Law School Ditches Federal Loan Program, Forces Students To Take Out Private Loans

Which school would do such a thing to its students? It's none other than...

The vast majority of those who are in law school rely heavily on federal loans to finance their legal educations. When graduation rolls around and they still haven’t found a job, they’ll celebrate the grace period on those loans that will give them a few months to get their acts together. If and when they aren’t able to find a job, they’ll be thanking their lucky stars that they can enroll in Income-Based Repayment (IBR) or Pay as You Earn (PAYE), which will allow them to pay a fraction of the cost of what would have been their monthly payments on a regular plan — sometimes, the monthly payment will be $0. Thank God for the federal loans that are handed out to prospective lawyers like candy. Law school graduates may be drowning in federal debt, but at least they have options.

Private loans are an entirely different beast. They carry with them far greater risk and far fewer protections than federal loans. There’s no potential for forgiveness in the future, and there aren’t programs like IBR and PAYE to save borrowers if they’re unable to make payment. Private loans can be dangerous, and law school graduates are often left with little to no recourse when struggling with this kind of debt.

That’s why we were very surprised when a law school recently announced that it was abandoning federal loans… in the middle the academic quarter. Which school would do such a thing to its students? None other than Thomas Jefferson School of Law, a much-maligned institution that’s seen its share of trouble over the past few years.

But wait, there’s more! TJSL is only sending a portion of its students to private loan hell. Regular JD students needn’t worry about this, it’s only the students in school’s JSM, LLM, and JSD programs that are affected by this nonsense — many of whom are foreigners. Take a look at the memo the school dumped on these students before Memorial Day:

We are writing to inform you about some changes in financial aid. Thomas Jefferson School of Law will no longer participate in the Title IV Federal loan assistance program (Stafford and Grad PLUS) for its JSM, LLM, and JSD programs. Students enrolled in these degree programs will instead be able to process private educational loans from participating loan providers. A comprehensive list of private lenders may be found at http://www.finaid.org/loans/privatestudentloans.phtml.

How does this affect me?

Beginning with the SUMMER 2015 quarter (next quarter), students who wish to finance their education must do so with private funds, including a private lender loan. A FAFSA is no longer required. Loan requests are processed directly with the educational lender. Qualifications for these loans may differ from those of federally supported loans. If you find that your loan application is declined by two or more of these providers, please contact our Financial Aid Director, Marc Berman, provide documentation of the denial, and we may be able to assist you in receiving the financing required.

Tipsters tell us the school hasn’t provided students with any reason for making this bold move. We reached out to TJSL for comment, but have not yet heard back. We will update this post with their comments if and when they respond to our media inquiry.

In case you’re wondering what’s going to happen to the federal loans that students have already taken out for the Spring 2015 quarter, it looks like TJSL is going to cancel them and give all students in good academic standing a scholarship to cover their tuition payment only. Students who aren’t in good standing will presumably be screwed, and students who were relying on federal loans for their living expenses may also be screwed.

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Why would a law school do this to a group of what some would consider its most vulnerable students? Is this just a test for the future of its regular JD program? Will Thomas Jefferson School of Law be the first of many troubled law schools to put its students between a rock and an even harder place? We suppose we’ll find out soon.

(Flip to the next page to see the full memo from Thomas Jefferson School of Law.)

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