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Student Loan Program Pumps Legal Ed Bubble: For Now

The news from the legal world keeps getting worse. Recent financial data published by the University of California-Hastings, a San Francisco law school that is part of the UC system, and publicized by the indefatigable Paul Campos at Inside the Law School Scam, shows the kind of questions that prospective students need to ask before figuring out whether law school is the right move.

From the admirably thorough if sometimes forbidding info that Hastings provides, a few facts jump out. The first is the staggering rise in the cost of law school tuition over the last decade, even as total applications to the school fell by nearly a third, and as employment opportunities for newly-minted JDs collapsed during the same period. As the report highlights, Hastings’ tuition revenue nearly doubled from 2003 to 2011, while in-state tuition at the institution more than doubled, from $21,000 to $47,000 from 2004 to 2012.

But the story gets bleaker. For those readers just starting college this fall but considering law school (i.e. starting in the 2016-2017) academic year or who have kids in this position, total non-resident tuition and fees at Hastings by then is projected to rise to nearly $59,000 per year. Taking into account living expenses, that means that the average graduate of Hastings – who, the school’s administration freely admits, face difficulty getting jobs in a Bay Area market where Stanford and Berkeley graduates dominate – will face nearly $200,000 in non-dischargeable student loan debt. That’s the kind of number that we at Via Meadia are referring to when we talk about a War on the Young.

It would be one thing if all of these naïve liberal arts graduates were paying for the privilege of a Hastings education with money from the family vaults. But they’re not. Close to 100 percent of the tuition that students paid was financed by federal loans, like the Stafford, Perkins, and GRADPLUS programs. The student loan system is effectively allowing Hastings to raise its tuition beyond any reasonable or sustainable point and it is encouraging students to make bad investments — in much the same way federal debt programs encouraged the housing bubble of the last decade.

Look even more closely into the details, and you will see something that should make aspiring lawyers think even harder about what they are signing up for. Hastings has very few scholarship programs or other resources for financial aid, but its students do not all pay the same amount of tuition — even after correcting for the difference between in state and out of state tuition.

This probably means that Hastings, like many other law schools, recruits promising students with offers of reduced tuition while making the duffers and the ordinary grunts pay through the nose. It’s a widespread practice and there is nothing particularly wrong with it as long as everyone knows what the story is — but the buyer must beware.

If Hastings is making you pay full tuition, it means the school may think you don’t have the makings of a good lawyer. The more you are paying for your law school education, the less likely it may be that the investment will ever pay off.

This would be one thing if there were enough jobs in the legal field for everyone to get one after law school, but of course that is no longer the case. A significant number of people paying $200,000 for three years of law school are going to end up with jobs they could have had without the degree.

Something that can’t go on forever, won’t, and a lot of American law schools are likely to close their doors. Via Meadia hopes that instead of simply reducing the number of law schools, Americans will figure out how to make legal education cheaper, faster and better.

It’s not at all clear that law school needs to be three postgraduate years; some of the greatest lawyers in American history never went to law school. In the UK, lawyers major in law as undergraduates and usually have one year of legal education afterwards and serve an apprenticeship for two more. It’s likely that either undergrad programs or short intense postgrad programs focused on training students to pass the bar exam combined with apprenticeships would prepare most lawyers for most legal work as well or better than our present system — and in any case, our legal system is about to undergo radical change as IT penetrates farther into the legal world and outsourcing moves more legal and paralegal work overseas.

In the meantime, some words to remember: if a second or third tier law school isn’t offering you a substantial tuition break, the school doesn’t think you’re a very competitive student. It doesn’t make sense to pay full price to enter a profession in crisis when the experts are telling you that your prospects are poor.

And do not forget: most student loans do not get discharged if you go bankrupt. They are a ball and chain that will drag you down for decades. Please, look very carefully before you leap.

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  • Verinder Syal

    Do we need this many lawyers to start with? De we need a country of a million lawyers, millions of laws, laws that are selectively enforced?

    The result is actually corruption in a multitude of ways.

    Not too long ago, it seemed, that 10 commandments were all we needed.

  • chase

    Very good advice Professor. I wish every student, or prospective student, in America read this blog post.

    Your arguments are excellent. I just worry that there is no way for young people to get through to the powers that be in higher education, who seem to be oblivious to the pain they are imposing on their students.

  • Walter Sobchak

    There is no reason why classroom legal education is not a 2 year program at the community college level, other than the artificial regulations.

    My benchmark for lawyers is Abraham Lincoln. He did not have any organized secondary school, or college education. If you think you are better lawyer than Abraham Lincoln was, you are wrong.

  • Gerald

    Just a thought – anyone stupid enough to borrow $200K to attend law school when there is already a glut of “lawyers” looking for a job with no realistic prospects – is too stupid to be attending a reputable college in the first place. If one can not understand the math involved, do something else.

    Secondarily, there is nothing involved in law school that could not be accomplished in a quality undergraduate program. There is certainly nothing more complex or demanding in law school than in chemical engineering, electrical engineering, etc. The requirement is simply a political and guild issue – not one of education or learning.

  • Mr. Mead:

    As a young lawyer who graduated in 2005, I sympathize with your discussion.

    I would also like to note that (what was rumor for us in 2005 at my law school) much of the cost of law school might be passed along to the remainder of the university for use in other places.

    See this article, for instance: – where a resigning dean of the University of Baltimore noted that:

    “As of academic year 2010-11, the University retained approximately 45% of the revenue generated by law tuition, fees and state subsidy. Using any reasonable calculation of the direct and indirect University costs, the University was still diverting millions of dollars in law school revenue to non-law University functions.”

    THIS is madness. The ABA should make every law school it certifies reveal how much of its law school revenue is diverted to other university sources.

  • Tony

    One thing that was not mentioned is the Income Based Repayment (IBR) program. The program allows graduates with federal student loans to pay 10 or 15% of their income above 150% of the Federal Poverty Level for 10/20/25 years and have the remainder of the loan discharged.

    Graduates who work in the public sector or at non-profits get the 10 year loan discharge, while others get 20 or 25 years. Also, the discharged amount is not counted as taxable income for the public sector and non-profit workers while it is taxable for regular workers.

    To run an example, assume a graduate takes out the $200,000 at 6.8% in loans and gets a $50,000 job. The student would have a $415 monthly payment while the interest on the loan costs $717. This negative amortization quickly balloons, but it does not capitalize. After 25 years assuming their income grows 3% yearly they will have a total of $358,000 forgiven by the government. This clearly is unsustainable, and once taxpayers realize the extent to which they are subsidizing these schools they will demand the student loan program be drastically cut back.

    You can run your own calculations on the IBR program here:

  • Kris

    How wonderful that we have public universities like the University of California system, instead of those private for-profit universities whose unbridled lust for lucre lead them to exploit students!

    Tony@6: Thanks for giving me the opportunity to once again mention a pet peeve of mine: Why on Earth should graduates who work in the public sector get preferential treatment in student loan repayments?!

  • teapartydoc

    When the next couple of generations finally figure out the extent to which they have been screwed over by preceding generations, I’m afraid they are going to make the French Revolution look like an episode of Barney and Friends.

  • Truth

    There’s no “artificial barrier.” You can sit for the bar exam in NY or California by working under the supervision of a lawyer for 5 or 6 years. You may need 1 year of law school as well.

    The problem is, without a law degree, no one will ever hire you. No client, no firm, no company.

    If you want to talk about a really bad investment, it’s the undergraduate liberal arts degree.

    The law degree will actually help you get a job and boost your income, not like studying English or History.

    You can see labor market data here:

    The average lawyer makes $130K ($115K median) and the unemployment rate for lawyers is around 2%.

    Starting salaries for law grads are around 80K per year.

    In the middle of the worse recession since the 1930s.

    Some crisis, huh?

  • Really, Truth?

    Not sure of the Kool Aid you are drinking but I want some!

    Those stats you point to are very misleading. A few things not counted by them:

    1. Those who never work as lawyers do not get counted in those stats even if they are licensed. Read here: law graduates who never become lawyers.

    2. An attorney who becomes unemployed and does not find employment in the field after a certain amount of time is NOT COUNTED as an unemployed lawyer.

    3. Solos (including those not making any money) are not counted either because they are self-employed. Their salaries are not counted so the average salary made by those in the profession rises.

    See how the numbers get skewed and tossed around? Without those key data points, the truth gets blurred, Truth. There is a revolution taking place in the legal profession as we speak. Anyone going to law school outside the top 5 schools is a fool. The public does not care about lawyers but the same problems inherent in the legal profession will start to arise in all areas of the higher ed scam.

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