Paul L. Caron

Friday, November 30, 2012

Schrag Reviews Tamanaha's Failing Law Schools

FailingPhilip G. Schrag (Georgetown), Failing Law Schools -- Brian Tamanaha's Misguided Missile, 26 Geo. J. Legal Ethics ___ (2013) (reviewing Brian Tamanaha (Washington U.), Failing Law Schools (University of Chicago Press, 2012)):

Professor Brian Tamanaha’s book, Failing Law Schools, usefully collects in one place the recent critiques of law schools for reacting excessively to U.S. News rankings, manipulating admissions data, spending excessive amounts of money to hire “star” professors and to circulate glossy brochures and magazines, and in some cases, falsifying graduates’ employment statistics. But Tamanaha’s main argument is that law school has become unaffordable for most applicants, because it will saddle them with debt that they cannot afford to repay on the incomes that they can reasonably expect. His thesis is based on a misunderstanding of student loan repayment methods. In particular, he erroneously assumes that the only proper way to repay student loans is through so-called “standard” repayment (over a ten year period). Actually, many law graduates will find typically law school debt manageable if they repay federal student loans through income-based repayment plans, particularly the new Pay As You Earn (PAYE) plan. Tamanaha disparages income-based repayment, however, because he incorrectly believes that total debt, rather than the ratio of current repayment obligations to current income, primarily determines a borrower’s credit-worthiness for mortgages and other large loans.

Based on his belief that law school is no longer affordable for most students, Tamanaha offers several radical proposals, such as amending accreditation standards to permit a two-tier system, in which only a few expensive law schools would continue as research institutions offering three-year degrees, while most would offer law degrees after two years of classroom study and a year of some sort of lightly-supervised apprenticeship. He would also do away with the standard that requires schools to put most faculty members on tenure tracks and to support faculty research. This review essay questions the need for those far-reaching changes in legal education and concludes with the suggestion that Tamanaha focus his considerable critical skills on the problems not of law students, but of lower-income clients who are unable to obtain the legal services that they need.

Other reviews of Failing Law Schools:

Update #1:   Brian Tamanaha (Washington U.), What's Wrong With Income Based Repayment In Legal Academia: A Response to Schrag:

Phil Schrag has written a strong critique of my analysis, which I encourage everyone interested in these issues to read. He criticizes me for directing a "nuclear weapon" at the structure of legal education, when "small arms fire, to curb a few evident abuses, would have been a more appropriate response." The Income Based Repayment program (IBR) solves the economic problems I identify, he argues. IBR allows graduates to make monthly loan payments based upon their income (10% of income above 150% of the poverty rate), and forgives the remaining balance after 20 years. In a section called "Sarah gets rich," Schrag shows that law graduates on IBR end up doing very well. He also argues that, contrary to concerns I expressed, their credit scores (FICO) will not be adversely affected by the fact that their loan balances will remain very large (and in many instances grow), because creditors will care only about their fixed and manageable low monthly payments. ...

Schrag makes a convincing case. The recently implemented version of IBR is far more generous than the formula in place when I wrote the book (15% of income above 150% of the poverty line, forgiveness after 25%). Under the previous program, a student on IBR would end up paying more each month and a much higher amount of interest on the loan before forgiveness. ...

That said, in my view IBR does not solve the basic underlying problem of the warped economics of legal education, but actually has the potential to make it worse. I will identify just two reasons to doubt Schrag's assertion that no big changes are necessary.

First, I find it alarming, not reassuring, to be told that IBR should be viewed as the "standard payment" for contemporary law grads. ... The second reason for concern is that the operation of IBR exacerbates the situation in several ways. ... Because monthly loan payments under the program are tied to salary, not to the amount owed, IBR renders the size of the debt irrelevant. ... Besides encouraging inefficient economic decisions by students, IBR will artificially keep alive law schools that should not exist. ... Finally, the fact that IBR makes the size of the debt irrelevant means that law schools can increase tuition without worrying about adverse consequences for our students. ... Law schools benefit from and are happy about these aspects of IBR. But legal educators should also consider whether they are good for our students and for society.

Update #2:  Paul Campos (Colorado), Sarah's Problem:

There are a whole lot of problems with Schrag's claim that IBR is a good thing for law students (let alone for the public as a whole, which of course is picking up this particular bill), but I'll leave those for another day. Here I'll stick to a much simpler and more fundamental point:

Sarah's real problem is that she's not getting a job, or if she does get a job it's not paying $60,000, or if it does pay $60,000 she's not going to be able to keep it.

Law professors tend to live in a bubble where they imagine that Sarah's hypothetical career path is a typical outcome for people who don't make the big bucks in Big Law.  That's why arguments about "affordability" end up assuming a series of can openers, consisting of solid salaries, career stability, and other features that have very little to do with what the large majority of current law graduates can realistically expect to obtain in return for taking out ever-more enormous piles of taxpayer-funded debt that will never be repaid.

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