Law Schools and Cows

[The New York Times reports]( that there is a glut of law school graduates, many of whom went to school based on glowing career opportunity statistics that turn out to have been fairly thoroughly cooked by law schools. Law schools, it turns out, are cash cows for universities, especially since law students expect to be crammed into large lecture halls. With the promise of large salaries at the other end of three years, the schools can also charge high tuitions. $43,000 a year on average.

This shouldn’t come as a surprise to me — still it did — because I had a similar glimpse into another professional school economy while I was at Indiana University. While there, I worked for a time in the Executive Education unit of the School of Business — it’s now the Kelley School of Business, I believe, and Exec Ed is known as Kelley Partners. Our unit produced revenues of six to eight million dollars a year, with an annual profit between $500,000 and $800,000. That money went straight into our Dean’s budget, for him to use as he saw fit.

Of course, our profit to the School and to the University did not end there. What we also produced was a regular stream of extracurricular work for business faculty, such that when the School was recruiting new hires, they could in effect say to a prospective faculty member, “Look, we can only offer you *this much* salary, but we can guarantee you *this much* in executive education work.” (And so, a starting salary for a business faculty member might have been, and this is fifteen years ago, in the high five digits or low six digits, but, for some faculty, the executive education money might double the total value of the package. That’s a nice perquisite for an organization to be able to offer.)

Now, the executive education dimension was, and is, separate from the other rather large profit center at the business school — and, to be clear, IU’s B-school was only doing what every other B-school was doing, and I know they were not as extravagant as some other schools, even other midwestern schools — and that profit center, like the law school, is the MBA program. Like law schools, MBA programs strove to charge high tuitions because they could, in a booming economy, promise such a good return on your investment. (I think, at the time, IU’s MBA program regularly placed people in the $60k range to start, and that was awfully good money in the mid-nineties, and, more importantly, it was only to start: MBAs were typically fast-tracked for promotion.)

Now, with Harvard faculty re-thinking the value of the MBA — that an entire generation of MBA-thinking may have brought about the insanity of an economy driven by finance and not by the production of actually useful things — I wonder where MBA schools stand, and if their graduates are facing anything similar…