Legal Education

Government Finally Tells Private Law Schools to Slash Tuition, Faculty

…In Korea.

The country’s Ministry of Education wants people from poorer backgrounds to be able to practice law, so its solution is to demand law schools charge less and offer more need-based scholarships, according to The Korea Times.

Average private law school tuition is a scandalous $17,152 annually (it takes about five years, as I discussed last year). The plan calls for a 15 percent tuition cut at Korea’s fifteen private law schools, which would put it below $15,000. The article isn’t clear as to whether public law schools would be affected.

Just to show you that there’s nothing new under the sun, the law schools complained that they’re under financial strain already, with faculty taking up ~$24.0 million while tuition revenue is only $19.7 million. Using math against ABA data for the 2013-14 academic year, I get an average $10.6 million to private law schools (excl. Brigham Young, Pontifical Catholic, and Inter American) from full-time students paying full tuition. I doubt the total is more than $15 million.

The government’s response: “[T]hey can lower the tuition if they restructure their high-cost faculty system.”

Indeed, the faculty numbers the article gives are bizarre: The government’s standard is 312, but they have—and I think this is an average—537. That comes to 8,055 faculty for … 6,021 students at all 25 law schools, which implies a student/faculty ratio well below one. Again, for comparison, in the U.S., the average number of full-time faculty (current definition) at private law schools rose from 35.4 in 1999 to 43.2 in 2014 (peak 48.9 in 2012). We could also easily get by with fewer profs and fewer schools.

Maybe there’s something off in the reporting, and I’m not sure how the ministry can encourage the law schools to cut their tuition levels if they don’t want to. Nonetheless, it makes you wonder whether the law-school system fails wherever it’s tried.

A Simple Equation: Huge Debts + IBR = -(-(Default))

Simple, that is, for everyone but the letter-writers responding to the NYT editorial from two Sundays previous.

The objective of today’s outing isn’t to defend the Times as such but rather to draw attention to the sad rebuttals to it.

Argument #1: Law students are less likely to default on their student loans than undergrads.

Law students borrow more than undergrads, but most are able to repay, and do. The graduate student default rate is 7 percent versus 22 percent for undergrads.

[O]nly about 1.1 percent of alumni at Florida Coastal are in default.

[D]ata shows that law school graduates have lower default rates than other professional degree holders.

Response: It is true that the Times accused law schools of, “sticking taxpayers with the tab for their [students’] loan defaults,” but the line between “default” and “certain IBR/PAYE/REPAYE/PSLF loan cancelation” is hazy. Arithmetic tells us that with $130,000 of debt at current student loan interest rates, law-school debtors earning about $70,000 from day one cannot even dent their student loans’ principal. Because it’s unlikely these debtors will ever find high-paying jobs, it’s all but certain that large portions of their loans will be canceled.

It may not be default, but it’s only “repayment” in the technical sense. Better to call it “not-not-default.”

Argument #2: Thanks to scrupulous admissions practices, law school enrollments have declined.

Many law schools are downsizing to maintain standards. Since 2010, first-year enrollment has dropped from 52,500 to 37,900, a level last seen in 1973.

Since 2010, law schools have responded to the changed legal job market by dramatically cutting first-year enrollment by 28 percent.

Response: This is the most astonishing bit of revisionist law-school history I’ve seen. Remember five years ago (!) when Richard Matasar cited record law-school enrollments as evidence that applicants understood their job prospects? Well, surprise, surprise, surprise! Only 53,500 people applied to law school in 2015, down from 87,900 in 2010, and there’s evidence that fewer people applied in 2010 than the number of LSAT takers would’ve predicted. Law school admissions policies are not responsible for prospective applicants’ decision not to go to law school.

Applicants, Admitted Applicants, 1Ls

(Sources: LSAC, ABA)

Also, law schools are admitting higher proportions of their applicants since 2010.

Dispersion of Full-Time Law School Applicant Acceptance Rates

(Source: Official Guide, author’s calculations)

Argument #3: Declining interest in law school will [create a disastrous attorney shortage/equalize supply and demand for lawyers].

[Due to falling enrollments] the rule of law may begin to fray. Our country needs lawyers, prosecutors, defenders and judges, not only lawyers in big cities and big law firms.

[A] law degree continues to be a sound investment over the course of a career. … [Falling enrollments] will bring supply more into line with demand.

Response: I lump these arguments together because they entail the same prediction: Job outcomes and wages for law grads will improve in the near future. Testing this belief with NALP data, it’s clear that law grads are much more likely to find themselves in J.D.-advantage jobs than in the past. If the job market for lawyers tightens, we’ll see graduates shift from these jobs to lawyer jobs. Instead, while the number of unemployed grads fell in 2014, so did the number of grads in 2-10-lawyer firm jobs. Meanwhile J.D.-advantage jobs rose. This doesn’t speak highly to the value of law school.

No. Grads Employed by Status (Incl. FT-PT) (NALP)

Additionally, based on various measures, including those provided by the Bureau of Labor Statistics, there are hundreds of thousands more law grads than there are lawyers. Many of these people left law voluntarily, e.g. they didn’t like law practice or they moved on to post-law professional careers (like the judiciary). Alternatively, they didn’t have opportunities for careers at the bar at all. As more lawyer jobs open up, presumably many of these people would come out of the woodwork. However, there are few indicators that demand for lawyers—which is what really matters here—is improving. Moreover, graduates reporting full-time, long-term employment might not stay in the law for long due to the profession’s high attrition rate.

Also, one letter-writer asserted that a law degree is “a sound investment” and that declining enrollments will “bring supply more into line with demand.” These statements contradict each other, albeit mildly. Although it’s possible the 5,000 class of 2013 graduates who were reported as unemployed will embark on professional careers in the future, it can’t be to their advantage if they graduated when supply was higher than demand could absorb.

Argument #4: Capping federal loans restricts the profession to the wealthy.

Capping graduate federal loans as the editors suggest would fall hardest on students from modest circumstances who will not be able to attend law school or will need to resort to private loans, which are typically more expensive, and repayment is not income-contingent.

[C]utting federal loans will only narrow the pool of people who can pursue a legal career and decrease the availability of lawyers to serve this need.

Response: Even with unlimited federal loans the legal profession isn’t accessible to the poor, but supposing these consequences are true, state governments could just make it easier for people to become lawyers, e.g. by reducing law to an undergraduate major. We have had lawyers without law schools—good ones even, and we’ve had bad lawyers with law schools.

Argument #5:

[T]aking loan money from law students is both bad economics and bad policy.

Response: No evidence is given to support these claims, but the existence of not-not-defaults discussed above disproves them. Also, we had lawyers with fewer loans to law students and dischargeability for private loans. This isn’t the distant past; it’s pre-2005.

Argument #6: Florida Coastal School of Law’s graduates rocked the February bar exam.

In February 2015 we had a 75 percent first-time bar pass rate, third best out of 11 law schools in the state, and an institutional ultimate pass rate of 87 percent.

Response: Fewer people typically sit for the February bar exam than the July one, so we have a sample problem. Also, don’t let FCSL’s 509 report fool you: Its graduates may pass the Florida bar at about a 75 percent rate, but at least 30 percent of its students don’t report at all. Florida State’s non-report rate is about 15 percent; U of Florida’s is less than 10 percent. Both of those schools have higher pass rates too.

Paul Campos addressed some of the other arguments by Florida Coastal’s dean.

Argument #7: The editorial ignores improvements to legal education, like more clinical courses.

[Law schools have] sharpened academic programs to provide the training employers seek.

In recent years, many law schools have been overhauling their programs to provide more hands-on skills training. Clinics cost more than big lectures, but they prepare lawyers for practice and teach them about their professional responsibility to serve people unable to pay for services.


Better training does not create jobs.

Better training does not create jobs.

Better training does not create jobs (except for the trainers).

The one letter I’ll call out specifically is New York City Bar Association president Debra L. Raskin’s because … it leveled a coherent argument.


I’ll not exhaustively nitpick everything here, but by focusing on law school debt the Times editorial is bringing out the kinds of arguments we can expect to see from academics defending the subsidies that ultimately flow to them. Some of the points I read here are novel, so it’s not an opportunity to waste.

LSAT Tea-Leaf Reading: October 2015 Edition

Halloween happens this weekend and the LSAC is celebrating by giving us yet another increase in LSAT takers. Gaze upon your zombie apocalypse:

No. LSAT Takers, 4-Testing Period Moving Sum

33,229 people took the October LSAT this year, up 7.4 percent from September 2014. The four-period moving sum is up to 105,410 (2.2 percent), just higher than December 2013.

As I hypothesized in June, more people might be taking the LSAT because of the media coverage saying now is the best time ever to go to law school. I happen to think this is a silly position: There really are far more people going to law school than there are indefinite-duration professional jobs available, but at least some lucky people might get strong scholarship opportunities. The catch is that someone has to pay for those scholarships, and that might also be people who borrow hundreds of thousands of dollars believing now is the best time ever to go to law school.

Maybe the recent NYT editorial will have an impact for the future, but regardless, it appears prospective law school applicants are a fickle bunch, easily swayed by mainstream media articles leaning one way or the other.

On the other hand, interest in medical school is at an all-time high. We certainly need doctors more than we need JDs.

Speaking of Grad PLUS Loans…

This weekend, the Times both accepted the Bennett hypothesis and chose not to condescend to us about the “paradox” of how underemployed law grads can refuse to work for people who can’t afford to pay them. That’s really remarkable. What more can I say?

Okay, one point, an emphasis. When I wrote that applying the gainful employment rule to all law schools would cause fifty to close in short order, I was clearly being conservative. $50,000 in discretionary income is a lot of money, even for law school graduates.

And since we’re on the topic of student lending, the Department of Education updated its student loan data through the 2014-2015 academic year. I’ve updated the Student Debt Data page accordingly.

The big findings are that (a) people are borrowing less money from the federal government:

Amount of Federal Loans Disbursed

…But (b), Grad PLUS borrowing hasn’t changed much in the last year.

In the last two years though, the number of Grad PLUS borrowers has grown (+2,540) while the total amount borrowed has fallen (-$140 million). It only amounts to about $500 per borrower, but who knows, maybe it’s due to fewer law students? I wouldn’t be surprised.

Finally, in the same week that I bought my first car I realized after years of listening that Galaxie 500’s “Blue Thunder” is about a man’s love for his car, and the Route 128 reference indicates it’s an homage to the Modern Lovers’ “Roadrunner.” (I’m terrible at discerning lyrics; it’s usually not what I listen for in music.) I really dig how “Blue Thunder” denies the listener the chorus until the very end.

I prefer the album version, but how could I not post an ’80s video?


Class of 2014 NALP Data: Unemployment, Small Firm Jobs Down

A few weeks back, the National Association for Law Placement (NALP) uploaded its national summary chart that’s the basis for its Employment Report and Salary Survey (ERSS). It’s here (pdf). Two things worth noting: One, this year’s version doesn’t include the total number of graduates or the number who responded to the survey, making it impossible to determine non-responses. I have no idea why the NALP did this.

Since the class of 2013 ERSS appeared to use the same total number of grads as the ABA did that year, I’ll assume it’s 43,832 this year, which includes graduates from the three Puerto Rico law schools. Also, this year the ERSS changed 2-10-lawyer firms to 1-10-lawyer firms. I’m not sure if this is a typo or if it’s meant to separate graduates who work under solo practitioners as non-lawyers from graduates who start their own solo practices.

Okay, some analysis. Obviously this year’s ERSS confirms what’s been widely reported since the ABA’s version of the same data came out several months ago: Unemployment is down, as is the number of grads in bar-passage-required jobs, and with fewer graduates, the percentage of employed grads rose.

Here are charts of the number of graduates by employment status and the percent employed. (These exclude non-responses.)

No. Grads Employed by Status (NALP)

Percent Employed by Status (NALP)

These charts also illustrate the remarkable growth in J.D. advantage jobs over the years.

Here’s a detailed version graduate employment but with full-time and part-time status and only going back to 2007.

No. Grads Employed by Status (Incl. FT-PT) (NALP)

The question that I don’t think has been addressed is what kind of bar-passage-required jobs are responsible for the drop in that category. I won’t show all the math, but the answer is overwhelmingly private-practice, small-law firm jobs: 1/2-10-lawyer practices and solos.

No. Graduates Employed by Size of Firm (NALP)

Interestingly, the number and proportion of grads reported as starting their own practices did not change much since 2013 (-175 from 1,378). I draw two conclusions from this: One, small firms looking for new lawyers will need to look harder. I have no idea if that will push up wages in the future (there’s trivial evidence it has this year for full-time, wage-and-salary jobs). On the other hand, these could be eat-what-you-kill arrangements, which wouldn’t cost these firms much. Nominal wages for 1/2-10-lawyer practices are still way down from 2007, but the proportion of grads reporting wages is up, so this is a phenomenon to look for. The better these jobs pay, the better grads do overall: It’s the marginal graduate who matters most.

Speaking of whom, and this is my second thought, grads appear to prefer J.D.-advantage jobs and unemployment to small firm work. Given the definition of J.D. advantage, which is so broad that it likely includes graduates returning to their prior jobs, graduates’ employment “choices” don’t speak highly of small-firm work.

Thus, there is still much slack in the legal labor market, but it is improving. Big law isn’t hiring the way it used to, but fewer grads are working in smaller practices:


Cumulative Percent Change in Grads Employed in Law Firm Jobs by Firm Size (Index 2007=100) (NALP)

(Sorry this one is a little unclear.)

To conclude, this ERSS verifies the odd accounting identity explaining law graduate employment: The first people who don’t go to law school are the first ones to not be underemployed after graduating. Small beans for the thousands of unemployed grads though.

Prepare for the Return of Private Law School Loans

That’s what you should be inferring from Charles Lane’s WaPo op-ed, “How student loans help keep expensive schools in business.”

Lane argues that Grad PLUS loans are, “a de facto bailout, enabling many law schools to maintain capacity and delay reforms, or settle for modest ones, while continuing to charge more or less the same high tuition.” The author’s position, to say nothing of his article’s title, largely resembles my early forays into the subject, especially, “How Grad PLUS Loans Sustain Zombie Law Schools.” It’s always nice to see mainstream sources arrive at my conclusions.

It’s not so nice when they don’t fully understand the implications. If Congress gets rid of Grad PLUS loans, or scales graduate lending back dramatically, then some law schools will demand their students substitute the tuition difference with private loans. These loans won’t be easily discharged in bankruptcy, so it will be a strong reason to stay clear of law school, even more prestigious ones.

Before I go, I just wanted to editorialize on Lane’s opening: “Income inequality bedevils the United States, as does debt, of the public and private varieties.”

This is bad writing. One, “income inequality” doesn’t play any role in the editorial, so a good editor would’ve axed it. Two, public debt doesn’t bedevil the U.S. at all. Currently, 10-year treasuries are trading at 2.18%.

10-Year Treasuries

(Source: FRED)

Yes, I’m not the first to recognize that WaPo caters to people who insist public debt is the second evilest thing in the history of evil (no. 1 is inflation), but eliminating Grad PLUS loans won’t close the deficit. Does Lane write editorials against corporate welfare?

Still, there are many correct points in the article, and it suggests that our East Coast media elite are finally beginning to turn on student loans instead of debtors—but not totally.

Where People Aren’t Taking the LSAT


Cumulative Percent Decline in LSAT Takers by State

Courtesy of LSAC. These are permanent residents, by the way, not administration locations. It would be more interesting to compare this to 2007 rather than 2010. Although, it is notable that Minnesota is number one, given that two of its law schools are merging.

The LSAC also has a table of test takers by country of administration, which doesn’t consider residency. Presumably some non-Americans who would’ve otherwise applied to a U.S. law school are choosing not to.