Law School Economics: Ka-Ching!

[cbreeze]

<p>Despite fewer high-paying jobs, students continue to pour into law school, and schools keep raising tuition. Here is an article in NYT on this issue.</p>

<p><a href="http://www.nytimes.com/2011/07/17/business/law-school-economics-job-market-weakens-tuition-rises.html?hp%5B/url%5D"&gt;http://www.nytimes.com/2011/07/17/business/law-school-economics-job-market-weakens-tuition-rises.html?hp&lt;/a&gt;&lt;/p>

[sallyawp]

<p>I’ve attached some selections from this article below. You’ve got to love the messed up incentives that law schools have to increase class sizes and raise tuition.</p>

<p>

WITH apologies to show business, there’s no business like the business of law school.</p>

<p>The basic rules of a market economy — even golden oldies, like a link between supply and demand — just don’t apply.</p>

<p>Legal diplomas have such allure that law schools have been able to jack up tuition four times faster than the soaring cost of college. And many law schools have added students to their incoming classes — a step that, for them, means almost pure profits — even during the worst recession in the legal profession’s history.</p>

<p>It is one of the academy’s open secrets: law schools toss off so much cash they are sometimes required to hand over as much as 30 percent of their revenue to universities, to subsidize less profitable fields.

</p>

<p>

From 1989 to 2009, when college tuition rose by 71 percent, law school tuition shot up 317 percent.</p>

<p>There are many reasons for this ever-climbing sticker price, but the most bizarre comes courtesy of the highly influential US News rankings. Part of the US News algorithm is a figure called expenditures per student, which is essentially the sum that a school spends on teacher salaries, libraries and other education expenses, divided by the number of students.</p>

<p>Though it accounts for just 9.75 percent of the algorithm, it gives law schools a strong incentive to keep prices high. Forget about looking for cost efficiencies. The more that law schools charge their students, and the more they spend to educate them, the better they fare in the US News rankings.

</p>

<p>

For years, it made economic sense for smart, ambitious 22-year-olds to pay the escalating price for a legal diploma. Law schools have had a monopolist’s hold on the keys to corporate lawyerdom, which pays graduates six-figure salaries.</p>

<p>But borrowing $150,000 or more is now a vastly riskier proposition given the scarcity of Big Law jobs. Of course, that scarcity hasn’t been priced into the cost of law school. How come? In part, it’s because schools have managed to convey the impression that those jobs aren’t very scarce.

</p>

[shanntotheont]

<p>There really is no business like law school business. Think about it. For each law school student, it costs 60,000+. Now multiple that number by at least 200 students (and I’m low balling that number). That is at least $12 million in the bank, and let’s not forget the application fees (that in fact are ALL profit like undergrad). </p>

<p>Maybe now some of you will WISELY choose your law school.</p>

<p>P.S. let’s not forget that $12 million is only for one class, and there are in fact three classes plus the LLMs.</p>

[taxguy]

<p>I read the article and frankly was sickened by it. I feel so badly for the hard working law students being fleeced by the law schools. Even worse,which the article didn’t mention, law schools currently graduate 47,500 students each year! The economy only can handle about 25,000 of them. Roughly 50% will have their career dreams die, not to mention having over 100K of debt that they probably can’t afford. I wish I could do more for these kids.</p>

[Doratheexploree]

<p>As you lay your bed so you lie on it</p>

[alwaysamom]

<p>

Even worse,which the article didn’t mention, law schools currently graduate 47,500 students each year!

</p>

<p>The article did mention that. </p>

<p>I can’t really feel sorry for the hardworking law students. They should be researching their plan more fully than many of them are. These aren’t innocent 18 year olds here. They’re college grads, many of whom have graduate degrees or who have been in the business world for a few years. They are fully capable of understanding the current situation with law schools and what their prospects are likely to be.</p>

[taxguy]

<p>alwaysamom, ^^ I truly wish that you were right. They should be more discerning being college grads,but many are not. If you were right, there wouldn’t be this enormous number of applicants applying to law schools and tier 4 schools wouldn’t be able to charge the outrageous tuition that they charge. </p>

<p>Generally, I have found that 20 year olds are not financially savvy. Some are just plainly desperate since they don’t know what to do with their liberal arts degree. Some feel that they will be that special snowflake that will put them in the top 5% of their class,which should get them some job. Many are in just plain denial.</p>

<p>My son is attending a teir 4 law school. However, he, at least, has solid job connections. He has met many kids who are taking out large loans to cover their tuition. They will graduate with at least 150K or more in debt. This probably holds true for the vast majority of law students. I wish I could just shake most of them into reality.</p>

[ThrowingMuses]

<p>I am merely an undergraduate (junior) right now, freshly transferred (well, in the process of transferring with a few universities to choose from).</p>

<p>I’ve always loved the idea of law school but after numerous visits to ‘Above the Law’, I’m not sure if it is indeed a path that I would wish to pursue.</p>

<p>I am not trying to be facetious here – I never dreamt about the ideal law career as exercising some sick speech-and-debate skills and doing justice in the brightly lit courtroom – I just want a career to substantiate a comfortable living and a hard-to-maintain ego, is all. And law just doesn’t seem to be it anymore.</p>