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ABA task force advises review of law school costs

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In its year and a half examination of how lawyers are educated, the American Bar Association Task Force on the Future of Legal Education concluded the financial system law schools have developed to provide that education must be re-engineered.

While it made recommendations for other aspects of legal education, the task force conceded the problems of pricing and funding were too tangled with economic and political issues for it to tackle. Retired Indiana Chief Justice Randall Shepard, chair of the task force, said he did not want to issue a report that said let’s have another study but, in this case, the group did not have enough time to develop solutions.

Randall Shepard Shepard

Law school deans can point to reasons why prices have risen and agree the criteria for awarding scholarships should be changed. But they have few suggestions for how to bring the financial aspect under control.

“It’s important to explain to people why costs have grown the way they have. Not to justify it, but to explain it,” said David Yellen, dean of the Loyola University Chicago School of Law and member of the task force. “Some people act like one day law schools decided to double tuition and pocket the money. It’s way more complicated than that.”

Law schools experienced a boom for two decades prior to the recession which included tuition rising considerably faster than the rate of inflation. Driven by competition with other law schools and the desire to meet the demands of students and establish a good reputation, legal education institutions spent.

The schools installed more assistant and associate deans, added extras like career services for the students, brought in new technology, hired more faculty to lower the student-to-teacher ratio, and ballooned the number of courses and specialized programs offered.

To fund all these things, law schools rely on tuition dollars along with revenue from other sources like donations and state appropriations. Accordingly, tuition rises as budgets grow.

yellen-david.jpg Yellen

In 1990, state-run law schools were charging in-state students a median of $3,012 for tuition and fees, according to the ABA. Ten years later that had increased to $7,201; by 2010 the median tuition and fee amount was $18,077. It hit $21,532 in 2012.

For out-of-state students, the 2012 median was $33,056 while students at private schools were paying $40,732.

Peter Alexander, dean of Indiana Tech Law School, pegged most of a school’s expenses to personnel. Salaries and benefits can gobble more than half of an annual budget and as law schools have added layers of administrators, the need for more revenue has increased as well.

“Schools just have to ask themselves, ‘Do we need to have all these people?’” Alexander said. “These are somewhat luxury positions that we’ve come to expect in law schools, and at some point we have to ask, ‘Can we afford all these luxuries?’”

Merit over need

The task force found the funding scheme to be very complex, but it was disconcerted to discover a wide disparity in how much students are charged.

As chair of the task force, Shepard has spoken out several times about scholarships being given disproportionately to law students with high grade-point averages and LSAT scores at the expense of students who need financial help.

“The adverse effect on equal opportunity is really quite serious and needs to be restructured,” Shepard said. Presently, those who already have had a lot of advantages are getting tuition discounts subsidized by students who may have less opportunity in the workplace and, therefore, struggle to repay their loan debt.

bodensteiner Bodensteiner

He provided the task force with statistics from the ABA that illuminated the shift during the 1990s. By the 2009-2010 school year, the system had tilted to the point where about 39,800 law students were receiving merit-based scholarships representing $522 million while roughly 17,600 students had need-based scholarships totaling $143 million.

Even though law school deans decried the increase in merit-based scholarships, they were hesitant to buck the system because doing so would put a school’s status at risk.

All, including Shepard, pointed to the law school rankings by U.S. News & World Report as the culprit. The news magazine’s use of students’ GPA and LSAT numbers when calculating its ratings results in law schools offering money to the high-achieving students in order to boost their U.S. News profile.

Giving scholarships based on merit to increase a law school’s prestige has become, Yellen said, an “irresistible temptation.”

Schools work to improve their rankings, in part, because potential students pay attention to the list, said Alexander. Price and ranking color students’ perception of quality, leading many to believe that expensive tuition and higher position on the U.S. News list means it is a better school.

As a consequence, he said, law schools are spending more money to try to become mini-Harvards. He pointed to his own experience in opening the law school at Indiana Tech as evidence that schools that attempt to do something different can get pillaged in the blogosphere.

Alexander Alexander

While graduating from an Ivy League law school may open more doors, going to a mid-level law school will still provide the education graduates need to be a lawyer, said Ivan Bodensteiner, interim dean at Valparaiso University Law School. Education, in general, and efforts to diversify the legal profession are hurt when schools pad their rankings by focusing only on certain students.

He said many legal educators agree that LSAT scores are not good predictors of who will do well in law school. But chasing after students with dazzling GPAs and LSATs has created a perverted system that helps those who come from privilege, he said.

Cutting and freezing

To Kyle McEntee, executive director and co-founder of Law School Transparency, scholarships are just a symptom of the financial problem. The true crux of the matter is to change how students finance their debt.

tuition_facts.jpgYellen also voiced concerns about the student loan program. Students are able to borrow as much as they need which removes market controls from pricing decisions by universities and law schools.

A fix, Yellen said, should spread some responsibility to law schools if their students cannot repay the loans.

The ABA has the ability to push Congress to make changes to student loans without appointing another committee to make recommendations, McEntee said. The association could make an impact just by telling the federal government that law schools can’t get their house in order because the loan program keeps giving them blank checks.

Some law schools are addressing the issue of affordability in a dramatic way by announcing reductions in tuition. Ohio Northern University Pettit College of Law, Penn State University Dickinson School of Law and the University of Iowa College of Law are among the schools that intend to reduce tuition rates.

Bodensteiner has made a recommendation that the Valparaiso Law School not raise its tuition next school year. The question for Valparaiso and other law schools is whether the cuts and freezes are sustainable.

To control expenditures, law schools may consider cutting faculty and hiring more adjunct professors or reducing the number of courses offered, Bodensteiner said. With fewer applicants, schools now have to decide if they should increase tuition rather than automatically wondering how high they could raise it.

McEntee applauded the tuition reductions but he, too, worried about law schools’ appetite for continuing to cut costs.

“We have a window here before we see enrollment creep up,” he said. The job market will improve and that could entice law schools to revert to their former pricey practices.•

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