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End game

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Noam Scheiber has an excellent piece in the Times on the changing economics of legal education at low-ranked law schools, which combine high tuition with poor bar passage rates and dismal job outcomes for large numbers of their graduates.

Scheiber spent several days at Valparaiso’s law school, talking to students and faculty, and he places the school’s struggles within the larger context of the declining demand for lawyers. He reveals that last fall the university was considering closing the law school, but decided to downsize instead:

In February, Valparaiso announced it was offering buyouts to tenured professors. As of May, 14 of 36 full-time faculty members had either accepted the package or retired. The law school plans to reduce its student body by roughly one-third over the next few years, from about 450 today.

Valpo has already shrunk from 566 JD students in 2010 to 433 last fall. By my calculation net tuition revenue for the school fell from about $19.4 million to $13.3 million over that time.

Over the last few years, all but a handful of the most elite law schools have had to engage in some combination of reducing class size, cutting admission standards, and cutting effective tuition (sticker minus discounts). Valpo has done all three. The school cut admissions standards drastically three years ago, with its median LSAT dropping from the school’s historical 150 range to an astonishing 143. The last two entering classes have compiled 50th/25th LSAT percentiles of 145/142 and 145/141.

These scores all but guarantee that the school will be unable to come anywhere close to meeting the new ABA requirement that 75% of a school’s graduates who take the bar pass it within two years of graduation. (Valpo’s bar passage rates have already dipped far below that figure, and that’s before the “beneficiaries” of the school’s new quasi-open enrollment policy have even taken the bar. The entering class of 2013 will begin to do so next month).

As for tuition, in constant dollar terms Valpo has maintained sticker tuition at about $40,000 (2016$) for about five years now, while the percentage of the class paying sticker has fallen from a little under three quarters to a little over half.

When we spoke, I emphasized to Scheiber that Valpo’s historical journey from a modest but respectable regional law school that didn’t cost much to attend to an institution with something resembling Harvard Law School’s financial structure (minus HLS’s two billion dollar endowment of course) is a completely standard one in the context of American legal education.

In the fall of 2015, Valpo was charging what Harvard was charging its students in 2007 (if you adjust for inflation, Valpo’s current tuition matches Harvard’s in 2002). No law school charged $40,000 in tuition a decade ago: now the vast majority of private law schools — and quite a few public ones — charge that and far more.

Here’s the average tuition at private ABA law schools over time: (All figures have been adjusted to constant 2016 dollars):

1956: $4,178

1974: $11,232

1985: $16,803

1995: $26,480

2005: $35,550

2015: $45,123

The result of this trajectory is that the average Valpo graduate now graduates with about $150,000 in law school debt alone (this figure doesn’t include other educational debt, consumer debt etc.). Indeed the average Valpo Law School graduate has more law school debt than the average Harvard Law School graduate, because while the average debt incurred by HLS graduates with debt is about 15% higher, only 72% of 2015 HLS grads had any law school debt at all, while the comparable figure for Valpo was 94%. (That 28% of HLS grads have no law school debt is strictly an expression of the fact that a whole lot of rich kids go to HLS, since maximum need-based aid to HLS still requires the student to pay about $45,000 per year in tuition and living expenses).

But while almost any HLS grad who wants a big firm job with a six-figure starting salary can get one, the percentage of Valpo grads who can get such jobs — the only jobs which offer reasonable prospects that $150,000+ in educational debt is actually going to get paid off — is essentially zero. Indeed less than half of Valpo’s 2015 graduating class had any legal job ten months after graduation, and three out of every ten graduates were flat-out unemployed. Scheiber poses the most relevant question all this raises quite directly:

Given the tectonic shifts in the legal landscape, the relevant issue may not be how much law schools like Valparaiso should shrink. Today the more important question is whether they should exist at all.

I’ll address that question, along with the question of how law schools managed to end up increasing their tuition by a factor of ten in real terms, in another post.

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