Over at Inside the Law School Scam, the anonymous “Lawprof” has some interesting posts, here and here, on why law school tuitions have grown so much over the last 20 to 30 years. I agree with some of it, but I wonder if it’s also missing a significant part of the picture: The combined role of rising law firm salaries and readily-available student loans.
I’m not an expert in these topics, but here’s my sense of what’s happening. Law school tuition has risen greatly, but so have the salaries offered to first-year associates at large law firms. For example, when I was in law school in the mid-1990s, Harvard Law’s tuition was about $20,000 a year. In contrast, today’s tuition is $45,450 per year. But the salaries at the big law firms that most students aim to work for have gone up at about the same rate. When I was interviewing for a job at the big law firms in DC in 1995-96, the big DC law firms paid $74,000 to their first-year associates. Today the standard first-year salary at a big DC law firm is $160,000. If you compare the rates of increase since the mid 1990s, then, tuition has gone up 127% and salaries have gone up 116% (both in unadjusted dollars).
That’s a slight difference, but not much. The ratio of law-school-cost to employed-lawyer-income has been relatively steady. And while the ratio is hardly fixed, I don’t think it’s entirely random. My sense is that the high salaries offered to associates at big law firms have made many students less sensitive to debt than they otherwise would be, which has in turn lessened pressure on schools to limit tuition hikes. Put another way, if law school buys you a ticket to make $160k a year plus a bonus, with your salary rising steadily to $210,00 plus bonus by your fourth year, you’re not going to be as sensitive to the cost of that ticket as you otherwise would be. And if you’re not as sensitive to the cost of the ticket, the cost of the ticket is more likely to rise.
Government-supported student loans are the other part of the picture. Government support enables loans to be obtained regardless of how likely it is that a particular student will get one of those high-paying jobs. This makes it easier for students to take on loans now without fully confronting how they’ll pay the loans back later. As a result, it’s easy for students to take on debt now and just be optimistic that they’ll get a great job later. The shameful lack of candor among law schools about student employment prospects certainly hasn’t helped, at least to the extent students actually rely on those representations. But the ready availability of the loans, plus the known prospect of a possible $160,000 a year salary (plus a bonus) after just three years of study, has created an environment in which law schools haven’t had the pressure to limit tuition increases that they would have had otherwise. Today’s high tuition is a cumulative product of that culture.