Sep 02, 2014

For Law Students, a Supply Glut and ‘Exploding Scholarships’

UT Austin Law students are already hard at work in the Tarlton Law Library on campus three days into the semester on August 29, 2014. Photo by Martin do Nascimento/Reporting Texas

UT Austin Law students were hard at work in the Tarlton Law Library three days into the fall semester. (Photo by Martin do Nascimento/Reporting Texas.)

Editor’s Note: An earlier version of this story misidentified Aric Short as dean of the Texas A&M School of Law.

By Rabeea Tahir
For Reporting Texas and The Dallas Morning News

Law school graduates in Texas face one of the worst job markets in history.

Many are saddled with thousands of dollars of debt. They have no guarantee that they will find employment after they graduate.

Supply appears to be exceeding demand. Texas law schools that rank low in a nationwide academic survey — so-called bottom-tier schools — continue to churn out graduates even as some Texas lawmakers want to build a new law school.

Some law schools lure in first-year students with “exploding scholarships” that often are eliminated or reduced. So the students who want to finish their legal education may take on huge debt that can haunt them for a long time.

The numbers

Law historically has been considered a financially secure and lucrative profession. And law school continues to be a popular choice for students who may not know about the challenges that confront young lawyers.

The nation’s law schools produced more than 46,000 graduates in 2013 — the largest graduating class ever, according to the American Bar Association. Almost 4,000 Texas students took the bar exam in 2012, according to the National Conference of Bar Examiners. That’s up from about 3,300 in 2000.

A recent Bureau of Labor Statistics report concludes that there will be 73,600 new jobs for lawyers between 2010 and 2020.

More than one out of every 10 lawyers in the class of 2013 are unemployed, according to the ABA.

Confronted by such dismal numbers in recent years, the ABA formed a task force on the “future of legal education” in 2012.

“The system faces considerable pressure because of the price many students pay, the large amounts of student debt, consecutive years of sharply falling applications, and dramatic changes, possibly structural, in the jobs available to law graduates,” according to a recent report by the task force.

All of those factors “have resulted in real economic stresses on law, damage to career and economic prospects of many recent graduates, and diminished public confidence in the system of legal education,” the report concluded.

That gloomy prognosis may be discouraging to some.

While a record number of law school students graduated in 2013, new enrollment was 11 percent lower than in 2012. In 2013, 39,675 students enrolled in law schools—the lowest number since the mid-1970s.

Big money

Law schools continue to be big moneymakers for universities. Nationally, tuition increased by 30 percent from 2009 to 2012 in public law schools, and by 13 percent in private schools, according to ABA statistics.

At the same time, the starting median salary for recent law school graduates has slumped. The National Association for Law Placement reports that it dropped from $72,000 in 2009 to $61,245 in 2012.

And the debt burden for law school graduates has grown since 2009.

The average for private school graduates was $122,158 in 2012, according to the ABA. It was $124,950 in 2011. In 2010, it was $106,249. And in 2009, the average was $91,506 in 2009.

For public law school grads, the average debt was $84,600 in 2012, according to the ABA, up from $75,728 in 2011. The average was $69,687 in 2010 and $58,591 in 2009.

“What we need to do as a society is to return to the idea of real access, not loaning people money that they can’t pay,” said Paul Campos, a law professor at the University of Colorado-Boulder. “That’s a fake egalitarianism.”

Exploding scholarships

Campos said some law schools exploit students by intentionally advertising a lower cost of attendance based in part on “exploding scholarships” with academic conditions that statistically are almost impossible for everyone to maintain.

“It’s a way of maximizing revenue by taking advantage of the naivete of students,” Campos said, a “bait and switch.”

Scholarships and grants provided to students in the first year of law school are often “conditional.” The students must maintain a B average to keep the scholarship or the grant.

The simple statistical reality is that some students inevitably end up in the bottom half of their class. For scholarship students, that means trouble.

“It isn’t their fault,” said Dallas lawyer Fawaz Bham. “First-year law students don’t have the tools to gauge how challenging it is to outperform their peers who are equally as smart and motivated. … Inevitably, some students must end up in the lower percentile bucket.”

The Texas A&M School of Law in Fort Worth reported that 64 percent of its scholarship students saw their awards eliminated or reduced in the 2011-12 academic year and that 61 percent were eliminated or reduced in the 2012-13 academic year.

Aric Short, vice dean at Texas A&M School of Law, said scholarship policies were crafted and implemented when the school was part of Texas Wesleyan University. He said that Texas A&M acquired the law school in August 2013 and that administrators are now examining scholarship policies.

“I anticipate that we will be modifying these policies, but I don’t have specifics at this time,” said Short.

For now, the general approach is to reward incoming students for their past academic success as undergraduates and for their strong LSAT scores, he said.

Students, he said, are told what they must do to maintain their scholarships — otherwise scholarship money can be reduced or withdrawn.

Students may be disappointed to lose their scholarships because of their class rank after the first year, Short said, “but it is also disappointing for students to not be able to afford law school in the front end because they weren’t given any scholarship money to even have a chance to enter and succeed in law school.”

St. Mary’s University School of Law in San Antonio reported that nearly four-fifths of the 179 entering students awarded conditional scholarships in 2011-12 had their awards eliminated or reduced.

St. Mary’s President Thomas Mengler said the law school is hiring a new dean, who will be encouraged to look into the issue of low scholarship retention.

“It is definitely one of the things on my list,” Mengler said.

Mengler said that scholarships at St. Mary’s are competitive because they are directly tied to academic achievement. The students are aware of the possibility of losing their scholarships if they don’t meet the GPA requirement, he said.

St. Mary’s would like to provide more and consistent scholarships to incoming students, Mengler said. He said he wants to do more fundraising to make that happen.

More law schools

At a time when many new lawyers are struggling to find jobs, some Texas legislators have pushed for even more law schools.

State Sen. Royce West, D-Dallas, successfully led an effort to create the University of North Texas Dallas College of Law — despite recommendations by the Texas Higher Education Coordinating Board that there already were enough schools in Texas.

Proponents of the UNT law school argued that it was intended to serve the specific needs of those who don’t have easy access to legal help, not to compete with existing law schools.

“Frankly the legal profession has to come to grips with the facts that middle class people and small business don’t have access to lawyers at affordable prices,” said Royal Furgeson, dean of UNT Dallas College of Law.

Furgeson said he understands that graduates of his startup law school are less likely to land jobs in big law firms. But he sees a significant need for lawyers who will work in smaller law firms and in public service jobs.

UNT isn’t trying to compete with law schools like Southern Methodist University or the University of Texas, Furgeson said. The UNT law school’s focus, he said, is to be more affordable and accessible to people of different ages and ethnic backgrounds.

Annual tuition at the UNT law school is $12,500, about $10,000 less than the average tuition at public law schools nationally.

Furgeson said that his law school is “transparent with our young people” and tells them “that demand in the legal job market is stagnant.”

“We’re also telling our students that if you want to make big bucks, don’t come to our law school,” he said. “However, if you have a passion for law, if you want to serve people and serve justice and make rule of law work, then come see us, and we’ll train you to hit the ground running.”

State Rep. Armando Martinez, D-Weslaco, is pushing for a law school near the Texas-Mexico border. Martinez, a firefighter, said it could serve people like him who can’t afford a major city school.

Even with a glut of law school graduates, some rural areas like the Rio Grande Valley may be underserved. The Dallas-Fort Worth area has about one lawyer for every 265 residents, according to State Bar of Texas data. In the Brownsville-Harlingen area, there’s one lawyer for every 770 residents.

Still hopeful

Zohaib Qadri graduated from UT in 2013 with a degree in psychology and sociology. But he hopes he can make law a career. He said he’s taken a hard look at the industry and is not deterred.

“Things are bad because of the economy, but they won’t necessarily stay that way,” Qadri said. He hopes that by the time he gets a law degree, the legal market will have picked up as well.

He started St. Mary’s University School of Law this month, but he still has a backup plan.

He’s thinking about getting an MBA. Just in case.

The entire report is also available at The Dallas Morning News.

About this series

This project is the result of a collaboration between The Dallas Morning News and Reporting Texas, a program at the University of Texas at Austin’s School of Journalism. Student journalists spent several months examining unemployment and debt among millennials, and how those issues were related to higher education.

Also in this series

The Millennial Trap: a College Degree, Debt and Lousy Jobs
College-age millennials are faring worse than preceding generations did in their mid-20s and early 30s, reports say.

State College Support Dives, Shifting Debt Onto Students
Student debt should concern everyone because of its potential effects on the national economy.