Law Schools, Rankings

How Stanford Law School Could Cut Tuition and Save the World

There goes my hero…

Law school students are becoming more and more vocal about the myriad unresolved problems with the law school industry. Things are getting so bad that yesterday, a Rutgers student (and former Navy SEAL) got into a shouting match with Governor Chris Christie about the Rutgers merger drama.

Something has got to break soon. Right?

If Above the Law’s 2011 Lawyer of the Year Paul Campos has anything to say about it, the answer is a definite “yes.” And he has a drastic idea for fixing what he would call the “law school scam.” It all starts at Stanford University, where he visited earlier this week to talk about his idea.

What did Professor Campos have to say? Does “30 percent unilateral tuition cut” mean anything to you?

In a word, he suggested that Stanford Law School should immediately reduce tuition for its J.D. students by 30 percent.

Let that sink in for a minute. The blogger behind Inside the Law School Scam wants the #3 law school in the country to simply chop its tuition by a third.

Are you out of your mind, Campos? You can’t say that! You better join the Witness Protection Program before they find you dead with a gavel in your eye socket.

But in all seriousness, his idea makes a lot of sense. First, let’s look at the financial implications of his plan. (Apologies for the long block quotes, but I want to let Campos talk.)

From his blog:

In the course of Monday’s discussion, I suggested that SLS should immediately reduce tuition for its JD students by 30%, i.e., to around $33,000 per year. (This would reduce tuition to where it was, in nominal terms, in 2004. In real dollar terms the reduction would be somewhat larger). The cost of doing so would be about seven million dollars, assuming that the school continued to spend what it’s spending now on scholarships and grants.

Whoa, whoa, whoa, Miss Lippy. You want universities to voluntarily take less money from their students? No way. No f***in’ way.

Now it’s true seven million dollars is not a small sum of money, even in Palo Alto. But consider that Stanford University’s endowment is currently about $17 billion dollars. The law school’s endowment isn’t a public number, but given that it was supposedly around $270 million 12 years ago, and that over that same time the university’s general endowment has nearly tripled, a conservative estimate would put it in the $600-$700 million range (HLS’s endowment is said to be $1.7 billion, although it’s a much larger school).

In other words, SLS’s endowment throws off several tens of millions of dollars in income every year. Of course much of this income is dedicated to specific purposes, so it’s not a simple matter to dip into it for the purpose of cutting tuition. Nevertheless, it’s not hard to imagine how some combination of redirection of endowment monies and a fundraising appeal premised on the attractive proposition that SLS is going to take the lead in moving American legal education toward crucial structural reforms (and become the top-ranked law school in the country in the process) could shake seven million dollars per year out of the seat cushions.

Was Campos hanging out with Ken Kesey while he was down at Stanford? He says by cutting tuition, the school will actually make MORE money and scramble to the top of the rankings. He must be trippin’.

And that’s not even the best part.

The crux of the plan is what would ideally happen after Stanford takes the plunge. It would be a domino effect for large-scale law school tuition slicing:

What would happen then? My guess is that Martha Minow and Robert Post, and their respective university presidents, would have a bad day or two. Then they would announce they were doing the same thing. (As a law professor points out law school deans and faculties will in many cases have to fight battles with central administrations to make these sorts of changes. This is another reason why transparency is crucial: the myth that it’s either fair or efficient to charge law students a cross-subsidized university tax because of the great jobs they’ll be getting needs to be killed sooner rather than later). After all, who other than the Winklevoss twins will choose to go to HLS or YLS at $50K per year, if you can go to SLS for two-thirds as much?

The consequences of this would also be fairly predictable. Can CCN charge 30% more than SYH? Obviously not. What about MVPD? Nope. Etc. Now at some point as one slides down the hierarchy schools will find that they have to engage in truly major long-term (as opposed to moderately uncomfortable short term) restructuring in order to return their tuition to what it was, in real terms, a dozen years ago. And somewhat further down the line, some schools may find it not merely difficult but actually impossible to do this. In other words, some schools will find it impossible to charge a price of attendance that even comes within rough hailing distance of something that would produce a reasonable expected return on investment for a reasonable proportion of their students. Those schools would go out of business — which, it should be unnecessary to point out, is exactly what should happen.

To me, it looks to be a good solution, using the age-old adage of, “if you can’t beat them, make them feel uncool and inadequate, and then they will follow your lead out of shame.”

If you’re interested, video of the discussion is available on YouTube.

It might be tough for some young overachievers in the future who don’t know to do with their lives. Because if there were fewer law schools, some people might not be able to get into law school (gasp!). Law school would no longer be a failsafe choice.

But on the other hand, that ship has already sailed, hasn’t it?

The 30 per cent solution [Inside the Law School Scam]

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