Why Law Schools Should Report “Gainful Employment”
Guest post by law professor Aaron Taylor.
The recent recession provided a compelling backdrop for legal education to come under scrutiny. The resulting angst about jobs engendered skepticism regarding the law degree’s value and the forthrightness of law schools in characterizing that value. A couple schools have been found to have intentionally misrepresented data, and others are being formally accused of such.
There is also a pervasive feeling that even though most schools have complied with reporting requirements, some have nonetheless failed to tell the whole story. Caveats were undisclosed. Explanations were unprovided. In short, law schools too often failed to adhere to the heightened standard of conduct they expect of students.
So what can law schools do to regain the public’s trust and provide prospective students with the most useful data?
The American Bar Association (ABA) has acted quickly in mandating detailed employment data and providing sanctions for the misrepresentation of data. But more is necessary. Law students are most interested in the value of the law degree—specifically, whether their investment of time, effort, and money will likely pay off. So efforts to provide information useful to that assessment are of utmost importance.
Historically, a school’s percentage of employed graduates and the associated median salary have been the primary indicators of the potential payoff of legal education. The employment percentage was assumed to represent chances of employment, while the median salary was assumed to represent a reasonably expected monetary return. These two types of data are intuitive and simple; as such, they were relied upon heavily by people assessing the value of the law degree. But the downside of simple assessments is often their blunt nature. And the shortcomings of generic employment rates and median salary figures have been exposed by the realities of the lean economic times in which we are living. More nuanced indicators are needed. The ABA mandates are a step in the right direction, but a framework that borrows components of the Education Department’s “gainful employment” standards would be more useful in contextualizing the outcome data on which many people rely.
What is “gainful employment”?
Federal law requires that programs at for-profit educational institutions (e.g. University of Phoenix) and those lasting less than one year at traditional higher education institutions must “prepare students for gainful employment in a recognized occupation.” This standard is premised on the idea that skills-based higher education should confer a tangible pay off, particularly given its high cost. The focus on skills-based education is apparent in the fact that most academic programs at traditional institutions are exempted from the rule. The meaning of gainful employment, however, was undefined until this past summer when the Obama Administration implemented a set of benchmarks that schools must meet or risk losing eligibility to receive federal financial aid funds. Generally, a program is in compliance with gainful employment standards if it meets at least one of the following benchmarks:
- At least 35% of former students are actively repaying student loans.
- Annual loan payments for typical graduate do not exceed 30% of her discretionary income.
- Annual loan payments for typical graduate do not exceed 12% of her total income.
Each benchmark focuses in some way on the ability of graduates (and other former students) to earn income sufficient to pay their student loans. Given the primacy of student loans in higher education, measures that focus less on employment and salary figures and more on actual ability to pay bills provide the type of nuanced information that students would find useful.
How would a gainful employment framework look in legal education?
For starters, it would not need to be mandated by the Education Department. Using the Education Department’s definition, practically every ABA-approved law school prepares its graduates for gainful employment. So this idea is less about increasing oversight of legal education and more about law schools adhering to their own heightened ethical standards. As such, the purpose of the framework would not be to set minimum benchmarks, but to provide better information—something law schools should embrace without compulsion.
A gainful employment framework in legal education would contextualize employment and salary data by measuring the extent to which graduates are able to actually pay what is likely their largest debt. The fundamental question the data would seek to answer is, “Are graduates not only working but also able to pay their student loans?” Using the benchmark prompts above, this question would be answered from both macro and micro perspectives. The first prompt would provide a big-picture view of the extent to which graduates are able to pay their loans. The latter two prompts would provide individual-level measures of loan indebtedness. The relative nature of the data would render it less sensitive to differences that may be misleading. For example, median salary differences may be rendered less significant if graduates from schools with lower medians have lower relative indebtedness or pay their student loans at higher rates. Schools could provide short-term and long-term views by aggregating data over different timeframes.
Why would a gainful employment framework make sense in legal education?
Given that 80% of law students rely on student loans, employment and salary data placed in the context of student loans indebtedness would have broad usefulness. Moreover, because repayment data would come from the Education Department, the already low risk of self-serving inflation by schools would be lessened even further. But the most compelling reason why the framework makes sense is that law schools need to do more to inform students of both the benefits and the risks associated with legal education. The very nature of legal work is changing, and the cost of legal education is ever-rising. So in this climate of fundamental change and higher stakes, law schools should embrace assessments that reflect their role as professional schools premised on the idea of preparing students for gainful employment.
The so-called crisis of confidence in legal education is not about law school fraud; it is about misinformed expectations. It is about students believing the law degree guarantees lucrative employment—and law schools doing little to temper those unduly optimistic assumptions. Law schools have a duty to ensure that their students know upfront both the potential rewards and possible risks of undertaking legal education. Principles of ethics and integrity require such forthrightness. Gainful employment data would help prospective students make more informed choices regarding legal education, and in the process help law schools regain the public trust.