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October 01, 2015

Tuition Discounting and Consumer Education

Barry A. Currier
Managing Director of Accreditation and Legal Education

Deans Dan Rodriguez and David Yellen recently have written on the Law Deans on Legal Education Blog about tuition discounting, the practice of providing a reduction in the stated tuition (the so-called sticker price) to a student as an inducement to accept an offer of admission to enroll at the school making the offer. This is an important matter for legal education. The better the data on discounting (and its mirror image – net tuition paid), the more informed and intelligent a discussion about it will be.

Yellen began the conversation with a post flowing from an Inside Higher Education report that freshmen at private colleges and universities in the Fall 2014 received, on average, a 48% discount rate off the stated tuition. This is a 10 percentage point and 26 percent increase in the discount rate over the last decade. Yellen speculated that this rate was likely close to or above the average rate for legal education and that discounting in law schools was also on the rise. The IHE piece further reported that 89 percent of first-time, full-time college enrollees received at least some discount. Only a very small fraction of new students at these schools, apparently, paid the advertised tuition.

Rodriguez agreed that the matter deserves attention. But, he reminded us, we do not know the average discount rate for any school, at least through the data currently collected by the ABA. Further, we know much less about how discount dollars are distributed, at both the local and aggregate levels, including the role that financial need plays in how they are awarded.

There certainly are limits to what we can know from the way the ABA collects data on “grants and scholarships” as it is called. The Standard 509 consumer information that schools are required to post reports a median grant amount for those receiving aid, not the average; it provides rough cuts on how many students received grants by level of award (e.g., “full tuition,” less than ½ tuition”). But the data collected and the way it is published have remained static for many years as law school practices have changed.

Nonetheless, the data we do have provide a basis for some analysis, which the recently released ABA Task Force on Financing Legal Education Report (at pages 24-31) undertook. From the report, it is fair to assume that discounting is growing in law schools at or beyond the rate of growth reported for private undergraduate schools reported above.

Importantly and not surprisingly, the level of discounting varies with the strength of a law school’s entering class (measured by median LSAT scores). The higher the LSAT median, as a general matter, the lower the discount rate. Further, the Task Force Report noted that the percentage of students paying full price has decreased, similar to what is taking place in the undergraduate space. The percentage of law students receiving a discount is not on a par with the 89% figure reported for undergraduate schools, but that percentage for law students has increased from ~42% in the 1999-2000 academic year to ~62% in the 2013-2014 academic year.

Should more specific and comprehensive information about tuition discounting be collected and reported? Would reporting the average discount rate or average net tuition paid by a student at a school be helpful or should there be finer-grained reporting of discounting to provide greater insight on how and to whom schools distribute these awards? Could we arrive at a definition of “discounting” or “net tuition” that would work across the board for all law schools, public and private? Wouldn’t it be more useful, for example, for applicants to have a verified and consistently reported average discount or net tuition paid figure to compare to what a school is offering them?  

Schools may consider this information proprietary, but the fact that the ABA does not report more about discounting and net tuition paid does not mean that information is not out there. The question is whether the information that circulates is reliable, verified, comparable, and consistent information. Students and law school admissions staffs know that there are a plethora of blogs, bulletin boards, and other ways in which students trade information about the deals they are being offered:

Dear Bulletin Board: I am a 3.6 Poli Sci major from an Ivy League school with a 163 LSAT. I have been accepted at two law schools. Outstanding Law School #1 offered me a scholarship of $X, guaranteed for 3 years. Outstanding Good Old Major State U. offered me a guaranteed free ride for the entire J.D. program.  What should I do? What are others’ offers looking like?” Signed, Just Wondering.

Dear Just Wondering: I have a 3.5 from another Ivy League school and a 166 LSAT. Outstanding Law School #1 offered me $X+Y for three years. Signed, Don’t Know Why They Love Me So Much, But I’m Glad They Do.

Phone message left on Dean of Admissions at Outstanding Law School #1: This is Just Wondering on the line. Please give me a call at your earliest convenience. I am very interested in your school, but I have another very good offer from another school that I am seriously considering. Can we talk?

Given the importance of this information to students, law schools, the profession, and the public, would it make sense for the ABA to move toward collecting and more explicitly reporting more data about discounting? Is doing so, in fact, necessary and appropriate to be true to the spirit of Standard 509 that consumers should have complete, accurate, and not misleading information about law schools. As both Deans Yellen and Rodriguez suggest, this may be a conversation worth having.

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