Proposing A New Standard To Require Scholarship Retention Information

For prospectives seeking to make an informed decision about attending law school, the need for consumer information extends beyond disclosing post-graduation employment information. They also need to understand how much the degree will cost. Scholarships, grants, fellowships, and stipends (referred to generally as "scholarships") are increasingly being used to attract stronger students who might otherwise be unwilling to attend a particular program at full cost. Unfortunately, getting honest information about the value of these scholarships can be almost as difficult as figuring out what graduates do after graduation.

The reason for this is that many scholarships are contingent upon achieving a certain level of academic success in law school, either on a semester or yearly basis. And while law schools are quick to point out the number of scholarship recipients or offers made to applicants each year, they are generally silent on how many students retain those scholarships once they're in school and competing for grades on a curve. For this reason we have submitted a new proposal to the ABA Section of Legal Education. The proposal includes a new Standard [509(d)] and a chart [view here (.xls)].

Merit scholarships with strings attached are nothing new. They're also not conceptually problematic when a student knows (or should know) what is required to retain the scholarship. Issues arise, however, when the combination of opaque grading curves and conditions bound to that curve obfuscate the meaning of the terms and limit a prospective's ability to understand the expected value of the scholarship. Even if a scholarship recipient knows what the curve is, the GPA required to retain the scholarship, and that there are others in the class with a similar scholarship, they are still not able to know the real value of the scholarship because they cannot fully appreciate how those facts interrelate. This information is central to computing the price of law school, and the price of a law school is essential to evaluating law schools.

The lack of transparent scholarship retention information is starting to receive more attention: in fact, in addition to our latest proposal (below), it's also the subject of an article in tomorrow's New York Times. [Update: online version. The article also links to Professor Jerry Organ's new paper on the topic. Professor Organ is a member of the Questionnaire Committee; we've previously mentioned his important contributions on that front.]

LST's Proposed Standard 509(d)

(d) A law school must publicly disclose scholarship retention data for all of its students by preparing and posting on its website the attached chart.
 (1) Scholarship retention information shall reflect the scholarship retention data for each student who:
  (a) matriculated in a JD or equivalent degree program at the law school during any of the three previous academic years for full-time students or four previous academic years for part-time students; and
  (b) received a scholarship for all or part of the student's first year.
 (2) The scholarship retention data must be gathered and disclosed in accordance with the instructions and definitions issued by the Section's Questionnaire Committee.
 (3) The scholarship retention information about the previous academic year must be posted on the school's website by October 31 of the following academic year.
 (4) The scholarship retention information posted must remain on the school's website for at least three years.
 (5) Any scholarship information pertaining to the potential scholarship recipient's ability to retain the offered scholarship throughout law school must be disclosed to the potential scholarship recipient in any scholarship offer made.
  (a) The terms of the scholarship offer that are relevant to the potential scholarship recipient retaining the scholarship must be disclosed in plain English to the potential scholarship recipient.
  (b) These terms must be accompanied by scholarship retention information about scholarships with the same material retention terms.
 (6) Any scholarship information the law school discloses must be fair, accurate, and not misleading.
 (7) The term scholarship shall mean any scholarship or grant from internal sources (law school or university).

This proposal lays a foundation for putting better information into the hands of prospective law students. Additional definitions and instructions, either as part of an Interpretation to Standard 509(d) or as part of the Questionnaire Committee's annual questionnaire, will help prevent schools from gaming the requirements and misrepresenting the underlying data.

The Supplemental Chart

The chart referenced in 509(d) [view here (.xls)] aims to show what happens to scholarship recipients during their time in law school. Understanding the chart begins with understanding that, for each anticipated graduation year, the "entering class" is the denominator for the percentage who "began law school with a scholarship or grant." Every other percentage uses the number of students who "began law school with a scholarship or grant" for an anticipated class year as the denominator. After each academic year passes, a school will then report how many of its original scholarship recipients from the entering class lost their scholarships.

A few other notes:

• The "entering class" covers all students who matriculated at the school during the previous three (FT) or four (PT) years. Students who matriculate at the start of law school do not, however, necessarily all graduate on time or from the same school. Some students drop out, transfer, take a leave of absence, or are otherwise unable to continue their legal education.
• The "entering class" figure will never change, regardless of the number of graduates that leave the school. Likewise, students who transfer to the school will never be included in the "entering class." It will also not include those who, for example, earned a scholarship due to high 1L grades or a commitment to public service. Even if a student changes her anticipated graduation year, the original "entering class" number will not change. This rule caters to the need to find a manageable way to collect and present complex scholarship retention data.

This restrictive definition carries consequences, of course. First, schools might look worse simply because people leave their school. But because the goal is to help prospectives determine the expected value of their scholarships, those who "lost their scholarship" should include students who actually lost their scholarship, as well as those who could have lost it but for the fact that they transferred, dropped out, or took a leave of absence. Someone "could have lost" their scholarship when the school could have exercised its option to not provide the scholarship.

In other words, if the scholarship recipient would have had too low of a GPA to retain the scholarship, the school cannot claim that it would have exempted the student from the scholarship requirements had the student not decided to drop out of school. We assume the school would have exercised its option if they could have because a school could have provided a scholarship without strings in the first place.

509(d)(5) Disclosures

In addition to disclosure to all prospectives through the Standard 509(d) chart, schools will have to disclose certain information to the prospective students it has offered a scholarship. This includes scholarship retention information about scholarships with the same material terms offered to the prospective. For example, the school would need to disclose the retention rate for previous scholarships with a 3.0 cumulative first-year GPA requirement.

The 509(d)(5) disclosure requirement recognizes that the statistics in the Standard 509(d) chart aggregate different classes of scholarships, and that a scholarship recipient should be especially concerned with how easily previous recipients retained the same class of scholarship.

Going Forward

We have submitted this proposal to the two committees in the ABA Section of Legal Education: the Standards Review Committee and the Questionnaire Committee. In the near future, we will try to convince the Section to adopt a final version of LST's proposed Standard 509(d).

Please do not hesitate to let us know if you see any unresolved problems with either LST's proposed Standard 509(d) or the accompanying chart.