St. Louis

THE economics of legal education are broken. The problem is that the cost of a law degree is now vastly out of proportion to the economic opportunities obtained by the majority of graduates. The average debt of law graduates tops $100,000, and most new lawyers do not earn salaries sufficient to make the monthly payments on this debt. More than one-third of law graduates in recent years have failed to obtain lawyer jobs. Thousands of new law graduates will enter a government-sponsored debt relief program, and many will never fully pay off their law school debt.

How did we get into this mess? And how do we get out?

Two factors have combined to produce this situation: the federal loan system and the American Bar Association-imposed accreditation standards for law schools. Both need to be reformed.

First, consider the loan system. For more than three decades, law schools have steadily increased tuition because large numbers of students have been willing and able to pay whatever price the schools demanded. Annual tuition at many law schools in just over a decade surpassed $30,000, then $40,000 and is now more than $50,000 at a few. The reason that students have been able to pay such astronomical sums is that the federal government guaranteed student loans from private lenders, and now it supplies the loans itself with virtually no limits.

To restore some economic rationality, the federal loan system needs to demand greater accountability from law schools: those with a high proportion of recent graduates in financial trouble should lose their eligibility to receive money from federal loans. (A similar requirement is currently applied to for-profit colleges.)

The money itself also needs to be reined in. One option is to cap the total amount that each law student can borrow from the government (at, say, a maximum of $125,000). Law schools would then be forced to set tuition with this limit in mind. A flaw of this proposal is that, to reap additional revenue, law schools could simply enroll more students, which would only worsen the oversupply of law graduates.

So another option is to cap the total amount of federal money that any individual law school can receive. A number of law schools now get about $50 million annually in loan money for students directly from the government. Placing an across-the-board cap on total federal loan money (of, say, $40 million) would force law schools to control tuition as well as enrollment.

Whichever cap is chosen, it will function properly only if the government refuses to guarantee private loans and if private loans can be discharged in bankruptcy, which would make banks leery of lending money to law students who are unlikely to repay. To make up for this, the law schools themselves would have to extend loans, thereby aligning their interests with the success of their students. 

Then there’s the problem of the American Bar Association-imposed accreditation standards. In theory, these standards, put in place a century ago at the urging of legal educators, ensure a certain level of quality by requiring every law school to be run like an expensive research university — limiting, for instance, the use of adjuncts and teachers on contract. In practice, however, by imposing a “one size fits all” template, these standards ensure that there is little differentiation among law schools — no lower-cost options and no range of choices comparable to what exists at the undergraduate level among community colleges, teaching colleges and research universities.

One solution to this problem is to strip away the accreditation requirements that mandate expenditures to support faculty scholarship — for example, deleting the requirement that the bulk of professors be in tenure-track positions, removing limits on teaching loads, not requiring paid research leaves for professors, not requiring substantial library collections and so forth. This would allow some law schools to focus on training competent lawyers at a reasonable cost while others remained committed to academic research. Law students would then be able to choose the type of legal education they desired and could afford.

If we don’t change the economics of legal education, not only will law schools continue to graduate streams of economic casualties each year, but we will also be erecting an enormous barrier to access to the legal profession: the next generation of American lawyers will consist of the offspring of wealthy families who have the freedom to pursue a variety of legal careers, while everyone else is forced to try to get a corporate law job — and those who fail will struggle under the burden of huge law school debt for decades.

The complexion of the legal profession, and our legal system, will suffer as a result.

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