What's American's strategy?

 Updated below

American University is an interesting test case for how law schools are going to handle the ongoing collapse of applicants.  Last year AU managed to reel in its normal nearly-500 member class by slashing the median LSAT of matrics from 162 (86th percentile) to 159 (77th).

American is the kind of school that no rational person who isn't either a member of idle rich, or already exceptionally well connected in the legal world, or both, would consider attending with anything less than a full tuition scholarship.  (A commenter makes the plausible suggestion that, given the cost of living in DC, the opportunity cost incurred, and the abysmal employment prospects, AU would not at present be a good decision for the typical applicant even with a full tuition scholarship.)   It currently combines an astronomical cost of attendance -- $70K per year, leading to an estimated $250K in debt if fully debt-financed -- with appalling employment numbers: 65% of the 2011 class didn't have a legal job nine months after graduation, and less than one in ten grads gets either a well-paying job or a federal clerkship.

So what's the school doing to deal with this unpleasant combination of factors? Apparently, the answer isn't "reduce real tuition by giving out lots of 'scholarships.'"  Instead the school seems to be banking on a combination of the sunk cost fallacy and slashing admissions standards even further.

TLS features threads for applicants and admits to individual schools, and the one for AU reveals that the school is offering modest one-year non-renewable "scholarships" for people who have what are quite good admissions numbers relative to AU's current standards.

For example one admit was offered $20K toward the first year cost of attendance (and nothing else) despite having an LSAT far above the school's 75th percentile, and a GPA above the 25th percentile.  In other words, he's being offered a reduction in COA from about $220K (assuming COL increases in tuition which is optimistic) to $200K, despite having what are on balance better numbers than last year's average matric.

Another admit was offered just $10K for one year despite being above the 75th percentile for last year's admits in terms of both LSAT score and GPA.  These outcomes seem to be typical, given what information can be garnered from the thread.

What's going on here?  The logic behind offering one-year "scholarships" is pretty self-evident: once people have spent a year in law school they tend to find it very difficult to quit, even when quitting is obviously the smart move, because a combination of the sunk cost fallacy and the (related) social pressure not to be a "quitter."  (I've seen some anecdotal evidence that this may be changing, with 3Ls and 2Ls encouraging 1Ls to drop out if their grades aren't at at least X percent of the class after the first year, or even the first semester. It will be interesting to see how many non-academic dropouts schools endure this year).

But the sunk cost fallacy can only take an institution of higher learning so far. Given the evident unwillingness of American to actually cut real tuition in any serious way for well-qualified applicants, it seems probable that the school plans to cut admissions standards as much as it needs to in order to ensure that a larger percentage of this coming fall's 500 new 1Ls will be paying the sticker COA.  How deep those cuts will have to be this year remains to be seen, but I expect we'll be looking at some pretty startling LSAT and GPA medians for the entering class of 2013, at American and quite a few other places as well.

Update:

A current 3L at American writes:

AU rides the US NEWS rankings scam and tricks many good people who are interested in human rights. So if you are a person who wants to go to a t1 school and be in DC but can't get into GW or Georgetown you go to AU. If you are interested in human rights, the school makes you believe there is actual opportunity there. Remember debt is all relative to 22 year old 0Ls, and the school fraudulently boast great employment stats. People go into AU as I'm assuming most schools believing they are going to get a job and be able to manage more then fine.

In reality, the employment prospects from American are just abysmal, as everyone here knows. Most members of the law review don't have jobs lined up. It is the most depressing place on earth to be at and I can not wait to get away from it. Literally almost every 3L is depressed, and walking around in shame at having been swindled so badly. There is tension in the air at AU, make no mistake, the students are pissed. You can't scam people so badly and not expect them to be livid.

To further drive the "international law scam" the schools Dean is not even a JD. He can also barely speak English and is also barely at the school.

Also as Law Prof knows, the school is running as fast as it can into a new huge facility. The school claims it will not add more students, but we all know that is a lie. ECONOMY AND STUDENTS BE DAMNED. The fact the school is even considering a new facility shows you where its priorities really are, the professoriate class.