TaxProf Blog

New York Times, Why College Costs Rise, Even in a Recession, by Ron Lieber:

If you have paid a college tuition bill recently …  [you may want] to ask some pointed questions of the people who are doing the educating. Where does all that money go? And why can’t the price tag fall for a change? …

Public universities will always appeal on price, and Wellesley and Harvard are likely to remain oversubscribed forever. But Lafayette and colleges like it could have trouble justifying themselves and their cost soon, and the resistance may not simply pass once the economy improves. …

[Here are] some reasons why it is so hard to make big cuts to a college’s budget and reduce tuition in turn:

Cutting Departments.  The political challenges with faculty make something as seemingly simple and obvious as cutting expensive and undersubscribed academic departments pretty hard. …  But such cuts are practically inevitable for programs that have fewer students.

Faculty Productivity.   Professors at Lafayette teach five classes a year over two semesters and work with students on their independent research projects. At some colleges and universities, the number of classes is lower and at others it is higher. Couldn’t Lafayette lower costs by demanding that the faculty perform less research and teach one additional class? … Lafayette is so certain in its convictions that it grants faculty members a year off every six or seven years for a sabbatical. How does a college defend such a practice to parents who have had to work ever harder to pay the growing tuition bill? …

Administrative Overload.  Lafayette, like many colleges, spends more on nonfaculty salaries than it does on pay for the teachers. How did that happen. …  

Three Years.  Perhaps the biggest cost-saving measure for private colleges like Lafayette would be to allow students to pay the same price per year but graduate in three years instead of four. … [Lafayette President Daniel] Weiss said this is worth considering, though he had not looked at how the numbers would work. “Although without sounding in any way defensive, we also do offer time for personal development,” he explained. “And that is part of what college is supposed to be. Not only to learn stuff but to have your life changed. For some students, three years is more than enough, while for others four years is not nearly enough.” He’s right, of course. Or at least that is how college used to be. The question all of us have to ask now is whether the price of that transformative experience is simply too dear — and whether a basic education ought to be the highest (or maybe only) priority.

(Hat Tip: Ann Murphy.)

Duncan Hollis (Temple) asks:  When Should American Law Students Take International Law?  Eric Posner (Chicago) answers:  never:

There is no reason to take international law in any year unless you want to work as a lawyer in the State Department or certain obscure precincts of the Justice Department, hope to work for an international organization such as the United Nations or an international NGO with a legal agenda such as Human Rights Watch, or have an academic or intellectual interest in international law and international relations. … For most law students, who aspire to work in regular law firms, or in prosecutor’s offices and other government agencies outside the State Department, the chance that you will encounter the type of issue taught in a public international law course over the course of your career is close to zero. So don’t take it at all–unless you think it might be interesting.

Do not confuse public international law and private international law! Private international law, which essentially involves choice-of-law issues, could be useful if you expect to work for a law firm whose clients include corporations that do business across borders. Do not confuse public international land and comparative law! Comparative law, which introduces you to foreign legal systems, could conceivably be useful but probably is not. The types of public international law concepts that might come in handy for a law firm lawyer—such as treaty interpretation—are easily picked up.

Law schools have always offered public international law courses, as they should. These courses have always been poorly attended, which is also how things should be. In recent years, a number of law schools have expanded and highlighted their international law offerings, and have created elective or mandatory international law courses for the first year. These changes do not rest on any coherent theory of pedagogic priorities. They are marketing gimmicks that play off buzzwords like globalization. They do little more than reflect transitory intellectual fashions. They are patronizing efforts to turn you into citizens-of-the-world. If you have time on your hands and want to learn something that might increase your value to future employers, take statistics!

For rejoinders, see:

• The Utility of International Law Courses — A Response to Posner
• Michael Scharf on International Law in the First Year

The Wall Street Journal, Students Borrow More Than Ever for College; Heavy Debt Loads Mean Many Young People Can't Live Life They Expected, by Anne Marie Chaker:

Students are borrowing dramatically more to pay for college, accelerating a trend that has wide-ranging implications for a generation of young people.

New numbers from the U.S. Education Department show that federal student-loan disbursements—the total amount borrowed by students and received by schools—in the 2008-09 academic year grew about 25% over the previous year, to $75.1 billion. The amount of money students borrow has long been on the rise. But last year far surpassed past increases, which ranged from as low as 1.7% in the 1998-99 school year to almost 17% in 1994-95, according to figures used in President Barack Obama's proposed 2010 budget. …

The new numbers highlight how debt has become commonplace in paying for higher education. Today, two-thirds of college students borrow to pay for college, and their average debt load is $23,186 by the time they graduate, according to an analysis of the government's National Postsecondary Student Aid Study, conducted by financial-aid expert Mark Kantrowitz. Only a dozen years earlier, according to the study, 58% of students borrowed to pay for college, and the average amount borrowed was $13,172.

The ripple effects for today's heavily indebted young people are becoming palpable. A growing body of research suggests that tough loan payments are affecting major life decisions by recent graduates, forcing them to put off traditional milestones—from buying a first home to even marriage and having children.

Also, the rising levels of borrowing may ironically be contributing to the accelerating cost of college, say some college-finance experts. Loans can give colleges an artificial sense of a family's ability to pay tuition. To some extent, that false sense of security gets built into the assumptions schools make when setting prices, say experts. …

Some recent graduates say they wish they had known more about the consequences of debt before taking it on. Lillian Russell graduated from law school at the University of Pittsburgh last year with $181,000 in debt from her seven years in school. She has spent much of the past year looking for work. In recent weeks, she found a job clerking at a small law office. While she settles into her job, she has deferred payments on most of her federal loans, though interest continues to accrue.

"I wish I had considered the long-term impacts of what I was getting into," Ms. Russell says. When she entered school, "the idea was I'd take out the loans, get a job, and pay it back," she says. It seemed straightforward. But as the economy has soured, "I feel like it's shifted a lot of my life goals," says Ms. Russell, from buying a house to starting a family. "I'm really concerned about handling this obligation while taking on new ones."

Reuters: Extra Credit Could Bankrupt Students, by Rolfe Winkler:

The market for college education looks a lot like the market for houses circa 2006 – very bubbly. And the reason is similar: There is too much credit.

Colleges can keep raising prices, despite the recession, because the government keeps lending students more money to pay them. …

[T]he extra credit isn’t benefiting students. It’s just inflating the price of their education, burying them under a bigger pile of debt despite stagnant wage growth and poorer employment prospects.

This is eerily reminiscent of the housing bubble, when too easy credit inflated the price of houses well beyond their fundamental value.

Reuters:Dealing with Student Loans, by Felix Simon:

At least with mortgages, people have a reasonably good idea of how much they can afford to pay back. With student loans they don’t — especially not with something like a law degree, where either you get that coveted $160,000 job as a first-year associate, or you don’t. And if you don’t, you’re very unlikely to make anything like that kind of money, and your student loans are likely to dangle over your head for decades hence.

There’s a strong case to be made that the government should not be in the business of making it easy for students to go massively into debt even when their chances of repaying that debt are slim. … It’s ridiculous that colleges can charge pretty much whatever they want, and the federal government will always be there to provide loans. One good way of decelerating the inflation in tuition fees — and the concomitant rise in student debt — will be for the federal government to start getting much stricter about the kinds of sums it’s willing to countenance.