Modeling the Future
We believe that the crisis faced by many recent graduates is a precursor to institutional disaster for law schools as they struggle with their own economic realities. With high fixed costs brought about by school-on-school competition, unchecked federal loan money, a widely-exploited information asymmetry about graduate employment outcomes, and a lack of self-discipline masked by assertions of innovation, tuition is up, job rates are down, and skepticism of the value of a J.D. has never been higher. If these trends do not completely reverse course, droves of students will continue to graduate with unsustainable student loan debt that greatly reduces their ability to fulfill the law school graduate's traditional and important role in American society.
The exact point at which the law school crisis turns into a disaster for legal education is debatable, but the importance of preparation for it is not. LST will track and analyze new models—including some of our own—for effectively delivering legal education in the 21st century. We consider effective delivery through three foundational principles.
First, the model must be the appropriate balance of quality and cost. Legal education must be affordable and prepare new lawyers for a career in law. Second, the model must be prepared for the legal profession of the future, particularly as it undergoes significant structural change due to globalization, technology, outsourcing, etc. Third, the form of the model must exist for the benefit of clients and students, i.e. those who receive legal services and those who deliver them.
The federal government lends as much money to students as schools say it costs to attend. The result: tuition increases well above the rate of inflation and schools exercise the fiscal restraint of somebody who doesn't understand how credit cards work. After all, the money will be there to lend and the students in tow to borrow. As a result, schools share no risk with federal taxpayers or students. With the Higher Education Act of 1965 up for reauthorization, Congress will decide whether this policy of unchecked lending makes sense in light of higher education economics. An important step towards affordable legal education will be limiting the now-limitless lending to students and increasing the accountability of educational institutions.
As the accreditor of U.S. law schools, the ABA issues the ABA Standards to ensure students at ABA-approved schools receive a sound legal education. Currently, the most pressing issue with the ABA Standards is that they do not adequately protect students and society.
Law schools enroll too many students each year. Today, even after a substantial enrollment decrease, many schools are still too large. Law schools and other policy makers must understand how important it is to achieve and then maintain responsible enrollment, expanding or contracting based on jobs and not economic pressure or vanity.
Tuition continues to rise at alarming rates while both the number of legal jobs available and the salaries for those jobs decline. Schools set prices in a market distorted by an information asymmetry about employment outcomes and limitless federal student loans. It is essential that law school become affordable.
Even after 7 years of pressure from LST and many improvements to the amount of disclosure, many law schools still keep important information about employment outcomes to themselves. Without access to essential information for analyzing the value of the J.D., prospective students cannot make adequately informed decisions about whether and where to attend law school. Moreover, policymakers cannot adequately analyze whether present policies make sense in light of new graduates' economic realities, which matters for anybody concerned about the future of the individuals making life-changing decisions, the legal profession, or the judicious use of taxpayer money.
As schools struggle to enroll students into their J.D. programs, they have decisions to make about their incoming class sizes and credentials like LSAT scores and undergraduate GPAs.
For years, schools have been moving away from need-based aid towards merit-based tuition discounts. These tuition discounts are usually financed through tuition payments by lesser-credentialed students, which means that those least likely to succeed in law school subsidize those who are most likely to succeed. As schools struggle to enroll students into their J.D. programs, many schools are increasing their tuition discounts even more to persuade students to attend.
Law School Budgets
Information is scarce about the internal workings of law schools, which challenges a full dissection and diagnosis of legal education's financial problems and opportunities for improvement. Those who have access to detailed structural information about how a law school operates at best have been unable to come up with and achieve reforms on their own; at worst, they are too self-interested to do anything but restrict access to information that could permit others to demonstrate how to improve a school's value proposition.
Creating a thorough model for affordable legal education requires a great deal and variety of data about law school finances that are not yet publicly available. Not only would structural transparency galvanize reform efforts, but it also would help hold law schools accountable. Without transparency, the inmates will continue to run the asylum.
The U.S. News rankings produce bad decisions by law schools and students alike. This toxic influence needs to be reduced so that law schools think more about what's best for their students and students think more about what schools are best for their career objectives.