Law schools: Reform or go bust

But even achieving enrollment targets does not guarantee a balanced budget. For the past two decades, law schools have been relying on discounted tuition to recruit the best students. Students with higher test scores and undergraduate grade point averages boost rankings, which helps with student recruitment.

But tuition discounts, sometimes approaching 100 percent, are problematic. When aggregate discounts become too large, more students actually result in less net revenue. Without endowment income sufficient to cover tuition revenue lost to discounting (which very few schools have), the least qualified students with the worst prospects for gainful employment after graduation end up paying for the most qualified students to attend law school.

It is also the case that law school tuition has risen in excess of inflation for the past four decades. When I entered the University of Chicago Law School in 1969, tuition was equivalent to $16,000 in 2014 dollars. Chicago’s 2014 tuition was over $54,000. No one can claim that today’s students are getting three and a half times more value than I did 45 years ago, but they are willing and able to pay that much because they can get government guaranteed loans to cover the expense.