Much has been written about the sky-high debts facing law-school graduates, who face difficult odds in landing jobs that will help pay off their loans. But students at Thomas Jefferson School of Law are among the first who are contemplating the possibility of a get-out-of-debt-free card that no one’s eager to cash in.
It would apply only if the law school, which is struggling to restructure a $133-million debt, were to close—a prospect the private, stand-alone school in downtown San Diego is determined to avert. After failing to make a June payment, the school was given a reprieve until October 17 but ordered to pay an additional $2-million.
While legal blogs were speculating that the school’s days might be numbered, creating waves of anxiety among its already-stressed students, school officials released an official statement to The Chronicle this week, saying it had made most of the June payment to bondholders and was working out an arrangement that would allow it to remain open.
“Because a restructuring of the school’s obligations to the bondholders is likely, the school believes that it will be able to continue to prosper,” the statement said.
“Prosper” may be too optimistic a word for any law school these days.
The number of applicants to law schools accredited by the American Bar Association plummeted 45 percent from 2004 to 2014, according to preliminary figures released by the association. By 2013, first-year enrollment had slid about 18 percent, a devastating decline for schools, like Thomas Jefferson, that depend heavily on tuition.
Schools were reaching deeper into applicant pools to fill their classes, and passage rates on state bar examinations took a hit.
As Thomas Jefferson struggles to remain afloat, Michael A. Olivas, a former president of the Association of American Law Schools, suggested it may be “a canary in the coal mine of legal education.”
The nation has too many law schools, said Mr. Olivas, who is also a professor of law at the University of Houston, and he expects some will close in the next several years.
“I believe there will be, in all likelihood, about a half-dozen schools that are on anybody’s watch list,” he said.
A Saturated Job Market
The number of ABA-accredited schools has grown from 182 in 1999 to 204 today (three of those are provisionally accredited), and there are dozens of additional schools that are either accredited by individual states or unaccredited. California has 21 ABA-accredited schools, including Thomas Jefferson, and a few dozen unaccredited schools whose graduates can sit for the state’s bar exam.
Located in a state saturated with lawyers and with a bar exam that is notoriously tough, Thomas Jefferson’s statistics this year have been grim. The number of entering students dropped 43 percent, from 422 in 2010 to 242 this fall. Fewer than three in 10 the school’s 2013 graduates landed full-time, long-term jobs requiring a law degree nine months after graduation, and the average law-school debt for its graduates that year was more than $181,000, the highest of any law school nationwide, according to U.S. News & World Report.
Meanwhile, the campus opened a $90-million, eight-story building in downtown San Diego that was started in more prosperous times and completed in 2011, just as a combination of national scrutiny on law schools, a retrenchment in hiring, and the economic downturn had prompted applications nationwide to nosedive.
As word leaked out about the precarious financial situation the school was in, some students started looking into a federal loan-forgiveness provision for students whose colleges or schools go under.
Lauren Audette, a third-year student at Thomas Jefferson and editor of the law school’s newspaper, said some students were worried the school might close before they could graduate with an accredited degree, and were confused about whether their debts would vanish at that point.
“Then what? Our loans go away?” she wrote on Tuesday in an email to The Chronicle.
“For me, I hardly see that as a benefit,” she added. “I have been struggling and working my whole academic career to be a lawyer, and I have been seeking this since I was 12 years old. So, like many of us, the thought of all our work going down the drain was disheartening.”
She’s hopeful, though, that the school’s dean since July 2013, Thomas Guernsey, has found a way to restructure and keep the school open. Contacted by The Chronicle, Mr. Guernsey declined to comment beyond the statement explaining that arrangements were in the works to restructure the school’s debt and that he was optimistic students’ education wouldn’t be disrupted.
‘Too Much Debt’
Paul F. Campos, a professor of law at the University of Colorado who attracted a certain amount of notoriety in recent years for his scathing rebukes of legal education in his blog, Inside the Law School Scam, has been especially critical of the government’s willingness to let anyone admitted to an accredited law program borrow the full cost of attendance through federal loan programs, with no limits on how much schools charge or students borrow.
“There’s not enough work for law graduates, and they’re acquiring way too much debt,” he said. “If you can’t make a living as a lawyer, having a law degree isn’t necessarily a good thing.”
Law firms are outsourcing basic legal work to places like India or are automating simple tasks like document reviews. “General counsels realize they don’t have to pay $300 an hour to have associates proofread documents,” he said. As a result, the days when newly minted lawyers could land six-figure salaries and pay off their debts “aren’t coming back any more than the steel mills in Pittsburgh are,” says Mr. Campos.
He expects to see law schools’ closing in coming years, especially in saturated markets like California’s.
Katie Smith, a third-year student and president of Thomas Jefferson’s Student Bar Association, said in an email on Tuesday that the dean had not wavered “under the pressure of media attention” from his commitment to the school. “Our dean has been actively seeking out strategies to ensure student education remains uninterrupted, and we are confident that he will be able to meet that goal,” she said, adding that while students felt “frenzied” because of the negative attention the school has been getting, many continue to land prestigious internships.
Enrollment Declines
Thomas Jefferson is hardly alone in its struggles. Other law schools suffering sharp enrollment declines in recent years include those at the University of La Verne and the Catholic University of America, as well as New York Law School.
Thomas M. Cooley Law School, with five campuses in Michigan and Florida, defied gravity for years, opening a new campus in Florida two years ago even as other law schools were scaling back their enrollments. The school, which accepts more than 80 percent of its applicants, saw enrollment plummet 41 percent from 2010 to 2013, from 3,931 to 2,334, according to a report this year in National Jurist.
This fall it stopped accepting first-term students on its Ann Arbor campus as part of a plan that includes faculty and staff layoffs across its four Michigan campuses. Now it’s considering shutting down the Ann Arbor campus.
A spokesman for Thomas Cooley, James D. Robb, said the school had made an “internal decision” not to divulge how many people had been laid off. But he insisted that now is “a great time” to apply to law schools.
“We are seeing signs of improved hiring, and entering classes’ sizes are smaller,” he said, “so three years from now, fewer graduates will be entering into what I expect will be a greatly improved job market.”
