What’s wrong with the finances of American legal education, nutshell edition

University of Virginia press release:

The University of Virginia announced Monday that Paul G. Mahoney will step down on June 30, 2016 after eight years as dean of the School of Law and return to teaching and scholarship full-time. During his tenure, Mahoney advanced the school’s reputation as one of the nation’s top law schools by leading efforts to strategically expand the faculty, launch curricular innovations, enhance support for students and set records in fundraising. . .

During one of the toughest recessions in U.S. history, Mahoney helped bring the Law School’s capital campaign to a successful close in 2012, surpassing the $150 million goal by more than $20 million. More than half of alumni participated in annual giving during each year of his deanship.

The Law School’s endowment – which funds scholarships, professorships and other academic initiatives – had a market value of $463 million on June 30, 2014, which makes it the fifth-largest endowment among the nation’s law schools. Despite the recession, the Law School’s endowment on a per-student basis has grown a remarkable 55 percent during Mahoney’s tenure. . .

Throughout, Mahoney has overseen an operation focused on keeping costs as low as possible for students. The Law School was the only top-10 law school recognized for its administrative efficiency in a recent ranking by U.S. News & World Report.

Mahoney became dean of UVA Law in 2008. All figures below are in 2014 dollars.

UVA non-resident tuition in 2007: $43,958

UVA non-resident tuition in 2014: $54,000

UVA resident tuition in 2007: $38,249

UVA resident tuition in 2014: $51,000

Percentage of students who were paying sticker tuition in 2007: 38.3%

Percentage of students who were paying sticker tuition in 2014: 62.2%

Approximate average effective tuition (sticker minus discounts):

2007 non-resident: $34,000
2014 non-resident: $45,350

Effective tuition for non-resident students rose by 33.4% in constant dollars

2007 resident: $28,249
2014 resident: $42,300

Effective tuition rose for residents by 49.7% in constant dollars

Expendable endowment income per student in 2007: $13,400 (2014$)

Expendable endowment income per student in 2014: $20,800 (2014$)

Effective tuition plus endowment income in 2007 was approximately $45,400 per student in constant dollars

Effective tuition plus endowment income in 2014 was approximately $65,200 per student in constant dollars

National reported median starting salary for class of 2007 law graduates who reported a salary: $75,069 (2014$)

National reported median starting salary for class of 2013 law graduates who reported a salary: $63,480 (2014$)

These salaries represent the medians for law graduates who were employed full-time and reported a salary, a category which in both years included less than half of all graduates. The real median salaries were much lower.

Now UVA is an elite law school, which means that outcomes for its graduates are quite a bit better than the national averages, but:

(1) The school’s employment numbers aren’t nearly as good as they were back in 2007, before most big law firms had figured out they could outsource almost all their document review work etc.

(2) Does anybody think that the 43.6% increase in revenue being generated per student at the school over the last seven years has produced an equivalent improvement in any aspect of whatever value UVA Law “adds” as the economists say?

(3) The fact that UVA and other elite schools are always charging absurdly more than they were a few years earlier (this is true for any period going back to the 1950s) means that dozens of schools with terrible employment outcomes will be charging absurdly more than they were a few years earlier, because it has been decreed that a bad private law school shall charge 20% less than whatever elite schools are currently charging.

I’m not picking on UVA here, or on Dean Mahoney. It and he are just playing the higher ed game as it’s currently structured, which means measuring success almost exclusively by the extent to which an institution is spending more money this year than it did last year.

Still, characterizing all this as a system that is “focused on keeping costs as low as possible for students” is a bit much, even by the standards of contemporary higher ed propaganda.

(h/t JDU).