Saturday, April 30, 2011

Law Students do NOT Lose the Grant Game as Schools Win

New York Times business writer David Segal is fast becoming journalism's expert on law students and law school. That's good, because we need one -- although I love David Lat, that blowhard Elie Mystal at Above the Law has been a pretty sorry oracle. Segal, in case you don't know him, is the author of January's excellent and on-point article entitled "Is Law School a Losing Game?" Over the weekend, he published another detailed piece entitled, "Law Students Lose the Grant Game as Schools Win."

This weekend's piece points out something that most lawyers and law students either know or intuit, which is that lower-ranked law schools attempt to boost their U.S. News & World Report rankings by using merit-based grants as a carrot to entice students with high LSAT/GPA's. In a typical arrangement, the student is allowed to keep a partial or full scholarship through all three years of law school, contingent on the student's ability to maintain, say, a 3.0 GPA. If the student fails to do so, the grant or scholarship goes away and the student begins paying the same price as his or her peers. Because schools know that the grade curve means not all of these students will be able to maintain the grades they need, the schools are able to offer more three-year scholarships than they will in fact pay for three years. In short, the thesis of Segal's article is this: students "lose the grant game" because although everyone who accepts a grant or scholarship enters law school expecting to graduate with a high GPA, not all do; law schools "win the grant game" by using students' irrational optimism about their own scholastic abilities to advance the school's status in the rankings. Although it is true that both sides are gambling (students on their grades, schools on the rate of grant-program attrition), in Segal's view the house (i.e., the school) generally has better odds because it both set the grade curve and holds crucial data, like the average number of students who lose their scholarships each year. As a result, the casual reader of the article comes away with the nagging feeling that students are victims, and that schools are engaging in what can only be called exploitation.

I don't buy it. I do buy that 'average' schools use this tactic to purchase entice 'above-average' students. And I do buy that some, perhaps many, grant-getters experience unexpected and genuine hardship when they start paying full tuition because they are unable to maintain their GPA's. What I don't buy is that these particular students are victims of their law schools.

Here is why. 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. Put another way, a student's decision to accept this type of scholarship is really a risk-free bet on their own ability -- win, and get free money; lose and be no worse off than their non-betting peers. (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 benefitted 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?"

So, there's my take on Segal's latest article. I think that in this case he's barking up the wrong tree. I do appreciate the attention he is paying to law schools and to the plight of law students who are currently being ground to pieces by the current, cruel shift in supply and demand in the market for young lawyers. Many law students are victims. Some are victims of schools' promises about employment. Some are victims of the great shrinking economy of the late 2000's. Some are victims of their own apathy ("well . . . might as well go to law school") or of their own inability to critically examine a dominant cultural message ("a law degree is versatile and will always have value"). But students 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.) I realize people will disagree with me. Or worse. That's okay. I do feel for students who made a prediction about their future, and even acted in financial reliance upon it, only to find themselves somewhere they never planned to be. But in my view that experience, however painful, doesn't necessarily mean they are victims of their law school.

Anyway, part of what I hope this post does is shed some light on whether students at Boalt feel our own school's financial aid practices are predatory. I have my own views on this (and in light of the above they may actually surprise you) but I hope to hear first from the anonymous masses. Fire away.

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31 Comments:

Anonymous Anonymous said...

Agreed for the most part. This is award money with crystal clear terms. Many law students did this in college, and as long as the curve %s are available the student is/should be an informed buyer.

My only complaints re. Financial Aid Office here at Boalt is the speed with which they disperse our hard-borrowed dollar$.

5/01/2011 1:35 AM  
Anonymous Anonymous said...

Also agree. I think what is shocking or at least leaves a bad taste in students' mouthes is the fact that the law school they have chosen to attend--in a decision that may have felt to them like the crucial decision to marry a particular person--is playing them. It's unsettling to be caught in a situation that you thought was created in good faith, only to find out that the school was gaming the same students they appeared to be infatuated with. Naive? Yes. Unsettling to the naive and even those watching from the sidelines? I think so.

Thanks for the thoughtful post. I look forward to other comments.

5/01/2011 9:13 AM  
Anonymous Anonymous said...

Patrick,

You make some good points, but I'm not sure I am with you all the way.

At least some students would not have attended law school at all if not for the scholarship. So it isn't as though every student in question placed a "risk free" bet on themselves.

Furthermore, while I agree students should read the fine print, this doesn't mean that the schools are in the clear. One thing that may not occur to students without law school experience is how the strict, often brutal curve works. And students may not realize that schools give out scholarships knowing that their curve makes it mathematically impossible for everyone to make the cutoff. The article makes it pretty clear that some schools are very evasive with this information.

I'm not saying that these students should have a cause of action or claim against their law schools. But I also don't think that schools are doing the right thing in the way they disclose this information.

Let's not kid ourselves. Many of these schools made conscious decisions to structure their offers in these ways and to provide limited or no information about their curves. They did so with the full knowledge that the risks would not be apparent to many students.

If you tried something like this while trying to sell a car, a security, or insurance, you would certainly run afoul of consumer or investor protection laws.

5/01/2011 9:56 AM  
Anonymous Anonymous said...

Any law school outside the First Tier (that isn't the only law school in the state) is a complete scam, and anyone who attends these schools is literally burning money. People are graduating Boalt and are unable to find any work, what kind of chance does someone have from one of these places?

The Government needs to stop federal funding for student loans to these places. Want to know why you are paying an absurd 8.6% interest rate? Because you are subsidizing these third tier students who will certainly default on their loans.

These schools are no different than criminal enterprises. They sell a product worth literally nothing and don't give a crap because they get their federal funding up front, does not matter that these students will never have a chance to actually become lawyers.

5/01/2011 10:13 AM  
Blogger Patrick said...

9:56, isn't this a little different than consumer or investor protection? A merit-based scholarship is more like a gift or a contest than it is a sale. And you can do pretty much whatever crazy thing you want with gifts or contests -- witness Oprah and The Amazing Race.

I agree that the students who wouldn't attend school without the scholarship may present a different story. Though I doubt there are many of them (the vast majority of people who decide to go to law school, apply to law school, and are admitted to law school, willgo to law school) but with respect to those that do exist, I guess I fall back on "read the fine print" or at least "ask how hard will this be?" before jumping in with both feet. It's still hard for me to see them as victims of their school, and not of their own decision making.

5/01/2011 10:37 AM  
Anonymous Anonymous said...

10:13--could you give an example of one of these schools where students *literally* burn money? I've heard of bonfire rallies and the like, but never of a law school where students actually set paper currency on fire.

5/01/2011 10:58 AM  
Anonymous Anonymous said...

Patrick, isn't it exactly the nub of the problem that most people who apply to law school and get into law school will go to law school? If the market for law students more accurately reflected the needs of the legal job market, one would hope that many fewer people would actually apply or attend. Instead, prospective students read false reporting in U.S. News or they hear the magic words "merit scholarship" and they think "other people make it work; so can I." The truth for someone not in the top 25% of their class at Golden Gate, sorry to say, is that they probably can't.

I think I agree that the blame doesn't lie solely with the schools, which are in a competitive environment and have to reshuffle their revenues and expenditures to stay competitive. This is just an argument for outside regulation--like consumer protection laws--to keep law schools from racing to see who can hide or distort the most information. The fact that the ABA hasn't done anything about this--or to strip the mantle of credibility from U.S. News--makes me wonder if it still makes sense for the law to be a self-regulated profession.

5/01/2011 11:12 AM  
Anonymous Anonymous said...

Patrick,

9:56 here. I'm not sure your analogy is apt.

A gift or a prize is not typically tied to the offer of services or a product. In fact, in most states it is illegal to tie a prize to the sale of a product. That's why you see all those "no purchase necessary" disclaimers.

But even disregarding the law, I don't think most people think of a prize as something they get as long as they also pay for an expensive service or product.

If Toyota offered you a lease on a car with $2000 off each a year so long as you fulfilled certain conditions, you wouldn't really characterize that as a "prize." Instead you would think of it as a valuable discount on your purchase.

If Toyota attached conditions to this "prize" that were difficult to meet, you can be sure the law would place disclosure obligations on them.

If, on the other hand, the law schools (or Toyota) offered you the money AFTER you had already made your decision to attend that school (or buy that car), that would be a real award or prize.

My basic point is that monetary awards designed to induce you to buy a product or service are not "prizes" but "discounts."

That said, I agree with you that these students should have read the fine print or asked more questions. But this doesn't mean that what the schools are doing is ethical.

For more on reading the fine print: see the latest South Park episode, HumanCentiPad.

5/01/2011 11:19 AM  
Anonymous Anonymous said...

10:58,

Stop being a douche. You know exactly what 10:13 meant.

Also, look up the word hyperbole.

5/01/2011 11:21 AM  
Anonymous Anonymous said...

11:21, I am shocked and dismayed at your lack of concern for feminine hygiene.

5/01/2011 11:41 AM  
Anonymous Anonymous said...

I love 10:58

5/01/2011 11:48 AM  
Blogger McTwo said...

I know one game I did win: not having to enter a captcha in order to post on Nuts & Boalts!

One other thing to consider about these sorts of GPA reqs: this is the same as most undergraduate merit scholarships. It isn't as if the system suddenly changes at the law school level, people just overestimate their own prowess. That is why going to the best school one can rather than the school which offers the most money
(traditionally) is the most risk averse choice. When I made my decision to go to school, one of the factors I considered was how I would fare if I was at the bottom of my class. Someone who chooses to go to Golden Gate on a full ride likely did so thinking they would be near the top of their class.

5/01/2011 11:52 AM  
Anonymous Anonymous said...

McTwo,

The system does change at law school--that's the whole point. Most undergrad institutions do not have strict curves and an average student will be able to pull of a 2.8 or a 3.0 if they try. Many lower ranked law schools have brutal curves. Students do not understand this. They should, but they don't. And law schools are not eager to publicize this information in their brochures.

There are also dark rumors of "section stacking." I doubt these rumors are true, but they sound plausible. According to these rumors, some law school will sometimes stack sections with their merit scholars. This ensures that many of these scholars will be forced off the scholarship by the curve.

Students erroneously think that admissions officers and financial aid officers are on their side will be candid about their prospects. This isn't true. Students need to realize that a decision to enroll in law school is one of the few remaining transactions that is truly caveat emptor.

5/01/2011 12:58 PM  
Anonymous Anonymous said...

What this article also avoids/ignores is that some schools are known to stack sections with all of their scholarship students. This ensures that some students have to lose based on the curve.

5/01/2011 1:28 PM  
Anonymous Anonymous said...

1:28 can you elaborate on your statement that "some schools are known to stack sections with all of their scholarship students"? This is a serious allegation. Are schools really "known" to do this, or only are there only rumors? If some schools are known to do this, which schools are they?

5/01/2011 1:36 PM  
Anonymous Anonymous said...

I have heard that many of the lower-tier New York schools do this: Cardozo and Brooklyn come to mind - but I'm absolutely not sure. It's obviously difficult to get solid confirmation of this.

5/01/2011 2:29 PM  
Anonymous Anonymous said...

Patrick grants that many of these students would have attended higher ranked schools if they knew their actual chances of keeping the scholarship. Thus, his argument depends on students being dumb consumers because all relevant information being available when they decided to accept their scholarship.

But the schools don't provide their grading curve in scholarship offer letters or provide statistics on what percentage of students keep their scholarships after the first year. I think if school’s provided more information to scholarship recipients Patrick would have a point. Unfortuantly, they don’t provide the complete picture.

5/01/2011 3:31 PM  
Anonymous Anonymous said...

Perhaps we should not be so quick to criticize other schools when our own school eliminated LRAP behind the scenes (and let's not call the crap the 1Ls are getting LRAP, it's a ten year period of indentured servitude), yet we all have no problem ourselves telling the prospective students how awesome our pub interest support is.

We play the same game every other school plays, we lie to students because whoever actually tells the truth will lose out to those who lie. It's basically the law school "game" and people shouldn't be shocked at things like this when even we are playing it.

5/01/2011 3:43 PM  
Anonymous College Papers said...

Nice post.I am highly impressed.

5/01/2011 11:41 PM  
Blogger McTwo said...

Thanks, spambot. Your input is greatly appreciated.

5/02/2011 9:02 AM  
Anonymous Anonymous said...

Some schools stipulate that you must rank in the top 50% to maintain your scholarship. I don't have a problem with that at all -- it is a 'Merit' scholarship, after all. The question is, what happens with the funds taken away from students who don't meet that threshold? Is it re-awarded to students who performed well and didn't get a scholarship? If so, then this is really a non-issue.

5/02/2011 9:52 AM  
Anonymous Anonymous said...

Can someone explain why 1Ls are so pissy about LRAP? It's working fine for me.

5/02/2011 11:57 AM  
Anonymous Anonymous said...

No. No, the GPA requirement is not clear. An decent school puts the GPA information in your acceptance letter, without making you dig. The school I currently attend did that. The GPA requirement is IN the scholarship letter. Another school that offered me a scholarship did not. I didn't find out what its GPA requirement was until I read the NYTimes article. It wasn't in the papers given to me then, and it's not on their website now. I would have had to accept the scholarship before learning the terms of it, and for six figures in tuition, I don't want a freaking box top contract. Diligence is diligence, but the terms shouldn't be buried in a broom closet in the basement of your law school.

5/02/2011 12:02 PM  
Anonymous Anonymous said...

Unless someone has clear evidence of school X stacking its sections, it is contemptible to link a statement such as "I've heard [rumors] that it's done" with the name of a school.

5/02/2011 12:39 PM  
Anonymous Anonymous said...

It is very rare that I agree with Patrick. I do here.

I transferred to Boalt from a Southern California second-tier school ("2TLS").

I did not get into Boalt as a 0L; nor did I get into USC, UCLA, or a number of other T20 schools. But apparently 2TLS thought I was a catch, and offered me a $20K scholarship if I kept my GPA above 3.0.

Well before law school, I learned that 2TLS had a very strict curve, and that to graduate in with a 3.0 GPA I would have to be in the top 40% of the class. This was not difficult to find out. Most of my classmates who also received merit scholarships had also done this research.

I agree with Patrick with his admittedly harsh statement that a person who cannot finish his first year in the top 40% at a second-tier school will probably do worse at a higher-ranked school that accepted him or her, and the monetary effects of such a decision would be negligible.

I did suspect -- as did some classmates -- that 2TLS did "section stacking." Many of my sectionmates had received such scholarships.

This would not be very difficult to investigate, if there was cooperation between students, given the average law student's aptitude with Surveymonkey.

My analysis is that without evidence of section-stacking, this is a non-story.

5/02/2011 1:33 PM  
Anonymous Anonymous said...

I guess I won my grant bet.

I turned down 5 T-14 schools to attend a top 25 school on a full ride without a GPA stip. I will graduate with no debt. Turned down even a rank 15-20 school on a full with a GPA stip for this reason.

Not all of us soon to be JD's are losing to the law schools. Some of us take advantage of the law schools themselves. I could care less about USNews rankings, but thanks to them I get a free meal.

5/02/2011 1:45 PM  
Blogger Armen said...

If you COULD care less, then why don't you care less?

5/02/2011 1:48 PM  
Anonymous Anonymous said...

I am amazed by people who think GGU (or others like it) isn't section stacking because, well, there's no proof and it's all silly rumors. You won't get data for this kind of thing. You won't get your so-called facts. Just like for law firms "known" to be sweatshops etc. It's all based on rumors and that's all we have to work on.

For what it's worth, I know two GGU students and a USF student and they both claim section-stacking. Ditto for NYLS and Cardozo (I just know one person each going there, though). Don't know about Brooklyn, but I won't be surprised if someone going there tells me about section stacking.

5/02/2011 4:38 PM  
Anonymous Anonymous said...

What incentive do the schools have to not section stack?

5/02/2011 10:11 PM  
Anonymous Anonymous said...

thanks for the post, patrick.

a thing i find tricky about all this is that collectively, we know that a large number of people getting GPA-dependent $$$ are going to lose. just like, of course, we know that a large number of people playing poker in a tournament are going to lose.

but how do you advise someone not to gamble on their own ability? or perhaps more accurately, how do you get people who don't have a very clear sense of what the law school process is like (due to a somewhat curable lack of information) or a very clear sense of how they will fare relative to their peers (due to a rather incurable lack of experience...I mean, who really has any clue until they start to get grades back) to "accurately" evaluate their risk tolerance when it comes to gambling on themselves to do well?

how, especially, do you convince them that this should be part of the calculus when, continuing the disjointed analogy, they have fared pretty well in blackjack tournaments in the past? (blackjack "skill" might be a loose predictor of poker success, but it's far from a guarantor.)

how "smart" you think you are, assuming critically that you are rational and honest with yourself, based on college and general life experience obviously correlates at least a little bit with how well you can hope to do if you work hard in law school, but it just as obviously is not a perfect or even very good predictor, EVEN IF you attend a law school that is among the least selective you got into because they are offering you $$$.

the reason I raise this angle is because I think so much of the problem now is that even though so many people (current law students, recent alums, thoughtful professors/administrators, national media, etc.) are very aware of these problems, we have yet to figure out how to get prospective law students to appreciate the true contours of the decision they have to make. i think this would be a critical issue even if schools suddenly decided to openly disclose things like GPA data, curve information, etc.

i had a situation recently when a friend of a friend asked me whether he should accept a full (or nearly full) ride from a very low-ranked law school or try to get in off the WL at a top 20 school. i didn't think the right thing to do was to say definitely do X or definitely don't do Y, but it was incredibly difficult to try to paint a thorough picture of the nature of the decision between X and Y.

5/02/2011 11:56 PM  
Anonymous Anonymous said...

isn't this the site that cracked the mystery about the lottery for picking courses?

at any school where section stacking is suspected, can't the students gather data on the rate of students in each section that got some scholarship money? students will have an incentive to share that simple fact, i think. they have an interest in learning whether they're playing a stacked game. if there are a lot of that kind of students and if over half of the scholarship money is in one of four sections, the odds it was random are likely to be vanishingly small.

5/03/2011 4:19 AM  

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