Monday, November 21, 2011

The Responsibility of Yale Law School for the Rise of Tuition Nationwide--And What It Can do to Help

Brian Tamanaha

Yale Law Professors Akhil Reed Amar and Ian Ayres (a fellow Balkinization contributor) recently posted a thoughtful essay on Slate noting the problems with tuition and debt. Tuition at private law schools has more than doubled in real terms in the past quarter century, average debt among law graduates is approaching $100,000, many graduates are not getting jobs as lawyers, and many who do get lawyer jobs do not earn enough to manage their monthly loan payments. Their main proposal, which they are urging their dean to implement, is to encourage law schools to offer law students a one-half tuition rebate to drop out of law school after the first year. By then, students will know whether they are interested in a legal career and their likelihood of landing a decent-paying job.

That’s an easy offer for Yale to make, as Amar and Ayres acknowledge, because few Yale law students will take it. In addition, Yale already takes in plenty of transfer students at the end of the first year (about 10% of the class), which will allow it to easily recoup the cost of the handful of students who walk away with the one-half refund. Realistically speaking, few other law schools can afford to make such an offer.

If Yale law professors really want to make a difference for law students across the country, they must lobby their dean on the issue of tuition. Yale bears a direct responsibility for the rise in law school tuition noted by Professors Amar and Ayres at the outset of their piece.

First some numbers. From 1985 through 2009, resident tuition at public law schools increased by a staggering 820 percent—from $2,006 to $18,472 (non-resident tuition increased by 543 percent, from $4,724 to $30,413)—while tuition at private law schools went up by 375 percent—from $7,526 to $35,743. These increases far outstripped the rate of inflation. Had tuition merely kept pace with inflation, average resident tuition at public law schools today would be $3,945, less than a fourth of what it is, and average private school tuition would be $14,800, less than half of what it is. Law school would still be affordable if law schools had not extracted such a large premium over inflation.

Now let’s look at Yale. Tuition at Yale Law School was $12,450 in 1987; in 1999 it was $26,950; in 2011 it was $50,750—an increase of nearly $24,000 in just the last dozen years. Factoring in projected living expenses ($18,900), Yale students without scholarships (half of the class) who commenced their legal studies in 2010 will pay more than $200,000 to obtain their law degree. If the recent rate of increase continues, ten years hence tuition at Yale Law School will exceed $70,000 annually. That might sound impossible, but ten years ago many would have scoffed at the suggestion that that tuition at Yale would be $50,000 today.

Why is Yale law school responsible for the rise in tuition nationwide? As Henry Riggs, the former president of Harvey Mudd College, explains, “Tuition in the private higher-education industry is a classic example of price leadership—the ‘top players’ define the sticker price and all others follow suit.” Universities and law schools show the same pricing patterns: elite institutions charge the most, and others are priced below them in rough correlation with their ranking (with the exception that non-elite law schools in large legal markets are able to tack on a premium owing to their location). Tuition varies in relation to prestige—not costs—because the perceived value of the education affects how much students (and their parents) are willing to pay for it.

When Yale (and other uber-elites) raised its tuition each and every year by a significant amount, every other law school in the country rose as well under its wings. Law schools have raised their tuition every year because every other law school was doing the same, and students kept coming.

Yale bears special responsibility for the simple reason that it is the most elite law school and it ramped up tuition without restraint. By heedlessly raising tuition, other elites were able to do the same, and everyone else followed. If Yale had increased tuition by “only” $10,000 in the past decade, it is likely that average law school tuition nationwide would be $10,000 lower today. That is because other elite law schools could not price themselves significantly above Yale (Columbia tuition would not be at $50,000 today if Yale was at $40,000), and non-elite law schools could not price themselves above the elites. Tuition increases overall would have been more restrained.

Professors at elite law schools might ease their conscience about the extraordinary tuition increases in the past two decades by pointing to their generous loan forgiveness programs, made possible by the substantial wealth of their institutions. This of no help, however, to the 45,000 law students (annually) at the 190 or so law schools that offer little debt relief—students whose debt went up as a result of the tuition increases of the elites.

The folks at Yale can respond that they have exercised restraint, in the sense that they could charge much higher tuition and still fill their seats with the very best students. That is correct. Yale would still have students (from wealthy families) clamoring to get it even if its tuition was $70,000 today. But this response is valid only if uber-elite law schools deny any obligation to consider the broader social consequences of their actions.

Now, in fairness to Yale, it must be said that other law schools could have and should have restrained their own tuition increases. Yale is top of the line, charging top of the line prices that still give value to its students. Few law schools are in its league, however, and by jacking up their tuition along with Yale, other law schools, particularly non-elite private law schools, have come to charge far in excess of the value of their degree. Yale is not morally responsible for the actions of other law schools which followed their lead. Nonetheless, what happened was predictable and observable, and here we are.

The negative consequences of this extend beyond the mountainous debt many law graduates now bear. The most harmful social consequence wrought by law schools in the past two decades is the creation of an enormous economic barrier to a legal career.

A disheartening irony lies in this: The mantra of progressives is social justice; key aspects of social justice are equal opportunity for all, and access to law; most law professors on elite faculties (including at Yale) are progressives; by greedily raising tuition, however, elite law schools, and all the rest of us, have worked against social justice to an extent that might exceed all the aggregate good accomplished for progressive causes by liberals on law faculties. Students from middle class and poor families who are frightened by the size of the expected debt will not go to law school. We all but force graduates to seek corporate law jobs to manage their debt payments and our tuition-scholarship matrix has helped the wealthy consolidate their grip on elite legal positions.

The harm has already been done. If Yale law professors want to make a real difference going forward, they are uniquely situated to have an outsized effect: they can lobby their dean to declare a five year tuition freeze effective immediately. That would be a dramatic statement with industry-wide ramifications. Anything less than that is tinkering.


Who sets the cost of tuition at Yale Law School? Is the University involved? I do not think you can separate the cost of Yale Law School from the cost of Yale College. It costs a huge amount to go to Yale College. Why would the cost of the Law School be significantly less?
Yale Law students do very well in the world. People want to go there so they will have their pick of opportunities—which they do. What dollar figure would you set for home much that is worth? I am not being facetious. How should Yale have set its tuition pricing over the years? I am not arguing the price they set is right. I generally support your efforts to bring attention to problems in the current system. But, I want to know how you think they should have gone about setting their tuition, particularly in light of what the rest of the university was doing.


I don't know anything about how Yale sets its tuition, although it is likely that the University had a role in pushing up tuition. And you are right that Yale law students still get value for their money. None of that detracts from or responds to my point: as a price leader that kept upping the price in large amounts, Yale is responsible for the rise of tuition nationwide, which has had major harmful consequences outside the halls of Yale, Of course, Yale is not alone in doing this, but it had the power to restrain it. What it would have taken is a sufficient number of faculty members, or the dean, to decide that tuition was going up by too much too quickly.

Thanks for your response. I do have a problem with the monocausal nature of your analysis. If only Yale (and do you specifically mean Yale Law School) had not raised tuition, the cost of education in America would have been much less. I don't know.
And I still think details matter. Who sets the tuition at this institution? How can we place blame for tuition rises, if we do not know who has the power to make the call? We are not engaging in a legal argument, but specifics like that matter in an analysis. Students would be expected to ask that question before they constructed an argument, pro or con. And as for complicity, which is what you are charging the Yale faculty with, what about the responsibility of other law schools? If this shaped all law schools, why weren't all law schools and faculties responsible for writing to Yale and saying, "Don't do this?" Who did that?

By the way, what I wrote above is not an argument against holding the line on tuition.

I greatly admire Brian's observations on the contemporary political economy of legal education. I suggest, though, that he is off the mark in some particulars of his analysis cncerning tuition at Yale. For many elite schools, tuition is like the initial asking price in an old-fashioned car dealership. What one needs to know is the actual range of amounts paid by the Yale students. Why wouldn't it be equitable, for example, to RAISE the tuition to $100,000/year for those who can afford it while offering every more generous scholarships to those who couldn't even afford $25,000 (or, indeed, $5K)/year. I.e., extracting from the top tuition based on ability to pay and then giving to the bottom on the basis of need? It would be foolish in the extreme for Yale to cut back its tuition, say, to $40K, and concomitantly cut back on its subsidies to the less well off. (I'd even be amenable to the prospect of Yale auctioning off five seats, in part to establish a "market price" among the rich and in part to allow a test of whether those who flagrantly bought their admission would in fact fare worse as students than those 7% or so culled out of the entire admissions pool.)

No doubt Brian has good answers to these suggestions, but I'd be eager to see what they are.

The problem with having a high sticker price and then discounting it is that the opacity of the process allows follower schools to point to the sticker price of Yale to justify their own price increases while not feeling any pressure to follow suit with respect to discounting.

This is the same point BT made with respect to tuition forgiveness programs which are far less uniform than sticker prices.

@Brad-- "follower schools" point to Yale too whom? What follower schools are telling applicants that the tuition they charge is just fine because it is based on Yale's tuition? Why wouldn't it be incumbent upon a person "hearing" this not to ask whether that made any sense, to ask "What is the difference between the follower school I'm interested in and Yale"? The answer, of course, would be almost everything. Is there really no required curiosity or sense of self-protection involved in this process at all?


Non-profits have elevated obligations as compared to for profit corporations, which are expected to be entirely mercenary.

Caveat emptor is simply not good enough, particularly for institutions who not only receive the benefits of tax exemption, but also constantly preach the merits of social justice.

Thar is not responsive to my post. What institutions tell applicants that the tuition they are charging is based on Yale's tuition.

Of course I meant "that" is not responsive.

I would add that if schools are saying this to anyone, they should know what Yale is doing before they follow along.

"Yale is not morally responsible for the actions of other law schools which followed their lead."

It seems the entire rest of your post is making an argument that you contradict with that sentence. Which is it? Do they bear the responsibility for heightened tuition elsewhere (since you concede their own tuition, with loan forgiveness, is pretty unproblematic), or don't they?

If other schools followed their "lead" without understanding what Yale was doing to mitigate the effects of their high tuition,that's not Yale's fault.

I would simply like to lend anecdotal evidence that law school tuition has left many middle class college graduates of my generation hesitant to pursue a legal career, despite being equipped with proper skills and having quality GPA and LSAT scores.

As an individual who scores a 167 on my LSAT and having a 3.5 GPA from a Big Ten University, the best public law school in my state would still leave me with ~$60,000 in loans, with an additional $20,000 pending from my undergraduate education. The prospects of being nearly $100,000 dollars in debt is simply too daunting--nearly the price my parents paid for their home at a similar age. At this point I, and several of my peers, feel that playing the Law School casino too much of a risk, despite having displayed a passion for law and legal history throughout our undergraduate career.

Without parents who could come to my rescue should my big J.D. bet fail, I have a difficult time pursuing a profession I have longed to join. I hope my youth sustains itself long enough that I will find the decision easier to make while I am still in a socially responsible position to attend law school.

Sandy (nice to hear from you!),

The problem is not with Yale in isolation, but with the consequences of its (and the other upper elites) tuition increase on every other school.

Yale might be engaged in a redistribution along the lines your suggest--charging those who can afford it and using that to subsidize those who cannot (only half the class received scholarships). But Yale is unique because it does not have to buy LSAT scores to the same extent that other schools must. It is because of this necessity that scholarships nationwide have moved from mostly need based (15 years ago) to almost entirely merit based now.

So here is the problem: When Yale increases it tuition, everyone else goes up in price as well. Yale might use the extra money to support those in need, but other law schools will use the money to pay for high LSAT scores--in the latter context what often results is that the bottom half of the class (with the worst job prospects) ends up subsidizing the top half of the class (with the best prospects).

Yale might be using its pricing power to play Robin Hood (I don't know this), but other schools are using their excess revenue to construct a reverse Robin Hood arrangement.


My answer to you follows from my response to Sandy.

Yale can be "responsible" for the tuition rise nationwide in the direct sense that it followed directly from its actions (again, along with other uber-elites). But that sense of responsibility is different from "moral responsibility."

For the latter (moral responsibility) to attach, Yale must have some moral obligation to factor in the likely negative external consequences of its actions. I have not made such an argument here.

Having said that, I am urging Yale to think about the broader social ramifications that follow from its actions--even if Yale cannot be blamed for these consequences in a moral sense.


If Yale does not bear moral responsibility, then why should it have a special onus to fix the problem or prevent its excacerbation in the future? Lots of things "directly" cause lots of effects in the more value-free sense of responsibility you posit. To take an extreme example, Bill Gates "directly" causes higher law school tuition by his decision not to donate $10 billion to law schools. Calling for someone to take special measures against a problem almost inherently attributes moral responsibility to them.

Leaving the special culpability of YLS aside, I would like to know what Brian/Prof T. thinks is driving this increase in {sticker} tuition?

At undergrad colleges and many universities, we hike tuition to pay for every-more elaborate gyms, dorms, and unions, as well as to subsidize sports teams and pay for expanded disability services.

I assume that most of these are not directly connected with LS tuition. So, what is it?

WV: sioutent. Really??

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I have forgotten much of antitrust law that I had to consider in earlier days of my law practice (pre-Ronald Reagan), but conscious parallelism comes to mind in connection with how law school tuitions are set. Has there been a study on this? If not, should there be?


The bottom line of what is behind tuition increases is that we have been able to increase tuition without suffering from a reduction in demand that hurts, at least so far. Demand continues because there are enough people who continue to believe that law school is a worthwhile investment. They are willing to pay, in other words, and the federal loan system gives them the ability to pay.

I say "so far" because I believe that demand has in fact been falling in the past ten years (see my recent post "more ominous signs...") in a way that has not been visible on the surface.


You make a good point. Let me clarify that, although I did not make a moral argument in my post, that does not mean no moral argument can be made.

The essential question for me is whether Yale law school professors have an obligation of some sort to consider the harmful external consequences of their actions. Let me set aside a moral argument (I am not a fan of moral argument), and make one that relates to the goals of progressive law professors.

My basic point is this: if they value equal opportunity for all and access to law, then their actions are producing consequences that work against these goals.

You are forcing my argument into moral terms--and it can certainly be read that way--but it could also be read as a pragmatic one: if you really want to achieve your goals, you must change what you are doing.

Prof T. I hate to keep bringing this up, but do law profs set the salary at Yale? You write as if they are the sole people involved. How does it work at your school? Does your faculty set the salary and, could the faculty decide to lower it significantly? Forget what the folks at Yale have done. Could your law faculty vote to lower tuition? I don't mean symbolically, but in a way that would bind the university?

This is the same point BT made with respect to tuition forgiveness programs which are far less uniform than sticker prices.

Brian's response to CTS:

"The bottom line of what is behind tuition increases is that we have been able to increase tuition without suffering from a reduction in demand that hurts, at least so far. Demand continues because there are enough people who continue to believe that law school is a worthwhile investment. They are willing to pay, in other words, and the federal loan system gives them the ability to pay."

brings to mind a discussion at a Board of Directors meeting in the early 1970s at which the founder and CEO of medical device company that I served as General Counsel as well as a Director gave a presentation of a new product it had developed for which there was great promise. An outside director (a Harvard Business School professor) inquired of pricing. The CEO furnished an anticipated price, stating a significant profit margin. The HBS professor suggested that rather than base the price on a high profit margin percentage, the price should be based upon what medical laboratories would be prepared to pay for such a great product that might provide an even higher profit margin.

The bottom line of what is behind tuition increases is that we have been able to increase tuition without suffering from a reduction in demand that hurts, at least so far. Demand continues because there are enough people who continue to believe that law school is a worthwhile investment. They are willing to pay, in other words, and the federal loan system gives them the ability to pay.

So law schools operate purely as profit-maximizing entities. They charge what the traffic will bear. In that case, of course tuition increases at Yale and other top schools will drive tuition increases at other schools. They are more or less substitute goods.

Of course, if law schools have any pretensions to not being ordinary profit-maximizers, and simply charge what is necessary to run the place, then it's worth asking who gets the money. What's happened to law school salaries in recent decades, and why? That issue seems to be missing from the discussion.

I was naive when I began practicing law in 1954 to venerate non-profits; I quickly learned that a non-profit can make a profit (subject to limitations on the use of such a profit) and increase administrative/faculty salaries.

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