The Tuition Puzzle

Paul Campos

This is the first of what will probably be several posts about the extraordinary increases in law school tuition over the past half century (In this as in so many other respects, law school is merely a particularly extreme version of something that has happened all across higher education in America).

First, some numbers:

Law School Transparency has done a nice job graphing what has happened to law school tuition since 1985, in both current and inflation-adjusted dollars. Private law school tuition has gone from just over $16K to just under $42K in 2013 dollars. Public resident tuition has gone up even more sharply, from $4,300 to $23,000, again in constant inflation-adjusted dollars.

These numbers are startling enough, but they obscure the extent to which by the mid-1980s tuition had already skyrocketed over the course of the previous 25 years. LST is using data the ABA posts on its web site, which only go back to 1985. Looking back to 1960, private law school tuition averaged around $7000 in 2013 dollars, while public law school tuition was perhaps a third of that, i.e., essentially nominal (These estimates are based on Harvard’s and Michigan’s law school tuition at the time. They assume that tuition at HLS was around 20% higher than at the average private law school, which has been the norm over the past three decades, and that Michigan’s resident tuition was typical of state law school resident tuition. If anything this latter estimate probably overstates public law school resident tuition in the 1960s).

This is, in the context of normal economic activity, a remarkable situation. People often speak these days of a “tuition bubble,” but a classic price bubble involves a sharp short-term run-up in prices, followed by an even more sudden collapse when the bubble bursts. For example, the US housing market was relatively stable between 1970 and 2000, with median home prices staying between $150,000 and $180,000 in real terms. The housing bubble featured a five-year run up, during which the median price rose by nearly 70%, before falling back to pre-bubble levels just three years after the peak.