Law school education as a case study.

A revealing report from Law School Transparency. Their findings are pertinent across the higher education sector but the specifics with regard to Law Schools are striking.

Especially for those of us who came through higher education in the 1980s. For about a two decade period, law schools were the darling's of Universities. High revenue, low costs - they were the cash cows of university systems and the institutional challenge was how got to keep the greater part of the excess profits, the university or the law school.

How the times have changed. Both universities and laws schools fell victim to administrative bloat. Both fell victim to mission creep, shifting focus from preparing future leaders to fixing perceived social ills through education. Both donned the repressing ideologies of political correctness and micro-aggressions; ideologies which ensured that no one could discuss the real problems in public.

And now the consequences are with us. The returns on education are plummeting. For the best students from the best families at the best schools, it is still a worthwhile investment, indeed a critical investment. For everyone else? An increasingly risky investment. And increasingly, doing the most harm to those favorites of diversity and equity policies.

From LST's 2025 Vision. They open with a roll calling of indicting facts and trends.

Law school tuition has exceeded inflation for decades. Private and public law school tuition is 2.8 and 5.9 times as expensive as it was in 1985—after accounting for inflation. In 2019, tuition topped out at $72,360. The average tuition at top-performing law schools is much higher than the rest. But prices do not scale with job outcomes. The average tuition at the lowest-performing schools is similar to the average for mid-range schools.

While law schools typically discount the sticker tuition price for a portion of the class, 25% of J.D. students paid full price in 2018-19. Students who pay full price or close to it are more likely to come from lower socioeconomic backgrounds or be underrepresented racial minorities. Their tuition dollars subsidize the scholarships that their more advantaged classmates receive. These disparities enhance persistent inequity in law practice.1

Students borrow to pay these high prices. Three in four graduates borrow for law school at high interest rates. Among borrowers, the average 2018 graduate borrowed $115,481. This person is likely to have roughly $130,000 in debt from law school alone when they start repayment six months after graduation because interest accrues immediately on law school loans. As with scholarships, underrepresented racial minorities—not to mention women—borrow more on average for law school.2

When factoring in graduate salaries, students borrow excessively for law school. One common-sense rule in student lending provides that students should not borrow more than they expect to earn after their first year. At 94% of law schools, the median amount borrowed exceeds the median earnings in the first full year after graduation. The median debt-to-income ratio is 1.86. One in six law schools have a ratio of 3.0 or higher, which means that the median amount borrowed exceeds the median earnings by 200%.

Another common sense-rule in student lending recommends that a graduate should not devote more than 10 or 15% of income to monthly student loan obligations. The median borrower across all law schools ranges from 10.7% to 78.7% using the standard loan ten-year repayment term and the median income. The median percentage of pre-tax income devoted to debt service is 29%.3

A graduate who owes $130,000 at first payment has a monthly payment of about $1,450 on the standard plan—nearly 50% higher than the median mortgage in the United States.4 To remain in range of the recommendation, the graduate must make between $116,000 (for 15%) and $174,000 (for 10%). The median entry-level salary for 2019 graduates was $70,000. That average is generous due to non-responses and nearly double-digit unemployment.5

Changes to the federal student loan program would devastate many law schools. Law schools depend on tuition to meet their budgets. Across all law schools, 69% of revenue comes from tuition. A quarter of law schools receive at least 88% of revenue from tuition.6 With so many students borrowing, law school tuition dependency is really federal student loan dependency. Major changes to the loan program would mean major problems for law schools. Both President Obama and President Trump proposed significant changes to the federal loan program that would be less generous and thus more likely to make students stay away from law school.7 This might sound good in theory, but the reality is that it would make our profession less racially and socioeconomically diverse. We also happen to need new lawyers.

But even if the federal student loan program does not change, the cost of law school is indefensible. Law school is expensive and it is insufficient to return to prices and borrowing levels from a decade ago. The status quo threatens the long-term health of the legal profession and the legal system.

I think the latter couple of points are worth elaborating. The whole law school sector is essentially a make-work scheme by the federal government to support the economics and ideologies of otherwise unviable or unsustainable universities.

As long as federal loan guaranties continue to flow, we will have a substantial misallocation of tax revenue, human capital, and personal capital into low productivity, low value add professions and hitting the most socially and financially vulnerable the hardest.

This is not what is intended, but that is what is happening.