The Problems with the President's Two-Year Plan

At a town hall event in Binghamton, N.Y. earlier today, President Obama was asked the following question:

I'm a faculty member of the computer science department.  I'm very excited and encouraged by your plan on the affordability reform.  My question is related about the quality of future higher education.  As you know, many universities are trying their best to provide the best value by doing better with less.  But the challenges are real, and they're getting tougher and tougher as the budget cuts are getting tougher and tougher.  So my question is what your administration will do to ensure the best American universities remain to be the best in the world in the 21st century?

After acknowledging that state educational funding had dropped off significantly (". . . what you've seen is a drop from about 46 percent of the revenues of a public college coming from states down to about 25 percent"), the President then turned to ways in which universities could also cut costs:

So states have to do their jobs.  But what is true also, though, is that universities and faculty need to come up with ways to also cut costs while maintaining quality -- because that’s what we’re having to do throughout our economy.  And sometimes when I talk to college professors -- and, keep in mind, I taught in a law school for 10 years, so I’m very sympathetic to the spirit of inquiry and the importance of not just looking at X’s and O’s and numbers when it comes to measuring colleges.  But what I also know is, is that there are ways we can save money that would not diminish quality. 

This is probably controversial to say, but what the heck, I’m in my second term so I can say it.  (Laughter.)  I believe, for example, that law schools would probably be wise to think about being two years instead of three years -- because by the third year -- in the first two years young people are learning in the classroom.  The third year they’d be better off clerking or practicing in a firm, even if they weren’t getting paid that much.  But that step alone would reduce the cost for the student.

Now, the question is can law schools maintain quality and keep good professors and sustain themselves without that third year.  My suspicion is, is that if they thought creatively about it, they probably could.  Now, if that’s true at a graduate level, there are probably some things that we could do at the undergraduate level as well.

The full transcript is here.

I'm sure a lot will be said about this in the upcoming days, but since it's a Friday night in August, I thought I'd weigh in with a few initial thoughts.  So here they are:

(1) The President's proposal does not lower tuition.  It may seem obdurate to suggest that lopping off a third of the legal education provided to students would not reduce the tuition they pay.  But it won't -- at least, not on its own.  Yes, it will cut the costs of providing that education, at least in theory.  But it won't lower tuition.

Frankly, I'm somewhat baffled that proponents of the two-year plan -- and, in fact any proposal to cut the costs of providing legal education -- fail to grasp this point.  We just went through a period where a lot of law schools raised their baseline tuition at rates significantly higher than inflation despite the fact that the J.D. remained the same number of credits.  In other words, over the last decade law schools charged significantly more per credit hour.  What's to prevent them from doing this in the future?  

But, how, you may ask, could law schools really charge the same price for 1/3 less education?  Well, play it out.  Let's suppose some states allow students to sit for the bar after two years, rather than three.  Some schools would change their J.D. programs to two years, but many would not.  In fact, it's more likely that the higher-ranked schools would keep their programs as is.  But putting that variable to the side -- yes, there would be competition at lower-ranked schools, and many would create two-year programs.  But they would charge what the market could bear.  And up until very recently, that market could bear about $100,000 to $150,000 for a J.D. with many students lining up for it. Why wouldn't that market dynamic remain the same?  

If you need further proof, just look at Matt Leichter's school-by-school analysis.  As he said, "law schools do not care about controlling their costs and will shift them onto students who don’t realize that their predecessors had a significantly better deal than they did."  Since I'm a law professor, I would frame this differently (schools will keep spending to improve the education they provide and their reputation), but the point is the same: law school tuition is not constrained by credit hours.

If someone magically changed the J.D. program at my law school to two years, I wouldn't shrug my shoulders and go, "Oh well -- guess we're only two years now!"  I would work with my colleagues to figure out how we could make those two years meet the needs of our students -- and pack as much in as possible.  If the same U.S. News rankings remained in place, don't you think schools would continue to compete on class size, expenses per student, and educational reputation?  And wouldn't that drive up costs?  What if, in the new two-year law school, we added a clinical component, an externship component, and a ten-person small section component to the basic Contracts class, and then assigned it to a doctrinal professor, two clinical professors, and four adjuncts?  That would be a better class, no?  But it'd also be a lot more expensive.  A school could easily justify spending $60,000 or more a year per student -- again, if the market rewarded schools for offering such classes.  (As an aside: is it better to have two years of intensive classes or three years of broader offerings?  That's an interesting pedagogical question -- but it's a pedagogical, not a financial, one.)

So I do think, initially, a two-year program would lead to reduced tuition.  But would it hold that way?  I don't think so.  The pressures towards education excellence would increase costs to meet whatever students and their lenders were willing to pay.  That's not necessarily a bad thing, if consumers have the proper price sensitivity.  But if you want tuition to go down, work on that.  Otherwise, the assumption that law school tuition will go down if costs go down is like the argument that 11 is louder.  It assumes that law schools just can't make 10 louder themselves.

(2) The President's plan would worsen the jobs aspect of the current crisis.  No one doubts that a significant part of the current crisis is based on the drop in employment opportunities for law school graduates.  If we change the requirements so that lawyers from here on out would only need two years of school, there would be more of them, and they would come to the market more quickly.  And that would be a bad thing for those lawyers who are currently in the market.

Again, this seems to be a point that many reformers are either missing or are conveniently ducking.  If you think there are too many law grads chasing too few jobs, then you really want fewer law grads.  And if you are making legal education cheaper to provide, either by lopping off a third of the education required, or getting rid of tenure, or loosening other accreditation requirements, then you are putting down incentives for *more* law grads to be out there.  And here's the Scylla-and-Charibdis: either tuition will not go down, and law schools will just make more money off their students as their costs drop, or tuition will go down, and more students will have the economic incentives and ability to go to law school.  Pick your poison.

(3) Choices about the required program of legal education should be based on pedagogy.  The President proposed lopping a third off of legal education because "by the third year -- in the first two years young people are learning in the classroom.  The third year they’d be better off clerking or practicing in a firm, even if they weren’t getting paid that much."  That's not much of a pedagogical theory -- I guess he doesn't like clinics -- but then again, there's not much pedagogy to a lot of these theories.  I believe that with increasing legal complexity, most of us would likely need more education, rather than less, to be properly prepared.  Of course, it is always the job of law schools to provide the necessary education at a sustainable price.  But schools can provide a three-year legal education at a sustainable price.  In fact, we've done it in the past.  

If we find that a two-year J.D. provides an adequate education, then we should adopt it.  But if we reduce the quality of our legal education -- and reduce it in ways that leave lawyers less able to handle their vocations -- simply because we can find no other way to reduce the price, then shame on us.