Sunday, May 1, 2011

The Scam-Economy

Here's a link to a N.Y. Times article on a Law School scam.  It is run by second and third and fourth-rate law schools.  They offer a "merit" scholarship, to cover the cost of tuition, but with the condition that a certain GPA is maintained.  If the student fails to achieve the grade, the scholarship ends, and the student must pay to complete school.  Of course, students are graded on a strict curve, which ensures that a fair number of merit scholarship recipients must lose out.
The students recognize that it is a kind of "bait and switch" game.

Nobody knows exactly how many law school students nationwide lose scholarships each year — no oversight body tallies that figure — but what’s clear is that American law schools have quietly gone on a giveaway binge in the last decade. In 2009, the most recent year for which the American Bar Association has data, 38,000 of 145,000 law school students — more than one in four — were on merit scholarships. The total tab for all schools in all three years: more than $500 million.
It’s a huge sum, particularly when you realize that merit scholarships were exceptionally rare at law schools a mere generation ago. But given that many students lose their grants after the first year, the question is this: What exactly are law schools buying with all of that money?
The article emphasizes that the merit scholarship money is used as a competitive weapon among schools attempting to climb in their U.S. News and World Report rankings, rankings which rely heavily on the statistical character of incoming students.
I classify it as an example of the rise of the scam-economy, because it is an example of deliberately exposing people, who can not bear much financial risk, to increased financial risk.