The "law school scam" media bubble

By Razib Khan | April 30, 2011 2:58 pm

If you’re like me you have friends and acquaintances who want to go to law school. I often respond sarcastically that “a mind is a terrible thing to waste.” There have long been “law school scam” blogs, but it seems that right now there’s a veritable bubble in media reports on exactly how law schools are screwing their students. Remember, law school debt is not dischargeable in bankruptcy.

First, an article in The New Republic, Served: How law schools completely misrepresent their job numbers:

When we take temporary employment into account, it appears that approximately 45 percent of 2010 graduates of this particular top-50 law school had real legal jobs nine months after graduation. And the overall number is likely lower, since it seems probable that the temporary employment figures for the graduates of almost any top 50 school would be better than the average outcome for the graduates of the 198 ABA-accredited law schools as a whole.

Even this grim figure, however, may be unduly optimistic. All these statistics are based on self-reporting, and neither law schools nor NALP audit the data they publish. In the course of my research, I audited a representative sample of individual graduate responses and found several instances of people describing themselves as employed permanently or full-time, when in fact they had temporary or part-time jobs (I found no instances of inaccuracies running in the other direction). Perhaps some graduates exaggerate their employment status out of embarrassment, or for strategic reasons, but, whatever their reasons might be, this apparently not uncommon practice suggests that the true employment rate should be lowered even further.

This is old news. The New York Times now has a piece up with a new twist, Law Students Lose the Grant Game as Schools Win:

To keep her grant, all that Ms. Leumer had to do was maintain a grade-point average of 3.0 or above — a B or better. If she dipped below that number at the end of either the first or the second year, the letter explained, she would lose her scholarship for good.

“I didn’t give it much thought,” she said. “I didn’t think it would be a challenge.”

Her grades and test scores were well above the median at Golden Gate, which then languished in the bottom 25 percent of the U.S. News and World Report annual rankings of law schools.

How hard could a 3.0 be? Really hard, it turned out. That might have been obvious if Golden Gate published a statistic that law schools are loath to share: the number of first-year students who lose their merit scholarships. That figure is not in the literature sent to prospective Golden Gate students or on its Web site.

But it’s a number worth knowing. At Golden Gate and other law schools nationwide, students are graded on a curve, which carefully rations the number of A’s and B’s, as well as C’s and D’s, awarded each semester. That all but ensures that a certain number of students — at Golden Gate, it could be in the realm of 70 students this year — will lose their scholarships and wind up paying full tuition in their second and third years

Why would a school offer more scholarships than it planned to renew?

The short answer is this: to build the best class that money can buy, and with it, prestige. But these grant programs often succeed at the expense of students, who in many cases figure out the perils of the merit scholarship game far too late.

It’s true that people should go into these sorts of decisions with eyes wide open, even taking into account cognitive biases which we as humans have to strongly overestimate our skills and ability to “beat the odds.” But a lot of this stuff would clear out if educational debt was treated the same way as other debt when it comes to bankruptcy. Of course that would kill the cheap gusher of money, as creditors will be more vigilant and stingy if there’s a probability that they will lose all legal grounds to collect at some point in the future. But this sort of discipline is necessary when making a rational calculus. As it is, law schools, and higher education more generally, has a other-peoples’-money problem right now. At some point the music will stop, people will be left holding the bag, and the bubble will burst.

The fact that the mainstream media is now devoting so much time to the issue is a good sign that there’s a change in the offing. Outrage and disillusionment has percolated out far enough socially that this is a story that many people are interested in. In the higher socioeconomic stratum enough people have relatives, friends, and acquaintances, who have been played. Stories about how check cashing places exploit the lower orders often have an anthropological feel. Not so when it comes to law schools. These are “our kind of people.”

  • Uncle Al

    Barack Obama was Harvard Law Review, won the Nobel Peace Prize, and is assured six-figure salary plus lavish perquisites through 20 January 2012. After that, as the Moo U Financial Aid Office was oft wont to inform out-of-state students, “you can donate blood plasma three times each month.”

    The US national goal is to end intellectualism, for it conflicts with Official Truth in all venues. It is not enough to impress a hegemony of diversity – admission by reason of disqualification. If we wish a future in which every child’s utterance bears the same weight as its adult oppressors’, we must destroy the hateful framework of individual worth. We suppress reproduction of the Gifted with unremittable poverty while vigorously subsidizing reproduction of the lowest classes with unlimited boons.

    Uncle Al says, “If god loves the poor, crippled, and stupid, then god can bloody well pay for them or take them back. My wallet is busted.” As for lawyers…parasites are either fat or dead. Choose wisely.

  • Robert

    Hasn’t it always been true that less than 25% of those who pass the bar exam actually end up having professional careers as practicing attorneys? At any rate it’s just as well that the weeding out of those unsuitable for a legal career starts earlier rather than later. After all, lawyers are supposed to be savvy (at least that’s what they keep telling us.)

  • coldequation

    The problem with letting people declare bankruptcy on student loans is that the penalties aren’t enough to deter a rational new grad, who has nothing to lose yet except for a big debt. Only an quaint sense of honesty or a misguided over-concern for credit ratings would stop new grads with big loans from strategically declaring bankruptcy, even if they have good jobs and could afford to pay their debts.

    In fact, the penalties for defaulting on student loans aren’t so bad, and I expect a lot of grads with worthless, expensive degrees to figure that out. Some states make it hard for creditors to collect from deadbeats (in Pennsylvania they can freeze your account, but they can’t garnish your check, and you don’t really need a bank account), and the main other penalty for defaulting is that you can’t collect social security, which is a remote concern for 24 year olds.

    My pet solution is to cap monthly payments at a percentage of the grad’s income minus reasonable living expenses, and cap the number of monthly payments (your loans are forgiven after, say, 10 years, if you made the payments, regardless of how big they were). That way the school gets paid if and only if their degree is valuable. That would put an end to worthless diploma mills.

  • John Emerson

    There are similar problems with graduate school education, especially in history and English but in many other fields. Tons of PhDs with no reasonable prospect of careers are graduated, and most of them have debt. The ones who want to stay in the field end up teaching as adjuncts for starvation wages.

    There’s been a migration of public money away from education, so PhDs etc. end up with much more debt than they used to. (The high debt drives MDs into the arms of the HMOs.) Eventually people will figure out that it’s just not worth it, and a lot of colleges and grad schools will probably close.

    The withdrawal of public money is normally justified in terms of We Cannot Afford, but we’d be better off wasting money on education than on the War on Drugs or Three Strikes laws or Mandatory Minimums, all of which are fiendishly expensive, and this is to say nothing about our interventionist foreign policy and the billion spent on weaponry the military doesn’t even want.

    It’s just that the “wasteful” spending has been directed away from education in order to be wasted elsewhere.

  • Jester

    Do you know Donald Trump? He is very much in favor of strategic bankruptcy and has done it several times. He has been very clear in interviews that strategic bankruptcy is a good thing. So currently, wealthy people make millions by declaring bankruptcy but poor and middle class die the slow death of debt.
    As to your second point, penalties for defaulting on student loans are severe. State laws do not apply. They have their own collection laws. The penalties rival tax debts. They absolutely WILL garnish you wages. More importantly, the banks add a 25-50% penalty which also will be garnished.

  • Lucy Stewart

    In New Zealand, student loans must be paid back at a minimum of 10% on everything you earn above a certain amount – which is pretty low, below full-time minimum wage. You can’t declare bankruptcy, but you can’t be ruined by them, either. The trouble here, of course, is that the easy way to get out of this is to go overseas – where most jobs that you can get with expensive degrees are much better paid. Whether it’s sustainable long-term remains to be seen, as we’ve only had the loans scheme for twenty years. My generation is the first which will have serious debt to pay off before we can look to buy houses.

    (Of course, here a law degree is a bachelor’s three or four-year degree, not grad school, so loans for law school are not nearly as much of a burden. We still produce way too many lawyers, but they end up working in jobs paying rather less than they expected, or having difficulty finding them, rather than burdened with impossible debts.)

  • Lindros

    @ ColdEq: The problem with NOT letting people declare bankruptcy on student loans is that the risk to the issuer is near nil, which results in monies being made available that are not based on prudent lending decisions (ie. ability to repay). Lending standards are lax, you push too much money into whatever system you’re addressing, and you create a bubble, where the economic equilibrium is grossly distorted. The result in this instance has been the consistent above-inflation cost increases of higher education. And, because lenders bear no risk, they turn down few borrowers, and perpetuate the cycle.

    These disequilibria never end well. See: US Housing Market, circa 2008; NASDAQ, circa 2000; Dutch Tulips, circa 1636; etc.

  • Anthony

    The easy way to deal with the strategic bankruptcy problem, besides the bankruptcy courts actually verifying the claims filed, is to forbid bankruptcy discharges of student loans for a period of time on the order of 5 to 10 years. If, 7 years after graduating, you still can’t pay your student loans, then you file. But if you’ve made a career or are looking to buy a house, and you can pay, you’ll think long and hard about that strategic bankruptcy.

  • John Emerson

    It’s weird that this has become a thread about strategic bankruptcy. There are a lot of major questions about the purpose of education, who finances it, who benefits from it, who should go to school, how much should be spent on education, etc. The education bubble does have a lot of similarities to the housing bubble, but bringing it down just to the question of individual dilemmas / solutions isn’t especially illuminating.

    There’s a division between prestige education and usable (lucrative education). Grad school is pure prestige in many cases, law is some prestige / some money, medicine is lots of prestige but less money than before, pharmacy and dentistry can pay well but aren’t very prestigious, and skilled trades and small businesses have little prestige but pay fairly well or even very well. This is actually a big split in the middle class, between those who have academic validation (more often liberals / Democrats) and those who don’t (more often conservatives / Republicans.) By and large the impoverished educated will be Democrats, and the impoverished uneducated tend not to vote, but vote surprisingly often for the Republicans despite various Democratic programs benefiting them.

    From the prestige point of view, education is a positional good, though, and the more educated there are the less education per se is worth. We can’t all be above average, so the master’s or other grad degree (~10% of the population) has taken the place of the bachelor’s (another ~20% of the population).

    It would a good thing all around for people at every level to be educated up to their level of ability, and it would be worth the cost in my opinion, but there’s the countervailing social desire , which is now dominant, to make it scarce and positional and to make class position hereditary.

  • John Emerson

    Anyway, people will often go to law school or grad school because a.) they can’t think of anything else to do at that point in their lives and b.) they can get the money one way or another. Often their purpose beyond that is uncertain, but generally either prestige or money is in the background, even though the money part doesn’t show up.

    Another point: schooling is also often used by employers as a selector for general ability. For example, a friend of mine who was an ABD in Arabic got a well-paying job in a completely unrelated field because they figured that someone who could get that far would be smart and hard working, and because there was no good training program for the field itself. (Pre-med is actually not the best way to get into med school, and med schools will prefer a student who did well in a tougher field.)

  • Peter

    I’ve got a better idea: the government will pay for your college and graduate school education … if you study what the government tells you to study. Want to study electrical engineering or pharmacy? It’s free! Want to go to law school? Pay your own way, buster.

  • Anthony

    Part of the problem with law schools in particular is that some percentage of grads really do get very well-paying jobs ($160k/yr), which is more than enough to pay off the debt, even if there’s undergrad debt, too. Law schools of course emphasize the $160k lawyers and don’t talk much about the $60k lawyers.

    Another part is that law is one of two fields which are well-known to employ liberal-arts and social-science graduates in significant numbers (teaching is the other), so lots of those students go to law school in an attempt to improve their job prospects, because even $60k at the local DA’s office is better than what most liberal-arts or social-science graduates can earn otherwise.

  • John Emerson

    Central planning of education does not strike me as an appealing prospect. Hopefully Peter was joking.

  • John Emerson

    Many of those with law degrees who don’t go professionally into law do make use of their legal education. A relative did well in the insurance business, a friend worked in government, and another friend was able to do a lot of pro bono work for causes he believed in, though he never made a living out of it.

  • Robert

    “Only an quaint sense of honesty or a misguided over-concern for credit ratings would stop new grads with big loans from strategically declaring bankruptcy, even if they have good jobs and could afford to pay their debts.”

    Even if student loan debt was forgivable in a bankruptcy, the judge would disallow it if you had a good job and could afford to pay it.

  • Robert

    “There are a lot of major questions about the purpose of education, who finances it, who benefits from it, who should go to school, how much should be spent on education, etc.”

    In my mind there isn’t. If we limit university education to the top 10% of the intelligence curve we could then afford to make it free to those in that group who wanted to attend. Everybody else would have to go to work after high school.

    We can get rid of most junior colleges too by pushing trade school education back down to the secondary schools where it belongs.

  • John Emerson

    Well, something being a major question and it being a question in some individual’s mind are two different things. You seem confident that you’re in the top 10% of the intelligence curve and I don’t have enough information to have an opinion on that question. You don’t indicate why you think that it’s not a good thing for the other 90% to get education past high school, or why you think that all trade school education can be handled by age 18. Certainly, though, restriction of education would be very beneficial to those who just barely squeaked into the top 10%.

  • Robert

    “You don’t indicate why you think that it’s not a good thing for the other 90% to get education past high school, or why you think that all trade school education can be handled by age 18.

    Because those with IQ’s lower than 120 are capable of contributing very little to the advancement of theoretical knowledge and because private industry should foot the bill for training their own damn workers. That the taxpayers should subsidize degrees in restaurant management or worse yet, a bachelor of arts in the “critical theory studies” of comparative literature is absurd.

    The supposed advantage of a university degree would be far less evident if restricted to a minority as there would be even larger numbers than there are now of successful people without one. As for the general civilizing effects of higher education, the greatest benefit for society in this regard would be if the masses had to STFU and get down to work sooner rather than later.

  • John Emerson

    Schools for those who can advance theoretical knowledge wouldn’t need to educate more than about 2% of the populace. When technical education was only financed by individuals, their families, and employers, there was a lot less of it. Public funding of technical education has been a great success, regardless of anyone’s philosophical scruples about the constitutional or libertarian propriety of public funding. But as I’ve said, as education has mushroomed its purpose has become unclear. You haven’t specified you reasons for your animosity to liberal arts education, but I’ll assume that they’re the usual.

  • Robert

    “Schools for those who can advance theoretical knowledge wouldn’t need to educate more than about 2% of the populace.

    And I daresay that restricting undergraduate education to the top 10% would have just about that salutary effect on the pool of post graduate students.

  • John Emerson

    Why educate the 8%? Only a minority even of the 2% will ever make any significant contribution, which seems to be your standard.

  • Robert

    “Why educate the 8%?

    Because we still need to educate school teachers, RN’s, engineers, lawyers, and medical doctors. And while it may be true that only a small fraction of the top 1% ever make advances in the field of say pure mathematics there are many advances in more mundane areas made by the less intelligent. Indeed there will considerably more productivity from the 80% if they are not hampered by useless undergraduate studies in late adolescence.

  • Jockaira

    Let’s see…10% get the plum jobs, the big paychecks, social prestige, political power, and the satisfaction of having done something significant with their lives.

    The other 90%…willing workers. We do need them so let’s set them up in their own neighborhoods and schools so that they aren’t disheartened by their lowly stations and diminished expectations. It will be easy to administer their lives by prohibiting ownership of their homes and subsidizing ownership of rental properties by the top 10%.

    This sounds like the perfect solution to all our societal ills…let’s do it!

    Even better…let’s acknowledge our thanks to those really productive 10% by giving their children preferential points for enrolling in the universities of the top 10%…let’s see, have I forgot anything…we can make public office heredity, after all IQ is heritable…we don’t really need elections if the top 10% is in charge.

    It’s a whole new country, much more than the United States of America ever was…but we don’t have to change the bath towels and monogrammed tableware…we’ll call the new country the United States of Assholes.

  • coldequation

    @Jester, I stand corrected. You are right that they can garnish student loan defaulters even if state law says otherwise. That takes care of people who get that good job, but it’s also worth noting that they can only garnish 15% of your disposable income, which amounts to little for the JD working in a basement for $18/hour.

  • Robert

    “Let’s see…10% get the plum jobs, the big paychecks, social prestige, political power”

    Why not? ‘Twas ever thus. And schoolteachers do not have “plum” jobs, merely ones that perhaps require some sort of credential. It’s a hard job. A proper university degree in the liberal arts would certainly obviate the need for meaningless certifications like the teaching credential. When university degrees become less common they will actually become less necessary.

    As for a “meaningful life”, there will be plenty of successful people without a bogus degree; indeed even with a ~120 IQ or so hurdle there will be a significant portion of the 10% who will not avail themselves of the opportunity. What it will do is eliminate the absurd situation we have now where there is a plethora of meaningless bachelors degrees awarded to 90 or 100 IQ individuals.

    All God’s chilluns do not need nor do they benefit from a college education. We have the situation now where the ranks of school teachers are rife with scads of uneducated morons. I am merely advocating a return to the standards of the 1920’s (or earlier) only with the addition of generous subsidization, and equal opportunity for all that are qualified.

  • Nick

    As an unemployed 2007 graduate of law school, I am living what this post is about.

    I don’t blame anyone but myself for my tough economic situation. Instead, I warn anyone I can about going to law school. I was 21 when I graduated. I always joke that I had just been allowed to legally drink when I took on $150,000 in debt to go to law school.

    I didn’t have professors, financial aid planners, or friends warning me about the job prospects for the legal profession. I am glad that the media is picking up on the issue, because the people who take on the risk are often young, idealistic, and unfamiliar with financial planning necessary to effectively plan the rest of their lives.

  • Matt B.

    Uncle Al, you have to at least get the numbers right. Presidential terms end in years that are one more than a multiple of 4.

  • 4runner

    Anecdotally- it was apparently law students who were the worst offenders when it came to
    1) borrowing tons of money for law school,
    2) taking a bankruptcy course or two in law school, and
    3) declaring bankruptcy immediately after graduation.

    As for the the NYT article– a bunch of people who want a career that involves reading the d__ contract and figuring out its implications are upset because they didn’t read the d___ contract offered by the law schools and figure out its implications.

    Absolutely amazing.

  • John Emerson

    I still don’t really know why Robert is confident that the education of more than 10% of the population is a bad thing, or why he thinks that if we educated fewer people we’d have more and better HS teachers (????) I have a pretty solid inkling of his political agenda, though, and I’m not very interested in learning more about it.

  • MikeJ

    I’d like to correct one misconception I keep seeing. There are a TON of socially useful things lawyers could be doing right now. Think of all the homeowners in foreclosure whose banks have been caught forging documents and lying to courts about their ownership of the notes. Or consider the backlog of indigent criminal defendants or convicted felons with new DNA evidence that can exonerate them, and the lack of resources available to get public defenders and appellate defenders working on their cases in a timely matter. The need is there; the only thing that’s missing is a willingness to pay for it.

    It’s a question of values. Do we, as a society, actually stand for justice and due process, or are we merely paying lip service?

  • ohwilleke

    The law graduate pay in the last decade or so, breaking from long term trends, has a bimodal distribution.

    One large chunk (more than 10%, less than 50%), gets a summer clerkship at a large law firm after the second year of law school, goes from law school to a job at that firm or a prestigious judicial clerkship, and make incomes of ca. $160,000 a year, which is more than a lot of people with other degrees will ever make in their lives. Most of these new hires will wash out and not make partner, moving on to small and medium sized law firms with more work-life balance and less fat salaries, while a bright, hard working and lucky few will make partner and work very hard for very fat paychecks for a long time. These firms are dominated by the top students at the top law schools, although the blog and popular accounts exaggerate the extent to which this is the case — a significant number of top students from middling regionally prominent law schools also make the cut and often do better than their elite school peers once hired.

    Another somewhat larger chunk end up working in government, non-profits, or small and medium sized law firms, or even in solo practice after graduation, make much more modest salaries (the other mode is about $60,000 a year), have more balanced lives, and have middle class, relatively high prestige careers as they work their way up the mountain of promotions, lateral hires and self-employment to make a life for themselves, most seeing improving salaries over time in their legal careers.

    “Hasn’t it always been true that less than 25% of those who pass the bar exam actually end up having professional careers as practicing attorneys?”

    This is probably a great overestimate of the attrition rate after bar passage. Most, but not all, women for pass the bar exam do take time off for a substantial period to have kids and be parents when the kids are young before returning to the practice of law, and return (after paying an immense economic price) to a typically lower pressure practice afterwards. Some lawyers do end up in business, etc. But, the attrition rate is not 75% or anything close.

    The proportion of lawyers who have trial practices is quite low and dominated by a modest number of criminal lawyers, personal injury lawyers, and debt collection lawyers, but a lot of lawyers do continue to practice law in less publicly visible practices.

    Moreover a fair share who don’t practice law still manage middle to upper middle class careers of some type (although I would never recommend law school to someone who isn’t planning to be a lawyer).

    Also, the flip sideof the unemployment question is that while lawyers certainly have bouts of unemployment, and 2009-2010 was the worst pair of back to back years on record (with 6% of big firm lawyers laid off, disproportionately from the ranks of associate attorneys), that law school graduates tend to be better at finding work (not necessary as lawyers) than many of their graduate school educated peers.

    Law school is not cheap, and grant based financial aid is much more scarce in law school than in most other graduate programs, but for a liberal arts graduate contemplating entering the job market with no job related skills or entering graduate school in the liberal arts (which has far higher unemployement and underemplyoment than law school at lower wages for those who are hired), law school is still frequently the best available option in terms of economic prospects, even considering the debt involved.

    Also, ABA accredited law schools that are at least middling in prestige typically have extremely high graduation rates of admitted students, and very high percentages of students who ultimately pass the bar exam (not necessarily on a first try). This is in stark contrast to the prospects of getting a degree and obtaining relevant professional certifications in a wide variety of pre-professional undergraduate programs that can be very pricy themselves.

    While student loans aren’t dischargeable in bankruptcy, if you manage to graduate and pass the bar, paying them is something that is in the realm of the possible through options like income contingent repayment plans that have recently been sweetened by new legislation. Student loan deferment options are likewise more generous than a typical credit card, mortgage or car loan.

    In short, while law school is not the surefire ticket to the upper middle class that the average person contemplating law school believes it to be (which it is for those who manage to make it into the top part of the bimodal pay distribution for even a few years), it is also frequently the option with the greatest potential to secure a middle class living (with unemployment being less likely than other options) for a liberal arts major, if that person has a reasonable prospect of finishing law school and passing the bar exam given their undergraduate academic performance, even considering the massive student loans involved. A bottom of the barrel job for a lawyer still generally beats a bottom of the barrel job for a post-doc in English literature economically (and entails a lot less time spent as a graduate student incurring opportunity costs).

    In addition, law school is a gamble whose upside potential far exceeds that of the vast majority of the alternatives. Even if the worst case scenario for a prospective lawyer net of big student loans is a slightly worse than the typical scenario for a high school teacher who sticks with it (and 50% of them burn out in the first few years and do something different), there are very few straight jobs that someone without strong quantitative skills can do that offer the same upside potential to people in the top 10-30% of their professions.

    The people who shouldn’t consider law school are (1) those with strong viable alternative career options (medicine, engineer, accounting, business, IT professional, scientist), (2) those with medicore grades and LSATs which mean that have a good chance of not graduating or not passing the bar exam, and (3) those who don’t want to be lawyers.

  • Robert

    We would not necessarily have more schoolteachers, just better ones like we had in the past when there were much higher standards of academic excellence in secondary and college level education. No need even for IQ or SAT testing to determine aptitude as the successful completion of a rigorous curriculum is a thing which speaks for itself.

    Those famous reprints of 19th Century high school exam questions are exactly what I’m talking about. You are going to find quickly decreasing pass rates among the masses as IQs decrease from 120.

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About Razib Khan

I have degrees in biology and biochemistry, a passion for genetics, history, and philosophy, and shrimp is my favorite food. In relation to nationality I'm a American Northwesterner, in politics I'm a reactionary, and as for religion I have none (I'm an atheist). If you want to know more, see the links at


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