Law Schools

Congress Plans To Take Away Your Student Loan Money -- What Happens To Legal Education Then?

Efforts are underway to radically change America's student loan regime. Are you ready?

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As lawmakers stare down the barrel of a potential trillion-dollar deficit, they’ve already started looking for ways to stanch the bleeding. The F-35 program, a trillion-dollar boondoggle of a weapons platform that only occasionally works, isn’t really on the table. Nor are the massive tax cuts that forged the present budget shortfall. No, where legislators intend to recoup some scratch is in capping access to federal student loans for graduate students.

Karen Sloan of Law.com outlines the bill making its way through Congress now:

Republicans in the U.S. House of Representatives in December advanced out of the committee a Higher Education Act reauthorization bill that would make several major changes to graduate federal loans. The bill would:

* Eliminate public service loan forgiveness, which allows law graduates in public interest jobs to keep their monthly payment manageable and see their federal loans forgiven after 10 years.
* Do away with income-based repayment, which lets federal loan borrows cap their monthly payments at around 10 percent of their income, and see their loans forgiven after 20 or 25 years.
* Cap federal graduate loans at $28,000 annually, instead of allowing students to borrow the full amount of tuition, living expenses, books and fees as determined by their individual programs.

That generally tracks the aggressive student loan cuts in the latest Trump budget proposal, which means that, like it or not, this is going to happen. The details may shift before this is all over — there’s some noise that the annual cap may move up to $40,000 — but some dire changes are coming to student loan access for law students, and public service loan forgiveness and income-based repayment are almost surely goners.

But what does this mean for legal education?

First up, expect to see a slow-motion crisis unfold in public interest. All right, so public interest always rests at varying levels of completely screwed, but yanking away the two programs that deliver the most relief to lawyers giving up the big bucks is a devastating blow right up there with playing political football with legal aid funding.

Of course, there will still be granola-munching young lawyers committed to serving the public good, willing to tough it out despite the massive loan payments with only their paltry income and a trust fund to see them through. Not to besmirch the affluent do-gooders of the world — their service is admirable — but the public service sector shouldn’t have to limit its talent pool only to lawyers a generation removed from people who contributed to the crisis in the first place.

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In fact, the sector likely to see the biggest hit to its ranks is the government. While we don’t always think about the public sector when we think public interest, those government lawyers have also sacrificed better-paying work to serve. Obviously, there will always be a social climber ready to take a prosecutorial gig, but the ranks of, say, the EEOC aren’t going to get filled if lawyers can’t figure out how to do their job and make rent. The UC system has worked hard to promote lawyers making this choice, but it gets a lot harder when the federal government turns its back on public service.

There are critics of the PSLF system, and there’s something to the concern that it runs the risk of creating a sort of moral hazard — law schools driving up tuition and students taking jobs as prosecutors just to game the system before lateralling into Biglaw. But if there’s ever been a case for narrowly tailoring a response, this is it. An AUSA may be able to hop right into S&C as special counsel, but a career legal aid attorney isn’t likely to get the same look. Meanwhile, the cost to the government of forgiving a few thousand bucks to provide a lawyer for a critical public service need is more than worth it as an investment. Certainly better than the F-35 appears to be.

On the other hand, cutting off the federal money machine will likely crush a whole bunch of terrible law schools, so it’s not all bad news. The “Rank Not Published” (RNP), bottom-feeder law schools have made their bankroll convincing starry-eyed students that they can be lawyers if they just pile on enough debt. By the time the students realize over half of their class won’t be getting work as lawyers — or even passing the bar exam — the school’s already cashed the check. Private lenders have figured this out — roughly 70 percent of applicants can’t get a private student loan — but the federal government hands out the money with virtually no questions asked.

Starving the school of federal money is what finally did in Charlotte, and their cohort will wither just as fast if these caps are as harsh as the initial proposals.

While it would be a win for consumer protection to cull the number of law schools pumping out students into a market that doesn’t have work for them, the fact that these schools tend to produce more minority graduates for a profession bereft of diversity is a serious concern. But as we’ve pointed out before:

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But you know what’s a bigger risk? That lower-tier law schools are dangling an unrealistic goal in front of students who can barely afford to pay for it and then wrapping themselves in the noble rhetoric of diversity to dupe the powers-that-be into giving them a pass. Screw those people…. Diversity requires seeing through potentially unrepresentative raw numbers to find students who will enrich the educational experience. It doesn’t mean creating an expensive pipe dream factory.

Taking diversity seriously needs to be the job of more mid-tier and upper-tier law schools. It shouldn’t be something we abdicate to bottom-ranked schools trying to make a buck. Losing some of these law schools will result in some diverse students missing out on a law school education, but the question we should be asking is how many diverse lawyers are we losing if these schools shut down. Because a law school education isn’t worth much if the graduate can’t practice.

But in the end, this problem is better resolved through tougher accreditation than cutting off federal loans. There’s no reason to push the dream of being a lawyer further out of reach for poor and middle-class students looking at mid-tier law schools just to put the squeeze on the RNPs. At every turn, the supposed benefits of these reforms are wildly outweighed by the harms. Every enumerated problem with the current system, from PSLF abuse and facilitating lower-tier schools — can be better addressed through narrow tweaks than recklessly taking a hammer to the whole regime.

Unless your actual goals were to gut public interest work and make it harder for everyone but the richest among us to become lawyers. In that case, you know, mission accomplished.

Proposed Student Loan Cap Could Devastate Law Schools [Law.com]

Earlier: Law School Grads To Pay ‘Significantly More’ On Their Loans Under Trump’s Budget Proposal
Kentucky Attempted To Kill Legal Aid Funding — We Should All Be Terrified
With DACA Under Attack, Janet Napolitano Works To Create A New Generation Of Public Interest Lawyers
Raising The Bar: Law School Takes Bold Stance — No LSAT Scores Below 142!

HeadshotJoe Patrice is an editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter if you’re interested in law, politics, and a healthy dose of college sports news.

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