Brian Leiter's Law School Reports

Private law school tuition discounting

Blog Emperor Caron has the details.

Brooklyn Law School Professor Alex Stein named to the Israeli Supreme Court!

The BLS news release.

In Memoriam: David Caron (1952-2018)

International law scholar and lawyer David Caron, and longtime member of the Berkeley faculty, who became Dean of the law school at King's College, London some five years ago, has died.  I will add links to memorial notices as they appear.

(Thanks to Dean Rowan for the pointer.)

UPDATE:  A memorial notice from KCL.

ANOTHER MEMORIAL NOTICE from Berkeley.

Nearly a 30% jump in December 2017 LSAT takers compared to the prior year...

...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.

Antother blast from the past: Glenn Reynolds wants to have a "conversation" about guns

Sadly relevant again.  This was back in 2012.

Blast from the past: Ellmann v. Leiter on (what was then a proposal for) requiring clinical/experiential education

Back in 2014.

Political bias in the selection of law review articles

This finding--by my colleagues Adam Chilton, Jonathan Masur and our Behavioral Law & Economics Fellow Kyle Rozema--is hardly surprising, given how out of their depth most law review editors are in figuring out what to publish.  Maybe law reviews should advertise that year's ideological tilt of its Articles Editors?

The UVA pipeline of female Deans of elite law schools

A FB friend pointed out the remarkable pattern of recent years:  women who began their careers as tenure-track law professors at the University of Virginia, and are now Deans of leading law schools.  They are Kerry Abrams (newly appointed Dean at Duke), Risa Goluboff (Dean at UVA), Liz Magill (Dean at Stanford), and Jennifer Mnookin (Dean at UCLA).  I guess other leading law schools will know where to look in their next Dean search!

Limited Liability and the Known Unknown (Taxing Limited Liability) (Michael Simkovic)

Private firms often withhold information or contest scientific knowledge when public revelation could lead to costly regulations or liability.  This concealment leads to negative externalities and public harm. 

But what if private firms’ superior knowledge and self-interest could be harnessed to reveal information about risks and accelerate the implementation of safety regulations?  

In Limited Liability and the Known Unknown, I argue that firms that desire limited liability for their investors should be forced to pay what they believe limited liability is worth.  This would have several salutary effects.  Firms’ choice between unlimited liability and higher taxes would reveal important information about internal risk assessments, reduce public-private information asymmetries, and accelerate the application of scientific knowledge to personal and public health.

Abstract:

Limited liability is a double-edged sword. On the one hand, limited liability may help overcome investors' risk aversion and facilitate capital formation and economic growth. On the other hand, limited liability is widely believed to contribute to excessive risk taking and externalization of losses to the public. The externalization problem can be mitigated imperfectly through existing mechanisms such as regulation, mandatory insurance, and minimum capital requirements. These mechanisms could be more effective if information asymmetries between industry and policymakers could be reduced. Private businesses will typically have better information about industry-specific risks than policymakers.

 

A charge for limited liability entities-resembling a corporate income tax but calibrated to risk levels-could have two salutary effects. First, a well-calibrated limited liability tax could help compensate the public fisc for risks and reduce externalization. Second, a limited liability tax could force private industry actors to reveal information to policy-makers and regulators, thereby dynamically improving the public response to externalization risk.

Charging firms for limited liability will lead private firms to sort themselves by riskiness and reveal information to policymakers. Policymakers will then be able to focus their attention on the industries that have collectively self-identified as high risk and develop more finely tailored regulatory responses. Because the benefits of making the proper election are fully internalized by individual firms, whereas the costs of future regulation or limited liability tax changes will be borne collectively by industries, firms will be un-likely to strategically mislead policymakers in their elections. By helping to reveal private information and focus regulators' attention, a limited liability tax could accelerate the pace at which policymakers learn and therefore the pace at which regulations improve.

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.  

H.R. 4508 gets worse.  The bill would cap the amount that can be borrowed under federal student loan programs that finance high-quality programs, such as 4-year institutions and graduate and professional degree programs and increase the cost and risk for borrowers under these programs.  These programs have among the lowest default rates and are among the most profitable in the federal government's portfolio, even after taking into account student loan forgiveness programs. 

The Republican bill would penalize programs with low repayment rates in early years, which is typical of some extremely high-quality programs whose graduates typically see their earnings start low and then grow rapidly.  Graduates of these programs should be encouraged to use a slower repayment schedule.  Consider graduates of medical school working in residency or graduates of law school working in clerkships before more lucrative pursuits.  Law graduates and other professional degree holders typically see their incomes start at relatively modest levels and then grow rapidly for decades.  Education is about outcomes over 30 or 40 years, not 2 or 3.

There are problems with the way the old rules evaluated outcomes and limited eligibility for student loans.  The rules focused on absolute outcomes rather than value-added.  The rules did not adequately take into account student characteristics or prevailing economic conditions.  These problems should be addressed, and the rules amended.  But scrapping the rules completely and flooding the market with low quality educational programs--or replacing them with rules that make even less sense--is not in students' or taxpayers' interest.

* Poor outcomes could also be due in part to differences in student populations, and at least some for-profit programs might perform well.  The gap in performance is largest for 4-year+ programs.

**The bill has been given the rather Orwellian title "Promoting Real Opportunity, Success, and Prosperity through Education Reform Act."