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Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Saturday, April 5, 2014

The Ethics of Law School Merit Scholarships

MeritForbes:  The Ethics of Law School Merit Scholarships, by Michael Krauss (George Mason):

What can be wrong with giving scholarships to the meritorious?  A meritorious society is a just society, right?  Giving money according to “worth” seems way better, ethically, than giving to the well-connected, or to those of a favored race or religion, right?

Well, maybe.  But then again, sometimes maybe not.

The problem of law school merit scholarships is a complicated and nuanced one, especially for those who have not considered it at length.  In brief, here are five background points underlying the ethical conundrum I will subsequently sketch out:

  1. Law Schools, like car dealerships, have list prices for their wares.  ... 
  2. But in reality not everyone pays list price. ... Law Schools always want to attract the “best” students, and one way to attract them is to price discriminate, i.e., to offer discounts from list.
  3. U.S. News and World Report rankings are so influential that they have become the cart driving the law school admissions horse. USNWR has homogenized our understanding of student value. ... The higher the median LSAT and GPA scores of the admitted student body, the higher a law school’s ranking will be. ... Rising ranking thus stimulates a “virtuous circle” while falling ranking leads to a “vicious circle” that, if left unattended, can result what some fear to be a “death spiral.”  Buying better students is one attempt to move from a vicious circle to a virtuous one.
  4. Today, law jobs are quite hard to come by for many law school grads, and law school tuition as risen so high during the boom years that many grads are saddled with student loans they have great difficulty repaying.  ...
  5. In our increasingly meritorious nation, the cream has often already risen to the top.  The wealthy tend to be smarter and better educated than the poorer – and they tend to have children who are smarter and better educated than are the children of poorer parents.

These five factors play out in predictable ways.  At super-elite law schools (Yale/Harvard/Stanford, etc.), virtually all students have stellar LSAT and GPA scores.  Those with such scores are willing to pay list price for the experience, the contacts and the credential these Brahmin schools provide – and these schools can therefore eliminate merit scholarships and admit selectively based on criteria other than LSAT and GPA.  [Did you rise from humble beginnings?  Did you overcome your physical handicap and climb Everest, writing a Pulitzer-winning account of your exploit?]  But at most schools, merit scholarships will be offered to the high LSAT and GPA scorers among applicants to that school.  Most schools must pay to lure those scorers away from other, equally or possibly higher-ranked schools that are bidding for their attendance.  And those merit scholars will tend to be more intelligent and from tonier zip codes than lower-ranked admittees to the same law school. ...

The upshot of all this is that, at most law schools, price discrimination results in poorer, less well-educated students “subsidizing” (paying higher tuition than) richer, better-educated students.  For their subsidy, poorer students are penalized a second time at graduation – because the subsidized richer students will tend to finish at the top of the class and get better paying jobs, while the poorer students will find it harder and harder to find employment to pay for their higher student loans.  Thus are  “list price” payers made to seem to be chumps over and over again, while the recipients of merit scholarships laugh, as it were, all the way to the bank.

This looks in many ways like a classic regressive tax. ...

Law professors are, for the most part, lawyers, and we are bound ethically to make access to our profession accessible to qualified and interested people.  Have we done this by setting up a system that transfers resources from the more to the less needy? If so, perhaps we need to rethink what we are doing.

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I ain't got no fancy book learnin' in economics, but Wikipedia says "price discrimination" happens when you sell the same product with the same cost of production to different folks for different prices. But students with lower LSATs have a higher "cost of production" for the school because they bring down the reputation, hence they are charged a higher price. Hence no price discrimination. If only we had someone from George Mason where they know economics real good to help us!

Posted by: profess2impress | Apr 5, 2014 10:21:47 AM

"we are bound ethically to make access to our profession accessible to qualified and interested people."

I disagree. No individual is required to spend his own money or time for the benefit of others wanting to enter his profession, and no individual is entitled to perform charitable acts with other people's money.

A law school is a business, and survival comes first. Cosmic fairness to students should be addressed by government aid, not by compromising the finances of the school.

Posted by: AMTbuff | Apr 5, 2014 11:22:56 AM

I went to a Tier 3 school on a full ride. I could have T50 for full tuition. Ooch that would have hurt.

As long as schools compete, the system will continue. It on the students to decide how much risk they want to take. Now if they’re isn’t data out there to make a good decision, then that’s on the schools. But that aside, you can’t whine too much, when things don’t go your way once you’re in school.

Posted by: mc | Apr 7, 2014 6:12:26 PM

The notion that children can be given a leg up in life by their parents is a national outrage. Because it is impractical to expect some parents to stop doing this, it is imperative that we re-order our public policy to address the problem. Accordingly, I propose that we migrate responsibility for our public education to the federal government, prohibit private schooling, and expand the school day to 12 hours. This, along with reasonable screening of our teachers for orthodoxy, will help minimize the unfairness at least until society matures to the point where all parents are equally inept and indifferent. Obviously religious nuts and other reactionaries will oppose this, but we must do it for the children.

Posted by: Mike Petrik | Apr 8, 2014 8:51:02 AM