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September 13, 2012

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CBR

I wish... (and I've said so before: http://www.legalethicsforum.com/blog/2012/02/after-the-student-loan-arms-race-the-disruption-of-hierarchy.html ). But shrinking class size, I think, is an area where interests align; taking fewer students does increase the chance that graduating students will be able to obtain good employment outcomes, while also protecting the school's ranking. I think that makes it a fairly easy decision for schools who are able to do so (and not all can, of course). But I definitely agree that students (and schools) should emphasize rankings less; I thought it was really telling that a recent Kaplan survey found that pre-law school students (still) rely most heavily on rankings, whereas recent alums would recommend looking more carefully at employment outcomes and affordability. (http://press.kaptest.com/uncategorized/advice-from-law-school-grads-to-law-school-applicants-instead-of-rankings-focus-on-law-schools-job-placement-rates-and-affordability )

Orin Kerr

I don't think it is largely U.S. News driven: I think it is *entirely* U.S. News driven.

CBR

But Orin: Do you think faculties would favor it so strongly if it didn't also align with student interest? I agree that the primary driver is probably U.S.News, but I think there would be more resistance if it weren't also seen as being good for students/graduates.

Matt Bodie

I agree with CBR. It is not in a school's long-term interest to take students outside of its traditional profile. Given the well-documented crunch to the legal employment market, it makes sense for almost all schools to shrink their class sizes in response to shrinking employment rates. That may have an effect on individual schools' USNWR scores, but the decision does not depend on that effect.

Lou Mulligan

At my school, Univ. of Kansas, our significant reduction in class size is almost entirely driven by the job market. Moreover, I suspect that any benefits in UNWR will be offset by the similar actions by other schools. So while I agree that UNWR should not rule the roost, I am not sure this is the best example --- at least in our case.

CBR

I agree that there's no U.S.News benefit if everyone does it (and right now, it seems like everyone who can shrink the class is doing so)--but there's a big U.S.News problem if a school *doesn't* shrink, right? Given the changing profile of LSAT takers this year, there is effectively a choice between shrinking the class size or else risking a drop in the rankings. And loss aversion (i.e. fear of dropping in the rankings) is a bigger motivator than the possibility of achieving gains...

Ani

I agree with CBR. This decision is indicated by U.S. News, because reduced class sizes will improve score medians and better the chances of finding employment for graduates. It is indicated by student interest, less so because of score medians, but more so because of employment -- and also because improving U.S. News ranking is in the interest of present students and past graduates. And it is indicated by the public interest, because it probably reduces the amount of public expenditure on pursuit of legal credentials in a saturated market -- I suppose we could even say it corrects for a market imperfection caused by the subsidy.

So Orin's comment that it is "*entirely* U.S. News driven" could be about inner motivation, but does not address appropriateness. On the flip side, I think anyone contending that it is driven by the job market and that USNWR has nothing to do with it, because everyone is doing it and no one benefits, is not thinking about relative positioning.

Ani


Also, I was struck by this comment in the original post: "If the U.S. News is having a disproportionate affect on class size (when measured against other reasons a school might choose to shrink the class size), isn't it time for schools and students to stop relying so heavily on these rankings? I've met a number of students in recent years happily ensconced at third and fourth tier schools, even though they could transfer to 'higher ranked' schools because they are pleased with the level of student/instructor interaction and support and they are confident in job placement and bar passage at those schools. Can we not give students credit for making decisions about where they want to study outside the rankings?"

I think my answer is "No, we cannot," but I wouldn't put it negatively in terms of "credit." It is very hard for prospective students to differentiate among schools save on the basis of rankings or other reputational indicators; they have every reason to think that it matters to others making decisions about them, too. Potential transfers, the cited population, are a different matter, and I tend to doubt that those students would generally be regarded as making sound decisions in refraining from transferring -- at least absent good information about the quality of teaching and the like at the admitting school. And so, given enrolled students who select on rankings, it becomes awkward to decide admissions policy so as to ignore them.

CBR reports that law students value rankings more than do recent alums, who say that they should look at employment outcomes and affordability, among other things. It would be a better world if the students listened to the alums on this, and if the advice was good. But I wonder whether the alums, when exercising hiring authority, ignore rankings to the degree they urge.

Orin Kerr

CBR, perhaps I am just overly cynical about law schools. But my recollection is that when applications were up a few years ago, and schools could therefore expand class size without taking a hit in the U.S. News numbers, many schools did so.

More broadly, identifying what is in the student interest is tricky, in part because students are a they not an it. When schools decide to shrink, the schools say it's good for the students that are already here: it means higher numbers and better employment figures. When schools decide to expand, the schools say it's good for the students that will be coming: more people get to benefit from the school, and their greater numbers and added tuitions can help the school expand with more course offerings, more professors, and needed building renovations.

JMG

There is a pretty easy way to answer this question as to motive. Look at whether or not the schools in question are "back filling" the lost tuition by increasing the number of transfer students they take. This "gaming" of the system--keeping 1L credentials up for US News purposes, while meeting revenue needs by increasing transfers--has only increased with the drop in applications. If a school is really concerned with adjusting its student body size in response to the realities of the job market, it won't be adding to that class size via the transfer game.

flip

"Am I missing something or is this largely U.S. News driven?"

Professor, it's entirely about jobs. Supply and demand. US News is a distraction. Law schools have graduated too many lawyers for far too long.

A long period of contraction is upon us. The glory days are over.

CBR

It would be really interesting to compare 1L class size, number of transfer students, and LSAT/gpa statistics across a couple years--and I suppose US News is collecting this information now, so it may be more easily available soon.

I also wonder what is happening at the lower end of the scale--what does a tuition-driven school with a median LSAT in the 140s do? (By my count, there are approximately 10 schools where tuition is above $30,000 a year and median LSAT is 149 or lower). With the number of LSAT takers down significantly, there are fewer applicants and the school will probably have a smaller class size by default; they are already largely non-selective. (And flip: I think you are right that supply and demand is driving the decline of LSAT takers; but for the relatively selective law schools, I think that how schools' acceptance rates react to that decline is affected both by a concern for rankings and by a concern for future employment). I also think JMG is right that higher-ranked schools will be looking to cherry-pick good transfer students to make up for the loss in tuition revenue from 1Ls. Some schools are offering significant scholarships to transfer students this year, which was uncommon in years past--and I agree that this is at least suggestive that rankings may be driving the 1L downsizing more than concern for employment outcomes.

I would guess that schools at the sub-150-LSAT level are involuntarily shrinking--but I would be incredibly curious to see what kind of financial impact this is having on them. A number of schools at that level are run as for-profit entities (Cooley, Florida Coastal, Phoenix, Charlotte). They may face a double whammy: students declining to attend, and investors pulling money out. I suspect that the response will be to raise tuition even more (and Paul Campos has pointed out that Cooley did just that this year: http://insidethelawschoolscam.blogspot.com/2012/07/crash.html ). Interestingly, Cooley's website shows an increase in tuition even above what was apparently planned in June 2012 ( http://www.cooley.edu/finaid/tuition_incoming.html ). If Congress would limit the amount of money that could be borrowed through the GradPlus program, raising tuition would be much more difficult--and some of the schools would likely close. Without such limits, though, I suspect that they can raise tuition enough to stay open, if not enough to return much of a profit to shareholders.

FWIW, I think looking at the unranked schools really illustrates why it's not helpful to think in terms of US News rankings for many schools. A school like North Carolina Central (with tuition a little over $11,000 for in-state students) serves a very different mission than a school like Cooley (tuition of $39,750 this year).

CBR

Correction: Cooley is non-profit.

James Morrison

"U.S. News and the Shrinking Class Size"
-------------------

It is jobs. That is it. We have about 45,000+ law graduates each year. It is estimated that somewhere between 33% to 50% will ever get real jobs actually requiring their JD.

The reason the application pool is changing is because the real information is now well documented online. Sources such as 'Law School Transparency' and 'Inside the Law School Scam' have done a solid job of exposing the oversupply of lawyers been dumped on the market.

The funny thing is, if you look at the changing profile of LSAT takers, it is the smart kids that are now avoiding law school. The number of high scoring LSAT students has fallen dramatically. The decline on the lower end of scores has been much smaller. The smart kids have figured out that even those who get jobs as lawyers are actually in a dead end. 3-5 years of biglaw, then washed out? Is that really worth the risk? Most of the smart kids have done the math and figured out that the legal industry is likely facing a huge crash. Then when you consider the impact of Legalzoom.com and Suzie Orman DIY kits, who really thinks small law firms are likely to prosper in the near future?

Do you still think it is just US News? Heck no !!! It is common sense. Going to law school is just pure idiotic these days with the future outlook for the job.

http://www.lawschooltransparency.com/
http://insidethelawschoolscam.blogspot.com

James Morrison

Jacqueline Lipton,
How complicated is your move that you really are this out of touch? I can understand if the story broke over the weekend while you were moving. But that is not the case. This story has been developing for months, if not years. This is a basic economic challenge facing your institution and the entire legal industry.

"It is difficult to get a man to understand something when his salary depends upon his not understanding it."

CBR

James, I think you and Jacqui are talking about different things. You are talking about the shrinking of the applicant pool as a whole, and I think you are right that it is shrinking largely because students are concerned that the financial cost of law school will not be met with employment opportunities that make the investment worthwhile. But Jacqui is referring to how the more selective law schools respond to this change. Those who are more selective can choose either to shrink their 1L class and maintain the same class profile (LSAT/gpa) or they can take the same number of students and lower their profile (again, as you note, the decline in applicants is largest among the better-credentialed applicants). She is not suggesting that the applicant pool is changing in response to rankings, but is rather suggesting that schools' strategies for dealing with the changing applicant pool is driven by rankings considerations.

James Morrison

CBR,
Fair enough points. When this trend started a few years ago, we all thought that it would affect the lower ranked law schools first and they would be forced to make the changes. The conventional wisdom was that smart kids would still apply to top law schools.

However, the numbers seem to be turning that thinking inside out. The smart kids are avoiding law school altogether. There are still plenty of lemmings willing to pay $40,000 (with Grad Plus loans at 7.9%) per year for TTT and TTTT schools. They are already at the bottom, so they certainly don't care about standards when they will accept any mouth breather that can sign a student loan form.

So if tier 1 law schools have to shrink classes to maintain their class profile (aka US News rank) when does that start forcing schools to shrink salaries, cut staff, stop building new law palaces?

Jacqueline Lipton

CBR is indeed correct in the characterization of what I intended to address in my original post. Additionally, I should note that when I referred to being 'out of touch' due to a recent move, I only meant that I missed the early faculty meetings when the specific admissions figures for this year's class first became available for discussion. Indeed, I have been following the larger debates for many years now as have we all ...

James Morrison

Jacqueline Lipton wrote:

"I've met a number of students in recent years happily ensconced at third and fourth tier schools, even though they could transfer to 'higher ranked' schools because they are pleased with the level of student/instructor interaction and support and they are confident in job placement and bar passage at those schools. Can we not give students credit for making decisions about where they want to study outside the rankings?"
---------------------

They may be happily ensconced at third and fourth tier schools, but that happiness tends to end during that third year when they emerge from that bubble and realize that the first student loan payment on that $100,000 to $200,000 debt (at 7.9%) is about to come due. At that point pure panic, anxiety and depression start to trickle into those brains that only produced a 140 LSAT score.

"and they are confident in job placement and bar passage at those schools"

Seriously? If they were foolish enough to enroll at a third or fourth tier school with anything less than a full scholarship, do you really think they are qualified to have confidence in job placement? Those students are twits and got scammed into attend those schools. Probably over 75%+ of TTT and TTTT law grads will never get a job as a lawyer.

CBR

James, I think we're just starting to see the changes. For the schools who cut the class size, there are real financial consequences for faculty and staff (e.g. faculty pay freezes, decisions to hire fewer faculty members, staff layoffs at some schools, and faculty being strongly urged to to "donate back" some portion of their salary at other schools) as well as for students (at some schools, class offerings are reduced; this makes for difficult choices when some of the more useful skills classes can also be among the most expensive). I think you are seeing schools advertise their shrinking class sizes but not necessarily advertising the difficult choices that are made to get to that point--but from what I've heard, schools are making cutbacks. Getting faculty buy-in for shrinking actually helps, I think--faculties willing to do that are more willing to accept a pay freeze etc in order to bring in a smaller class, rather than making cuts in student services/classes/etc. The argument against cutting class size, though, is that the ranking matters less than other aspects of the educational experience, and the number of new attorneys admitted will not change if a 3T school goes deeper into the applicant pool, taking students who would have otherwise been admitted only to a 4T school (or 2t vs 3t, or a school ranked 20 vs a school ranked 35). It's more a question of who bears the costs of the shrinking pool. I can see both sides, though I have been in favor of shrinking my own school.

There are students willing to pay $40,000 for a school with a 149 median LSAT. But I would disagree that there are "plenty" of them--I think they are in short supply this year, and I think this is why Cooley raised its tuition above what it expected to even 3 months ago. This suggests to me that the non-selective, tuition-driven schools are struggling this year. I am also interested to see how price-sensitive students will be. I think we are starting to see more price sensitivity in general (which is good!), but there are likely to be pockets of price insensitivity--and for the reasons I wrote about at the Legal Ethics Forum, I think price insensitivity is likely to be greatest among the students who (1) borrow the most, (2) to attend schools with the worst employment outcomes. If someone knows they are likely to be on income-based repayment for the duration of their legal career, there is no incentive to limit borrowing. This, I think, is how Cooley can get away with what are really significant tuition increases--and why Congress should limit GradPlus borrowing.

But this is a really long answer to your question, which was when we will see spending cuts--the answer to that, I think, is that spending cuts are happening now at all "tiers" of schools.

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