Law Schools

S&P revises outlook for Albany Law School, citing enrollment drop

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As fewer students apply to law schools, some of those institutions are struggling to maintain enrollments—a problem reflected in a revised Standard & Poor’s outlook for Albany Law School.

S&P has revised Albany Law School’s outlook from BBB/positive to BBB/stable. The Albany Times Union reported on the change in a story published last week. In a report on the school’s outlook, S&P cites lower enrollment and applications, resulting in a 2 percent drop in net tuition revenue.

Albany Law School is one of five stand-alone law schools rated by S&P, according to Jessica Matsumori, a higher education director at S&P. Most law schools that are analyzed by S&P are reviewed in conjunction with a rating for an affiliated university, and they represent a small portion of the overall rating.

Headcount at Albany Law School decreased by 12 percent to 615 in the fall of 2012 compared to fall 2011, after decreases of 5 percent in each of the previous two years, the report says. The school told the Albany Times Union it currently has 617 students enrolled. School officials are planning to lower the target number for the entering class next fall to 130 students, a drop of almost 50 percent from previous targets of 250 students, the report says.

The stable outlook reflects S&P’s opinion that the school has “healthy financial resources” and will stabilize enrollment, according to the report. The school had a $2.3 million surplus in fiscal 2012 “due to conservative budgeting.”

Albany Law School is affiliated with Union College, but it is a separate financial entity. “We recognize the industrywide downward trend in law school enrollment is due, in part, to the economy,” the report says. “We, however, believe the demand profiles of stand-alone law schools, such as Albany Law School, face greater risk than law schools financially supported by a larger university system.”

The only stand-alone law school with a downgraded rating was the Thomas Jefferson School of Law in San Diego, given a downgraded BB/negative rating in June 2012. The report for Thomas Jefferson says the law school had nearly $133 million in debt after a move to a new campus. The school’s enrollment had increased in part due to financial aid, creating a “rising tuition discount rate.” On the positive side, the school had a history of operating surpluses and a dean who was professionalizing the institution.

The other stand-alone schools rated by S&P have held their ratings. They are New York Law School (given an A-/stable rating in January 2012), Brooklyn Law School (given a BBB+/stable rating in July 2012), and Thomas M. Cooley Law School (given a rating of BBB/stable in June 2012).

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