New York Times gets shrill on law school scam

This editorial doesn’t mince words:

Florida Coastal charges nearly $45,000 a year in tuition, which, with living expenses, can lead to crushing amounts of debt for its students. Ninety-three percent of the school’s 2014 graduating class of 484 had debts and the average was almost $163,000 — a higher average than all but three law schools in the country. In short, most of Florida Coastal’s students are leaving law school with a degree they can’t use, bought with a debt they can’t repay.

If this sounds like a scam, that’s because it is. Florida Coastal, in Jacksonville, is one of six for-profit law schools in the country that have been vacuuming up hordes of young people, charging them outrageously high tuition and, after many of the students fail to become lawyers, sticking taxpayers with the tab for their loan defaults.

Yet for-profit schools are not the only offenders. A majority of American law schools, which have nonprofit status, are increasingly engaging in such behavior, and in the process threatening the future of legal education.

The editorial accurately identifies unlimited amounts of unregulated federal loan money as the main driver behind these trends. To repeat: Any ABA-accredited law school can admit anyone it wants to admit, charge those admits whatever it wants to charge, and stick taxpayers with 100% of the bill for this cozy arrangement. That for-profit entities are allowed to rip off the public in this way is outrageous on its face, but the Times makes the crucial point that this incentive structure is hardly less invidious when exploited by “non-profit” institutions. Non-profit status, after all, is merely a tax category. As a functional matter it means the economic stakeholders in the enterprise are internal to it, rather than external owners.

The editorial advocates some straightforward solutions: Apply the gainful employment rules that the Obama administration is trying to impose on for-profit schools on non-profits as well, while capping the amounts people can borrow to pay for tuition.

For starters, the government must require accountability from the law schools that live off student loans. This year, the Obama administration extended the so-called gainful employment rule, which ties a school’s eligibility to receive federal student loans to its success in preparing graduates for jobs that will enable them to repay their debt. The rule currently applies only to for-profit law schools, all of which, given their track records, would fail to qualify for federal loans.

This rule should also apply to nonprofit schools. If it did, as many as 50 nonprofit schools could fail as well, based on one measure that considers students’ debt-to-income ratio. Another good idea would be to cap the amount of federal loans available to individual schools or to students. This could drive down tuition costs, and reduce the debt loads students carry when they leave school.

Again, the reason why law schools with horrible employment outcomes and bar exam results charge $45,000 per year or more in tuition is simply because the federal educational loan system allows and indeed encourages them to get away with this behavior, not because there is any conceivable pedagogical justification for doing so. Here, IN 2014 DOLLARS, is what private law school tuition cost in the fairly recent past:

The Infilaw schools, who are currently admitting people who can barely read, are now charging more than Harvard Law School cost barely a decade ago:

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

Harvard Law School is charging more than $58,000 this fall, which, given the perverse logic of American higher education, means it’s a bargain for institutions that are also law schools — in the same sense that France and Syria are both currently sovereign nations — to continue to charge 80% as much for the “same” thing.