An unimpeded market response to the collapsing demand for lawyers--a response that economist Joseph Schumpeter might have called "creative destruction"--would have required the weakest competitors in the Problematic Submarket to innovate dramatically, slash tuition, and/or close their doors.Such has not been the case. But why not?
Harper assigns responsibility to three players. First, "students share some of the blame for the market's failure because they indulge their own confirmation bias. For too many, bad things happen only to someone else." Second, "the easy process of securing federally guaranteed loans encourages price insensitivity." Third, and the object of Harper's most barbed comments, are the Problematic Submarket law schools themselves, that is, "schools whose graduates experience the worst employment outcomes produce some of the highest levels of student debt."
As long as these law schools are playing with someone else's money (i.e., students' and the federal government's), there's no reason for reform. In other words, the market for legal education is not working.
Harper goes on to suggest reform centering around reducing availability of federal student loan funding to students who attend such schools. I won't reproduce the entirety of Harper's proposal here but suffice it to say that if graduates of a law school do not get FTLT-JD jobs at the rate of the Regional Submarket schools, that school's students would could not borrow the full cost of attendance. Students attending the Problematic Submarket schools would thus need to find resources other than federal loans and, to the extent that money came from private lenders, it would be dischargeable in bankruptcy.
I have repeatedly posted to the effect that federal student loans distort the market for higher education generally. Harper's proposals go some way toward restoring market competition for law schools