I wrote some time ago about the apparent bubble in higher education. Many of the commentators I cited in that post blamed climbing costs on the pathologies in higher ed administration, misplaced incentives arising from college rating schemes, uninformed student demand for campus amenities and pursuit of majors which are not economically viable, and the easy credit spigot flowing out of the federal student loan program.
I recently came across an article in the The American Lawyer in which Steven J. Harper, himself a lawyer and adjunct law professor, argues that new law schools continue to open their doors despite the terrible post-graduation employment rate because federal student loan money is way too easy to come by.
Harper then tells the story of Charleston School of Law, a private law school which is in financial trouble related to mismanagement:
What was the source of Charleston’s now-distributed profits? The answer appears on the law school’s website: “Most students will depend on federal student loans to pay for tuition, books and living expenses while in law school. During the 2012-2013 academic year, 88 percent of our students borrowed student loans to finance their legal education. At graduation, the average student loan debt incurred for those borrowers while attending the Charleston School of Law was $146,595.”
Nine months after graduation, 53 percent of the school’s class of 2013 had found full-time long-term jobs requiring a J.D. (More than half of those were working in firms of fewer than 10 attorneys.)
So at Charleston, student debtors finance profit distributions to law school owners who have no accountability for poor graduate outcomes. When the school later hits the financial skids, only InfiLaw, another for-profit organization, can rescue it.
Wealth redistribution takes many forms, but none produces results more perverse than the current system for financing—and profiting from—legal education.