Why do tuition rates continue to climb even in this economy? Forum

[tarp]

Does anyone know why law schools keep raising tuition rates on a yearly basis, in spite of the economy that keeps getting worse and worse? Why should a law school education cost over $40,000 a year for three years, when most graduates are lucky to find jobs paying $50k? Why do people continue to pay sticker price and attend law school at these astronomical costs? I wouldn't have gone to law school if I wasn't getting a hefty scholarship. My suggestion to anyone thinking about attending law school right now who isn't from a super-rich family is to either go to an in-state school or go somewhere that gives you a big scholarship. Full tuition is outrageous and it's just not worth it. In Canada the law schools cost about $10k per year. This country is headed down the toilet.

[dr123]

Apps are up and people will the higher tuition. There are some LSes that ae around 10k, I know my local LS is instate

[Ignatius Reilly]

Supply and Demand. More people want to attend law school in a bad economy, so the price goes up.

The whole country headed down the toliet thing is a non sequitur

[lolschool2011]

Blah Blah Blah Blah, Blah... Blah Blah. This country is headed down the toilet.

Dad?

[99.9luft]

Blah Blah Blah Blah, Blah... Blah Blah. This country is headed down the toilet.

Dad?

[3ThrowAway99]

It is one way schools can improve their ranking (I think that higher tuition contributes positively to the 'money per law student' element of USNews ranking equation).

[3ThrowAway99]

Blah Blah Blah Blah, Blah... Blah Blah. This country is headed down the toilet.

Dad?

lol

[BeachandRun23]

Q: Why do tuition rates continue to climb even in this economy?

A: Because people will still pay them.

[JusticeHarlan]

Because people are still getting loans to cover whatever amount law schools charge.

[Bumi]

Because people are still getting loans to cover whatever amount law schools charge.

Plus, people still think they can get $160k jobs, so they're willing to go $200k in debt.

Plus: IBR.

[tarp]

Just wait until the financial crisis gets even worse and the student loan money dries up. Then the law schools will have to charge what people can actually afford. Taking on 200k in debt that cannot be discharged for a law school degree is pretty ballsy. When you buy a house for 200k, at least you have the actual house securing the loan, which you can always sell and pay off the debt with. Even if the house burned down and for some reason wasn't covered by insurance, or a nuclear plant popped up next door and the value of the house fell, you could always go bankrupt. Not so with student loans in the U.S. - they will get their money from you someday. With a law school degree, you are a slave for years paying down that debt.

[Nogameisfair]

Because people are still getting loans to cover whatever amount law schools charge.

Plus, people still think they can get $160k jobs, so they're willing to go $200k in debt.

Plus: IBR.

Guaranteed loans, and a healthy sense that "Old Ted will figure that out."

[EarlCat]

Guaranteed loans, and a healthy sense that "Old Ted will figure that out."

This. When you subsidize the purchase of a product, demand goes up and price goes with it.

[cinephile]

Just wait until the financial crisis gets even worse and the student loan money dries up. Then the law schools will have to charge what people can actually afford.

Somehow I can't imagine this happening -- that the government would stop handing out student loans like candy.

[BeenDidThat]

Guaranteed loans, and a healthy sense that "Old Ted will figure that out."

This. When you subsidize the purchase of a product, demand goes up and price goes with it.

But hasn't law school been subsidized for awhile? If so, it seems that subsidization is largely a non-factor in a rephrased version of OP's question: why have tuition rates continued to rise even after the 2008 crash as compared with the years just prior?

Taking a stab at that question, I'd argue that it's because of a few things:
- Overblown fear of the economy --> hiding out in school
- Bottom dropping out on expected earnings in other fields nearly across the board --> gamble for biglaw doesn't look as bad
- Law school was underpriced in the past

[thechee]

Guaranteed loans, and a healthy sense that "Old Ted will figure that out."

This. When you subsidize the purchase of a product, demand goes up and price goes with it.

But hasn't law school been subsidized for awhile? If so, it seems that subsidization is largely a non-factor in a rephrased version of OP's question: why have tuition rates continued to rise even after the 2008 crash as compared with the years just prior?

Taking a stab at that question, I'd argue that it's because of a few things:
- Overblown fear of the economy --> hiding out in school
- Bottom dropping out on expected earnings in other fields nearly across the board --> gamble for biglaw doesn't look as bad
- Law school was underpriced in the past

Subsidizing college and law school is still one of the major contributors to rising tuition, even ITE. For years, tuition was able to rise because educational institutions know that students will be ale to procure funding through federal loans. A consistent source of funding for all students means that expenditures at schools can rise at all schools where demand for a spot is high enough that a sufficient number of people are willing to go into debt to attend. If educational loans were treated the way that most other types of loans are (and lacked an explicit government guarantee), lenders would quickly see the number of high credit risk borrowers applying for funds, and a normal market adjustment would occur. Far fewer people would qualify for 200k in no questions asked loans, in which case educational institutions would be forced to reduce tuition and spending. Instead, in the name of "expanding access to education," the DOE helped make education much more expensive.

[EarlCat]

But hasn't law school been subsidized for awhile? If so, it seems that subsidization is largely a non-factor in a rephrased version of OP's question: why have tuition rates continued to rise even after the 2008 crash as compared with the years just prior?

As far as I know, the availability of student loans hasn't been affected by the crash. If anything, I would assume the government's continued centralization of the industry has made funds easier to get.

Law school was underpriced in the past

...

[Stringer Bell]

Because people are still getting loans to cover whatever amount law schools charge.

Yup. If you are willing to just lend a blank check for things (really doesn't matter what it is in most cases) without underwriting it, someone is going to take it.

[Stringer Bell]

But hasn't law school been subsidized for awhile? If so, it seems that subsidization is largely a non-factor in a rephrased version of OP's question: why have tuition rates continued to rise even after the 2008 crash as compared with the years just prior?

Taking a stab at that question, I'd argue that it's because of a few things:
- Overblown fear of the economy --> hiding out in school
- Bottom dropping out on expected earnings in other fields nearly across the board --> gamble for biglaw doesn't look as bad
- Law school was underpriced in the past

Tuition has been rising drastically for 20 years. That's the point. No external market forces have any affect on that.

[XxSpyKEx]

But hasn't law school been subsidized for awhile? If so, it seems that subsidization is largely a non-factor in a rephrased version of OP's question: why have tuition rates continued to rise even after the 2008 crash as compared with the years just prior?

Taking a stab at that question, I'd argue that it's because of a few things:
- Overblown fear of the economy --> hiding out in school
- Bottom dropping out on expected earnings in other fields nearly across the board --> gamble for biglaw doesn't look as bad
- Law school was underpriced in the past

Tuition has been rising drastically for 20 years. That's the point. No external market forces have any affect on that.

Actually, it is really interesting if you look at tuition increases relative to starting salaries for law school grads. Back in the early 90s, tuition wasn’t that high, but neither were the salaries… It was pretty much a skewed bell curve with the top side of salaries around $70K. Tuition starting skyrocketing after that though. By they time the 2000s rolled around, there was just this huge demand for top law school grads and top firms were going into salary wars to get them. From the way grads from this time frame (i.e. early 2000s) talk about it, law firms were pretty much giving away jobs at $160k year to t14 grads. What’s interesting is that ALL law schools began raising tuition in a way that closely reflected large law firm salaries, but, even during the boom, only something like 20% of all grads surveyed on NALP were getting biglaw (with the numbers skewed in favor of top schools).

It seems information asymmetry maybe had a lot to do with it. If you look at law school websites, pretty much every law school has a median salary of $160k /year. Law students also aren’t typically known being great at math. Therefore, it’s plausible that law students entered (and still are entering) into law schools with the assuming that $200k in debt isn’t that bad because they are most likely going to find a job paying $100K+, which seems a lot better than working at starbucks (since most law school students have bullshit UG degrees where they couldn’t find well paying work out of UG even when times were good). Unfortunately, the reality is that most law school grads nowadays are lucky to find paying legal employment generally, and employers definitely have the upper hand.

Here’s some data re: tuition from 1950-2009 at one school: http://www.law.umich.edu/historyandtrad ... istory.pdf

Notice how tuition more than tripled from 1990-2000, and then nearly doubled again from 2000-2009.

Here are some charts re: salary data:

[r6_philly]

Where are the 09 and 10 graphs?

[EarlCat]

Where are the 09 and 10 graphs?

Ever see a heart monitor flatline?

[bk1]

Where are the 09 and 10 graphs?

Ever see a heart monitor flatline?

i lol'ed

[paulinaporizkova]

Blah Blah Blah Blah, Blah... Blah Blah. This country is headed down the toilet.

Dad?

bumped for hilarity

[Fred_McGriff]

Supply and Demand.