"Robbery at its finest": Western State Law School May Close in Mid-Semester

Western State College of Law, a nonprofit law school located in California, may shut down soon. If it does, Above the Law reporter Staci Zaretsky observed, it will be the first time an ABA-accredited law school closes its doors in mid-semester.

What's going on? Well, its complicated. Western State is part of Argosy University, which is a nonprofit institution owned by Dream Center Education Holdings, a nonprofit Christian group. Dream Center bought Argosy from Education Management Corporation (EMC), a for-profit entity. EMC, once the second largest for-profit-college operator in the United States, sold out after it ran into trouble over its recruiting tactics.

Dream Center discovered that its purchase was not as profitable as it anticipated. As reported by Stacy Cowley and Erica L. Green of the New York Times, Dream Center expected to make a $30 million profit in the first year. Instead, it suffered a $38 million loss.

Dream Center could not pay all its bills, and a creditor put it into receivership in January. A federal judge in Ohio appointed a receiver, and the receiver wants to sell at least some of Dream Center's holdings.

Then, late last month, the Department of Education announced that it would yank all federal student-aid money from Dream Center, which will strangle all of its educational institutions.  DOE took this action due in part to the fact that Dream Center had not disbursed student aid money to students in a timely manner. According to DOE's letter of February 27, Dream Center failed to distribute more than $16 million in student stipends to Argosy University students, including law students at Western State College of Law. Meanwhile, the DOE letter said, Argosy continued paying its staff and vendors.

Naturally, the announcement that Western State might close in mid-semester, threw students into a panic."[W]e as students are suffering the never-ending consequences physically, emotionally mentally, and spiritually," said Kim Davoodi, a third-year last student. "This is robbery at its finest."

Without question, the precipitous closing of a law school is a disaster for students. But Davoodi may be misinformed about when this alleged robbery occurred. Western State, a third-tier law school, is shockingly expensive. Accord to Law School Transparency, which reports on law schools' costs and outcomes, it will cost an entering first-year student $282,000 to get a law degree from Western State.

Thus, almost all Western State students must borrow prodigious amounts of money to finance their studies. In fact, by Law School Transparency's calculations, a Western State graduate would have to make monthly payment of $3,329 for ten years to pay off this debt. (Of course some students receive tuition discounts, which reduces the amount of student loans they would need.)

Obviously, Western State law graduates must find very good jobs in order to service their student loans. But a law school graduate must pass the state bar exam to become a practicing attorney; and Western State's bar pass rates are abysmal.

How abysmal? Only 51 percent of Western State's first-time takers passed the California bar exam in the summer of 2018. And Western State's bar pass rate is going down. The school's bar pass rate declined by 5 percent from the previous year.

So if a robbery occurred (metaphorically speaking), it took place on the day Western State law students took out their first student loans. It is recklessly irresponsible for a law school to charge students outrageously priced tuition, when only about half of their graduates pass the state bar exam the first time they take it.

A few days ago Western State's Dean Allen K. Easley sent students an email alerting them that the law school was "finalizing plans" to stay open for at least two more weeks. Dean Easley also told student that Argosy's receiver was in "active discussions with a potential suitor interested in acquiring the law school."

Perhaps an investor will buy Western State and keep the law school open awhile longer. But speculation about a buyer for Western State reminds me of a scene from True Grit. Rooster Cogburn (played by Jeff Bridges) and Mattie (played by Hailee Steinfeld) come across a corpse hanging from a rope tied to a tall tree. Cogburn orders Mattie to cut the cadaver down, which she does; and then he slings the carcass on the back of a horse.

Why was he keeping the corpse, Mattie asked. If my recollection of the scene is correct,  Cogburn replied: "A dead body might be worth something."