Despite lagging law school applications, it vastly exceeds inflation. It's Supply and Demand 101: When demand for a product drops, prices fall to lure back buyers. But this fundamental law of economics doesn't apply to law schools. The number of applicants to U.S. law schools declined drastically during the past two years, yet the average tuition this fall will climb by more than double the rate of inflation.
Karen Sloan August 20, 2012
It's Supply and Demand 101: When demand for a product drops, prices fall to lure back buyers. But this fundamental law of economics doesn't apply to law schools. The number of applicants to U.S. law schools declined drastically during the past two years, yet the average tuition this fall will climb by more than double the rate of inflation.
Average tuition and fees at private law schools will increase approximately 4 percent over last year to $40,585, according to an examination of published rates by The National Law Journal. That's the first time private-school rates have crossed the $40,000 threshold. In-state resident students at public law schools will see a 6 percent increase on average, to approximately $23,590. Inflation is running at about 1.7 percent.
The tuition increases come at a tenuous time for legal education. Nationwide, the number of applicants has declined a cumulative 25 percent during the past two years, and some law schools have responded by slashing the size of their incoming classes. Growing debt loads and declining job prospects have been major factors taking the shine off a J.D.
"It's strange to watch," said Brian Tamanaha, a professor at Washington University in St. Louis School of Law and the author of the book Failing Law Schools. "Why aren't law schools announcing a decrease in their list price? That's what you do when demand goes down. We're playing by the old rules, and the old rules say that tuition goes up every year."
ADMINISTRATORS HAVE NOTICED
It's not as though law school administrators haven't noticed. The average increase at private law schools will be a full percentage point smaller than the 5 percent increase last year and one of the lowest annual percentage increases in 33 years (the increase in 2009 was also 4 percent), according to data from the American Bar Association. [See what deans have to say about tuition.]
In-state tuition at public law schools will remain lower than at private institutions but on average has been increasing at a faster clip for decades. It grew by 10 percent in both 2009 and 2010 and by another 9 percent last year. This year's increase will be the lowest since 2000.
"It does appear that prices have been somewhat sensitive to changes in demand," said Paul Schiff Berman, dean of George Washington University Law School. "It looks to me like the curve may be starting to level off. I wouldn't be surprised if tuition increases flatten out in the next few years."
Despite the average increase, tuition rates at individual law schools will run the gamut. A handful essentially held the line, including the William S. Boyd School of Law at the University of Nevada, Las Vegas; the University of Colorado Law School; the University of La Verne College of Law; Rutgers School of Law — Newark; Syracuse University College of Law; Temple University James E. Beasley School of Law; the University of Tulsa College of Law; and the University of Massachusetts School of Law — Dartmouth, which has committed to a three-year tuition freeze.
Twelve law schools — all public — posted double-digit increases. The highest percentage climb this year was at the University of the District of Columbia David A. Clarke School of Law, at 19 percent, although its tuition and fees will remain among the lowest in the country at $11,265. The University of California, Davis School of Law and the University of California Hastings College of the Law plan the largest dollar increases this year, each topping $3,000.
The tuition increases would seem to ignore the U.S. News & World Report rankings — small and large percentage tuition increases appear to be fairly evenly distributed among high- and low-ranking law schools.
"I'm not shocked by the numbers, but I'm horrified," said Ohio State University Michael E. Moritz College of Law professor Deborah Jones Merritt, who has begun blogging on University of Colorado law professor Paul Campos' blog Inside the Law School Scam. "It's professionally irresponsible. Law schools have a responsibility to our students and their futures, which includes not raising prices as much as we can."
George Washington's 4 percent increase, to $47,535, will be in line with the national trend at private schools, and represents the smallest percentage increase in recent memory, Berman said. Concern about the cost of law school was a recurring theme in the hundreds of telephone conversations Berman had with this year's crop of admitted students, he said. In response, the school is beefing up scholarships, adding to its loan repayment assistance program for graduates going into low-paying public-interest law jobs and looking for other ways to help reduce student costs.
The University of Maryland Francis King Carey School of Law froze tuition last year by tapping into a rainy-day fund and delaying equipment upgrades, said dean Phoebe Haddon. But it had little choice other than to increase tuition by 3 percent this year. "It's hard to do a tuition freeze," Haddon said. "I don't think any program can stay flat for long. Costs continue to go up, and they have to be paid somehow."
Like other deans at public law schools, Haddon doesn't expect an influx of financial support from state legislators — administrators consider themselves lucky that their public funding hasn't declined as it has at many other law schools. Tuition and donations must close the gap with rising costs, she said.
Of course, a law school's listed tuition doesn't tell the full story. Anecdotal evidence suggests that scholarship money is more plentiful than ever this year as law schools compete to fill their seats. For example, the University of Illinois College of Law has offered some scholarship money to every admitted student.
University of St. Thomas School of Law professor Jerome Organ has been analyzing law school tuition and scholarship rates for 2006 through 2011. During that time, tuition increased by an average 36 percent while the average median scholarship amount grew by 45 percent. However, the increase in scholarship money last year wasn't enough to fully offset tuition increases, and Organ expects that trend will continue this year.
Even with scholarship money on the rise, graduate debt loads continue to grow. Graduates of private schools left with an average $124,950 in debt last year, while their counterparts at public schools owed an average $75,728, according to the ABA.
'REVERSE ROBIN HOOD'
The growth of scholarship money, meanwhile, is exacerbating a phenomenon that Organ and others refer to as the "Reverse Robin Hood" — admitted students with the lowest academic credentials pay tuition and end up subsidizing educational costs for the highest-performing students.
"Effectively, law schools are charging more tuition just to give it back," said Organ, who noted that the students who land hefty merit-based scholarships tend to be those from financially privileged backgrounds who are most likely to land high-paying jobs after graduation. "At some point, the people paying full freight will say, 'This is just too much.' "
Even students with robust scholarships are hurt over time by sizable tuition increases, because most scholarships are set in dollars, not as percentages of tuition, Tamanaha said. As prices climb, most scholarship recipients shoulder a larger percentage of their tuition costs during their 2L and 3L years.
Yet another downside is a growing public perception that law schools are a raw deal. Schools don't report the average amounts that students pay after scholarships are factored in, so the list price dominates the conversation about the economics of a law degree. Applicants don't know whether they will win a scholarship, so a high list price can be a deterrent from the very start, Merritt said. "I think we're already starting to see that this year."
Tuition has been rising for other graduate and undergraduate programs, too, but several factors distinguish law schools. Foremost, Merritt said, they serve as gatekeepers into the legal profession — would-be lawyers have almost no options outside attending an ABA-approved law school, and that translates into pricing power.
The U.S. News law school rankings play another part, Tamanaha said, because they reward schools that spend more per student. Reducing spending could let them charge less but result in a rankings drop — a prospect no dean wants to face.
The single biggest factor in the ability of law schools to raise their prices is the availability of government loans, Organ said. As long as students can easily borrow the full cost of their tuition, schools will face less pressure to contain their costs. This year's tuition increases "tell you the extent to which federal loan money makes students less price sensitive and gives pricing power to law schools," he said. "I think the current system is pretty fragile. It's completely dependent on the federal government making loans available."