Competing for Students, Law Schools Turn to Tuition Discounting

By Allie Bidwell, Communications Staff

Tuition discounting – giving institutional aid to lower the net price of college for some students – is a well-documented practice among higher education institutions at the undergraduate level. But graduate and professional programs – particularly law schools – are also using the tactic as a way to attract and retain competitive students amid dwindling enrollments.

A new survey from AccessLex Institute and the National Association of College and University Business Officers (NACUBO) analyzed tuition discounting practices at 36 private nonprofit law schools across the country, and examined the effect it has had on the schools’ finances. The groups made sure to emphasize that due to the small sample size, the results of the study may not be representative of the entire legal education field. However, the survey provided data that can be used as a starting point for future research and policy discussions, they said.

Whether focusing on all law school students and just first-year students, the percentage that received institutional aid increased between the fall of 2015 and the fall of 2016 – from 65 percent to 67 percent for all students, and from 71 to 73 percent for first-year students. In most cases, the average award to students also held steady or increased, except for students enrolled at institutions classified as “low tuition” schools.

"The increased prominence of tuition discounting fosters a need to know more about the practice," said Aaron Taylor, executive director of the AccessLex Center for Legal Education Excellence, in a statement.

Overall, the survey found that tuition discounting increased at most responding institutions between the fall of 2015 and 2016, which resulted in a decrease in net tuition revenue. The institutional discount rate for all JD students – institutional grant aid expenditures as a percentage of gross tuition and fee revenue – increased from 35 percent to 39 percent overall. The institutional discount rate increased from 33 percent to 38 percent at institutions classified as “high tuition,” and from 37 percent to 39 percent at those classified as low tuition.

"These results are just the first step in helping us to better understand the effects of institutional grant aid expenditures on law schools' overall finances," said John Walda, NACUBO president and CEO, in a statement. "We now have a baseline from which to launch further work that can be used to study the role of financial aid in recruiting and retaining new professional students.”

The survey also measured tuition discounting by the student discount rate – the percentage of the tuition and fee sticker price covered by scholarships and grants. Overall, that rate increased from 47 percent to 48 percent between 2015 and 2016. At high tuition institutions, it increased from 45 percent to 46 percent, and at low tuition institutions it remained steady at 50 percent.

Both the institutional and student discount rates were noticeably different when only looking at first-year law school students, or 1Ls.

Across all 36 responding institutions, the average institutional discount rate for 1Ls decreased from 46 percent to 41 percent. The discount rate at high tuition institutions remained relatively stable at 41 percent to 42 percent, but declined significantly at low tuition institutions, from 51 percent to 39 percent. Likewise, the student discount rate for 1Ls was higher than for all students, but decreased from 58 percent to 50 percent. The rate remained relatively stable at high tuition institutions, but sharply declined at low tuition institutions, from 66 percent to 50 percent.

Net revenue from tuition and fees per JD student overall generally decreased, while the net revenue per 1L student increased. The vast majority of schools said they believed their tuition discounting practices would be sustainable for the short-term (47 percent) or for the long-term (47 percent), but 6 percent said they felt they were not sustainable. Among high tuition schools, that percentage increased to 11 percent.

"The trends covered in this study suggest that many law schools may be facing decreases in net tuition revenue, while others have not felt as much impact or have found strategies to mitigate the impact," the report said. "There is some evidence to suggest that law schools may want to change their tuition discounting practices in some way, and changes may already be occurring."

 

Publication Date: 10/31/2017


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