Law Schools, Money, Student Loans

Law School Math: Tuition Goes Up While Student Expenses Magically Remain Flat

Are student expenses keeping up with inflation?

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Law school tuition goes up. That’s just what it does. It goes up during boom times, it went up during the recession. It goes up when lots of people apply to law school, it goes up when applications are at historic lows. If they could distill law school tuition into a pill, it would replace Viagra.

Law schools seem very good at estimating how much law school should cost. But are they as good at telling you how much you’ll need to spend while you’re in school besides tuition? Room and board, living expenses and transportation costs, these things go up too. But some students argue that when it comes time to estimating these costs — costs that are the basis for the federal loans that students take out in order to shelter themselves and eat while they’re in school — law schools set the bar unreasonably low. From the law school’s perspective, student expenses are relatively flat… it’s only the tuition that needs to go up.

Tipsters pointed out one school for a case study of this phenomenon….

A tipster at George Washington University Law School was nice enough to send in some screen caps of GW Law’s “cost of attendance estimate.” Here’s how much GW Law estimates it will cost you to attend the school, beyond tuition. These are important estimates. Direct Loan programs look at these to determine how much money students can borrow. There’s also an issue of transparency. Law school doesn’t just cost the tuition; you also have to live for three years.

Here are the current cost estimates for the 2013-2014 academic year at GW Law:

As for other D.C.-area schools, Georgetown Law estimates $25,610 in living expenses and fees for 2013-2014, and Howard Law estimates $28,578 for first-year law students.

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(Speaking of D.C.-area law schools, if you’re a student at one of them, join us for free food, drinks, and trivia next Wednesday. For details and to RSVP, click here.)

Getting current data on expenses is one thing, but it’s harder to get historical data on what they used to estimate. Enter our GW Law tipster, who sent in a screen cap of the cost of attendance just in the 2011-2012 academic year:

Well, now that’s interesting. In three years, GW Law has increased its Room and Board estimate by $400. It has decreased the amount it allocates for transportation — did it suddenly become $200 cheaper to get around D.C.? The health insurance budget has gone up by just $200… and tipsters report that that the current health allowance of $2,000 is less than how much GW charges for its own health care plan ($2,500, according to them). In 2011-2012, GW mentions that you might need a computer, but by 2013-2014, GW evidently thinks you already have a computer, or can rely on the charity of your law school friends to get one.

And then there’s the loan origination fee. GW (and every school) charges you money for the privilege of processing the loans you take out for law school. You literally have to borrow more money to cover the cost of the school accepting your borrowed money. If, say, your parents just pay for school, you don’t have to pay that fee. In 2011-2012, GW Law transparently included that fee in its cost estimates, since you’re on the hook for it. In 2013-2014, George Washington is still charging you that fee, only now, magically, it has disappeared from its accounting of fees. Kind of like how it will magically disappear from your bank account when GW takes it out.

Putting it all together, the 2011-2012 attendance estimate for GW Law was $30,650. By hiding the cost of a computer (they still offer a computer loan, they just don’t include that in their list of expenses) and the loan origination fee, and low-balling the costs of health care and transportation, GW has made the cost of attending law school look almost $3,000 cheaper in 2013 than it was in 2011, about a 9 percent cost savings.

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MEANWHILE…. tuition at GW Law was $45,750 in 2011-2012. For 2013-2014, it’s $49,840. That’s almost a (wait for it) 9% increase over 2011 prices.

So, according to GW Law, the amount of money students must borrow for themselves, to spend on food, shelter, and incidental expenses around D.C., has been remarkably resistant to inflation over the past three years. But the amount of money students need to borrow to fund professorial salaries, capital expenses, and whatever else GW needs tuition for, has continued to rise. So not only has GW Law been able to keep class sizes high, they’ve also managed to reallocate a greater percentage of the loan money people are eligible for to the school as opposed to student expenses. That’s a neat trick.

Now, the GW people don’t think that’s much of a story. They contend that the GW expense estimate is higher than other local schools, and as noted above, the GW total cost estimate is more than Georgetown. I’m going to go out on a limb and suggest that if we had good historical information about other schools, we’d see something very similar to what’s going on at GW Law: student expense estimates remain relatively flat, while law school tuition goes up and up and up.

A GW spokesperson also said that the school’s methodology for calculating student expenses has changed from 2011 to now:

I can tell you that for the past two years, we have collected accurate data directly from students using surveys with respect to their room and board and transportation costs. I understand the methodology for collecting the data prior to the past two years was different, which may explain why there is not a huge increase in these costs….

I don’t know exactly what the methodology was before. As I’m sure you know, we had a different Admissions Dean at the time. I do know that now we are asking students directly for this information and reporting that data.

I still can’t get over how anybody figured that it suddenly became $200 cheaper to transport yourself around D.C. And the only way students are spending less on health care than what GW charges for health care is if their parents are still paying for their health care. But whatever. As we’ve seen, the biggest changes to GW’s methodology here are not the directly reported student expenses, but the decision to hide the cost of the loan origination fee and the computer.

One GW Law student has a reality check for the GW administration:

This year instead of increasing cost of living, transportation, etc. (which in DC goes up MUCH more than the average COL) they cut money from the transportation estimate and cut the ‘origination loans’ that get pulled from student loans if you are supporting yourself with a non traditional/wealthy family in order to make it seem as though the costs haven’t risen. I can tell you that costs have risen MUCH more than standard cost of living in DC, and the response I have gotten from the university is basically just to shut up. It seems that if you don’t have a wealthy support system or a standard nuclear family GW Law really doesn’t care at all about your well-being. I can tell you, the effects of these policy changes have caused very severe issues in being able to just subsist as a student here.

You know what law schools never underestimate? How much money they expect students to pay in tuition. That top-line figure never seems to get cut, it never seems to remain flat, it never seems to undergo a methodological change that more accurately reflects the value of the law degree. It just keeps going up.

Earlier: D.C. Is Shut Down, Seems Like A Perfect Time To Have A Party

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