Law school and the class divide

I’ve got an essay in the CHE on the striking shift in the demographics of law students over the 15 years since the law school reform movement got underway at the beginning of the previous decade.

Picture a graduation ceremony at one of the nation’s top law schools. As each graduate crosses the stage to be handed their diploma, they also receive a piece of paper with the total amount of debt they have incurred on their journey through this elite institution.

Half the students would find that their number is zero. The other half of the class would learn that they owe an average of $250,000 in high-interest debt, generating nearly $2,000 per month in accumulating interest. Unlike almost all other types of debt, these enormous sums are not dischargeable in bankruptcy.

The existence of two classes within a single graduating class — call them the upper class and the lower class — isn’t hypothetical. Consider the 2024 graduating class at the University of Chicago, widely considered one of the top five law schools in the country. About 49 percent of the class did not take out any loans to attend law school.

It is probable that almost all these students had no undergraduate loans either. (While it is common for students who don’t take out loans as undergraduates to borrow for law school, the reverse scenario is comparatively rare.)

The other half of the class took out an average of $186,554 in loans during law school. Yet even this sobering figure seriously understates the average debt these graduates face. For one thing, it does not include interest accrued on their loans during law school, or origination fees. These two factors collectively drove that average debt to around $226,000. Nor does it include undergraduate debt, which, for many of those in the lower class at an elite law school, is likely to be significant.

All told, estimating that these students had an average of $250,000 in educational debt, most of it at interest rates between 8 and 9 percent, is if anything conservative.

About 15 years ago, a loose coalition of law students, recent graduates, concerned law professors, and investigative journalists started shining a light on the professional and financial struggles many law students experience. This reform movement succeeded in pressuring the American Bar Association to force law schools to become more transparent about the relationship between the cost of attending law school and the economic benefits conferred by law degrees.

The demographics of law students have shifted markedly toward those who can afford the still-exorbitant cost of many law schools.

This relationship was, to put it mildly, much more fraught than law schools had led students to believe. The increased transparency produced a sharp decline in applicants, which fell by 40 percent between 2010 and 2017. This in turn produced significant declines in enrollment and, after many decades of seemingly unstoppable growth, law-school tuition. Leaving aside a handful of the most elite schools, where the already-stratospheric tuition levels continued to rise, the real cost of attending ABA-accredited law schools dropped by about 25 percent in constant dollars between 2010 and 2023. (Combined with the effect of enrollment declines, law-school-tuition revenue declined by more than 40 percent). That drop came on the heels of a 147-percent rise in tuition, adjusted for inflation, over the previous 25 years. At public law schools, resident tuition had risen an astounding 401 percent in constant dollars.

“This is a massive change compared to prior eras and reflects a genuine shift in market pressures,” notes Kyle McEntee, whose work at the advocacy group Law School Transparency, which he founded while still a law student, was critical in bringing about reform. “Schools just didn’t have the luxury of raising prices year after year.”

These positive developments, which have generated better job outcomes for graduates, along with lower debt averages at some schools, have also been accompanied by something deeply problematic. The demographics of law students have shifted markedly toward those who can afford the still-exorbitant cost of many law schools.

McEntee says the decline in borrowing “sounds great at first blush, but tuition and living expenses are so high that most, if not all, of the decline comes from the composition of student bodies. In other words, more students from wealthy backgrounds enroll in law school today compared to 15 years ago.”

This problem is especially pronounced at the most elite institutions, that, unlike the great majority of law schools, have continued to raise their tuition in both nominal and real terms.

For example, the University of Chicago estimates that the cost of attendance for the entering class’s first of three years is just over $120,000. Assuming typical cost growth, a student who borrows the full amount via federal loans will owe close to $460,000 in only law-school debt three years from now. Of that amount, $87,000 will be in the form of accumulated interest and loan-origination charges.

Like almost all law schools, Chicago offers little in the way of need-based grants: The majority of grants come in the form of so-called merit aid, which goes to students with the highest test scores and undergraduate grades. This leads to what has been called a reverse Robin Hood scenario, in which the richest students, who, for what should be obvious reasons, tend to have the best test scores and grades — there are of course many exceptions — have their education subsidized by their less-privileged classmates. This is because “merit aid” is, in effect, a form of cross-subsidization: Some students pay higher tuition, which lowers the tuition paid by others.

Exacerbating all this is the apparent shift in the demographics of law students that we see at both elite schools and across the rest of the legal academy.

Fifteen years ago, only 16 percent of Chicago’s graduates left law school without debt, even though the cost of attendance was less expensive in real dollars than it is today. That half the Class of 2024 graduated without law-school debt is even more startling when one realizes that, even with discounts on tuition, 80 percent of that class paid more than a quarter-million dollars in tuition and other costs of attendance.

At the nation’s top 50 law schools, the proportion of students who graduate without loans increased between 2010 and 2024 from 17 percent to around 40 percent. Class divide at law schools can be found pretty much everywhere now.

My own law school, at the University of Colorado at Boulder, is not among the most elite or expensive, yet the same basic pattern obtains. When we combine those students who took out no loans or incurred only minimal debt, half of the Class of 2024 graduated with an average of around $10,000 in law-school debt, while the other half graduated with an average of approximately $175,000 in educational loans. In 2010, 91 percent of our graduates took out loans; last year, only 67 percent did.

With the Trump administration’s strict, new limits on how much money students can borrow for graduate and professional education, the class divide will get worse. Starting with next fall’s entering class, students will only be able to borrow a maximum of $50,000 per year in federal loans for professional school — a sum that falls well short of covering even half the cost of attendance at many law schools. (There will also be a lifetime limit of $200,000 for all federal educational loans).

The upshot is predictable: When federal loans don’t cover anything close to the cost of attending law school, students will cover the difference with high-interest private loans, that, unlike federal loans, don’t feature any potential forgiveness provisions. Or they will attend less expensive — which is to say less elite — law schools. Or they will forgo law school altogether.

All of this will exacerbate the class divide in legal education, and in the legal profession as a whole. On one side will be the children of privilege, who graduate not only with elite degrees that open doors but also debt free.

On the other side will be the children of the middle — and even occasionally the working — class, who will graduate with appalling levels of high-interest educational debt.

It should be a fundamental tenet of American life that the wealthy cannot simply replicate their privilege across generations by purchasing elite educations that are either wholly unobtainable or practically unaffordable to those not born to that privilege.

Law schools, of all places, should stand for that principle. Increasingly, we are failing to do so.

It’s a big mistake to think the main problem with massive wealth disparities is that only some people can afford yachts with helipads, etc. The main problem is that those disparities allow the replication and maintenance of increasingly strict social hierarchies.

Of course conveying that message is going to become increasingly difficult, given that our oligarchs are busily buying up both the mass and elite media.