How Can Policymakers Assess the Value of a Law Degree?

New America’s Tia Caldwell partnered with the Urban Institute to contribute to their Learning Curve series. We’ve shared her work here.

Each year, more than 70,000 students apply to law school. Yet once law students graduate, fewer than half agree their degree was worth the cost. As skepticism about higher education mounts and students have growing difficulties repaying their student loans, policymakers face pressure to ensure postsecondary programs truly leave students better off.

To understand whether college programs place their graduates on better financial footing, we created an accountability metric that estimates the time it takes for college students to recoup program costs. The cost-to-earnings-premium metric divides the costs of attending college by the amount the program increases income above an estimate of students’ income if they had not earned their degree. Unlike similar metrics, the cost-to-earnings-premium metric includes the wages students could have earned if they were working instead of studying as one of the costs of college. Using rich data on law schools, we show that this metric is more aligned with quality benchmarks than other ways of comparing tuition and earnings.

Applying the cost-to-earnings-premium metric to 236 law programs shows the following:

• More than half of law programs pay for themselves within six years, and almost 90 percent pay off within 10 years.
• Ten programs that pay off in under two years, almost all offered at Ivy League and Ivy League–adjacent schools, achieve value by generating high earnings (averaging $198,000) that make up for high tuition (averaging $166,000).
• The 93 law programs estimated to pay off in two to five years result in more modest wages (around $86,000) but achieve value by charging lower tuition (averaging $105,000) than the highest-value programs.
• The 108 schools that take five to 10 years to recoup costs are, on average, slightly more expensive but lead to significantly lower wages. Recent graduates of law schools that take between five and 10 years to pay off earn about $66,000 after graduation and pay $110,000 in tuition and fees.
• About 10 percent—25 programs—take more than a decade to pay for themselves. Students pay around $109,000 to attend these programs, yet recent graduates earn an average of $53,000. These 25 programs have lower bar passage rates, employment rates, and loan repayment rates than other law programs.
• Although most programs in the dataset are offered at public schools, the programs projected to take longer than a decade to pay off are disproportionately run by private nonprofit and for-profit schools. Of these programs, 52 percent are offered at nonprofit schools, 32 percent are offered at public schools, and the remaining 16 percent are offered at for-profit schools.

Students, colleges, and policymakers should all note the wide variation in the payoff of law degrees. Law schools that perform poorly on the cost-to-earnings premium should consider what they can do to lower costs and improve employment outcomes. Prospective law students may want to ensure that their goals are aligned with likely outcomes by comparing their expected costs, including loss of income during school, with their expected wage gains minus what they already earn.

Policymakers should also pay attention to the range in the value of law schools and graduate programs in general. New gainful employment regulations will apply accountability metrics to some graduate programs for the first time, but only short-term and for-profit programs could lose access to federal aid for their poor performance.

This regulatory gap could be an opportunity to design accountability metrics tailored to graduate programs. Policymakers should collect and publish the median earnings of students before their enrollment in a graduate program. With these data, analysts and policymakers could more accurately estimate counterfactual earnings to better account for earnings premiums and lost wages during school. Once graduate programs are held accountable for creating value, more law graduates will be able to report that their degree was worth their time and money.

• Education Data Portal
• GitHub

• Borrowers Discuss the Challenges of Student Loan Repayment
• Towards a Framework for Accountability for Federal Financial Assistance Programs in Postsecondary Education
• Interactive Map of the Price-to-Earnings Premium for All Students
• Is Grad School Worth It? A Comprehensive Return on Investment Analysis