Law Schools, Money, New York Times, Student Loans, Stupid Lawyer Tricks

Are Law School ‘Merit Scholarships’ A Big Racket?

After the 1L money runs out....

That’s the question essentially posed in a long and interesting New York Times article, Law Students Lose the Grant Game as Schools Win (which we previously mentioned on Saturday; yes, we do post on weekends). The piece is by David Segal, who also wrote a big and buzzy piece back in January, Is Law School a Losing Game?

Segal’s latest article is more interesting than the January one. His January piece, while well-crafted and solidly (if imperfectly) reported, covered ground that had already been covered by many other outlets. Readers of Above the Law, other legal industry publications, or the numerous “scamblogs” already knew that the value proposition of going to law school was very much open to question (to put it mildly).

This weekend’s piece focuses on a less familiar aspect of the law school process, namely, merit scholarships. You might think that these grants, which help law students pay for their education in an age of ever-growing debt loads and skyrocketing tuition, are undoubtedly a good thing.

Well, think again….

Here’s a concise summary of the NYT piece, by Nathan Koppel of the WSJ Law Blog:

[S]ome schools lure top students with offers of merit scholarships that pay thousands of dollars annually. The schools bolster their U.S. News rankings by attracting academic overachievers, but there’s a catch: the students must maintain high GPAs to retain their scholarships, which students often are unable to do partly because schools grade on a curve, thus ensuring that only a small percentage of students will earn the sort of grades needed to retain their scholarship money, according to the Times.

Students accuse some schools of a bait and switch by offering high-paying scholarships without fully informing prospects of the likelihood that they will be able to do well enough to keep the scholarships.

And here’s why some students are so upset, from the WSJ:

If students lose their scholarships, of course, they are in a particularly difficult pickle, because they likely will have to shell out money to complete a degree at a school that they may not have attended but for the now phantom scholarship.

Indeed. The trade-off between scholarship money and prestige is a familiar one for law school applicants. We constantly receive questions from 0Ls that take the form of a choice between attending a lower-ranked school offering lots of grant money and a higher-ranked school offering less money. [FN1]

When you get such requests for advice on where to go to law school, perhaps from a relative or family friend, ask the applicant: Is the scholarship money you’re being offered guaranteed for all three years, or is it contingent upon your achieving a specific GPA in your 1L year? The lesson of the Times article is that this can make a big difference. Just because your LSAT and GPA are above-average for your school’s entering class doesn’t mean that you’ll be an above-average 1L student.

Segal’s piece quotes a number of law students who feel that they were deceived. But were they? In the words of one ATL commenter:

This is not a scam, this situation is a result of prospective law students failing to do their due diligence in researching the terms of their scholarship and the curve at their school. If you can’t do the basic research it takes to find out what the scholarship stipulations are, look at the grading curve, and realize that not everyone who has a scholarship will retain it, then you are a fool and have no business being an attorney. It is shocking to me how little thought prospective law students put into something that will take up 3 years of their lives and put them 175,000 in debt.

Over at Nuts & Boalts, Patrick isn’t buying into claims of law student victimization:

First, of what have these students been deprived? The ability to attend law school for free even though they are ultimately average law students? That hardly strikes me as an entitlement. Remember: students who fail to maintain their grades and lose their scholarships are no worse off than their peers. It means only that they will start paying the same price as everyone else….

(You may say that a student who accepts a scholarship in return for going to the lower-ranked school gives up unique opportunities at the ‘better’ schools that likely accepted them. It’s a fair point — and not explored in the article — but my suspicion is that a student who does not maintain a 3.0 at a lower-ranked school is unlikely to have benefited from the marginal increase in value at a better-ranked school. That’s harsh, I know, but it’s also likely true.)

If you think that was harsh of me, wait until you hear my second observation: at some point, these students (who want to be lawyers — i.e., represent other people’s vital interests) need to read the fine print. A good time to start is when their own careers and tens of thousands of their own dollars are on the line. To be told “all you have to do for $80,000 in scholarships is maintain a 3.0″ ought to make a prudent, college-educated person wonder, “exactly why are they willing to give me eighty grand?” or at the very least, “just how hard will it be to maintain a 3.0 at this place?”

[S]tudents who are offered free money to get good grades, and who lose that money because they end up without them, aren’t victims at all. They’re ordinary speculators who placed a risk-free bet on their ability to compete in an unfamiliar environment, lost, and ended up no worse than the rest of the pack. (Better, actually, because they got that first year for free.)

It’s a very interesting post; read it in full over here.

And here’s a rebuttal to the “caveat emptor” point of view, from another ATL commenter:

Has nothing to do with knowing the terms. It has to do with expectations and a lack of disclosure. Its about where and how that information is presented. There is a difference between having the information available hidden on a website as opposed to placed as a disclaimer right next to your award information, along with a below the curve minimum GPA requirement. And considering the fact that we are talking about disclosure from an institution whose primary function is education, they should be well aware of the importance of the part they can play in shaping misinformed expectations. I agree with you that many of those people have no business being in law school, But don’t you think the Law School should let them know that?

Personally I lean more towards the “caveat emptor” perspective, but I realize that reasonable minds can disagree on this.

We can argue until we’re blue in the face over whether scheming law schools or clueless law students are to blame for this sad state of affairs. It would be more productive, however, to do something about it — which is what the guys over at Law School Transparency are doing. They have submitted a new proposal to the ABA Section of Legal Education that would require schools to disclose certain information relating to scholarship retention. Check it out here (via the ABA Journal).

Regardless of whether one is more sympathetic to law students or law schools in this debate, greater transparency with respect to scholarship retention data seems like a good thing all around. It’s definitely good for prospective law students, so they’ll know exactly what they’re getting into when they turn down a more prestigious law school to accept a “merit scholarship” from a less prestigious one.

And it’s good for law schools, too. If the scholarship letters and law school websites are dripping with disclosures about the difficulty of keeping merit scholarships, when students complain of being “cheated” after failing to make the grade after 1L year, the law schools can say: “We told you all that, clearly and repeatedly, and you came here anyway. Now you have only yourselves to blame.”

UPDATE: The ABA is already looking into requiring law schools to disclose scholarship retention data, as reported by Karen Sloan over at the National Law Journal:

[Loyola-Chicago Dean David] Yellen said that the ABA’s draft accreditation standard likely would look much like Law School Transparency’s proposal — schools would be required to post scholarship retention information on their Web sites or in scholarship offer letters. The committee does not intend to address how merit scholarships are offered or allocated.

“I think this is a significant problem, in terms of maintaining an ethical system,” Yellen said. “Schools get people to come with these scholarship, knowing that a percentage of them will lose that financial support. It’s a funny way to do business.”

[FN1] I faced this money-versus-prestige trade-off myself, when I applied to law school back in the 1990s. I could go to an “H-Y-S” school, paying full freight, or to a lower-ranked but still top 10 school that offered me a free ride for three years. My parents told me to ignore the scholarship offer, saying that they would happily pay for my legal education but would prefer that I go to Harvard or Yale. In the end, I went to Yale, and I’m glad I did. Of course, the choice between scholarship money and prestige is much more difficult for students who have to pay for law school on their own (or on Sallie Mae’s) dime.

When I get asked if someone should go to law school, I sometimes say, “Sure — if you get into Harvard or Yale or Stanford, and someone else will pay for it.” This might sound like a joke, but it’s based on my own personal experience.

Law Students Lose the Grant Game as Schools Win [New York Times]
Proposing a New Standard to Require Scholarship Retention Information [Law School Transparency]
Law Students do NOT Lose the Grant Game as Schools Win [Nuts & Boalts]
Bait and Switch? Law Schools Gain in US News with Merit Scholarships Conditioned on High Grades [ABA Journal]
Are Law Schools Deceiving Students by Offering Merit Scholarships? [WSJ Law Blog]
The Impact of Scholarship Programs on the Culture of Law School [SSRN]
Law schools may be forced to disclose scholarship retention rates [National Law Journal]

Earlier: Quote of the Day: Law School Scholarship Funny Money?
A Notable Correction to the New York Times Article on Law School
Now That the New York Times Acknowledges the Perils of Law School Debt, the Next Question Is How to Recover From the Ruin

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