How fortunate you are

March 13th, 2013 / By Kyle McEntee

Dean Dan Rodriguez has written to his students at Northwestern University Law School to announce a class size reduction, a tuition increase, and a commitment to increase scholarships and to cover LRAP costs. (Letter below.)

The letter is a mostly honest assessment of the challenges faced by Northwestern, its peers, and law schools generally. There are too few jobs; attending law school costs a lot of money; and the legal economy is undergoing (and has undergone) a significant shift. Rodriguez is not the first dean to go on the record about these issues and he will not be the last. Without a doubt, acknowledgement is an early step for reform.

The far bigger challenge is having legal education leaders provide solutions that actually combat the problems they rarely struggle to articulate. Here I find that sincere philosophical differences stand between the people who want to see a reimagination of legal education and the people who believe that the scope of necessary change is relatively narrow. Both groups acknowledge the need to reform, but disagree on what reform looks like. In my opinion, the differences largely stem from how far away one thinks legal education is from a reasonable price and from a reasonable balance between students and jobs.

In the rest of this post, I respond to three of the solutions adopted by Northwestern to combat the problems facing law students, recent graduates, and the legal profession. However, Dean Rodriguez’s letter could have been written by any number of law school deans, faculty members, or trustees. The applicant market has forced schools across the country to cut class sizes, increase tuition discounts, and stop unrestrained budget expansion. Credit is due when schools move in the right direction, like when a school cuts enrollment because there aren’t enough jobs or because the school refuses to admit students who are unlikely to ever pass the bar. However, the motivation is never solely noble; among other vanity measures, schools want to maintain their U.S. News ranking. It’s important that decisions like Northwestern’s receive in-depth analysis and be challenged beyond their glossy exterior.

Class Size

Legal education is in an interesting place when an elite law school like Northwestern reduces class size due to a weak entry-level hiring market that cannot absorb all of its graduates. Each school needs to do its part to reduce size, and it appears that Northwestern’s contribution will be about 12-15% over a three year period. Compared to the incoming class of 2013 (274 students, enrolled in 2010), Northwestern’s incoming class of 2016 (enrolling in 2013) will be roughly 235-240 students. Northwestern has publicly set a baseline for class size reductions for schools of its kind. I’d say it amounts to a challenge to schools that do not have job outcomes like Northwestern to justify why they do not follow suit. For schools like Northwestern and its peers, they need to continue to assess whether current cuts suffice.

Of course, if a school reduces the number of people it charges, it needs to cut expenses and/or increase revenue.

A “Moderate” Tuition Hike

Rodriguez takes a page out of the higher education administrator’s playbook when he talks passively about tuition increases, as if they just happen to schools. According to this play, schools simultaneously deserve credit for restraint and sympathy for having to raise tuition. One current Northwestern student sarcastically thanked Rodriguez for “tell[ing] us how lucky we are that the school is taking more money from us, but [] not as much as they could be taking.” That the increase is in line with expected inflation and better than peers is supposed to be a consolation. Students do not see it that way.

My criticism is not directed at Rodriguez alone. The law school dean has less responsibility than one might expect and a variety of factors go into the nominal tuition rate–how many factors and to what extent each factor impacts the final number depends on the school. Nevertheless, somebody or a group of somebodies at Northwestern is responsible for a price point that continues to trend in the wrong direction. The appropriate next step for Northwestern stakeholders is to wonder why a law school representative–at any school, law or otherwise–would find it distinctive to talk about an increase of “only” three percent. Rodriguez’s letter stipulates that Northwestern is part of the solution, but its supposedly-progressive policies showcase what’s truly wrong these days in higher education.

But fear not, to temper the tuition hike even more, the school can increase its financial aid awards.

Tuition Discounts

Financial aid sounds completely benevolent. After all, it’s “aid” that helps all but the very wealthy afford to attend school. The term refers to student loans (at exorbitant rates), as well as merit and need-based scholarships. The latter category is an expenditure like faculty salaries or janitorial services. While scholarship money sometimes comes from limited purpose endowments, they’re usually tuition cross subsidies. That is, a scholarship for one student comes from the tuition revenue of all others. Need-based scholarships are scarce, so a huge chunk of scholarship expenditures comes from the tuition revenue from the students least likely to succeed. These students subsidize the students with the best incoming LSAT scores and GPAs (i.e. those most likely to succeed).

This translates to something far less noble than a solution to the soaring cost of a Northwestern education. Like almost every other law school, the school has chosen to expand its budget to buy credentials to continue its participation in the U.S. News charade. Who pays for this? The incoming 1Ls who pay more than the average price paid, current 1Ls, current 2Ls, and the alumni that Northwestern plans to obtain “external funding” from to recoup lost (and apparently necessary) revenue from class size reductions. At a certain point, if it hasn’t already happened, alumni will simply refuse to cover the difference and wonder why the budget must grow to provide a sound legal education. As mentioned previously, students already wonder.

Digging into Northwestern’s three solutions, even if presented as non-exhaustive, takes some polish off of Rodriguez’s letter. These are conscious spending decisions dressed up as solutions to various aspects of the legal education crisis that’s hitting even students at elite law schools. Unfortunately, continuous boasting from law schools about how they’re ahead of the curve on reform, when their solutions can only hope to make tiny dents into the legal education crisis, proves how far we are from affordable legal education that provides entry into the legal profession.

Letter from Rodriguez (emphasis mine)

During the past year, we have met in various venues and with a multitude of stakeholders to discuss the challenges facing legal education today, all of which are receiving due attention in the media and blogosphere. Most notably, over the past few years a decline in hiring at firms and the outsourcing of certain types of legal jobs have led to fewer opportunities for law school graduates. Further, too many students graduate with student loan debt that seriously affects both their career choices and their quality of life. And fewer people are applying to law schools nationally (20% fewer this year and an estimated 38% decline since 2010). Northwestern has not faced the same level of decline as other schools, nor have we suffered as greatly from the decline in legal positions as most other law schools. We are not immune, however. And we are not going to ignore the ways in which the legal economy affects our alumni, current students, and prospective students.

This significant shift in the legal economy presents real challenges. It also presents real opportunities. Informed by our culture of innovation and with the creative work of our faculty, students, and staff we will craft strategies, big and small, to meet the challenges facing legal education so that we will continue to thrive in the years to come. The strategic planning process, which is actively underway, will help shape curricular and external relations strategies to help propel us to the next level of achievement and reputation. Meanwhile, we will carry out three important first steps with an eye toward addressing these challenges. These steps result from several months of deliberate analysis and are, quite properly, focused on protecting and enhancing our reputation and reducing financial burdens on our students.

First, we will implement a modest reduction in the size of our traditional JD program: approximately 10% or 20 to 25 fewer entering students in 2013. As we become leaner, this modification also provides an opportunity for us to further enrich the strong and close-knit sense of community and camaraderie for which we are known.

Underlying this decision is the match-or, if you will, the mismatch-between the number of JDs who graduate each year and the actual demand the legal economy is creating and can sustain. Earlier this year the Bureau of Labor Statistics predicted that the economy will generate approximately 75,000 new legal jobs in the next decade while ABA-approved law schools are graduating more than 40,000 students annually. The specifics are debatable but the big picture is credible, and law schools must take heed and act in strategically responsible ways.

Second, we will continue to moderate our tuition increases. JD program tuition for the 2013-2014 school year will once again rise by just 3%, matching last year’s increase which was our smallest in more than 40 years and a rate that coincides with historical measures of inflation. Last year, this modest increase was at the very low end of the spectrum for top law schools. We expect that this will be at the low end this year as well.

Third, we will increase our total investment in need- and merit-based financial aid for entering students and in our LRAP program for graduating students by at least 25% during the next two years. This commitment, along with other measures we will explore, and our conservative approach to tuition increases going forward, are manifest efforts to limit the rising cost of a Northwestern legal education and corresponding burdens of student indebtedness.

Finally, we will look closely at managing more conservatively the expenses within the Law School, investigating ways we can repurpose dollars toward more efficient and efficacious methods of instruction. No part of the Law School will be immune from this careful review. For years, we have been asking students to make sacrifices by the tuition we charge and the debt undertaken; as faculty and staff of the Law School, we need to be prepared to make these sacrifices ourselves. While we look at cost-saving measures, we will be guided by answers to this overriding question: “Does this request for additional expenditures further directly the goals and objectives of our academic program?” That all said, we are not going to shrink precipitously the size of the Law School budget so as to impair the quality of our academic program. Indeed, due to the prudent and forward-thinking budgetary and contingency planning by our administrative team, we will be able to carry out these adjustments without the need to implement any major cuts to our operating budget. In the long run, however, we will need to pursue ambitiously alternative sources of revenue and, in particular, we will need to secure significant external funding, at even higher levels than before, through the generous financial support of our alumni and friends. This, too, we will do.

These changes are no panacea and no doubt there will be further adjustments down the road. Yet, present times call for these actions which, when implemented collectively, tangibly begin to address the convergent challenges facing all law schools. At Northwestern Law School, we know that a first-class, innovative legal education need not be provided with insufficient regard to students’ economic circumstances. We can be great and efficient, elite and compassionate.

Our Law School provides an exemplary legal education. Our graduates have been remarkably successful at lucrative and influential jobs around the globe. Supported by our community and our culture of innovation, we are prepared to confront these issues, and we will emerge from this era well ahead of the curve.

Thank you for all you do for Northwestern Law School.

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