Do Students Profit from For-Profit Law Schools?

I've always wanted to be a center in the National Basketball Association.

But I'm well short of six feet tall, 66 years old, and have the vertical leap of an anvil. The odds are long.

Nevertheless, I'm sure there's a basketball coach somewhere who would school me from dawn to dusk every day if I were to pay him exorbitantly for his services.

It might not seem like it at first, but this is a pretty good analogy for students who attend for-profit law schools.

Even though overall law school enrollment has been shrinking for several years, the for-profits (as well as other lower-tier schools) have increased the sizes of their student bodies by lowering standards and over-promising results. For many students at institutions like these, the outcomes include crushing debt and brutally disappointing job prospects.

What are the for-profits?

Six of the 205 J.D.-granting law schools accredited by the American Bar Association are designed and structured to make money for their owners. The rest are run by nonprofits, states, or other governmental entities.

The six accredited for-profit schools are Arizona Summit Law School, Atlanta’s John Marshall Law School, Charleston School of Law, Charlotte Law School, Florida Coastal School of Law, and Western State College of Law. In 2014, these institutions had a total of 5,242 students (according to disclosures each school submitted to the ABA). Arizona Summit, Charlotte, and Florida Coastal, all owned by InfiLaw (an organization based in Florida, which is itself owned by a private-equity firm based in Chicago), are among the largest law schools in the nation, with a combined total student body of 3,636.

Like most law schools, these for-profit institutions rely on tuition to survive. And their price tags are hefty.

At five of these schools (data from Atlanta’s John Marshall’s wasn’t available), tuition rose between the 2013–2014 academic year and the 2014–2015 academic year by an average of $1,410. Their mean tuition is just over $41,665 per year.

While costs have gone up, admissions standards have simultaneously dropped. Every one of these schools admitted applicants with lower LSAT scores for 2014 than admitted students had the previous year. And those LSAT results are near the bottom end of scores compared with other ABA-accredited schools.

The consequences of these lower standards are harsh, both for the law students themselves and for American taxpayers.

Do the costs outweigh the benefits?

According to research conducted by the Law School Admission Council (LSAC), the best pre-law-school indicator of whether a student will eventually pass the bar exam is her LSAT score.

A investigation by the advocacy group Law School Transparency (LST) found that students with LSAT scores between 147 and 149 (on a 120–180 scale) have a slightly-better-than-50-percent chance of passing the bar on the first try; students with scores in the 145–146 range have a somewhat-less-than-50-percent shot. But those law school candidates with scores below 145 have only a one-in-three chance of passing the bar on their first try.

At least half of the students at the six accredited for-profit law schools fall into these high-risk categories. And the 2014 LSAT scores of students entering the three InfiLaw schools rank in the bottom six among all accredited schools.

Recent statistics confirm LST’s findings: The bar passage rates among students at InfiLaw’s three schools have plummeted. And those bleak numbers don't include the most recently enrolled students, who, according to The Atlantic, entered law school with even lower LSAT scores than the previous cohort that did so poorly on the bar exam last year.

Unfortunately, such dismal outcomes are not limited to the six for-profit institutions. Several dozen other law schools have also lowered their entrance requirements so dramatically that substantial numbers of their students seem to have little realistic probability of ever passing the bar exam. (Unsurprisingly, graduates from law schools that lack ABA accreditation face even longer odds of passing the bar.)

Several states have reported historically low bar-passage rates over the last two years. For instance, New Mexico's 2015 passage rate fell by 12 percent from 2014, and Oklahoma's by 11 percent. Notoriously difficult California this year saw just under 47 percent of test-takers pass the state bar, down from an already dismal 48.6 percent in 2014.

Who do these schools hurt?

Given the extremely high cost of these law schools — and the dubious likelihood of passing the bar — an undergraduate contemplating a for-profit (or similarly low-ranked) law school should take a hard, unemotional look at two things: her total financial burden and the expected financial benefits of attending.

Alumni from these schools, on the whole, face a mountain of debt and limited job prospects (even if they manage to pass a bar exam, as many do not).

For instance, according to the New York Times, 93 percent of Florida Coastal’s 2014 graduating class had debt, the average being almost $163,000. The paper’s editorial board writes, "In short, most of Florida Coastal's students are leaving law school with a degree they can't use, bought with a debt they can't repay."

Indeed, even if a grad from one of these schools lands a law-related job, her likely compensation will probably be far less than is necessary to pay off her enormous student debt, which can easily reach $150,000 (including tuition, fees, and living expenses for three years), not to mention foregone income.

The mismatch between the applicants’ potential benefits and the cost of attending law school burdens both students and private citizens. Obviously, a given student has spent three or more years earning a law degree that may have cost more than it will be worth, but the problems affect more than just the individual student.

If the student borrowed tuition money, the lender was probably the federal government, through the Direct PLUS loan program, which until recently allowed graduate students, including law students, to borrow the full amount of tuition and living expenses. Such loans cannot be discharged in bankruptcy, which means that a law grad without a high-paying job is trapped by huge debt and little chance of getting out from under it.

In the summer of 2015, the U.S. Department of Education's “gainful employment rule” tightened eligibility for such loans. A school will be unable to receive funds that originate from Direct PLUS loans unless the ratio of graduates’ post-graduation loan payments to their incomes meets certain criteria.

The six for-profit law schools, which rely on federal loans, face an existential threat from this rule, since many of their students have “awful debt/income outcomes,” according to a post on the blog Above the Law. And according to the New York Times editorial cited earlier, students at none of the six would qualify for federal loans.

In addition to aspiring lawyers, American taxpayers also lose. When a student takes out a Direct PLUS loan, the federal government pays the school her tuition in full while she stays on the hook with the lender — maybe for life. If the student is unable to pay off her loans, tax dollars collected from private citizens across the country make up that difference. The reasons for this are complicated and involve fallout from the subprime mortgage crisis of the late 2000s. But the simplest explanation — and a reductive one — is that because student loans for ABA-accredited schools are backed by the government (which is itself the lender), it has no choice but to levy taxes on private citizens to recoup those funds.

As much as it pains me to admit it, I won't ever be a center in the NBA. And many undergrads should recognize the reality of their situations as well: Law school may not be a good career choice for you if it's unlikely that you'll ever make enough as a lawyer to repay your student debt.

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