Friday, January 1, 2021

Which law schools are worth attending? Part II

Just over six years ago, Old Guy posted his first article here to answer an important question: which law schools are worth attending? Using a simple but reasonable model and the data supplied by our friends at Law School Transparency, he concluded that 13 schools—Berkeley, Columbia, Chicago, Cornell, Duke, Harvard, Michigan, Northwestern, NYU, Penn, Stanford, Virginia, Yale—were "the only ones that anyone not independently wealthy should consider". Just maybe the total could be raised to 16 by including three marginal schools that people paying little or nothing might consider as long as they understood that "they [were] taking a big risk".

This recent report by Andrew Gillen of the Texas Public Policy Foundation revisits Old Guy's question. Pointedly entitled "Objection! Law schools can be hazardous to students' financial health", the report assessed law schools' performance and relative value by applying "a debt-to-earnings test called Gainful Employment Equivalent (GEE)" (at 1) to data from the US Department of Education. Of the 218 law schools (not all accredited), 168 had publicly available data; the others were so small that the Department of Education concealed their data so as to protect the privacy of students and graduates (at 2).

How many schools met Gillen's standard? Exactly as many as Old Guy cited in his more generous estimate: "of the programs with data, only 16 (10%) law schools pass GEE, with another 30 (18%) on probation. A shocking 122 (73%) law school programs fail GEE. Thus, almost three quarters of law school programs leave their typical student borrower with a debt so high relative to their post-graduation earnings that they are unlikely to be able to afford to make their student loan payments" (at 2).

The following are the schools that passed GEE (at 5–9):

  • Berkeley
  • Boston College
  • Chicago
  • Columbia
  • Connecticut
  • Harvard
  • Iowa
  • Michigan
  • Northwestern
  • NYU
  • Penn
  • Stanford
  • Texas
  • Vanderbilt
  • Virginia
  • Washington University in St Louis

This list will surprise the esteemed readers of Outside the Law School Scam for including several mediocre institutions while omitting some well-regarded ones. Most of the mediocrities barely scraped through. As for the missing élite institutions, please note that Cornell, Duke, and Yale were omitted for want of data, probably because relatively few of their graduates took out student loans.

Since Gillen's data come from 2015–16, the report amusingly includes the über-toilets that have shut down since that academic year, the first of which was Indiana Tech.

Gillen aptly observes that "only 15% of law school graduates attended a program that passed GEE. Another 17% attended a program on probation [by the Department of Education]. An astounding 68% of law school graduates attended a program thath fails GEE, indicating that the typical graduate ho borrowed will be unable to afford their student loan payments. In other words, for every law school graduate from a passing program, there was one graduate from a program on probation, and four graduates from a failing program" (at 2).

A glance at the five-page list of law schools shows that debt, where reported, is typically well past $100k. The following had median debt in excess of $185k (and remember that this was five years ago): Florida Coastal ($198,655), Whittier ($196,008), Thomas Jefferson ($195,892), Southwestern ($193,653), Arizona Summit ($188,191), Charlotte ($188,985). Small wonder that four of these six are defunct (well, Thomas Jefferson still operates, just without ABA accreditation) and that at least one of the others has one foot in the grave. In the department of earnings, the long-reported bimodal pattern stands out in sharp relief: 7 schools have median earnings above $150k, 19 have median earnings below $40k, and most of the rest seem to be close to the lower end (perhaps below $55k).

Unsurprisingly, high debt often accompanies low earnings. Of the six mentioned above where median debt exceeds $185k, the highest median earnings were $45,200 (at Arizona Summit, in case you care to know). Arithmetic could not have informed many decisions to enroll at über-toilets where the median debt is more than four times the median earnings.

Old Guy is grateful for Gillen's effort but wishes to point out that median earnings at the time of graduation are unlikely to last: even those few who get jobs paying $150k or more are likely to lose those jobs within three or four years—and find themselves unable to make comparable money again. Borrowing $183,857 to go to NYU, or $129,030 for Vanderbilt, is likely to turn out badly when the income that supports the high payments proves temporary. In addition, the median figures may be misleading. Harvard's median debt of $133,617 may appear manageable, but remember than many students get the entire cost paid from a trust fund or a parent's bank account and thus do not borrow anything, while many others borrow all or nearly all of the cost and thus run up a debt in the vicinity of $362k at graduation (figure from Law School Transparency). Debt around $362k is unaffordable even on a median income of $158,200. Similarly, median earnings often conceal a great deal of variation—especially at the bottom end, with quite a few graduates being unemployed or making little money at a temporary, part-time, or non-legal job.

Old Guy therefore stands by his original list. Perhaps Vanderbilt can be appropriately added (it was one of the three marginal candidates on Old Guy's extended list of sixteen schools), and Old Guy is willing to entertain arguments on behalf of Boston College, Connecticut, Iowa, Texas, and Washington U, especially for applicants receiving a full scholarship. Gillen and Old Guy differ on three or four schools (presumably he would accept Cornell, Duke, and Yale even though their data are not public), which is to say that they substantially agree—and that should come as no surprise, since their analyses are based on relevant facts and logic, not on arbitrary "rankings" by some long-defunct magazine or propaganda from admissions offices or pie-in-the-sky fantasies by lemmings who expect to achieve a financially successful career even though most new JDs today do not.

Although we can argue about the merits of individual law schools, the key point is that only about one school in twelve works out adequately for the median student when we generously and unrealistically assume that income shortly after graduation will not decline until the student loans are paid off. Anyone considering a law school can start with Old Guy's list or Gillen's (the latter should be supplemented with Cornell, Duke, and Yale) but must perform the financial analysis in light of individual circumstances. Perhaps UCLA on a full scholarship wouldn't be a horrible idea for you even though Harvard with no scholarship—and no trust fund or benefactor—would be. 

Gillen's final paragraph (at 4) can appropriately end this article as well: "Among the riskiest of the largest academic fields is law. Seventy-three percent of law schools fail these debt-to-earnings tests, and 68% of law school graduates attended a program that fails. Students should think twice about enrolling in one of these failing programs, and policymakers should stop providing taxpayer subsidies for them."