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

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.