Because there's still tons of money to be made:
Charlotte School of Law – battling lawsuits from students, a federal cutoff of student loans and financial problems – told students Friday night that it would reopen for the spring semester. “We are very pleased to announce that after extensive discussions with our regulators, we will be starting classes as scheduled,” the school told students in an email.
CSL told students at mid-week that it was trying to make arrangements with Florida Coastal School of Law in Jacksonville – a sister institution in the three-school InfiLaw chain – for students to complete their studies and receive an ABA-accredited degree.
I believe even struggling students should have a chance to succeed in life, and I'm all for taking (some) alternative routes for professional degrees. But that's not what we're talking about here. We're talking about a degree that isn't worth the faux-sheepskin it's printed on, and a crippling student debt that even a real lawyer can't help you figure out. Here's some more background, if you have the stomach for it:
Florida Coastal is one of three law schools owned by the InfiLaw System, a corporate entity created in 2004 by Sterling Partners, a Chicago-based private-equity firm. InfiLaw purchased Florida Coastal in 2004, and then established Arizona Summit Law School (originally known as Phoenix School of Law) in 2005 and Charlotte School of Law in 2006.
These investments were made around the same time that a set of changes in federal loan programs for financing graduate and professional education made for-profit law schools tempting opportunities. Perhaps the most important such change was an extension, in 2006, of the Federal Direct PLUS Loan program, which allowed any graduate student admitted to an accredited program to borrow the full cost of attendance—tuition plus living expenses, less any other aid—directly from the federal government. The most striking feature of the Direct PLUS Loan program is that it limits neither the amount that a school can charge for attendance nor the amount that can be borrowed in federal loans. Moreover, there is little oversight on the part of the lender—in effect, federal taxpayers—regarding whether the students taking out these loans have any reasonable prospect of ever paying them back.
This is, for a private-equity firm, a remarkably attractive arrangement: the investors get their money up front, in the form of the tuition paid for by student loans. Meanwhile, any subsequent default on those loans is somebody else’s problem—in this case, the federal government’s. The arrangement bears a notable resemblance to the subprime-mortgage-lending industry of a decade ago, with private equity playing the role of the investment banks, underqualified law students serving as the equivalent of overleveraged home buyers, and the American Bar Association standing in for the feckless ratings agencies. But there is a crucial difference. When the subprime market collapsed, legislation dedicating hundreds of billions of taxpayer dollars to bailing out the banks had to be passed. In this case, no such action will be necessary: the private investors have, as it were, been bailed out before the fact by our federal educational-loan system. This situation, from the perspective of Sterling Partners and other investors in higher education, comes remarkably close to the capitalist dream of privatizing profits while socializing losses.
Over the next few years, the InfiLaw schools did their best to obtain as much of that revenue as possible. Florida Coastal, which had existed for eight years prior to its purchase by InfiLaw, nearly doubled in size, growing from 904 students in 2004 to 1,741 in 2010. Phoenix—now Arizona Summit—grew at a still faster rate, increasing from 336 students in 2008 to 1,092 just four years later. Charlotte likewise expanded, from 481 students in 2009 to 1,151 in 2011. Despite across-the-board declines for the past few years, all three schools remain among the largest law schools in the country.
The InfiLaw schools achieved this massive growth by taking large numbers of students that almost no other ABA-accredited law school would consider admitting. InfiLaw was—and remains—up-front about this. Its self-described mission is to “establish the benchmark of inclusive excellence in professional education,” by providing access to a traditionally underserved population consisting “in large part of persons from historically disadvantaged groups.” Yet this means accepting many students who, given their low LSAT scores, are unlikely to ever have successful legal careers. In 2010, for example, two of the three InfiLaw schools admitted entering classes with a median LSAT score of 149, while the third had an entering class with a median score of 150. Only 10 of the other 196 schools fully accredited by the ABA had an entering class with a median LSAT score below 150. (By 2013, some 30 additional institutions had joined these schools.) An LSAT score of 151 is approximately the average among everyone who takes the test. A score of 149 puts test-takers in the 41st percentile. And it is worth noting that a large number of those who take the LSAT do not end up enrolling in law school. (InfiLaw says it does not rely as heavily on the LSAT as other schools do, because “it is not the best determinant of success as a lawyer and clearly has racial bias.” The company says it has instead developed a tool that is “demonstrably superior to the LSAT.” Called the AAMPLE program, it involves applicants’ passing two classes prior to admission.)
Every semester this school stays open, the financial body count grows. When less than 1% of your graduates get jobs at large law firms or judicial clerkships, you are (in fact) stealing their money. And their future.