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Law school tuition hikes spark talk of bubble

Ameet Sachdev

Chicago Law

April 27, 2010

The rising cost of law school is becoming a sore subject as the number of high-paying jobs shrink.

With large numbers of unemployed or underemployed lawyers who borrowed heavily to pay for their educations, legal educators face growing skepticism about the value of a law degree. Anonymous critics have started blogs with harsh names such as "Big Debt, Small Law" or "The Jobless Juris Doctor."

With three-year programs at top schools costing nearly $150,000, not including room, board or even books, some of the criticism is coming from inside the legal profession. Christine Hurt, a law professor at the University of Illinois, suggests that the market for legal education is strikingly similar to the subprime mortgage market. Her theory, which she posted on "The Conglomerate Blog" last week, goes like this:

Double-digit tuition increases in the last 25 years have priced law schools out of reach for many. Yet the promise of a career at a big law firm with its six-figure paychecks kept boosting enrollment. Easy credit allowed more students to finance their law degrees. All of a sudden law firms lay off droves of attorneys and limit the number of new hires, leaving graduates out of work with more than $100,000 in loans to repay.

Hurt ended her essay by asking, "What's the future of law school pricing?"

The recession already has forced law schools to rein in tuition hikes that were well above inflation for the last 25 years, including double-digit increases in many years. Last fall, Northwestern University's law school raised its tuition by about 4 percent, its smallest increase in 32 years, said David Van Zandt, its dean. Its annual tuition is still among the highest in the country at $47,202.

Van Zandt said the small tuition hike reflected the tougher job market students face, even at one of the nation's elite law schools. Northwestern could justify bigger increases in the past because typically about 70 percent of its graduates find jobs at the nation's largest 250 law firms, where starting salaries had reached $160,000.

But with law firms cutting salaries and hiring fewer graduates last year because of the economy, Northwestern sent just 55.9 percent of its 2009 graduates to the largest firms, according to the National Law Journal. Yet the school still was No. 1 in the publication's annual ranking of graduates who found jobs at big firms.

Van Zandt said he believes big law firms will never go back to hiring graduates in droves. That means they will recruit from fewer schools.

"It doesn't make a lot of sense to go to law school unless you go to a pretty good one," Van Zandt said.

Still, law schools of every stripe are seeing more applicants than ever before. Loyola University Chicago's law school saw a 35 percent increase in applications for the school year that begins in the fall. Dean David Yellen speculated that the recession had something to do with the spike but otherwise could not explain why the increase was bigger than other schools.

Loyola's tuition is about $37,000 and will go up 3 percent for the 2010-11 school year, he said.

"Tuition at law schools has gone up well above inflation for over 20 years and that clearly cannot continue," Yellen said.

His school normally places about 20 percent of its graduates at the largest law firms, but the disruptions at the megafirms are still being felt. His top students are being forced to look at smaller or more regional firms, creating more competition among students for jobs.

One of the biggest changes in law-school pricing in the last two decades has been the shrinking differential between public and private schools. Tuition at the University of Illinois is more than $36,000, about the same as Loyola and DePaul universities. There's also a smaller difference in tuition between the higher-ranked schools and those at the bottom.

In 1990, private-school tuition averaged $10,620, about three times more than the average tuition at a public school, according to the American Bar Association. Cutbacks in taxpayer funding have forced public institutions to boost fees at a higher rate than private schools.

The unrelenting increase in the costs of legal education worries many.

"It's not only the financially disadvantaged that cannot afford law school," said Heather Jarvis at Equal Justice Works, an association that promotes public-interest law. "The middle class may also be shut out."