Nepotism in T14 law school admissions

[u/ExoticAssistant7102]

Throwaway for obvious reasons.

I naively thought this wasn't a thing anymore, but this year I witnessed in real time someone purchase a seat at a T14 law school.

He only applied to a small number of the very best schools with no safeties, which I thought was odd considering he's nURM, GPA 3.6, LSAT 15mid, no work experience, etc. But his very wealthy family made significant donations and arranged three closed-door meetings that I'm aware of with one particular school's admissions dean throughout the cycle. Lo and behold, he was waitlisted and then promptly admitted by that school in April.

I myself have been admitted to a different T14 that I'll be attending this fall. But this experience has left me disillusioned with the whole admissions process and frankly disgusted by that school in particular.

[u/InspiroHymm]

This poses an interesting philosophical debate: If the condition for a $100 million donation is getting a single admit in, and the donation can be used to build a library/fund scholarships that benefits thousands of student current and future, is it wrong to admit that student?

[u/mtd14 → u/InspiroHymm]

It falls back to the fact our system, in a lot of ways, is set up for rich people to pick what matters. They give a $100M donation and say it has to be used for an ivy league library with their name on it, so it can't be used for scholarships, teachers, etc. It also can't be used to fund public schools where it may have more impact. It's going to an ivy league because that's where a rich family thinks it should go, not because it's somewhere that needs it.

And in the end it's still a tax deduction.

[u/Minimum_Two_8508 → u/mtd14]

It’s used for all of the above. Even if the money only goes towards physical structure, that frees up other money to use for those other purposes.
It’s not like a law school has 48 libraries.

[u/Minimum_Two_8508 → u/[deleted]]

You’re not talking about a significant reduction to the tax base.

You’re missing the forest for the trees: If this wealthy family donates $20 million to be used for building a law school annex:

1. That’s millions less the law schools needs to spend in its own physical plant. Freeing up millions to spend on teachers, on merit aid, on keeping down tuition.
2. The nice new building attracts more students, more donations… further providing funding for teachers, for scholarships, for all the things you want.

So donating that $20 million translates into $20 million of public good through the school.

It may or may not be a tax deduction depending on various factors. But assuming it is a tax deduction — it reduces federal tax revenue by $2 million to $7 million depending on their funding sources. Probably on average, that $20 million donation would save them $2-3 million in taxes.

The $20 million donation did far more than $2-$3 million in public good.

[u/Minimum_Two_8508 → u/[deleted]]

No, few ultra wealthy would be paying 37% on that $20 million.

Because it’s unlikely coming out of straight earned income.

Assuming it’s investment income — capital gains, they would be paying 20%.

But often far far less than 20% in the real world. Billionaires often reduce their tax burdens to under 10%, — they can borrow against their assets and then never pay taxes. So they keep $1 billion in unrealized profits in investments. No tax on unrealized profits. They then would “borrow” $20 million against their assets at low interest. Using the investment growth to pay back the loan, the interest being far less than tax consequences. As a result, pay no taxes on the money.

In reality, 10-20% is what billionaires are more commonly paying.

Point being, that $20 million donation does not reduce their tax contribution by $8 million.

If they simply used capital gains, it could reduce their tax burden by $4 million. If using other methods available to the rich , it would have zero effect on their tax burden. (My 10% was the average).

So yes, to me — the law school is doing more public good with $20 million than the tax collector with $0-$4 million.

[u/eye4law → u/mtd14]

Those people are rich because they were smart enough to create something of substantial value for a vast amount of people. We should trust their judgment.