What could be done to solve the apparent "law school crisis"?

kramerkks · February 23, 2011, 4:51pm

<a href=“http://www.nytimes.com/2011/01/09/business/09law.html?_r=1&scp=1&sq=is%20law%20school%20a%20losing%20game&st=cse[/url]”>http://www.nytimes.com/2011/01/09/business/09law.html?_r=1&scp=1&sq=is%20law%20school%20a%20losing%20game&st=cse</a>

Beginning Steps: [A</a> Sign of the Recovery? Law School Applications Fall - NYTimes.com](<a href=“A Sign of the Recovery? Law School Applications Fall - The New York Times”>A Sign of the Recovery? Law School Applications Fall - The New York Times)

What do you think could be done to alleviate the issue at hand? I think there are a few steps that would greatly impact this in a positive way:

<ol>
<li> Put a freeze on opening new law schools starting 2012.</li>
<li> Create REAL statistics about graduates that come out of law school. These must be posted clearly and easy to access on the website. There should also be a percentage of people who have jobs as LAWYERS after they graduate, not just employment. </li>
<li> Close down lower tier law schools that should have never opened in the first place. </li>
<li> Before giving the Grad Plus Loan out to students going to law school, they should be given a disclaimer of the potential things that could happen. </li>
</ol>

What do you think?

Pea · February 23, 2011, 5:08pm

I might be sorry I post this but here goes. I’m 50 years old and I’ve seen more than one industry fall on hard times. I watched the defense industry down-size in the 80s, I’m aware of two academic fields, (math and English) that became glutted in the 90s. The people who fared the worst were the ones who had too fixed of a notion of what their jobs would be. I knew one person who couldn’t see himself doing any work other than in the defense industry for anything less than $70,000 per year, (remember this was 1990). Things didn’t go well for him. It was the ones who could expand their vision of what they could do and who would settle for a lesser salary than what they had expected to earn who fared better. I also think it is important to note that at the end of the article on page 7 Mr. Wallerstein said that he wasn’t sorry about getting a law degree

I think a person should study what they are interested in and then not have too set of a fixed idea of what they will be doing down the road. That said, I don’t think anyone should take on too much debt in pursuit of any dream.

bluebayou · February 23, 2011, 5:17pm

Eliminate federally-supported grad loans, or allow loans to be discharged thru bankruptcy.

NYU2013 · February 23, 2011, 9:11pm

^^^

(1) You can’t blame the federal government for what colleges are doing. Some excellent students could not afford to attend law school without those loans.
(2) You want to discharge loans through bankruptcy? Let’s see… The US is… 14 trillion dollars in debt and climbing? We owe most of that to China? What happens when they come after us for money? No. Allowing bankruptcy only worsens the situation since then your taxes would go up to cover the lost costs. As much as we all enjoy higher taxes, I don’t think anyone would vote for that.

The only real, viable solution would be (1) to make it more difficult for law schools to be accredited and possibly knock out some of the lower ranked ones who’s students, for the most part, find it very difficult to be employed and (2) to reduce the size of law schools overall. The only way to fix the problem would be to reduce the amount of people going to law school. The problem is that there aren’t enough jobs in the legal field for the number of people graduating. That has nothing to do with ability to take out loans to go law school. That has to do with the number of law schools that are accredited and how many students they graduate each year.

Greybeard · February 23, 2011, 11:47pm

If you’re suggesting that something be done, it would be helpful if you say who should do it, and under what authority they should be acting.

I don’t think there’s anyone who has the legal authority to say, “Don’t start any more law schools.”

Unlike the AMA, the ABA has never taken the position that it would refuse to accredit new laws schools in order to protect the fees earned by current practitioners. It’s certifying that their member schools have the facilities in place to give their students an adequate legal education.

I’m not sure who would is in a position to compel law schools to reveal information about themselves, other than their prospective students.

Those that post false and misleading information about the employment prospects of their alumni are putting themselves in legal peril. If I were inclined to commit fraud, I would think that the last class of people I would want as my victims would be a large group of lawyers with a lot of time on their hands.

Fly_The_Helo · February 24, 2011, 1:28am

^^ I LOL’d.

zaprowsdower · February 24, 2011, 10:12am

I’m not sure this is an issue for many law grads. I don’t think the problem is people holding out for biglaw jobs despite having no real chance of landing one and turning down lower-paying jobs in the meantime. If anything, the problem is sort of the opposite: people tend to assume there will be more decent, if lower-paying, options than there are, and believe that a JD will open far more doors in other fields than it actually does.

It’s a good illustration of a mentality that leads people to apply to terrible schools. If you believe that simply becoming an attorney is prestigious and impressive, then you can justify going to Thomas Jefferson School of Law.

This doesn’t make any sense. The fact that there are more graduates than jobs has nothing to do with how easy it is to get a loan to go to law school?

The ABA, obviously. They already require the schools to disclose a lot of information about themselves.

lskinner · February 24, 2011, 11:58am

This is exactly the sort of wrong-headed thinking which got us into this mess in the first place. Tuition is ridiculously high BECAUSE of the easy availability of loans which creates artificial demand. Before student loans became widely available in the 1970s, it was possible to pay for college or law school just by working a part-time job during the school year and working full-time in the summer.

Only if the government were on the hook. If just the schools or private lenders were on the hook, then taxes would not be raised by even a penny. Instead, schools and lenders would admit and lend money only to people who have a good chance of finding sufficiently remunerative employment to pay their loans back. Which is exactly what we want to happen.

lake42ks · February 24, 2011, 12:10pm

Unless s/he also get training (with a degree) in other fields.

bluebayou · February 24, 2011, 2:21pm

<a href=“1”>quote</a> You can’t blame the federal government for what colleges are doing.

[/quote]

Sure I can. Did you miss the 60 Minutes segment on the massive growth of for-profit educators, all of whom live off of the federal dime. Do we REALLY need the University of Phoenix to add a law school? Does it help US society?

Yup that is true and probably beneficial to them in the long run. What good is giving them a a loan for $200k when the job that they can find pays $60k. (see the bimodal distribution of legal salaries)

OTOH, if Harvard, Stanford and Yale really do want diversity, including economic diversity, they’ll take the cash out of their endowments so such low income students can attend.

<a href=“2”>quote</a> You want to discharge loans through bankruptcy? Let’s see… The US is… 14 trillion dollars in debt and climbing?

[/quote]

Let the law schools assume the debt, or private lenders. Get the US government completely out of it.

Voila, no need to "regulate’ law schools bcos many will just go out of business on their own.

bluebayou · February 24, 2011, 2:22pm

deleting duplicate post

mochamaven · February 24, 2011, 3:45pm

Um…Harvard Yale and Stanford DO pay out of their endowments. And have loan forgiveness programs.

jonri · February 24, 2011, 4:08pm

I agree that private student loans should be dischargeable in bankrupty AFTER X number of years following graduation–perhaps about 10.

In the old days, the problem was that as soon as folks got their JDs or MDs, they declared bankruptcy and left their federal student loans unpaid.

So, the law was changed. However, for a significant period of time, the law was still that PRIVATE loans could be discharged. The result was that banks were cautious in making loans.

Then the bankruptcy rules were changed so that private student loans can’t be discharged. So, banks gladly hand out loans which they would NEVER make if the loans couldn’t be discharged in bankruptcy. And, as others have said, when the money became readily available, tution jumped.

FAFSA caps the amount of money you can borrow for law school. I agree that these loans shouldn’t be dischargeable in bankruptcy. But, IMO, after some period of time, private loans should be.

At the very least, there should be rules which prohibit things like penalties and attorney’s fees being included in the amount which can’t be discharged in bankruptcy.

sallyawp · February 24, 2011, 4:21pm

I agree with greybeard’s statement above.

I know that without the availability of a pretty massive amount of federal and private student loans, I would not have been able to attend law school. However, I went into law school with my eyes wide open, having taken time to work in NYC for a few years before attending law school, and having researched student loans and the law schools to which I applied.

I knew that I would have to find myself a BIGLAW job, but I knew that the law school I was going to attend had an excellent track record in that regard. Was that a risk? Sure. At that time, however, a significant percentage of students at my law school (particularly JD/MBA candidates, like I was) did very well during the on campus recruiting process. This is (or should be) still a major factor for potential law students in choosing a law school.

I also (wrongfully) believed at the time that attending a law school that was not as highly ranked as others to which I had been admitted would give me a leg up in my classes. I would not recommend making that same assumption. Law school exams are often unpredictable, and in most cases, a law student’s entire grade is determined by that one final exam.

The reality is that law schools need not act as guardians, providing you with warnings and explanations about what may occur in the future. (The caveat, of course, is that law schools that fraudulently manipulate placement statistics should get what is coming to them.) There are almost always success stories (no matter how infrequent) that law schools with poor placement statistics may shout from the rooftops. It is each potential law student’s obligation to question the “advertising”. Potential law students must also understand the potential effect that six figures worth of student loan debt will have.

Lskinner may have a point (and I don’t know enough about it to agree with the causal relationship lskinner posited) that tuition has risen because of the availability of federal student loans, but today, here and now, it is incumbent upon potential law students to think critically about the very serious decision to attend law school.

lskinner · February 25, 2011, 7:12am

Thank you. I see it as being analogous to polygamy. A lot of men support legal polygamy because they like the idea of having multiple wives. It does not occur to them that polygamy will also allow other men to have multiple wives so they are actually likely to end up worse off.

Similarly, when a lot of people think about student loans, it seem good that they can borrow money for college or law school. It does not occur to them that if other, more foolish, people can borrow, those people will bid up tuition levels and they will end up worse off.

bluebayou · February 25, 2011, 11:22am

Cash is fungible.

To make give an example in less theoretical terms, look at Pell Grants for undergrad. Every time the Pell is increased, Harvard can raise the need-based aid to the near-wealthy ($180k income levels) bcos the increased Pell is less aid that Harvard has to provide to the low income students out of its own endowment. Similarly, an increase in the Pell easily allows Harvard to raise tuition since it has no impact on the poor, and thus the press won’t care.

NYU2013 · February 25, 2011, 11:36am

lskinner…
By brining up the rate of inflation of education, you’ve opened up an entirely new problem. OP only asked about what could be done to fix law schools, not education as a whole. The argument has been that soon the “college bubble” will burst and people will simply just stop going. Because, in reality, college does not help all people. In fact, for a large majority of people, it only in-debts them while not gaining them anything substantial. If colleges continue the way they have been and american society as a whole continues as it has, college, along with the upper middle-class will become elitist. Eventually, only the upper middle-class and very wealthy will be able to afford education. But that’s breaking into an entirely different realm and dealing with different theories.

We don’t need to allow students to default on (private-only) loans, that only teaches irresponsibility and “how not to deal with debt.” And then the banks lose money and they come after you for that money. No one seems to be understand that if students default on loans, it’s everyone else that has to pay. E.g. your mortgage rates go up, the % charged on investments goes up, etc. Banks aren’t here to lose money, they like the government would with taxes, make up for the lost money in other places. Let’s not have another repeat of “financial crisis” like we just did. We saw how badly the US government handled that one.

Also, you seem to directly correlate the availability of loans to law schools being at fault for charging their tuition rates. There’s no logical deduction there. You’re leaving out the decisions of students. Students should not be taking out loans for things that will not make them better off. This is faulty decision making on the student’s part. Not on the lenders part. Assume an excellent student gets into H/Y (other T14) and assume it’s likely for them to come out a top student and land a big law job. Assume also that they need loans to pay off the cost. If we were to do it your way, you would make this student worse off by not allowing them to take out loans to attend law school. Is this a solution? Certainly not. You’ve now cut off students with great potential because of cost AND you’ve blamed the wrong people for the current problem. Loans are not the issue. The law schools themselves are.

Viable solutions still remain: Restrict the number of law schools allowed in the US. That way only X number of students graduate each year for Y number of jobs. Currently there are simply too many lawyers and not enough jobs. Easily the result of allowing too many law schools / too many people to attend. This way, no one is restricted from going if they will be made better off by going, rather than your way, which simply restricts who may go.

Polo08816 · February 25, 2011, 1:44pm

Nothing should be done. People need to make educated and realistic decisions for themselves. If they in-debted themselves going to law school, that’s their problem.
Life’s tough and it has long-term consequences.

bluebayou · February 25, 2011, 3:28pm

Actually, you are missing the point. There will not be any loans available if they are dischargeable thru bk court. No bank will make a loan without a government guarantee. Thus, the default rate will go to near zero.

The current banking crisis was a direct result of government involvement, essentially a federal guarantee of Freddie and Fannie, pushed by Congress. Without that guarantee, fewer risky loans would have been made, and fewer would have been in default.

Logic has nothing to do with it. A few prominent economists have studied the issue and it is they who have concluded that federal money for some increases tuition for all.

Concur but only in part. The problem – as it exists for EVERY government program – is the unintended consequences of that program. Indeed, you even recognize the unintended consequence bcos you then suggest that law schools be restricted. My point is that without loans, there would be fewer law students and fewer schools and therefore nothing to restrict.

lskinner · February 25, 2011, 6:08pm

I think the problem of huge increases in tuition is intimately related with the problem of loans. People think they need loans to pay the ridiculous tuition, but without loans tuition would not be ridiculous in the first place.

Well why have bankruptcy available for any kind of debt?

Exactly. If private loans were dischargeable in bankruptcy, nobody private lender would lend money for someone to attend a low-ranked law school. So low-ranked law schools would have to either cut tuition or go out of business. Which is exactly what we want to happen.

They shouldn’t, but unfortunately enough do that it ruins things for everyone else. The same thing happened with housing a few years ago. There were so many yahoos taking out ridiculously large liar-loans, the markets were overpriced for everyone, even prudent people.

Anyway, even if students are behaving foolishly, it doesn’t change the fact that getting rid of guaranteed student loans and making private loans dischargeable in bankruptcy would force tuition down.

First of all, that’s probably not true. When I went to law school in the 90s, private loans were fully dischargeable in bankruptcy. They were still available, but not for students attending the lowest-ranked schools.

If there were no government loans and private loans were dischargeable in bankruptcy, it would still be possible to borrow money to attend high ranked schools. However lenders would look carefully at the student’s credit history and employment prospects to make sure there is an excellent chance that the student will make enough money to service the debt. Which is exactly what we want to happen.

Second of all, you are looking at the student in isolation and ignoring the fact that without easily available student loans, tuition would drop.

It’s not a matter of blame, it’s a matter of solving the problem. Law schools can be expected to raise tuition to soak up the maximum amount of student loan dollars available. A significant percentage of law students can be expected to borrow money foolishly. It’s easy enough to condemn the law schools for their greed and to condemn the law students for their folly. But blaming will not solve the problem.

Anyway, I really would like an answer to my question:

If allowing discharge of private student loans in bankrutcy is bad because it “teaches irresponsibility,” why allow any loan debts to be discharged in bankruptcy?

What could be done to solve the apparent "law school crisis"?

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