Dollars, rankings and Yale Law School

Bill Henderson:

Yale Law School’s $1.2 billion share of the Yale University endowment provides approximately $63 million in operating funds, which translates into $106,000 per student, though this amount appears to be headed up due to the 40.2% increase in Yale’s endowment in 2021. See “Yale endowment earns 40.2% investment return in fiscal 2021,” Yale News, Oct 14, 2021; Evan Gorelick, “Yale’s endowment, explained,” Yale Daily News, Oct 22, 2022 (discussing Yale endowment’s 5.25% target payout and policy of smoothing returns over multiple years).

To be clear, these are the funds available before Yale Law collects its first dollar of tuition.  Nonetheless, as the top-ranked law school in the US News rankings for more than 30 years, Yale has a superabundance of highly credentialed students who would be willing to pay or borrow the current cost of attendance. For the 2021-22 admission cycle, Yale admitted only 5.6% of applicants; of those admitted, 81% enrolled, making Yale the most selective and elite law school in the nation. See YLS, “Statistical Profile of the Class of 2025.”

Among elite law schools, Yale clearly has the strongest balance sheet.  Its closest competitors are Stanford Law ($76,000 in endowment funding per student) and Harvard ($56,000), which typically rank #2 or #3 in any given year. Among the rest of the T-14, endowment funding generates approximately $20,000 per student, with a high of $33,000 and a low of $4,000, albeit these figures, similar to Yale, may go up due to improved endowment performances, as pandemic-related fiscal and monetary policies tended to make the rich richer. (See Methodological Notebelow for how these figures are calculated.)

The big news, of course, is that Yale recently announced its withdrawal from the US News rankings, at least as an active participant. See Ines Chomnalez, “Yale Law School withdraws from ‘perverse’ U.S. News rankings,” Yale Daily News, Nov 16, 2022.  This decision, and its likely second-order effects for other law schools, are nearly impossible to accurately grasp without also understanding (1) the technical intricacies of how the US News rankings work, as this creates the underlying incentive structure; and (2) the significant risk that Yale was running by continuing to play the US News game, making it a poor data point for generalizing to other law schools.

This special off-publication post covers both topics.