Brooklyn Law School Has its Own Debt Crisis
The nation as a whole may have avoided a debt default, but Brooklyn Law School's outlook isn't quite as rosy. Though the school is far from default, Standard & Poor's warned the school on Tuesday that it needed to stop the fiscal bleeding or face higher borrowing costs and a change from its current BBB+ debt rating. (The ratings system can be found here).
The credit ratings agency also lowered its outlook on the school's debt, from stable, to negative, with a one in three chance it could downgrade the debt, reports Crain's New York.
The school noted that Moody's Investors Service gave Brooklyn Law School a stable debt outlook only two months ago.
Numbers, Financial and Otherwise
Crain's cites figures that confirm what we've suspected about trends in law school admissions since applications and demand began to plummet a few years ago. At Brooklyn Law, the class size decreased 10 percent to 1,137 this year, and 22 percent over the last three years.
Even the filled seats come at a cost. Though the school has hiked tuition by 2.5 percent this year to $51,243, not everyone pays sticker price. In order to attract more qualified candidates (i.e. those with shiny GPAs and LSAT scores), the school has hiked total grants and scholarships to 37 percent, compared to 15 percent in 2007, the year before the apocalypse.
BLS operated with a near-$1 million deficit in the fiscal year that ended June 30, 2012 as well, according to Crain's.
What's the Plan?
That's the question plaguing all law schools, isn't it? You can cut class sizes, and have less seats to fill, thereby compensating for the decreased demand for law schools seats as a whole. But that shrinks the revenue stream, especially if the school wishes to maintain its admissions standards. (Not many did, if the Class of 2016 numbers are any indication.)
Another approach is to increase class sizes, and hope that the increased revenue will allow the school to "buy" a few more desirable admittees to keep the median LSAT and GPA numbers respectable. If those numbers drop too far, the school's US News ranking likely drops as well, decreasing the school's prestige and demand amongst applicants. (It's a slippery slope.)
What's Brooklyn's plan? A spokesperson told Crain's that they plan on reducing costs through lower salary and pension payouts. They'll also increase the incoming class size slightly and will introduce an accelerated two-year degree program next year.
More law graduates? That's exactly what the job market needs.
Think we're being overly harsh towards Brooklyn Law School? Have an idea that can solve the nation's law school problem (besides closing half of the schools and treating the lawyers as Shakespeare sort of requested)? Join the discussion on Facebook at FindLaw for Legal Professionals.
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