Law Schools

Changes To Federal Loan Program Could Be Catastrophic For Law Students

This will prolong law student and graduate suffering, but this time, at the hands of private lenders.

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This past week, law deans and law professors gathered in San Diego, California, for the annual meeting of the Association of American Law Schools (AALS). With the state of legal education somewhat in flux — from an increase in applicants thanks to the “Trump bump” to the closure of several law schools with uncertain futures — incoming AALS President Wendy Perdue, who also serves as dean at the University of Richmond School of Law, will be faced with many challenges during her tenure as leader of the organization. First and foremost, Perdue will have to figure out how to guide law schools through what could be a cataclysmic change to graduate student loan borrowing.

There’s an education bill pending in the House, and within that proposed legislation is a $28,500 annual cap on graduate borrowing. Given that average yearly tuition and fees at a private law school cost about $46,164, and average yearly tuition and fees at a public law school cost $26,264 for in-state students and $39,612 for out-of-state students, this would be absolutely catastrophic for law students who rely upon federal loans to debt-finance their legal studies. The fact that the education bill changes income-based repayment terms and axes loan forgiveness for those employed in public service jobs is just an added bonus for law school graduates who are drowning in debt.

Karen Sloan of Law.com caught up with Dean Perdue at AALS, and asked if deans were optimistic about the future of legal education. Here’s what Perdue had to say:

You can’t be a dean without being optimistic. Among deans, we are always hopeful about the future. I think the concern right now is the pending education bill that would dramatically limit access to loan funds for graduate students. The House bill, at the moment, caps graduate borrowing at $28,500 and would eliminate public service loan forgiveness, that’s of great concern to all law deans.

We’re also concerned about increasingly unfavorable attitudes toward higher education in general. That said, I think there is more optimism given the change in application numbers.

Of course law deans are concerned about the proposed federal loan cap for graduate borrowing. How are they supposed to fill their seats if prospective students aren’t able to pay the (egregious) prices it costs to attend? If law students aren’t able to borrow up to the cost of attendance of their programs, they’ll be pushed into securing private loans, which don’t have nearly as generous of repayment terms as do federal loans.

Something else to think about is the fact that some private lenders will be unwilling to give funding to prospective law students who may have limited earning potential (e.g., students who plan to attend lower-ranked or for-profit law schools, some of which have already been forced to close their doors). This will only add to the troubles that these law schools have been dealing with for nearly a decade. As my colleague Elie Mystal noted, with this graduate loan borrowing cap, “The Trump administration might kill the very kind of for-profit diploma mills the president himself once ran, by squeezing off federal funds to schools that do not deserve them.”

Dean Perdue is also concerned about “unfavorable attitudes toward higher education in general,” as are we all, but at the end of the day, prestigious law schools like the Harvards and Yales of the world will be able to find a way to survive. Lest anyone forget, elite institutes also have elite endowments, and they’ll be able to provide generous aid packages to students in need who would otherwise be unable to enroll thanks to the new graduate borrowing cap on federal loans.

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If we lived in another world, and this federal borrowing cap for graduate loans was meant to drive down the cost of attending law school, we’d be all for it. Sadly, we know that’s not the case, and if anything, changes like this that are made to the federal student loan program will only prolong law student and graduate suffering, but this time, at the hands of private lenders.

If this bill passes, the future of legal education will be quite dim for hundreds of law schools and tens of thousands of law students and graduates. We don’t think law schools — let alone prospective law students — are ready for this kind of change.

Proposed Changes to Student Loans Worry Law School Association’s New President [Law.com]

Staci ZaretskyStaci Zaretsky has been an editor at Above the Law since 2011. She’d love to hear from you, so please feel free to email her with any tips, questions, comments, or critiques. You can follow her on Twitter or connect with her on LinkedIn.

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