On February 11, the Washington Post published an article about the ... prospective shortage of primary care physicians. It rightly pointed out that medical students graduate with large amounts of student loan debt, and as a consequence, they tend to specialize early in their careers because they can earn a higher income for the same cost of education.
The article made two important errors: First, it failed to mention that since July 2009 university graduates with federal student loans can put those loans into the Income-Based Repayment (IBR) plan, which today caps monthly payments at 10 percent of the borrower’s discretionary income for 20 years, after which the loan is canceled and the debtor must pay income tax on the forgiven sum. While IBR is a decent idea for encouraging doctors to opt for primary care positions as opposed to higher-paying specialties, it's a savior for law school graduates who are not so fortunate to enter a field where there are more jobs than there are graduates to fill them.
The second, more significant, error the Post article makes is that it accepts high student loan debts for professional degrees as a given, as though tuition increases over the inflation rate are a fact of life, caused by magic. The Bureau of Labor Statistics' (BLS) Consumer Price Index (CPI) and Census Bureau data (Historical Income Tables, Table F-6) illustrate the reality of higher education costs quite dramatically.
... Those pondering the high cost of law school, rather than med school, ought to be even more perplexed. The jobs aren't there—and, unlike in medicine or dentistry, won’t be there either—so why is tuition still increasing? I can think of three hypotheses.
• Blame the applicants. There are always more people applying to law school than there are seats for them, so law schools increase their tuition due to high demand and short supply. This answer is true for ABA–accredited law schools but unsatisfactory. Without student loans, people wouldn't be able to buy the degrees, so the answer must discuss that.
• Blame U.S. News. U.S. News & World Report's annual law school rankings reward law schools for profligate spending and therefore for charging more. It's true that weighting law schools by "spending per student" will cause them to increase spending and tuition, but law students have to borrow the money to pay the tuition. This hypothesis suffers from the same flaw as "Blaming the applicants" does.
• Blame the federal government. By interfering in student debt markets, the federal government is unwittingly causing a tuition bubble. It fails to realize that universities can capture the subsidy student loans provide, allowing them to increase tuition indefinitely. This hypothesis is persuasive.
"Blame the federal government" is better known in academic circles as "The Bennett Hypothesis," named for then-Education secretary William J. Bennett after he wrote a New York Times op-ed piece in 1987 warning that universities were absorbing increases in financial aid to students and then demanding Congress raise the lending caps to repeat the process. The problem with the Bennett Hypothesis, though, is that the evidence for it was inconclusive, which is surprising given the CPI charts above. ...
A closer look at the Digest's data shows that in fact, tuition is increasing faster at law schools than at other professional schools, particularly dental schools and the medical schools referred to earlier. Behold:
Law schools' enrollments are vastly higher, accelerating more quickly, and result in poorer job prospects than their peer professional schools do. Whether this is because other professions deliberately deny accreditation to schools to engineer job shortages for their practitioners or because law schools require far lower start-up costs (i.e., no laboratories or cadavers), I can't say. What I can say is that universities' purposes for opening and maintaining law schools are clearly at odds with their students' career objectives, to say nothing of the public's intent behind the Title IV loan program. ...
Oh, and if you think I'm hard on law schools, run, don't walk, from MBA programs. ...