Paul L. Caron

Thursday, October 17, 2013

Brooklyn Law School Faces Debt Downgrade

Brooklyn LogoCrain's New York Business:  Brooklyn Law School Faces Debt Downgrade:

Standard & Poor's on Tuesday warned Brooklyn Law School that the institution needed to reverse its financial decline or face higher borrowing costs.

In a report, the credit ratings agency lowered its outlook on the school's debt, issued by the New York State Dormitory, to negative from stable. The lowered outlook means the rating agency believes there is a one in three chance it could downgrade the debt, and the decision on whether to change the BBB+ rated debt could come within the next two years if Brooklyn Law's fiscal problems don’t improve. ...

Law schools in recent years have seen steep drops in enrollment and tuition revenue and the ratings agency said that trend could continue for the next two years. Brooklyn law has been especially hard hit. Headcount decreased 10% to 1,137 this fall from a year ago and 22% over the last three years, the ratings agency said.

Competition for students has led to discounts on tuition. Even though full-time tuition increased 2.5% at the school this year to $51,243, the school has increased the amount it offers in grants or scholarships to 37%, compared to 15% in 2007, according to S&P.

For the fiscal year ended, June 30, 2012, Brooklyn reported a $996,000 operating deficit, the report said.

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Oh to see a law school going broke, and all the worthless professors forced to slum it by working in those BIgLaw jobs they all tell us they gave up.

Posted by: harold | Oct 17, 2013 11:20:10 AM

S&P is a lagging indicator.

Posted by: Kopf | Oct 17, 2013 8:48:21 AM

Can't Brooklyn Law just send Standard & Poors a copy of Simkovic's magical "Million Dollar Degree" *study,* and tell the ratings agency not to worry, because all their graduates will soon be wealthy and donate lots of money to the school?

Ha ha ha ha ha ha ha ha ha!

Posted by: Unemployed Northeastern | Oct 17, 2013 8:09:34 AM

This is beautiful to watch law schools crash in slow motion. They've destroyed so many lives and now they are getting their justly deserved comeuppance. It'll start with the worthless schools like Brooklyn and then slowly work its way up the USNWR Rankings.

Posted by: Bill | Oct 17, 2013 8:09:16 AM

I think Brooklyn is the prototype of a school in the most trouble. Incredibly expensive, terrible employment outcomes, and highly ranked enough that it has a lot to lose if admissions standards drop.

It also attempts to recruit reasonably bright students, which are the ones most likely to discern what a total mistake it would be to enroll at the school.

I’m curious to see how long they attempt to hold the line on admissions standards. At some point in the next few years, I think median LSAT drops to the 155 range.

Posted by: JM | Oct 17, 2013 6:53:39 AM

When are we going to see the first stand-alone law school default on its debt?

Posted by: HTA | Oct 17, 2013 6:52:42 AM