Law Schools

The New U.S. News Law School Rankings Should Have Used Tuition As A Ranking Metric Instead Of Student Loans

The idea of a law school being ranked based on how many of their students have simply taken student loans isn't great.

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I am pleased to see that U.S. News infamous law school rankings list is changing its methodology to take the cost of law school into account. Now, five percent of the rank score is determined by the student body’s loan debt incurred.

According to Mike Spivey’s blog, 3% weight will be applied to the average amount of graduate debt incurred by students in the previous year’s graduating class. Two percent weight will be applied to the proportion of a school’s graduating class who incurred law school debt. How this will be calculated and how these percentage numbers were determined is not quite clear.

But as I think more about it, I do not like the idea of a law school being ranked based on how many of their students have simply taken student loans, even if the rank score is only 2%. A student-loan free entering class, while ideal, is very unrealistic. From the wording, a person graduating with $25,000 of law school debt could weigh equally with someone who incurred $250,000. To me, that seems unfair. If a proportion of a law school’s graduating class that takes student loans is considered, then the amount of the loans should be considered as well. Otherwise, this rule should be scrapped and the average graduate debt incurred should compose the full 5% of the rankings score.

Also, I generally don’t believe that a law school should be ranked based on the amount of debt their students accrue during school. This is because law schools should not have control over a student’s cost of living expenses. I get that many young students do not fully understand the consequences of borrowing large amounts of money and are overly optimistic about their career paths. But at the same time, if schools want to game the system by limiting cost of living expenses, it can create problems for students. Out-of-state students might be unable to attend if they cannot afford a place to live locally. And students going to schools in expensive cities will have to live in a cheaper city farther away or in a cheaper but less safe part of town.

Measuring tuition cost would be a better way to rank schools. Tuition is something most law schools (or their head universities) can adjust. This would give schools in lower-cost-of-living cities an advantage. So while schools should be rewarded for being the most affordable, there should also be incentives to be efficient which will reward schools in high-cost-of-living areas. Schools should be given credit for maintaining tuition amounts in later years and given extra points for reducing tuition in a subsequent year. Schools that raise tuition over the cost of inflation should be penalized.

For calculation purposes, tuition should not be what is advertised on the school’s website. It should be calculated based on what the average student pays after applying discounts and scholarships.

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Tuition should also include mandatory fees. A school might claim that its annual tuition is only $5,000, it might try to offset that by including a number of dubious mandatory fees and surcharges.

Schools could improve their rankings under the new system by helping students obtain outside scholarships to help pay tuition and minimize their loans. Students look for scholarships only a few times in their life so they will have a harder time finding every scholarship available to them. It should be easier for schools since they are in a better position to devote resources looking for every scholarship possible. This makes me wonder why schools haven’t done this in the first place.

Of course, reducing tuition does not guarantee that students will leave with lower student loan debt. These days, many students have six-figure debts from bachelor degrees alone. While in law school, they are going to double or even triple down on their student loans and will be on PSLF for 10 years or become an IBR lifer while lobbying the government to forgive their student loans. But at least the schools have done all they can to minimize debt so the onus will be on the students themselves.

In the final analysis, my educated guess is that including student loan debt size in the rankings will not change most law schools’ operations due to the low weight in the rankings. Even if a school hypothetically reduced their tuition to the point where every student graduates with no loans, this alone will not result in a significant rankings bump. This will not justify a large scale tuition reduction without outside funding assistance.

But there could be positive side effects to lowering tuition. For example, a drastic tuition drop could attract students with better academic numbers which could raise a school’s rank meaningfully. Ultimately, any attempt to “game” the U.S. News rankings system will have to resort to the usual tactics such as marketing to law professors to improve their reputational rank (also known as “law school porn”). Schools will continue to offer full scholarships to the people who probably won’t need it at the expense of those who do.

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While I commend U.S. News for adjusting its rankings to help minimize student loan debt, I doubt it will disrupt the status quo. If student loan debt size affects only 5% of a law school’s ranking, schools will not be incentivized to spend substantial time and resources to minimize their students’ debt after graduation. Also, the efforts to minimize student loans can put law schools in an awkward position where they have to determine how their students can live. Law schools should be ranked on the metrics that they can control, such as tuition costs. This will incentivize schools to minimize tuition increases that outpace inflation. Also, if done correctly, schools will be motivated to help their student body obtain scholarships to minimize their debt and cover tuition.

Steven Chung is a tax attorney in Los Angeles, California. He helps people with basic tax planning and resolve tax disputes. He is also sympathetic to people with large student loans. He can be reached via email at sachimalbe@excite.com. Or you can connect with him on Twitter (@stevenchung) and connect with him on LinkedIn.

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