income, because family income, which tends to be about 20% higher than household income, is probably more significant in regard to financing higher education costs). Thus while a year’s worth of Harvard Law School tuition cost 16.8% of a median family’s income in 1953, that percentage had only grown to 23.9% 20 years later, even though HLS tuition rose by an amazing 145% in real terms over this time. During these years, the growth in the income thresholds for the 95th percentile of family income and the 99th percentile of family income were comparable to the growth in median family income.

1953:

Median family income: $32,918
95th percentile: $79,168
Threshold of top one percent: $141,000

1973:

Median family income: $57,391
95th percentile: $142,941
Threshold of top one percent: $263,500

(2) Starting in the early 1970s, growth in median family income stalled out. Over the next 20 years it remained essentially flat. Meanwhile the 95th percentile of income grew moderately, and that of the threshold of the top one percent increased a great deal.

1993:

Median family income: $59,623
95th percentile: $182,588
Threshold of top one percent: $393,000

While the average American family’s income wasn’t going anywhere, and that of those at the border of what can be thought of as the lower upper class (the 95th percentile) increased relatively slowly over the course of the two decades, private law school tuition doubled, and resident public law school tuition began for the first time to become a significant part of the cost of attending law school.

(3) Over the past 20 years, this pattern has continued:

2013:

Median family income: $64,690
95th percentile: $220,553
Threshold of top one percent: $510,000

Meanwhile, private law school tuition has nearly doubled yet again, and resident tuition at public law schools has more than tripled, reaching levels that exceed Harvard’s tuition in the 1980s, even though Harvard’s tuition had by that point already quadrupled in real terms over the previous 30 years.

One final note for now: it’s often claimed that the American economy boomed in the quarter century immediately after World War II, but has grown only modestly since then, which explains why median incomes have been flat for 40 years now. This is completely false:

Per capita GDP in 1953: $17,782
Per capita GDP in 1973: $28,241
Per capita GDP in 2013: $54,780

Per capita GDP grew by 58.8% between 1953 and 1973.

Per capita GDP grew by 94% between 1973 and 2013.

Most of this several trillion dollar increase in wealth per capita has of course gone to either the extremely rich, or the ordinarily rich, or the sort of rich. Meanwhile, the cost of a “Harvard-style” legal education* has gone from something that even a middle class family could afford without going into debt, to something that has to be debt-financed to the tune of several years’ worth of an average American’s income, unless one happens to already be in the upper-upper class.

This may work out OK if you’re getting a Harvard-style education at Harvard (although at these prices even that is getting dangerous for the not-already privileged). Of course the absurdity at the core of contemporary American legal education – and to a lesser extent at the center of American higher education in general – is that a 190-odd Not Harvard Law Schools have followed Harvard’s lead into the tuition stratosphere,* in a nation in which most families are at substantially the same income levels they were 40 years ago.

*In real dollars, Harvard Law School is currently collecting fives times as much each year in expendable endowment income as it received in total tuition in 1953, when the school’s endowment was comparatively negligible.

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  • PaulB

    The sharp increase in real tuition from 1553-63 is surprising. I can’t imagine how the GI Bill could have been the cause of this as most WW II servicemen would have completed their education by 1953. A more likely cause would have been the National Defense Student Loan program passed during the Eisenhower Administration. As you can tell by the name, this was one of a number of large scale investments in higher education and R&D that was justified to the public at large and to a much more provincial Congress than exists today as part of fighting the Cold War.

    Before we leave the GI Bill, which seems to be almost universally recognized as the most important domestic legislation of the post-war era, it should be pointed out to the predominantly left of center and elitist readers of this site that the organization responsible for this law and pushing it through Congress was the American Legion. The leading opponent was the American Association of University Professors. The best known critic was Robert Maynard Hutchins, Dean of Yale Law School while in his twenties and president of the University of Chicago at age 30. His prediction was that this law would turn our universities into “intellectual hobo jungles.” A little piece of history to keep in mind when dismissing arguments on the grounds that they come from the uneducated rabble.

    • Vance Maverick

      Not sure who you’re arguing against. Paul only mentioned the GI bill in passing.

      On the other hand, learning that Hutchins was a snob has shaken my liberal faith to its roots.

    • Manju

      The sharp increase in real tuition from 1553-63 is surprising.

      I blame Queen Mary.

    • petesh

      The 1952 and 1966 Veterans Acts (and later ones) were also frequently, if loosely, called GI Bills. Important, sure, but I’d nominate the Civil Rights Act as even more significant. And are you really claiming that today’s Congress is not provincial?

    • The Dark Avenger

      When my father started teaching in 1956 he had a few Korean War vets going to school on the G.I. Bill. That would account for the 53-63 uptick, to some degree.

  • eh

    I’m sure there are lots of pretty graphs that can be made from this, but I just whipped up this graph of the ratio of public/private tuition against harvard as a benchmark. No idea what’s behind it, but kinda interesting how steadily private schools hold.

    http://imgur.com/pRrfcLf

    • Paul Campos

      Thanks. One of the days I have to figure out how to make graphs on the internets.

  • divadab

    Really fascinating analysis. My question is – have law school expenses increased at the same rate as tuition? How has the composition of these expenses also changed? My guess is it’s only partially in professorial salaries – which have probably risen in step with the top 5% cohort’s disproportionate growth. The other piece is probably the growth in administrative costs as a share of total costs.

    It’s on my to-do list to analyze this using time-series data – anyone aware of studies already done? Getting at the data for private institutions is difficult…..public schools’ financial data is more available….

    • Paul Campos

      Law school spending has actually gone up faster than tuition, remarkably enough, for two reasons:

      (1) A minor factor is that law school endowments are much larger in real terms than they used to be, although at the vast majority of schools the income from endowments is still a very small portion of the operating budget.

      (2) The major factor is that the percentage of revenue taken by central administration at the 90% of law schools that are university-affiliated has on average fallen (in other words law schools aren’t nearly the cash cows they once were).

      The biggest single factor in increased spending has been the explosion in faculty size. Student-faculty ratios are less than half of what they were a generation ago. Harvard’s faculty is nearly twice as large as it was in 1998. Administrative positions have grown at an even faster rate, but they still make up a much smaller (but growing) part of the budget.

      Direct faculty compensation is roughly 50% higher per capita than it was 30 years ago. Indirect compensation (much lower teaching loads, less administrative tasks) has grown as a consequence of the great expansion in faculty positions.

      Of course in the last year or two we’ve finally begun to see some retrenchment from these patterns of explosive growth, as enrollments have shrunk drastically, and real per capita tuition (sticker minus discounts) has flattened out or at some schools actually declined, which given the past 60 years seems almost like a violation of the laws of physics.

      • divadab

        Aha! So faculty is being paid twice as much to do half as much work? Nice work if you can get it…..

      • CSI

        This is what it looks like when a bubble finally bursts. Things could have been worse of course, but I suppose to an industry which has known nothing but growth for a long time, this must be quite a shock.

  • Rick_B

    I am not a lawyer, but I have known a number of very good lawyers who read for the law rather than attend Law School. (presumably the ones not so good don’t still practice.)

    I remember in Texas about 30 years ago when the legislature eliminated that – except for legislators in the state legislature. All they have to do is pass the bar exam and they are allowed to practice law. At least one did this in the last decade. I am aware of it because he was the ex-mayor of fort Worth and it made the news.

    The law school requirement is primarily a way of reducing the competition among lawyers. Very similar to the scam used by Physicians. Paralegals probably would not be too hard to train up and get past the Bar exam.

    Legal practice would be hard to sell if it were as frequently life-or-death the way surgery is.

    • Marek

      The law school requirement is primarily a way of reducing the competition among lawyers.

      If so, it’s not working.

      • skate

        They didn’t set the bar high enough.

      • CSI

        When faced with the realization that they are overproducing graduates, a discipline could actually restrict the number of students they accept. Or maybe cut the costs of attendance, so students could better deal with reduced incomes on graduating.

        But both of these are painful for schools, principally because they reduce income. It is far more tempting to increase the training required for the credential, e.g. by making it require a doctorate. This increases the prestige of the discipline and also increases how much tuition they can charge.

        The vague hope is that this increased training requirement will reduce the number of people getting the credential and stop overproduction, but it never actually works.

    • Warren Terra

      the scam used by Physicians

      Oh, for the days of the hedge-doctor and the barber-surgeon!

  • JCougar

    *In real dollars, Harvard Law School is currently collecting fives times as much each year in expendable endowment income as it received in total tuition in 1953, when the school’s endowment was comparatively negligible.

    I don’t understand how this doesn’t make alumni donors viscerally mad. If you donate to an endowment for the purposes of making education more affordable for students as an act of goodwill–and then law school administrators inflate away all the goodwill your donation created to fund an ivory-tower bureaucracy that doesn’t do anyone any good–I would be suing to get my money back. It’s kind of a slap in the face.

    • Paul Campos

      The point of giving money to Harvard isn’t to make Harvard accessible, it’s to help Harvard remain elite. Elite institutions aren’t accessible by definition. For all of their egalitarian pretensions, Ivy League schools are carefully guarded class preserves, and HLS reflects this fact.

      • JCougar

        Someone should tell that to the people who create these universities’ fundraising campaign websites. They almost always contain a softly-lit picture of some minority with open books smiling and getting “tutelage” from a kind, bearded professor with a sweater, containing the slogan: “Your donation helps to make education affordable.”

        But maybe I should disabuse myself of the notion that cognitive dissonance is a thing that registers with people anymore.

    • Just_Dropping_By

      I’m pretty sure the main reason alumni donate to HLS at least is for the tax deduction. (OTOH, I don’t donate to any of my alma maters for any reason, so what do I know?)

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