The Law School Scam is but part of a larger transformation in higher education that has been going on for decades - namely, that the cost incurred to obtain the degree is increasingly inversely proportional to the value return it provides. We of the scamblog community feel that law school has become one of the canaries in the coal mine concerning this phenomenon, in that it has spiraled out of control to the point of absurdity. Despite all that has been said, across multiple platforms, about the cost of the degree and the damage the indebtedness can cause, many still do not seem to grasp the impact. As such, I offer the following:
Remember when housing was the primary aspirational asset for a still existent US middle class, to be purchased with some equity down by your average 30 year-old hoping to start a family in his or her brand new home, and, as the name implies, aspire to reach the American dream? Those days are long gone. Back in those days the interest rate on the 10 Year bond mattered as it determined the prevailing marginal affordability of leveraged real estate. That is no longer the case, at least not for about 90% of Americans, because as Goldman shows, while before the great crisis only 20% of home purchases were "all cash", since then the number has soared threefold, and currently the estimated percentage of cash transactions (by count and amount) has hit a record 60%. In other words, less than half of all home purchases are debt-funded, and thus less than half of all home purchases are actually representative of what middle-class America is doing.
So who cares, I hear some ScamDeans and LawProfs say. That is the fault of the larger economy, not the valuable well-roundedness a law degree provides. One should be more than pleased to shell out $250k for the experience, as a law degree is instant preftige and entre into the upper class. Yet:
NAR President Steve Brown, co-owner of Irongate, Inc., Realtors in Dayton, Ohio, said student debt appears to be a factor in the weak level of first-time buyers. "The biggest problems for first-time buyers are tight credit and limited inventory in the lower price ranges," he said. "However, 20 percent of buyers under the age of 33, the prime group of first-time buyers, delayed their purchase because of outstanding debt. In our recent consumer survey, 56 percent of younger buyers who took longer to save for a downpayment identified student debt as the biggest obstacle." Brown notes the survey results are for recent homebuyers. "It’s clear there are other people who would like to buy a home that are not in the market because of debt issues, so we can expect a lingering impact of delayed home buying," Brown added.
Of course, this is across all university-educated people in and around Dayton, Ohio, not just law grads. However, many talk about how $30k+ in student loans slows people down; how much more bogged down are unconnected people with an additional $100k+ in debt, i.e. the average law grad?
The incredible cost of law school does not just delay home purchases, it delays life itself. More than that, it puts life in shackles. If the ROI on law school approached some measure of reasonableness, then that would be one thing. But that is not the case currently. Lemmings, go do something else with your life. Please.
One thing is for certain: I doubt this crowd had difficulty buying nice homes in and around Dayton. Remember that the next time you think about law school, as one cannot, of course, write law review articles "defending liberty" and "pursuing justice" on the cheap.
That's where you come in.