For a lot of people I know who've gone to law school, I'm not sure it's entirely a delusion. I think the situation is that they find themselves a couple years out of college and still unable to put their BAs in a Humanities field (another area for which supply has greatly outpaced demand) to use. So they're already saddled with a debt they can't really service, and they've already got the B word in their heads. And along comes a really attractive proposition: If you double down on it by going back to school, you catch an immediate break because you get to immediately stop paying your student loans, and wont have to start again until after you've graduated. And sure, after that you'll have even more debt, but there's also a decent (maybe not great, but decent) chance that your new degree will let you land a sweet job that lets you pay them off much more easily and have plenty of money to spare. And even if you only land an OK job, hopefully it'll still be enough to keep your loans covered. . . and if it isn't, hey, no harm no foul. You're already thinking about the B word right now, so even if it turns out you can't handle all the new debt you've taken on it's not like you'll be any worse off than you are now.

Posed that way, I'm not sure what the students are doing is terribly irrational or delusional. What's crazy is the irrational credit system that enables/encourages this kind of thing to happen.