What’s ‘Bold’ About Nominal Law School Tuition Cuts?

…Is the question readers of The New York Times asked themselves Saturday morning while reading, James B. Stewart’s, “A Bold Bid to Combat a Crisis in Legal Education.”

The article begins by promptly misleading readers into believing there is a “crisis” in legal education because five law schools have closed, even though apparently all five were non-ABA-accredited schools in California, which frequently enroll only a few students. The distinction is important because the article doesn’t investigate why those law schools closed (if they did—I suspect the NYT’s source is the Wikipedia, which isn’t always reliable for information on California law schools) and what commonalities their fiscal situations shared with Brooklyn Law School’s, the central character in the article.

Indeed, the NYT quotes Brooklyn’s dean, Nicholas Allard, saying that high law school debt burdens are a significant problem, yet students at most non-ABA schools are ineligible for the kind of easy federal student loans ABA schools are infamous for. In 2012-13, 49 percent of Brooklyn Law students took out an average $34,800 in Grad PLUS loans, which can cover the $29,500 gap between the annual Stafford Loan limit and full-time tuition—and also living expenses in cheap, cheap Brooklyn Heights.

As for Brooklyn’s “bold” move:

[Brooklyn] announced that it was taking some unusually bold steps to confront the crisis: The school is cutting tuition and abandoning what has become a widespread obsession with climbing the ladder of national law school rankings.

But the real question is, does Brooklyn Law have a choice? For instance, this year it accepted 47 percent of its full-time applicants, up 7 percent from 2012-13 and up 17 percent from 2011-12. In 2012-13, only 16 percent of its full-time students were paying full tuition. Sixty-three percent were paying $35,400 or less, which after cursory investigation makes Brooklyn the most “over-leveraged” law school in the New York City area in terms of merit aid. Even Seton Hall doesn’t subsidize that many full-time students by that much. Clearly, Brooklyn Law School was playing the scholarship game very, very hard.

And it still lost badly, hence the cuts.

Aside from the above criticisms, too much of the article relies on quotations rather than real reporting. Specifically, the last three paragraphs might as well have been written as an editorial by Dean Allard.

Mr. Allard argues passionately that the legal profession isn’t just for Supreme Court clerks and high-paid associates at elite firms. He noted that 94 percent of Brooklyn’s graduates passed the bar exam and 90 percent were currently employed in legal careers. Many meet the legal needs of underserved populations.

To my knowledge, the bar passage rate is right for last July, but the 90 percent employment in “legal careers” would be a miraculous turn of fortune for Brooklyn Law’s graduates. Fewer than half of its 2011 and 2012 grads were employed full-time, long-term in “bar passage required” positions, and less than 10 percent of both classes were in full-time, long-term “JD advantage” jobs. Did I mention that more than a quarter of these grads reported being either unemployed or didn’t respond to the survey?

Allard adds:

“Those who do manage to graduate from law school end up with excruciating debt. They feel compelled to take jobs with the highest paycheck to find some relief. They don’t feel free to work in jobs that fit their interests or that meet a critical demand.”

Tell that to the Brooklyn grads who never have an opportunity for such jobs.

Then he closes with the real howler:

[Allard] said he believed that law schools had an obligation to address the problem. “If we don’t get this right, we’ll create an acute shortage of lawyers, and law schools will price themselves out of business.”

An acute shortage of lawyers? In a state that allows foreign-trained graduates to take the state’s bar exam?

Yes, the nominal tuition cut and reduced merit scholarship gaming is a good thing. However, characterizing it as “bold” instead of “necessary”; comparing Brooklyn to tiny, non-ABA law schools that aren’t eligible for federal loans; and then handing the mic to the dean is not good reporting. The Times takes Allard at his word when he rhetorically asks, “If you increase quality and reduce cost, demand goes up. Why isn’t everybody doing this?” when it should be asking him why schools weren’t doing that before. Why can’t the Times ask what if anything law schools can do to reduce the signaling effect on law school costs?

Real coverage on the story would have involved asking whether the proposed tuition cut would in fact increase demand. Law degrees aren’t perfectly spherical widget cows from an econ textbook; they’re highly subsidized positional goods that have lost their popularity. How will Brooklyn Law communicate to prospective applicants that $45,000 annual tuition as opposed to $53,000 will make their degrees worth the risk of 20 percent unemployment nine months after graduation?

We’ll find out in a few years if the Times and Allard are right. If Brooklyn’s application and matriculant positions stabilize (it lost 700 full-time applicants this year), increase, or drop less than at nearby schools that don’t try cutting tuition, then we’ll know that its target consumers respond to price changes. However, history has shown that law school applicants weren’t sensitive to price increases in the past, so it stands to reason that they won’t be when prices fall.

If this is true, then Brooklyn Law will have to do more than cut nominal tuition.

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2 Responses

  1. Matt,

    The “bold” move was not the tuition cut–which as you note was forced on them by the drop in applicants, and which other schools have done as well–but the promise to stop using merit aid (at least for LSAT scores). The merit aid system has perverse effects for students–the top goes free and the bottom pays full price.

    So far, only Laverne has done this, but at little risk because they are taking from the bottom of the pool.

    This is a bold (or at least risky) move because Brooklyn’s competitors can take away their best students by undercutting their base tuition. We’ll see if they hold to their promise when the competition for students heats up. If they start offering much greater discounts, playing the old merit game, then it wasn’t bold at all, but just marketing.

    Brian

  2. […] good on Brooklyn Law School for unilaterally cutting its tuition next year. It may not be a voluntary rather than demonstrative act like if an elite law school did it to buck the U.S. News rankings, […]

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