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The numbers · Lesson 6 of 12

How scholarships really work: the preview

After this lesson, you can pull a law school's 509 disclosure report and check the 4 numbers that tell you whether a scholarship offer is safe or risky.

12 min video, plus notes and 1 practice question below

In this lesson

• Know that every ABA accredited law school must publish a 509 disclosure report every year, and reading one takes about 10 minutes
• Check first-time bar passage rate against the state average first; a school below its own state's average is producing graduates less likely to become licensed than a typical grad there
• Check scholarship retention rate; a rate under 70% means a large share of first-year students lose their scholarship money by year 2
• Check bar-required employment at 10 months out; under 70% means too many graduates aren't landing jobs that actually need a law degree
• Compare median debt against realistic starting salary for that school's graduates; if debt outweighs salary, the math doesn't work over a decade of repayment

Why a 509 report matters more than the offer letter

A student was offered $60,000 off his first year of tuition, conditional on maintaining a 3.0 GPA. Before deciding what that offer was actually worth, it's worth pulling up the school's 509 report, the disclosure document every ABA accredited law school has to publish every year. It takes about 10 minutes to read.

In that particular case, the report showed a scholarship retention rate under 40%, meaning more than 60% of first-year students at that school lose their scholarship by year 2. The first-time bar passage rate was 51.5%, and the school's 2-year ultimate bar passage rate was 76.2%, barely above the 75% the ABA requires to keep a school accredited. The school had come off ABA probation the year before by 1 percentage point. None of that shows up on the scholarship offer letter itself. It only shows up in the 509 report, which is exactly why reading it before enrolling matters as much as reading the offer letter does.

The mechanism behind conditional scholarships

A school with weak outcomes can use scholarship money and careful language to draw in students who might have gotten stronger aid at a school with better outcomes. The grading curve is often built so that a predictable share of students lose the scholarship by year 2, which is usually the point where most students are too far into the program, financially and in credits earned, to walk away easily. So they stay, borrow more to cover the now-higher cost, and graduate into a tougher job market for that degree than the offer letter implied.

This pattern isn't limited to one type of school. It can show up at a school known for its size, a school in a specific city, or a school with a strong brand in one practice area. The pitch always sounds a little different, but the underlying mechanism, a conditional scholarship tied to a curve engineered to knock a predictable share of students off it, stays the same. The fix is the same regardless of which pitch you're hearing: check the numbers behind it before you sign anything.

The 4 numbers to check in any 509 report

First, first-time bar passage rate against the state average. If a school falls below its own state's average, its graduates are less likely to become licensed lawyers than the typical graduate in that state. Second, scholarship retention rate. Anything under 70% means your offer might not survive to graduation. Third, bar-required employment at 10 months out. Under 70% means too many graduates aren't working in jobs that actually require a law degree.

Fourth, median debt against realistic starting salary for that school's graduates. If the debt outweighs the salary, that's a gap you'll feel for a decade or more of repayment, no matter how good the scholarship offer looked on the day you got it. Every ABA accredited school's 509 report is available on the ABA's required disclosure site, and pulling all 4 numbers for a single school takes about 10 minutes once you know where to look and what to compare each figure against.

Put it to use before you sign a loan, not after

Run these 4 checks on every school on your list, not just the ones offering the biggest discount. A large scholarship number means little next to a weak retention rate behind it. If a school makes its numbers hard to find, treat that as information on its own, the same way you'd treat a career services office that won't share its recruiting numbers.

This is a preview of a much deeper topic. A full breakdown of how to negotiate and compare scholarship offers gets its own place later in this course. But even this 10 minute check protects you from the most common mistake applicants make with scholarship offers: judging one by the size of the discount instead of the odds behind it.

The short version

• Before comparing scholarship dollar amounts across offers, pull each school's 509 report and check the retention rate first. A bigger number tied to a low retention rate is often worth less than a smaller one you can actually keep.
• Treat any retention rate under 70% and any bar passage rate below the state average as flags that need an explanation, not numbers to skim past.
• Run the same 4 number check on every school on your list, including the ones you're already excited about. A strong reputation doesn't guarantee strong numbers in the report.

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