I'd like to thank Dave Jackson of Stanford's Computer Science department for taking the time to record the event and put it up on the Internet. I also want to thank him for reminding me that, when Harvard College announced its new financial aid model in December 2007, other elite universities fell in line with it almost immediately. This fact has obvious significance for any law school willing to consider gaining the considerable first mover advantages that would accrue to it if it were to cut tuition significantly.
In the course of Monday's discussion, I suggested that SLS should immediately reduce tuition for its JD students by 30%, i.e., to around $33,000 per year. (This would reduce tuition to where it was, in nominal terms, in 2004. In real dollar terms the reduction would be somewhat larger). The cost of doing so would be about seven million dollars, assuming that the school continued to spend what it's spending now on scholarships and grants.
Now it's true seven million dollars is not a small sum of money, even in Palo Alto. But consider that Stanford University's endowment is currently about $17 billion dollars. The law school's endowment isn't a public number, but given that it was supposedly around $270 million 12 years ago, and that over that same time the university's general endowment has nearly tripled, a conservative estimate would put it in the $600-$700 million range (HLS's endowment is said to be $1.7 billion, although it's a much larger school).
In other words, SLS's endowment throws off several tens of millions of dollars in income every year. Of course much of this income is dedicated to specific purposes, so it's not a simple matter to dip into it for the purpose of cutting tuition. Nevertheless, it's not hard to imagine how some combination of redirection of endowment monies and a fundraising appeal premised on the attractive proposition that SLS is going to take the lead in moving American legal education toward crucial structural reforms (and become the top-ranked law school in the country in the process) could shake seven million dollars per year out of the seat cushions.
What would happen then? My guess is that Martha Minow and Robert Post, and their respective university presidents, would have a bad day or two. Then they would announce they were doing the same thing. (As a law professor points out law school deans and faculties will in many cases have to fight battles with central administrations to make these sorts of changes. This is another reason why transparency is crucial: the myth that it's either fair or efficient to charge law students a cross-subsidized university tax because of the great jobs they'll be getting needs to be killed sooner rather than later). After all, who other than the Winklevoss twins will choose to go to HLS or YLS at $50K per year, if you can go to SLS for two-thirds as much?
The consequences of this would also be fairly predictable. Can CCN charge 30% more than SYH? Obviously not. What about MVPD? Nope. Etc. Now at some point as one slides down the hierarchy schools will find that they have to engage in truly major long-term (as opposed to moderately uncomfortable short term) restructuring in order to return their tuition to what it was, in real terms, a dozen years ago. And somewhat further down the line, some schools may find it not merely difficult but actually impossible to do this. In other words, some schools will find it impossible to charge a price of attendance that even comes within rough hailing distance of something that would produce a reasonable expected return on investment for a reasonable proportion of their students. Those schools would go out of business -- which, it should be unnecessary to point out, is exactly what should happen.
The idea that there's something inherent about the nature of legal education that requires it to cost at least twice as much as it did in real terms 20 years ago, and third more than it did a decade ago, is so absurd that it could only be believed by people who have an enormous ideological-economic stake in that belief. Stanford was a pretty good law school a dozen years ago, and there's no reason it can't return its financial structure to what it looked like then. The same goes for many, many other law schools (not, as noted above, all). And there's no reason why the process needs to stop there: longer-term structural reforms could reduce the cost of law school to what it was 20 years ago -- i.e., half of what is now -- with little or no loss of real educational quality.
The first law school dean who is bold enough to assert that fact through concrete actions will be remembered for a long time.