April 13, 2018
New study finds that Texas lawyers generally remain satisfied with careers even after the recession (Michael Simkovic)
A new survey study by Milan Markovic and Gabriel Plicket finds that Texas lawyers generally remain fairly satisfied after the 2008 recession. However, satisfaction varies by income, practice setting and status.
"In this article we used data from a large cross-sectional sample of Texas lawyers to examine lawyers’ career dissatisfaction in the post-recession period. Our results show that most practicing lawyers regard their careers as satisfying and that factors such as income, practice setting, class rank, and remaining law school debt affect career dissatisfaction whereas attorneys’ demographic characteristics, practice areas, and firms’ size do not. The economic recession may have impacted the legal profession, but the overall incidence of dissatisfaction remains low, and many of the factors that impacted lawyers’ assessments of their careers prior to the recession continue to be salient."
The study is interesting as a purely descriptive analysis, and consistent with studies using After the JD data such as Ronit Dinovitzer, Bryant G. Garth & Joyce S. Sterling, Buyers’ Remorse; An Empirical Assessment of the Desirability of a Lawyer Career, 63 J. Legal Educ. 211 (2013).
One of the more interesting findings is that satisfaction seems to increase with experience, although this raises questions about attrition from the sample (i.e., who leaves the practice of law?).
I think more caution is generally advisable when interpreting cross-sectional data about satisfaction and would have preferred less causal language. I think a longitudinal study with fixed effects would have supported stronger inferences about what drives lawyer satisfaction.
For example, the study notes that law firm partners are more satisfied than law firm associates and suggests that this is because partners have more autonomy. That's plausible, but it's also possible that law firm partners are on average more satisfied than associates because the associates who are the least satisfied leave the law firm, while those that are the most satisfied are better suited to law firm work and therefore are more likely to be offered an opportunity to join the partnership. With a cross-sectional analysis, it's hard to know which (or how much of each) of these factors could be driving differences in satisfaction.
April 11, 2018
In the Guardian, Fordham's Zephyr Teachout argues that members of Congress let the CEO of Facebook off easily and essentially treated his hearing as an opportunity to curry favor with him. Teachout writes:
"It was designed to fail. It was a show designed to get Zuckerberg off the hook after only a few hours in Washington DC. It was a show that gave the pretense of a hearing without a real hearing. It was designed to deflect and confuse.
Each senator was given less than five minutes for questions. That meant that there was no room for follow-ups, no chance for big discoveries and many frustratingly half-developed ideas. Compare that to Bill Gates’ hearing on Microsoft, where he faced lawyers and staff for several days . . . By design, you can’t do a hearing of this magnitude in just a couple of hours.
The worst moments of the hearing for us, as citizens, were when senators asked if Zuckerberg would support legislation that would regulate Facebook. . . . By asking him if he would support legislation, the senators elevated him to a kind of co-equal philosopher king . . .
Teachout goes on to argue that Facebook's wealth, power, disregard for individual privacy, ability to manipulate public perceptions and refusal to take responsibility for accuracy of the content it presents makes it a "danger to democracy."
"Facebook is a known behemoth corporate monopoly. It has exposed at least 87 million people’s data, enabled foreign propaganda and perpetuated discrimination. We shouldn’t be begging for Facebook’s endorsement of laws, or for Mark Zuckerberg’s promises of self-regulation. We should treat him as a danger to democracy and demand our senators get a real hearing. . . .
Zuckerberg strikes me as reliably self-serving. That doesn’t make him that interesting as the CEO of a corporate monopoly; it makes him a run-of-the-mill robber baron. . . [Senators should not] treat him as a good-hearted actor with limited resources, instead of someone who is making monopoly margins and billions in profits."
In fairness to Mr. Zuckerberg, traditional media organizations also often exhibit a disregard for privacy, manipulate public perceptions and refuse to take responsibility for the [in]accuracy of the information they publish and the harm it causes. Too many journalists and and editors invest the bare minimum in fact checking (often nothing), and prioritize entertainment value and "virality" over economic or political significance. The established press too often write preconceived stories full of selective quotes or facts while disregarding contradictory information, refuse to print corrections, elevate the status of those willing to supply "helpful" quotes, and retaliate against those who point out their errors.
This irresponsible behavior is made possible by defamation laws that make it virtually impossible for the press to incur liability unless it can be proved that they knowingly and intentionally lied with the specific goal of destroying an individual's reputation--which is virtually impossible.
Facebook may have contributed to the unexpected outcome of the last election, but so did other media organizations. Mainstream media organizations gave one candidate billions of dollars of free publicity (hundreds of millions more than his rivals) mainly because his provocative statements--delivered with the practiced timing of a "reality" TV star--were entertaining and boosted their readership, and therefore their revenues.
This is what happens when competitive market pressures encourage media organizations to see their role as packaging advertising rather than as supplying accurate information. Facebook may play the same game, only with better technology.
This does not mean that Facebook should get a free pass. But we should not use Facebook as a scapegoat to avoid talking about problems with the media landscape that are systemic and that would persist even if Facebook disappeared tomorrow.
UPDATE: This article was corrected on 4/15/2018 to note that media organizations provided billions worth of free coverage, not just tens of millions.
April 10, 2018
Jake Brooks in NY Times: Direct Federal Student Lending Should Provide Insurance to Students and Public Investment in Education (Michael Simkovic)
John Brooks of Georgetown's excellent Op Ed is available here.
Brooks calls to task some of the questionable and alarmist narratives that have been coming out of nominally liberal think tanks (which are funded by foundations linked to the private student loan industry and purveyors of ed-tech of dubious value), noting that Direct Lending, IBR and debt forgiveness can benefit both students and taxpayers. He also notes the dangers of the new PROSPER act and graciously linked to Friday's post about how small the direct budgetary impact of student loans is when viewed in context.
Brooks notes that some Democrats have been advancing a traditionally Republican privatization agenda. Jeff Sachs has similarly taken Obama and Clinton to task for underinvestment in basic and essential public services and infrastructure, noting that by the numbers they invest only marginally more than Republicans. Brooks argues that because of IBR, Obama deserves more credit, and that this important legacy of his presidency should be preserved.
April 09, 2018
Pepperdine’s law school recently made an error when submitting enrollment data to U.S. News.com. Pepperdine contacted U.S. News promptly after uncovering the error and submitted corrected data in time for U.S. News to use the corrected data in its ranking. Although the erroneous data was more positive than the corrected data, no reasons have been given to believe that Pepperdine intentionally sought to deceive U.S. News.
I know and respect Paul Caron, the current Dean of Pepperdine. While we don’t always agree on technical or political issues, the notion that he would intentionally commit fraud—and then immediately correct his error—is outlandish. (In the interest of disclosure, Leiter Reports joined a network of legal education blogs that Paul organized, but Leiter Reports and Caron’s blog, TaxProf, often compete and advance different perspectives. I have vocally criticized some of the research covered on TaxProf blog.).
Nevertheless, U.S. News punished Pepperdine by making it an “unranked” law school this year. Those who are not familiar with the reasons for this move in the rankings might mistakenly believe that Pepperdine fell outside the top 100. According to analyses by Bill Henderson and Andy Morriss, if not for the penalty imposed by U.S. News, in all likelihood Pepperdine’s rank this year would have risen from 72 to between 64 and 62.
Unranked status could have an adverse impact on Pepperdine’s enrollments and finances. It is punitive, unnecessary, and perhaps even counter-productive in that it might discourage honest self-reporting of mistakes. A more reasonable and compassionate approach would be to let Pepperdine off with a warning, and report the incident without changing the rankings, for example by including a footnote in the ranking explaining the misreporting. U.S. News is a private business, but because of its virtual monopoly on rankings, enjoys quasi-regulatory authority.
Some of Pepperdine’s competitors might rejoice at Pepperdine’s misfortune, believing that admissions and enrollment are a zero-sum game. They are making a mistake.
The lesson of the last decade is that law schools rise and fall together far more than they benefit from each other’s hardship. What U.S. News does to Pepperdine this year, it could one day do to any law school that makes a mistake, even if it honestly and reasonably attempts to correct it.
Healthy competition between law schools can promote innovation and efficiency, and be good for students and research productivity. But we should be careful that competition does not erode our ability to act cooperatively in pursuit of shared beliefs and shared values of fairness and due process.
March 28, 2018
March 27, 2018
Dangerous new bill could hurt taxpayers and make financing education more expensive (Michael Simkovic)
Higher Education could soon become substantially more expensive to finance. The federal government may reduce how much it lends to its most profitable borrowers—graduate and professional students—undermining the financial strength of the federal student lending program and reducing competition in the market for student loans. Borrowers could lose an important safety net that limits federal student loan repayments if student incomes are lower than expected. Public sector and non-profit employers could struggle to recruit and retain educated workers as a wage subsidy is eliminated and public-sector compensation becomes even less competitive with the private sector. For-profit lenders and dodgy for-profit online education programs could see huge financial benefits.
- Cap federal Graduate PLUS loans
- Scale back Income-Based Loan Forgiveness
- Eliminate Public Student Loan Forgiveness (PSLF)
- Open federal student loans to for-profit and online programs with questionable track records
Capping Graduate PLUS loans hurts taxpayers. A recent analysis by the Department of Education and the Government Accountability Office found that Graduate PLUS loans are the most profitable in the Federal government’s portfolio, even after accounting for the costs of debt forgiveness.
Figure 13 of the study shows that PLUS loans and unsubsidized Stafford loans make money for the government, after accounting for the cost of income driven repayment.
PLUS loans charge the highest interest rates in the government’s portfolio—often more than private lenders would charge similar borrowers. However, federal student loans come with a safety net that caps repayments as a fraction of a borrower’s income if the borrower’s income remains low relative to debt service payments for an extended period of time and eventually forgives the remaining balance. Risk averse borrowers may find this safety net attractive—public and private student loans are difficult to discharge in bankruptcy.
The Income Based Repayment safety net enables the federal student loan program to compete with private lenders, reducing borrowing costs even for those who opt for private sector loans. The government’s profits from graduate and professional student borrowers help defray the costs of subsidizing other borrowers more heavily.
Figure 5 of the GAO study shows Graduate Plus Loans in Income-Driven Repayment have the lowest subsidy rate of any loan program—that is, graduate and professional students repay more of their loans.
The GAO/DOE study has several limitations that overstate the costs and understate the benefits of these programs. If Graduate PLUS loans are curtailed, the federal student loan program will become less profitable and therefore more politically vulnerable to future cuts. The bill also threatens to undermine the performance of federal student loans by opening the floodgates to funding of low quality for-profit online programs.
Private lending is more volatile than federal lending. Private lending has an unfortunate tendency to become unavailable when it is most needed. During the recession of 2008-2009, private student loan origination volumes plummeted even as demand for education surged. Capping loans to graduate students could lock prospective students from poor and middle-class families out of graduate and professional school if they have the misfortune of graduating college during a recessionary credit crunch—precisely when the opportunity cost of pursuing more education is lowest because the labor market is weakest.
Limiting debt forgiveness could make federal student loans more “profitable” as a pure lending program but could have much larger costs to taxpayers if eliminating this safety net reduces investment in human capital.
The U.S. is already dramatically underinvesting in and overtaxing higher education, as demonstrated by the high public and private returns to education. The public returns to investment in higher education are greater than the expected returns to the stock market or bond market because we have a shortage of high skilled, highly educated labor. The proposed policy changes are bad for students, and they also threaten to undermine the long run economic growth and fiscal health of the United States.
March 02, 2018
February 28, 2018
February 20, 2018
...according to LSAC. This won't mean a 30% increase in applications, of course, but I wouldn't be surprised if we saw a 10% bump in total applicants this year. This year has already been the best year to be on the law teaching market in at least five years, and I expect if we do see an increase in qualified applicants to law schools, we will see an increase in hiring of new law teachers next year as well.
February 07, 2018
House Republicans propose to open floodgates to federal funding of low-quality for-profit, online degrees (Michael Simkovic)
House Republicans recently proposed to increase federal funding for the worst performing parts of higher education and reduce federal funding for the best performing parts.
For-profit ("proprietary") brick-and-mortar and online educational programs tend to have low rates of student completion, relatively poor employment outcomes, and relatively high student loan default rates compared to private non-profit and public institutions. For-profits' typically poor outcomes may be at least in part because for-profit programs typically spend far more on sales and marketing than traditional non-profit programs. This leaves fewer resources available for instruction and support services for students, or research that can help build an institutional reputation and connections with employers. Paying profits out to investors also drains cash and limits how much can be spent on instruction in any given year.* Short-term programs at for-profits are the only category of higher educational institution that have been shown by peer reviewed research to increase their prices without increasing educational quality upon gaining eligibility for federal aid.
Default rates of for-profit programs used to be even worse in relative terms, before rules were implemented to deny eligibility for federal student loans to the worst performing for-profit institutions.
A new House bill sponsored exclusively by Republicans, H.R. 4508,** threatens to open the floodgates to federal funding for for-profit and online education of dubious quality. According to the CBO, the bill would:
"Amend or repeal restrictions on institutional eligibility for federal student aid for certain types of schools, the largest of which would repeal the definition of distance education and eliminate the cap on the percentage of revenues that proprietary schools can receive from the Department of Education. . . .
Distance Education. H.R. 4508 would repeal the current-law requirement that online programs provide students with regular, substantive interaction with faculty. CBO expects that if programs do not need to meet that criterion they could more easily expand and scale up, resulting in higher enrollment. . . .
Short-Term Programs. Current law requires programs to offer at least 600 clock hours of instruction for students to be eligible for Pell grants. To be eligible for student loans, a program must offer at least 300 hours and have a student completion and placement rate of at least 70 percent. . . . H.R. 4508 would extend aid eligibility to students in short-term programs [and] there would no longer be any requirements about placement rates. . . .
Gainful Employment. In October 2014, the Department of Education published final rules related to gainful employment, setting benchmarks related to student income and federal loan debt that had to be met by programs at proprietary institutions...H.R. 4508 would repeal . . . gainful employment [rules]."
Indeed, it will be much easier to expand enrollment without the need to spend any money providing students "regular, substantive interaction with faculty," who can answer student questions, connect them with employers, or teach them.