Not the panacea, that is, to the economic woes facing U.S. law schools and the debt predicament of our students. As noted in my earlier post, the key dilemma for law schools engaged in heavy discounting is how to pay for this subsidy. For schools using existing tuition revenue, rather than external sources of cash, they have two choices: Increase student enrollment in order to pay for the discount (assuming here that such discounting is being used as merit aid) or increase tuition. There is a fair amount of research (e.g., Hillman, Research in Higher Educ. 2012 and Martin, Econ. of Educ. Rev. 2002 are two good surveys of the evidence & literature) which points to diminishing marginal returns to schools that engage in discounting. The Hobson's choice looms squarely before law schools who engage in aggressive discounting.
What is interesting, but ultimately unsustainable, is the apparent strategy in recent years of discounting without augmented student enrollment on the JD side and without accelerating tuition (at least in the last few years). So where is the $$ coming from? Augmentations in non-JD enrollments is one clear answer. The question here — and hence the title of this post — is whether such strategies are sustainable in the intermediate & long-run. I predict that the answer will be no, for reasons that warrant a separate, more nuanced, analysis. However, even if and insofar things on the LLM & Masters degree front continue to look rosy, law schools will need to take a hard look at how these enrollment strategies jibe with the overall objectives of the law school and, critically, the complex, dynamic marketplace that is implicated by moving headlong into the non-JD space.
I suppose little should be said here about the tactic of increasing tuition, except to say that it is a fairly bad option, for all sorts of reasons. What is scary is that the perceived imperative of steeply discounting tuition imposes pressure on law schools not to engage in substantial tuition reductions, reductions which we would expect would redound to the benefit of a wider cohort of students — that is to say, all of them! David Yellen's observation at the end of his post that tuition discounting improves well-being of students by lowering their debt load begs the question: Compared to what? Compared to meaningful reductions in tuition? Debt load is calculated as an average. Wouldn't we want to know whether and to what extent debt load on the part of students least able to afford it is decreasing?
One other skeptical comment about the relationship between tuition discounting and student well-being: Such strategies will usually mean ("usually" meaning for all but the wealthiest schools) a reduction in resources being devoted to other worthwhile endeavors within the law school. If we assume that faculty costs are essentially fixed (not a wholly accurate assumption to be sure, but plausible when you factor in the politics of the matter, and also the competitive instinct toward relentless competition among law schools to recruit and retain faculty talent), then what will be shaken loose will be variable costs for, say, student services and other mechanisms of support. It is not that simple, of course. But my small point here is just this: The wealth transfer from the law school budgets to the "best and brightest" has more complicated impacts on overall student well-being than meets the eye.
In the end, I do not mean all of this to be a screed against tuition discounting. Engaging in calculated efforts, through aid, for top students is a common strategy, and increasingly so in this rankings-sensitive environment. And there are in fact some positive aspects for students facing difficult economic conditions and tough choices. But the unintended consequences of such rapid run ups in these discounting strategies — especially on the part of law schools which can scarcely afford to be making such expensive investments in this turbulent environment — warrants more careful analysis, based upon theory and data, and perhaps a bit more caution.