The Price of Law School Cost Transparency
Higher-education cost transparency is all the rage. In a recent article in Slate, Annie Lowery argued that:
“It is true that we have tremendous amounts of data about higher education. But it is also true that too often students end up misled, overwhelmed, or confused attempting to gauge the different options. Big, expensive purchases require smart, educated customers. That is why the government created the new fuel-efficiency labels. It is also why the new Consumer Financial Protection Bureau is rolling out simplified, standardized home-mortgage forms. It should not, after all, take a Ph.D. in statistics to get through the college application process.”
In general, I absolutely think that law schools ought to compete on the transparency of their disclosures about student job outcomes, and that the ABA’s highest and best accreditation purpose would be to audit such data for its accuracy. However, I thought I’d caution proponents of cost transparency of two specific & unanticipated costs of their proposals.
First, think about what cost transparency entails. To my mind, real law school cost transparency doesn’t mean that we on a clear form provide prospective students a series of blanks: “tuition + anticipated tuition growth” plus “living costs + anticipated cost increases” minus “expected three-year scholarship”. We’d also need to disclose our predictions of the student’s chances on the summer job market – law school cost is for some students significantly defrayed by summer employment. If you look nationally, graduating law student debt has spiked in the last two years. That rise doesn’t follow largely from tuition increases, though that’s part of the story. Rather, it’s the collapse of the firm job market in 2008 -2010 that did the trick: students lost $10-$30,000 of expected income that would have offset or repaid borrowing.
The problem is that although law schools could get a handle on some of these numbers, disclosing them in a way that’s going to meet students’ ever-rising expectations isn’t exactly an easy task. Think about the average administrator in charge of this disclosure — how likely is it that they will be able to do so in a way that meets Lowery’s standard of clarity, accuracy, and replication? Even when they are excellent at their job today, this kind of data-organization and display task would demand a fundamentally new set of skills. Bringing in a new body is a fine idea, although many law schools are operating under hiring freezes to control tuition growth. Moreover, as Gordon Smith observed some years ago with reference to curricular change, legal education reformers often discount opportunity costs severely. So if law schools spend more time on figuring out the expected costs of law school education, they are going to spend less time on something else. (And, likely, less money.) What’s that to be? My guess is: library resources, clinics, and research support. Maybe that’s a worthwhile trade-off, but it strikes me that discussions of cost transparency are really just proxies for complaints about cost, period. Real law school cost will fall if and when the legal job market recovers.
Second, I’ve wondered if transparency might might mean something more like “relative position” to most students. After all, it’s not particularly useful to know your expected costs — you probably also want to know how your bottom-line number compares to other students, so you can get a handle on how hard you can bargain. (This kind of transparency is what enables you to bicker with car dealerships after seeing comparison sales on the internet.) The problem is, of course, that every law student pays a different price for their seat: law schools are like airlines, right down the tenured workforces. So you might think that law schools ought to be forced to disclose where a student’s scholarship package – and consequent cost structure – ranks against other students. But that would create some pretty awful unintended consequences. Status competition between those at the top of the class and those at the bottom would make everyone unhappy. As Bob Frank has argued, such competition leaves both high- and low-status people in uncomfortable binds, and may result in the most subsidized percentile implicitly paying those in the least subsidized percentile by forgoing a portion of their potential gains.
Most significantly, comparative transparency would reduce law schools’ ability to cross-subsidize tuition, and would further entrench wealth effects in higher education. Think about it — what kind of people are likely to be armed by knowledge about relative rank? I think: well-connected, aggressive, sophisticated consumers. I therefore suppose: relatively richer, male, upper-middle-class students. Those students will fight to be on the right side of every bell curve – as they are entitled to! But as a result, law schools will have less money to distribute to more passive, less sophisticated, students.
This isn’t a screed in favor of obscuring law school cost, let alone law school job outcomes. It just points out that mandating certain kind of disclosures without paying attention to the consequences of disclosure, or localized practices, potentially creates problems that transparency’s proponents ignore. As James Scott observed in Seeing Like a State, ordered disclosure of particularly formatted data can be a kind of social control, and rarely works as well as we’d want it to.