LSAT Test Registration Fee Increase: Why?

The Law School Admission Council has jacked up the LSAT test registration fee from $139 to $160 for the 2012-2013 admission cycle.

And, strangely enough, LSAC has acknowledged that the increase is in direct response to the recent drop in law school applicants and LSATs administered.

In a normal, well-functioning market, when demand decreases, prices drop accordingly.

However, when it comes to the fees associated with attending law school, the reverse is happening.

What's going on?

The Law School Admission Council argues that the drop in interest is the very reason that test fees and other application-related expenses must increase significantly.

LSAC's president makes the argument for the fee increase in LSAC's most recent newsletter. In an article titled, "Finding the New Normal" (PDF, page 3), he writes:

For years, LSAC has adjusted its candidate service fees annually only by an inflationary factor, even as law school tuition increases have outpaced inflation by significant margins. During this lengthy period of time, there was no increase in LSAC’s fees in real-dollar terms. Also during this period, LSAC greatly expanded the range, breadth, and quality of its services to candidates and law schools. Those readers who have been in this business for more than 10 years will recognize that the credential assembly service and law school support efforts we make today are greatly enhanced over their predecessors. 

Moreover, we have actually reduced the cost to law schools of participating in many of our programs, including the Annual Meeting, Forums, and workshops. At the same time, we have maintained a robust fee-waiver program for candidates who are unable to pay for our services. Last year, the value of the goods and services we made available through fee waivers was $3.4 million.  This mode of doing business probably was sustainable in an environment of record-level candidate volumes. Today, with successive double-digit volume declines and significant operating deficits, it is sustainable no longer. 

In recognition of this new reality, the Board of Trustees voted earlier this month to raise our fees by amounts that are larger than inflation. The new LSAT registration fee will be $160, the CAS fee will be $155, and the CAS report fee will increase to $21 per report. In reaching this decision, our trustees recognized that LSAC’s share of the total cost of obtaining a legal education is still very, very small, and that our fee-waiver program remains as an important safety net for those who cannot afford our fees. 

Our most recent spike in application volumes, during the middle and end of the last decade, shielded the organization from the need to raise fees to reflect the enhanced services we are providing. It is now time for us to correct our fees in light of new volume realities, and to align them more closely with the true value of those services to law schools and their applicants. We sincerely hope that this will be the only correction to our candidate-fee levels, and that the “new normal” will identify itself in the next couple of years.

Law school application volume dictates a significant amount of LSAC's revenue. Each applicant takes the LSAT at least once ($139/exam last year --> $160/exam this year), and pays a fee for the Credential Assembly Service ($124 last year --> $155 this year). Each application requires a separate CAS report, one of which must be sent to each law school ($16/report last year --> $21/report this year).

In short, LSAC's president is arguing that LSAC made a lot of money from law school application volume when times were good (the spike resulting from the recession). This volume apparently allowed LSAC to avoid raising fees by an inordinate amount.

In fact, times were so good that LSAC actually lowered the fees it charged to law schools at the same time that law school tuition was skyrocketing. While hindsight's 20/20, it clearly would've been more prudent to put that money in the piggy bank, rather than passing it along to those least in need.

Now that interest in law school is dropping (from an all-time high of 602,252 applications in 2010 to a projected 484,576 in 2012), LSAC needs more money in order to fulfill the purpose for which it exists. Rather than trying to get that money primarily from law schools, or by attracting new applicants, LSAC's squeezing it from the applicants who've chosen to stick around.

However, "the beatings will continue until morale improves" may not be the most effective strategy. While LSAC is the only game in town when it comes to law school admissions, applicants do have other options for post-undergraduate opportunities.

(It's worth noting that top business schools began accepting scores from the relatively cheaper GRE as a GMAT alternative in 2006. The Graduate Management Admission Council hasn't raised the price of the GMAT since 2005. Perhaps the competition has kept the price from rising.)

In a shrinking market, both LSAC and law schools are in desperate need of more law school applicants to stay afloat. Law schools, in particular, are looking to maintain their admission standards and keep the tuition dollars coming in. They can make far more money per student than LSAC can.

Maybe, just maybe, law schools should be picking up more of LSAC's expenses, rather than law school applicants.

So, who else thinks we're won't be seeing an increase in the number of law school applicants anytime soon?

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For further reading, see my series of posts on recent trends in law school admissions.