The Ethics of Subsidizing Law School, Part I

Some recent discussions regarding law schools point out that income-based repayment of debt, perhaps culminating in forgiveness of a substantial fraction of that debt, should be taken into account when thinking about law school reform.  Professor Schrag elaborates on this point in his critique of Brian Tamanaha's book. 

Collectivizing law students' debt makes law school a more appealing prospect for prospective students than it would be if students themselves had to pay back all they borrow. It is good for students (creating an option even for those who might decline the option if they find high-paying work), and certainly relevant to students' assessment of the costs and benefits of law school.

It does not follow, however, that such subsidies are socially optimal, or that any particular level of subsidy is desirable.  Additional arguments are needed to establish those points. What might those arguments look like?

One argument would assert that subsidies are quite common in America and educational subsidies are particularly common.  The premise is certainly true, but I do not think it entails anything.  I don't think the premise could support an argument in the form of (i) subsidies are common ergo (ii) all subsidies are justified. Head Start (if we call it a subsidy) does not justify agricultural price supports. This statement of the argument strikes me as a variation on the fallacy of division, but I am not sure what other form of argument this premise would aim for. 

I want to adress separately issues of externalities, progressivity, and the proper baseline for comparison, but for the moment I would note that even if subsidies are socially acceptable it does not follow that they render the cost of law school a moot point.  Indeed, I would think that the move to collectivize law school debt implies that the costs borne by taxpayers should be no greater than necessary to achieve the social benefits claimed.  Everyone, not just students, and including the government, would have a valid interest in cost control.  An analogy might be drawn to the argument, sometimes heard, that subsidies on the purchase of medicines justifies price regulation of those medicines. Obviously there are differences in the two examples, but the general point is worth thinking about. 

DM

 

Comments

[Milan Markovic]

Dear David,

IBR is available to graduates of higher education generally, not just law schools. IBR is also progressive, which makes it preferable to many current government subsidies. Is your concern with IBR generally or with respect to law schools?

In addition, I don't think we can treat IBR separately from the federal student loan program generally. Presumably hefty interest paid by some graduates on their student loans will help to defray "the subsidy" provided to graduates who participate in IBR or PSLF and other programs. Schrag also notes in his article that many countries have IBR in some form so I am unclear as to why IBR merits scrutiny over other educational subsidies.

Lastly, I share your concern on costs controls, but given the current environment law schools are in, I highly doubt that law schools can use the existence of IBR to justify increasing tuition.

[David]

I think whether IBR is progressive depends in part on whether law students (not lawyers) are wealthy in comparison to the population as a whole. I have seen some data on that point but I do not have it to hand, so I want to postpone comments until I have the data.

I would distinguish between professional schools and other schools with respect to repayment and thus, to that extent, between IBR and other forms of subsidy.
DM