Friday, May 21, 2010

Should 1L Year Tuition Be Free for Dropouts? An Illinois Law Professor Thinks So.

Illinois Law professor Christine Hurt at the Conglomerate Blog thinks first year law school tuition should be free for students who decide to leave at the end of their 1L year. Under her proposal, students who have decided that they do not want to practice law (or have come to their senses that they are unlikely to find a lucrative Biglaw job upon graduation due to grades, the economy, law school rank, etc.) would be able to leave debt free rather than stick it out till the end because they already invested so much on their first year tuition:

We have all had conversations with students who are unhappy in law school or have come to suspect that they won't like practicing law. These are hard conversations. We aren't encouraging a child to stick with piano lessons or the track team; we are helping students decide whether to continue to make a large investment in a professional degree. Although we always say that there are so many things one can do wiith a law degree, the one thing most people think of is practicing law. And many of the things one can do with a law degree don't require one.

However, when I talk to the rare student considering dropping out, the student usually mentions the amount of debt already incurred. Sometimes these are students unhappy with their grades or who fear their aptitude is not mapping on to the practice of law. Other students just don't like the study of law and fear that they won't like the practice of law. But students are loath to change courses because of the money already invested. Yes, I understand the concept of "sunk costs," but I also understand option theory. Yes, we may say that a student should walk away from a $30,000 mistake instead of throwing good money after bad and turning it into a $90,000 mistake. Particularly in a bad job market, where high-income producing jobs are getting fewer and fewer, we might advise the student to cut their losses. But the other side of the coin is that a student might think that paying $30,000 for nothing is worse than paying $90,000 for something. A law degree is worth something, and it might all work out in the end.

Now, having students stay in law school who either don't enjoy the study/practice of law or who may not be well-suited to it cannot be a good thing for either the student or the institution (never mind the loss to the profession the student might be perfect for). So, here's my proposal: free first year of law school. Here's how it would work:

If Progressive Law School costs $30,000 a year today, then starting next year, the first year is free, and the second year is $45,000 and the third year is $45,000. Students are admitted the same way, only tuition is deferred until a student registers for the second year of law school. If after the first year a student thinks this is not for her, then the student walks away with only the lost opportunity cost of nine months. I think few students would choose this option. Most students like law school or at least like it enough for the benefits of a law degree, which they plan to use. There's not a lot of career advantage to having one year of legal study, so few would game the system just to get nine months of fun common law courses! Admissions would still be competitive, so it probably wouldn't work out that students came just for fun.

What's in it for the law school? First, it would give them a comparative advantage over their peer schools because they are offering applicants a hedge. Second, it would probably end up increasing alumni morale and also placement statistics. I was bouncing this idea around to a colleague who suggested that the second and third years could also be increased over $45,000 to subsidize those who took the option, but I still think the number would be small enough that this might be unnecessary (or require a very small increase).

I agree that students should be given the choice to leave for free or at a reduced tuition rate. That would give students who come across BIDER and are at the bottom of their class or at a third tier school the opportunity to leave, no strings attached, and not waste two additional years and $100k+ on a useless degree.

Where she loses me is her proposal to increase second and third year tuition to a whopping $45,000+ to "subsidize those who took the option". That is ridiculous. Second and third year students shouldn't have to subsidize for their classmates' decision to drop out. I think what Hurt really meant is that tuition should increase by whatever amount necessary to maintain her six-figure salary. How about eliminating 3L year altogether and charging students who drop out after 1L year only half of the full year's tuition? That way, dropouts can cut their losses by half and remaining students won't have to subsidize the loss or go into further debt for a useless third year. What do you think?


  1. This is an excellent idea! If my tuition bill had been cut in half or eliminated altogether after my first year, I probably would have exercised that option. And I would now be $80K richer. As for increasing second and third year tuition, I think this might make sense, but not to subsidize drop-out tuition. Rather, it would make students who choose to continue on, pay for their first year since they might actually benefit from it professionally. It's never gonna fly, though, simply because law schools have a lot to gain from the "sunk costs" state of mind.

  2. Where she loses me is her proposal to increase second and third year tuition to a whopping $45,000+ to "subsidize those who took the option". That is ridiculous. Second and third year students shouldn't have to subsidize for their classmates' decision to drop out.

    That's not what she's saying. She's saying to break the $90k tuition into 2 chunks of $45k apiece instead of 3 chunks of $30k. The "subsidy" portion is about going a bit higher than $45k apiece to cover the drop-out costs.

    Better idea: de-professionalize the law. No law school requirement, no bar exam, no restrictions on interstate work.

  3. I think that she's full of crap. They get the money back on transfer students if it's a semi-decent school. And if's not, they should try to admit people who will succeed in Law School and life, not every Tom, Dick and Mary.

  4. I don't think a first year refund is a bad idea, but I'd rather see an entire refund if a law graduate can't find employment in the legal industry one year after graduation. Especially if the school is still telling incoming students that 99% of all their graduates get jobs.

  5. JJD: I agree, there should be some sort of tuition repayment assistance program for unemployed graduates. I think some people would abuse a money back guarantee policy by purposely staying unemployed for a year to be released from a $200k loan burden. However, a tuition repayment program based on income would help grads who are unemployed or forced to find a low wage non-legal job.

  6. Free in 2028: It's still requiring students to pay more second and third year to compensate for the $30k loss per student who drops out. I thought what she is saying is: charge $30k 1L year and then increase the tuition to $45k or more for 2L and 3L year to compensate for the loss of the dropouts. That would be an additional $30k per student who graduates to "subsidize" for the dropouts.

  7. I have NEVER been so proud of a professor at my alma mater. This is a great idea. And to be clear, I really enjoyed attending law school at U of I and am one of the fortunate ones who has managed to weather the Great Recession and is on a stable and secure career path in law (something that I am thankful for every single day).

    In addition to the comments above, I second what Angel said. If 1L tuition is free for those who drop out, law schools would be much more careful about who they admit, particularly the T3 and T4 schools, who seem to admit anyone with a pulse.

  8. HK, she says that tuition should be deferred and the only cost to the student would be the opportunity cost, so I think the previous commenter is correct; it's just a question of dividing the $90k in tuition in half rather than in 3rds.

    This wouldn't be a terrible idea, but I doubt any law school would go for it. The true sewers already kick their worst students out after one year in order to protect their bar passage rates, so they'd be losing big bucks.

    Also, with more and more students realizing it's top 10% or bust, there could be a major exodus from law school after the first year if one could escape with just paying the opportunity cost (i.e. going to law school for a year instead of working) and living expenses.

    Plus, psychologically, it could be harder to get away with charging two payments of $45k than three payments of $30k. People would probably be more hesitant to pay more money at one time - especially after seeing one's first year grades.

    My guess is that this would be too much of a threat to the scam for them to ever unilaterally accept this.

  9. These kids aren't dumb. I don't see them knowingly throwing good money on top of bad. I think real problem is that they just don't know the true state of the legal job market. The 1Ls just aren't making an informed decision.

    Remember, you couldn't work your 1L year. Some Law Students don't start looking for legal work until they end of their 2L year. By this time, they have already invested four semesters into the degree. IF during their 1L year they discover a general hated the subject of Law, then a one year eject could work.

  10. Does anyone see the irony in proposing that they forgive tuition when law schools wouldn't have to cut them one dime if they simply provided accurate and transparent employment stats?

    This prof has cleverly changed the subject to something that will never happen from something that absolutely should happen. By focusing attention on the the forgiveness of first year tuition which will never happen, she avoids discussing the accurate disclosure of employment stats.

    Not to mention, that even forgiving the first year's tuition is still a scam if the kids plop down 90K in the final 2 years with hopes of making 100k+. Its still a fraud and still a scam unless the employment stats are accurate. Let's not chase this red herring.

    the market will easily figure out that a law degree is worth about $10.00 when it is disclosed that you can get a 45K job which is not much more (if more at all) than what you could earn without.

    PLEASE STAY FOCUSED. Its accurate employment/salary data we need. Not tuition forgiveness.



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