In 2010, 85 percent of law graduates from ABA-accredited schools boasted an average debt load of $98,500, according to data collected from law schools by U.S. News & World Report. At 29 schools, that amount exceeded $120,000. In contrast, only 68 percent of those grads reported employment in positions that require a JD nine months after commencement. Less than 51 percent found employment in private law firms….
Heavy loans now threaten to consume the future earnings and livelihood of the nation’s young lawyers. … Very few critics, however, have examined the part played by the federal government through its student loan policies in creating a law school bubble that may be on the verge of bursting—one strikingly similar to the mortgage crisis that cratered the economy in 2008. Direct federal loans have become the lifeblood of graduate education, and they shelter law schools financially from the structural changes affecting the profession. The bills are now coming due for many young lawyers, and their inability to pay will likely bring the scrutiny of lawmakers already moaning about government spending.
As student groups continue to lobby the federal government for increased transparency, the lawmakers are bound to ask a very simple question: Why should the U.S. government, through the Department of Education direct-lending program, continue to make billions of dollars of loans to law students when structural changes in the legal market suggest that a large portion will lack the earning power to repay those loans?
The answer to this question has potentially grave implications for legal education. Law schools—many for the first time ever—will become vulnerable to significant cuts in the amount of money available to students as Congress tries to hold the line on additional deficit spending. …
The U.S. legal profession is in the midst of a broad structural transformation. Meeting the challenge to compete in a global economy requires a higher-education policy that honestly addresses issues of access, cost containment and national interest.
Legal education may soon provide an object lesson of what happens when we do nothing: Bad things happen when lawyers and law professors stick their heads in the sand. The republic may be in need of some world-class lawyerly judgment. And maybe soon.
Henderson and Zahorsky warn law schools of the danger in relying on a steady flow of federal student loans. Those familiar with Professor Henderson’s work recognize his ability to drive important issues to the forefront of academic discussion. As a journalist, Rachel Zahorsky has also covered legal education reform in the past. Their warning is designed to rally both the academy and the legal profession to take preemptive measures, calling for long-term planning and significant responses to permanent shifts in the legal market.
This poses an interesting question: how can the legal profession craft a model for educating new lawyers in a way that doesn’t require $4 billion of student loans per year? In other words, what model and pricing scheme can survive government scrutiny about whether graduates can actually meet the terms of their federal loans? And how many existing law schools can find the motivation and political will to change their cost structures and adapt to a more stable model before the so-called bubble bursts?
Henderson and Zahorsky’s warning about government action has more truth to it than many are comfortable admitting, and the numbers support their assertion. An educational model that sees students averaging $100,000 in debt to gamble for the right to enter the legal profession is not sustainable. Perhaps schools aren’t interested in normative justifications as to why they should aim to reduce the cost of legal education, but their interest in institutional self-preservation may be sufficient to get the ball rolling.