News of the day

Many people thought law schools would freeze tuition this year.  As Karen Sloan writes in the National Law Journal, it's "Supply and Demand 101."  Law school applications dropped last year, and they fell even more sharply this year.  According to LSAC's preliminary numbers, cited in Sloan's article, 67,957 students applied for seats in this fall's entering law school classes.  That's down from a high of 98,700 earlier in the decade--a decline of almost one third.

When consumers disappear, many producers cut prices to lure them back.  But not law schools.  In 2011, applications were already declining: the drop last year was from 87,500 to 78,900.  Schools responded to that 10% decline in demand--enough to send most sellers into a tizzy--by raising tuition an average of 9% at public schools and 5% at private ones.

This year continued the madness.  With applications falling another 14% (off last year's total), schools raised tuition again.  Sloan visited the website of every ABA-accredited law school to identify tuition for the coming school year.  After calculating increases, she discovered that private schools had increased prices an average of 4% over last year, while public schools had raised in-state tuition by an average of 6%.

All of this during a time of very low inflation.  From December 2009 through December 2010, consumer prices increased just 1.5%.  During the following year, it was 3.0%.  Since December 2011, inflation has been particularly low.  Indeed, the Bureau of Labor Statistics' latest report documents that prices in July 2012 were only 1.4% higher than in July 2011.  And that number is trending downward: Prices have been flat for the last three months, raising the possibility that the annual rate of inflation will be even lower by the time it's calculated in December.

For a somewhat broader view, consider this:  From July 2008 through July 2012, consumer prices increased just 4.2%, from an index value of 219.964 to one of 229.104.  That's not 4.2% per year; that's 4.2% total.

During the same years, average tuition at private law schools increased 18.3%, from $34,298 in 2008 to the $40,585 reported by Sloan in the NLJ today.  Average in-state tuition at public law schools escalated even more rapidly, a total of 40.1%, from $16,836 in 2008 to $23,590 this year.

What accounts for these extraordinary rises?  Deans refer to a variety of factors:  rising costs, legislative cut-backs, declining returns on investments.  Even collectively, I'm skeptical that these factors required an 18.3% tuition increase at private schools (where legislative cut-backs have little impact) or a 40.1% increase at public ones.

But that's not the point.  These factors undoubtedly have affected law schools, but they have burdened our students, their families, and their prospective employers as much or more.  Families who saved money to help a child go to law school lost plenty of cash on their investments.  For some families, their largest investment (a house) is still underwater.  Health care costs are higher for everyone, not just law school employees.  In fact, the mandatory health insurance premiums paid by law students warrant a post of their own.  Legislative cut-backs are decimating jobs in government and legal aid, leaving fewer positions for law graduates to fill.  Private employers have faced at least as much economic pressure as law schools, pushing them to cut hiring, lower pay, and rely on more temporary or part-time workers.

None of these other players have been able to respond by raising prices 18-40%.  The parent of a prospective law student couldn't say, "hey, I lost a quarter of our savings during the recession, and my health care premiums keep going up, so it's going to be tough to help with your tuition.  But don't worry, I'll just tell my boss to give me a 30% salary increase!"  Nor can legal aid offices around the country say, "gee, Congress keeps cutting our budget and we don't have much in endowment income.  We might have to fire another 350 attorneys.  But, hey, here's an idea:  let's raise our fees 25%!"

Law schools don't seem to understand the privileged economic position they occupy.  The very fact that schools have succeeded in raising tuition so aggressively during the last four years testifies to their economic power.  Protective accreditation standards, blank-check federal loans, and a treasured place as gatekeeper to the legal profession have allowed schools to raise tuition year after year.  Nor have recent increases simply been making up for lost time:  They come on the heels of more than 20 years of hefty tuition increases in legal education.

It's time for law schools to wake up and smell the burning toaster.  We have been raising tuition--substantially--while our applicants have been getting poorer and their job prospects have been dwindling.  We are continuing to raise prices as applicant demand falls.  These are not wise business strategies.  Worse than that, these actions are professionally irresponsible--in the old-fashioned, non-technical sense of the phrase.

Law school professors and administrators hold the keys to the legal profession:  We decide who gets to enter the profession and how much they pay for that honor.  Over the last three decades, we have continuously raised prices to the point where we take for ourselves most of the economic benefit conferred by a legal education.  For a growing number of graduates, we have exceeded that level; attending law school leaves those graduates worse off financially than they would have been without the degree.

We should care about those outcomes.  How many of our recent graduates still lack jobs?  Of those who have jobs, how many are earning less--after making their monthly law school loan payments--than they would have with a BA and three years of workplace experience?  How many are still floating from one temporary or part-time job to another?  What will happen to the students starting classes this month, who will carry even heavier debts at graduation than the students before them?  What will our profession look like in ten years, when so many lawyers are laboring under debt and jobs have become even more contingent?

This is not a matter of how we teach or what we publish; it is a matter of what we charge.  The market does a poor job restraining those charges, especially given the federal loan program.  We have to decide for ourselves--now--on the professionally responsible course.