Average tuition at private law schools has increased from under $8,000 in 1985 to around $40,000 this year, growing at more than twice the rate of inflation. Graduates have an average law school debt load of over $100,000. This has become an extremely troubling trend as the job market for law school graduates has declined.
Many factors have contributed to this trend, but none more than the impact of competitive forces in general, and the U.S. News & World Report rankings in particular. I suspect that before the rankings began, schools could have charged considerably more, but self-retraint prevented that. In one sense, what U.S. News has done is to incentivize law schools to lose that self-restraint. This is not to "blame" U.S. News or to deny reponsility for our own decisions. However, in order to understand why schools have increased tuition so much, we must carefully consider the effects of U.S. News.
Why U,S. News Matters
Rankings are widespread in higher education. In legal education, rankings seem to have more influence than in other disciplines (this may be why tuition has increased at a somewhat higher rate at law schools than in higher education in general). Perhaps this is because law in particular, is a hierarchichal, status-conscious profession. In some disciplines, there are more or less credible rankings done by several different entities, which dilutes the impact of any one of them. While there are a number of rankings of law schools, none has nearly as much influence as U.S. News.
Too many legal educators become obsessed with U.S. News. I have seen a few deans campaign for their position promising to game the system to move their school up. Others have issued a press release when they move a handful of spots (needless to say, there is usually silence when a school moves down).
But you do not have to be obsessed with U.S. News to feel its force. All of our constituencies - university presidents and trustees, faculty, students, alumni and employers - care to some extent about our standing in the world as reflected in the rankings. I have been dean when my school has moved up and when it has moved down; I can tell you that moving up is much better.
Prospective and current students are willing to pay a great deal more tuition to attend a higher ranked school, at least when the difference is more than a few spots. My school is currently ranked 67 in U.S. News. Virtually no one who is accepted by a school in the top 50 chooses to enroll with us, even though we are likely offering them a substantial scholarship. Choosing to enroll in a top 50 school may cause a student to incur as much as $90,000 in additional debt. They do so presumably because they think it will be good for their careers. In the other direction, hardly anyone we accept chooses to enroll in a school ranked below around 90. In addition, many students give up scholarships after the first year to transfer to a higher ranked school.
How U.S. News Increases Costs
Law schools have always cared about the prestige that comes from being highly regarded by judges, lawyers, students and legal academics. Soon after U.S. News began ranking law schools in 1989, it became the most visible indicator of prestige. It did not take schools long to begin trying to affect the various factors that go into the ranking. The most heavily-weighted factor is the reputation survey sent to four members of each school's faculty. Schools have tried many things to increase their standing in that survey, including glossy mailings hailing their accomplishments, increasing the amount of scholarship produced by their faculties (which has been achieved by increasing the size of the faculty, reducing the teaching expectations of some faculty and recruiting highly regarded scholars from other schools). Not surprisingly, with most schools following the same pattern, very few have actually succeeded in raising their reputation survey ratings. But this effort has been a major cost driver.
The grades and LSAT scores of incoming students are also major factors in U.S. News. As a result, schools pay more attention to these credentials than ever. Many schools now spend massive sums on scholarships aimed at luring students with higher credentials. The proliferationi of these merit scholarhsips has unfortunately contributed to a major reduction in need-based financial aid. And it has encouraged schools to increase tuition overall to pay for these scholarships.
Let me pause here for a moment to describe how hard it is to resist these trends. Imagine you were dean of a law school some time after U.S. News took hold. Soon you realize that you are losing many of the best type of students you had been attracting in recent years. Why? Because another school in your city or region, ranked around where you are, has begun offering them large merit scholarships. You could choose to ignore the trend and allow the quality of your student body to decline. Or you could begin to offer such merit scholarships yourself. If there is a viable third choice, I don't know what it is.
The focus on recruiting highly credentialed students has also been a cause of another big factor in law school tuition increases: the expansion of law school administrative staffs. Departments that provide valuable student services - career services, student affairs, financial aid, technology - have grown rapidly in the rankings era.
A final example of U.S. News' influence on tuition (although there are many more) is that 10% of its ranking methodology is based on expenditures per student. How this relates to quality U.S. News does not say. But if you spend more on your students, you do better in the ranking. For deans, this has been a very valuable tool in convincing universities to charge less overhead to law schools (the law school as "cash cow" is largely a thing of the past). But it also provides an incentive to raise tuition and spend more.
What Might The Future Hold?
Will law schools begin to cut tuition? With demand for our services down, and with great competition between schools, that would seem logical. However, higher education does not seem to follow this aspect of supply and demand. Very few schools have frozen tuition. Many other schools have slowed tuition increases to around the rate of inflation. Schools are continuing to aggressively court segments of applicants with merit scholarships. I know of no law school, though, that has reduced nominal tuition.
An explanation for this is that charging somewhat less than competitors does not really accomplish much for a school. My school's tuition has gone up more slowly than Chicago-Kent's and DePaul's, our two major competitors in Chicago. As a result, our tuition is now about $2500 less than either school. Because we all offer scholarships to our most desirable applicants, and they tend to look at bottom-line costs, this does not help us attract those students. It does mean that students paying full tuition will incur $7500 less debt over their law school career, but I see no evidence that this really affects their decisions.
Law schools are getting smaller, but as I have discussed, this has a lot to do with rankings. There is no similar self-interest in cutting tuition and even if there were, doing both that and enrolling fewer students would be extremely difficult. It is unlikely that a dean could convince his or her university to accept such a recommendation.
It is possible that external forces will force tuition down. The federal goverment might make eligibility for federal student loans depend on cost-control measures. If more states follow the path of the state of Washington and licence people without a J.D. to do some of the work that until now only lawyers could do, there will be downward pressure on tuition. If the ABA liberalizes its accreditation standards requiring fewer in-class hours or fewer full time faculty, for example), big changes might occur in the cost of legal education (the ABA Standards will be the topic of my next column).