Law schools scramble to react to shifts in financial aid rules
The One Big Beautiful Bill’s mandate to kill Grad PLUS loans and impose strict limits on student borrowing has law school administrators scrambling to sort through the law’s restrictions as they dig into data, shift messaging, reconsider scholarship funding and determine how new outcome rules will impact their schools.
“The message that we’re trying to get out to schools is ‘Don’t panic,’” says Gisele Joachim, Law School Admission Council vice president for law school engagement. “We just don’t even know everything yet.”
But what is known is that starting July 1, 2026, the bill kills Grad PLUS loans and caps unsubsidized federal loans to law students at $50,000 a year and $200,000 for graduate education over a lifetime.
“You can see where that wouldn’t be enough,” Joachim says, “either because the tuition on its own is above that, as it certainly is in most cases, or the cost of attendance is more than the $50,000.”
According to the 509 data provided by law schools to the American Bar Association, only 13 law schools have a total cost of attendance of less than $50,000 per year, says Stephen Brown, assistant dean of enrollment at Fordham University School of Law. “They should be advertising themselves to students as great options with costs less than the new federal direct loan cap,” he adds.
Neil Fulton, dean of the University of South Dakota School of Law, thinks the student the student loan cap might drive candidates to his school. (Photo by Aaron Packard)
“We just had our first tuition increase in five years, and we’re going to go just over $17,000 all-inclusive tuition and fees for resident tuition,” says Neil Fulton, dean of the University of South Dakota School of Law, one of those 13 aforementioned schools. “My immediate reaction to the student loan cap was that that is going to drive some candidates away from some regional privates and potentially drive them to us.”
Small private law schools could be hit especially hard, administrators contacted by the ABA Journal say, impacting how they are run—and, possibly, if they survive.
“This could shut down many law schools,” says University of Washington School of Law Dean Tamara Lawson. “We’re under 200 law schools now. Maybe we become 100 law schools.”
Data dive
To help think through next steps, LSAC has hosted two webinars—one for more than 500 administrators, and another for more than 1,600 students, LSAC’s Joachim says. And AccessLex is holding monthly webinars allowing attendees to ask the experts and each other questions on the bill’s impact, says Derek Brainard, AccessLex Institute’s director of financial education.
“Education is going to be absolutely crucial as we transition into this new student loan landscape over the next three years, and schools are really the first stop,” Brainard says.
Both groups are advising law school administrators to take a deep dive into their own data.
“Look at the current and historical borrower behavior at your school, who and how many students actually borrow more than $50,000 a year,” Joachim says. That school-specific calculation will help guide administrators on what next steps are needed, she adds.
UW Law Dean Lawson is doing just that. She’s asked the dean of admissions to run data from their existing student body as if the new loan policies were in place now.
“What would our class look like? How many less students would we have? How would that cut across demographics of students?” she says. “We want to put some tangible data around this.”
Multiple messages
The bill is forcing law schools to develop three sets of messaging to students: one for current students; one for recruits entering after July 1, 2026; and one for alums.
For most current students, there is little that changes—unless they take longer than three years to finish their programs.
Data suggests that at some schools, the vast majority of students have scholarships offsetting their tuition costs, says Gisele Joachim, Law School Admission Council vice president for law school engagement.
“So that’s part-time students, that’s joint-degree students—anybody who wants to take a leave for any reason like health,” Joachim says. “The way things are written, it’s unknown what happens in year four.”
Meanwhile, messaging for recruits who will enroll after July 1, 2026, when the bill takes effect, must be different.
The new lifetime loan caps are most likely to hit people who borrowed money for undergraduate or other advanced degrees, Joachim says.
Those students are going to have to think about private loans and “concern themselves far more with making sure their credit is in a place where they can take out loans and/or have a co-signer,” Brainard says.
While the elimination of the Grad PLUS plan won’t impact alumni, changes to the income-contingent repayment assistance plans could, starting July 1, 2028. “Keep an eye out for new calculators,” Brainard adds.
Sticker shock
While law schools have many levers they can adjust regarding students’ ultimate costs, lowering tuition prices isn’t an option at every law school, Lawson says. “There are rules, at least in our state and our public-school model, around your ability to change tuition,” she says.
But adjustments in how scholarships are awarded and funded could change to help students offset a school’s sticker price, administrators say.
Based on the 509 data studied by LSAC, “There is significant offset from scholarships for many students, and at some schools, it’s the vast majority,” Joachim says. “I don’t know if the schools will have the ability or financial wherewithal to put more money in those pots. But again, there could be a shifting of sorts of priorities of who that money goes to.”
She says colleagues, particularly admissions professionals, are considering ways “to at least inch away from the very heavily merit scholarship environment that we’re in, and trying to think creatively about ways to shift some of that to need-based money.”
And those funds could come from alums and other donors, she adds. “I have heard colleagues say this provides a pathway for them to ask the development officers to seek specific grant money from donors to support financially needy students,” Joachim adds.
At UW Law, leaders are hopeful they can provide other loan opportunities via local lenders.
“I don’t think we’re in as bad of a position as some places,” Lawson says. “We believe that we would ultimately be able to find lenders within our region to support University of Washington students.”
Accountability
The bill creates long-term concerns, too. A program could lose loan eligibility if it fails an earnings outcomes measure—meaning JD graduates had better be earning some level more than those with a bachelor’s degree, Joachim says.
“We don’t have a lot of information about this, but it’s confusing,” she says. “The collection date begins after July 1, 2026, so there’s this one-year lag on this, and then it’s going to take at least four years of information collection.”
While it is down the road, the regulation could be troublesome for schools that specialize in public interest law and have graduates who do not make high salaries; or for schools where many students want a JD to enhance their current position, and their salaries potentially could stay the same.
“If it sticks in the way it’s currently written, this is going to be difficult for schools on many levels,” she says.
Still, the rules can be amended and refined going forward, experts say. Students and administrators need to stay informed.
“Calm down, but just know what’s happening beneath the surface so that you don’t panic,” Brainard suggests.
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