With most ABA–accredited law schools facing dwindling applications, news about free-standing private (FSP) law schools has begun to appear more frequently. The Boston Globe, for instance, reported in January on New England Law’s highly paid dean along with his Boston school’s high prices and low employment outcomes. At around the same time, New Hampshire’s Valley News reported that Vermont Law School had arranged buyouts for 10 employees and was in the planning stages for buying out an unspecified number of faculty members next year.

Neither article drew significant attention to the fact that these schools are not attached to a larger university. Those were missed opportunities because the overall nose-dive in law school applicants places such law schools at particular risk since they lack substantial endowments to fall back on. How they react to the fiscal problems they face offers clues about what goes on at other private law schools as well as some expensive public ones. In fact, Education Department (ED) loan volume data show just how willing students at FSP law schools have become to take on extremely large sums of debt in the form of Grad PLUS loans, which they have been able to use since the program’s creation in February 2006 to pay for living expenses and any tuition costs remaining after they’ve used up their Stafford loans.

Any discussion of the 22 (soon to be 21) FSP law schools should begin with an acknowledgement that they are not a random sample of all private law schools. They tend to be less selective than most schools, as evidenced by the most recent U.S. News and World Report rankings, and some will undoubtedly extend offers to large majorities of their applicants this year. Thus, some—but not necessarily all—of these law schools are the " zombie law schools" to which I referred several weeks ago.

But zombie status hasn’t prevented these schools from taking in billions of dollars from their students. Thanks to ED’s Title IV Program Volume Reports, you can see both the sheer quantity of Federal Family Education Loans (FFEL) and Direct Loans (DL) these schools have disbursed since the 1999–2000 academic year and the parallel rise of the Grad PLUS Loan Program. Unfortunately, information on private loans students at these schools may have incurred at the same time is not available.

I should note that not all of the Grad PLUS loan money documented in the loan volume reports went to the FSP schools because the loan proceeds can be used for living expenses. Here’s a chart that captures the number of loan recipients by type of loan alongside total enrollments, which illustrates the transformation of FSP law school student borrowing in recent years.

(Sources: ED, ABA-LSAC Official Guide to the ABA Law Schools)

Although a high percentage of FSP law school students have reliably used Stafford loans to pay for tuition, as of last year, 71 percent of them had taken out Grad PLUS loans as well. (Those knowledgeable about the federal student loan program might wonder why Parent PLUS loans are omitted from the chart. The reason is simple: A scant two recipients in this 12-year time period took out Parent PLUS loans—a fact that highlights the contrast between the Parent PLUS and the Grad PLUS loan programs.)

Notably, because full-time tuition costs more than part-time tuition, the more part-time students a law school has, the less in Grad PLUS loans its students tend to take out. For example, Thomas M. Cooley Law School’s empire of part-time campuses means that a smaller percentage of its students borrow Grad PLUS loans than their counterparts at some other schools. Cooley’s expansionism alone indicates how easily law schools can increase revenues off just the Stafford Loan Program by enrolling more debtor-students. Other FSP law schools tend to target students from a more upper class background who can afford to pay their tuition out of savings, or simply redistribute more tuition revenue in the form of merit scholarships.

(Source: ED, Official Guide)

With the above breakdowns of full-time and part-time students in mind, here is the amount borrowed per Grad PLUS loan recipient and the excess tuition costs over the $20,500 annual Stafford Loan limit. Any amount beyond the cost of full-time tuition is likely spent on living expenses, unless recipients are ineligible for Stafford loans or they borrow Grad PLUS loans to pay for summer courses. Otherwise, many law students borrow $10,000–$15,000 per year to survive while in school.

(Source: ED, Official Guide)

Because there is significant overlap between Grad PLUS borrowers and Stafford borrowers, here’s the average loan distribution per student at FSP law schools. I couldn’t weight the amount borrowed by loan type per student because it’s impossible to distinguish between part-time and full-time loan recipients. Since Grad PLUS loans were created in February 2006, and since so few people took them out that year, I’ve omitted the $10,700 average disbursement for that academic year. It’s clear that nationalizing graduate student lending allowed these law schools to continue raising their tuitions past the Stafford Loan limit and insulated them from the financial meltdown in 2008. More subtly, you can see how they readily absorbed the increase to the Stafford Loan limit in 2007.

(Source: ED, Official Guide, FinAid.com)

As I wrote earlier, the information in the ED loan volume data offers clues about other private law schools. FSP law schools alone comprise a surprisingly large portion of all Grad PLUS loans and recipients, which indicates that all private law schools rely heavily on them as well.

(Source: ED)

Simply put, 6.6 percent ($475 million) of all Grad PLUS loan dollars went to 4.79 percent (16,900) of all Grad PLUS loan recipients at only 22 of the ABA’s 119 private law schools in the 2011–12 academic year. Since there were 105,400 private law school students enrolled at that time, 71 percent of them taking out Grad PLUS loans would equal about 74,800 students, or 21 percent of all Grad PLUS loan recipients. If they took out an equivalent amount of debt, then nearly three out of every 10  Grad PLUS loan dollars disbursed goes to a private ABA law school student. Add in the law students at public universities, and the proportion could exceed a third of the Grad PLUS loan program’s $7.2 billion annual disbursement.

It shouldn’t be much of a surprise that in 2011, the weighted-average graduate debt level of FSP law students was $124,800, and no one knows what happens to students who drop out of these schools, which is also common. But what kinds of employment outcomes can the graduates with this kind of debt expect?

Even in good years, FSP law schools’ employment outcomes tend not to be so good:

(Source: Official Guide, ABA)

The employment information presented here from older editions of the Official Guide is precise but inaccurate because there wasn’t nearly the specificity on the quality of employment outcomes as there has been since the revised reporting requirements went into effect. However, increased transparency has revealed that in 2011 only 41 percent of all FSP law school graduates were employed full-time, long term in positions for which bar passage was required. By comparison, 53 percent of all private law school grads found similar positions. There is no concise way to present these data with so many employment categories and types, but the number of known unemployed FSP law school graduates surpassed 1,000 last year, and it appears that total unemployment, as well as employment in the business and industry category ( which correlates with jobs that don’t require legal education), is increasing.

And here is the class of 2011′s employment type distribution, which should definitively show the poor outcomes FSP law school graduates tend to find on the job market relative to their peers.

(Source: ABA)

I close by adding that not all FSP law schools’ students have such high debts and poor outcomes. One might quibble that I should not have lumped all FSP law schools’ students together, and that I should have used unweighted averages to reduce the high debt levels and poor outcomes caused by outliers with larger enrollments. However, I don’t think the results would have differed much, and the implications are fairly obvious: Private law schools in general have rapidly absorbed new forms of federal lending, and they are a dominant player in the Grad PLUS Loan Program. Due to the heavy debts and poor employment outcomes that graduates of FSP law schools must contend with, it’s likely that we’ll be hearing more about them as they grapple with fewer resources. With the Higher Education Act up for renewal this year, hopefully we will also see more calls for ending the unlimited lending law schools thrive on.

Matt Leichter is a writer and attorney licensed in Wisconsin and New York, and he holds a master’s degree in International Affairs from Marquette University. He operates The Law School Tuition Bubble, which archives, chronicles, and analyzes the deteriorating American legal education system. It is also a platform for higher education and student debt reform.