With letters out and new student loan limits, law schools face uncertain admissions cycle
With acceptance letters on their way and new restrictions on student borrowing drawing near, law schools are bracing for a tricky admissions cycle that could find enthusiastic applicants with fewer and more expensive loan options.
“What we don’t know is when they try to matriculate in summer and have that serious conversation with their family about their resources, how many people will be priced out?” says Patricia Roberts, dean of St. Mary’s University School of Law.
That makes it unclear how enrollment numbers ultimately will land, says Beth McCormack, dean of Vermont Law and Graduate School. “Based on what they’re hearing on the ground, my admissions team says students aren’t necessarily focused on loans.”
The Grad PLUS loans, which have no borrowing limits, that have been available for two decades will end July 1 when unsubsidized federal loans to law students are capped at $50,000 a year and $200,000 total for graduate education. With average law school total costs at $230,163, according to Juris Education, many law students will be forced to take out private loans, which tend to have higher interest rates and limited repayment options—and that’s only if they qualify.
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“We’re not changing the number of individuals that we’re accepting, but we are keeping a larger waitlist than we might have in prior years,” says Patricia Roberts, dean of St. Mary’s University School of Law. (Photo by Brandie Jenkins)
Stuck in August?
Coupled with a 18.1% increase to date in applicants over last year, according to the Law School Admission Council’s latest numbers, the uncertainty about loans has deans developing workarounds to help students make sure they can pay for school.
“Law schools don’t want to be stuck in August” with unfilled slots for the incoming class, says Christopher P. Chapman, AccessLex Institute president and CEO. “Obviously, you aren’t admitting based on credit scores.”
Nearly 40% of students whose loans exceed the new limits “may not be able to secure private loans without a cosigner under existing underwriting standards,” according to a December study by the Federal Reserve Bank of Philadelphia. “Students with limited or poor credit histories, or those without cosigners, may struggle to secure private loans.”
“Historically at the law school level, of the people who were rejected for loans, probably a third could then go out and find a cosigner,” Chapman adds. “So overall, we might be talking about 20% of applicants that can’t get loans.”
Most at risk, he says, are first-generation law students and people without family wealth or cosigners.
“Based on what they’re hearing on the ground, my admissions team says students aren’t necessarily focused on loans,” says Beth McCormack, dean of Vermont Law and Graduate School. (Photo by Oliver Parini)“Those students are probably not going to be able to afford to go to law school,” Vermont’s McCormack says.
“That means it will exclude some people that we want to have in law schools,” says Austen Parrish, dean at the University of California at Irvine School of Law. Students may be forced to make hard choices, either deciding to forgo law school or trading off cost for prestige, he adds.
Loan strategies
To ease the uncertainty, law schools are employing different strategies.
Students should be encouraged to apply early for private loans, AccessLex’s Chapman says. “Most lenders will do preapproval and ensure that you have the ability to pay. You want to know about that sooner rather than later.”
Some schools, like St. Mary’s Law, are padding their waitlists. “We’re not changing the number of individuals that we’re accepting, but we are keeping a larger waitlist than we might have in prior years,” Roberts says. “If there are people who can’t afford it and we have no resources left to help them, then we’ll go to the waitlist.”
But that might kick the problem down the road. “Waitlists are usually a summer activity,” says Gisele Joachim, vice president for law school engagement at the Law School Admission Council. “If a student hasn’t sought out their eligibility for private lending by then, it would be even later in the cycle for the law schools to handle.”
Santa Clara University School of Law now guarantees all incoming students who put down a deposit by April 15 a $16,000 annual scholarship, says Dean Michael Kaufman. (Photo by Nic Coury)To help its students meet $50,000 limits for federal loans, Santa Clara University School of Law now guarantees all incoming students who put down a deposit by April 15 a $16,000 annual scholarship. The PLEDGE scholarship will not interfere with eligibility for other scholarships, Dean Michael Kaufman says.
And the University of Kansas School of Law created a partnership with the university’s endowment to create the J-HELPS Loan Program to finance amounts over the federal loan limits up to $12,000 a year through a 5% interest loan that doesn’t require a cosigner.
Some schools are in discussions with private lenders.
“I talked to one private loan company that says if you need to have a cosigner, they’ll allow the cosigner to get off the loan after the student graduates and has made on-time payments for a year,” Vermont’s McCormack says. “That’ll be hopefully helpful.”
And the 15 New York law school deans, along with the Commission on Independent Colleges and Universities, are discussing student loan options with the governor and state legislature during budget talks, says Anthony Crowell, dean of New York Law School.
“Our advocacy is focused on New York state creating a direct loan fund for law and other graduate students that would allow them to borrow beyond the caps on federally backed aid up to the cost of attendance,” says Crowell, the founding president of the National Association of Standalone Graduate Schools.
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“Our advocacy is focused on New York state creating a direct loan fund for law and other graduate students that would allow them to borrow beyond the caps on federally backed aid up to the cost of attendance,” says Anthony Crowell, dean of New York Law School. (Photo courtesy of New York Law School)Going forward, AccessLex’s Chapman says, the model for schools with financial resources will be some version of risk-sharing with lenders in which schools take on a share of the risk of loan repayment.
“Those programs exist out there,” he says, “but nobody I know of has actually signed one.”
While hand-wringing will continue for a few months, Chapman reminds deans that previous generations of law students were in this situation before the grad loans were introduced.
“It’s been over 20 years, but there was a world before this,” he says. “It’s such an unknown right now that schools don’t even really know exactly what to do. As potential matriculants seek private credit, the scale is going to become evident.”
See also:
Planning to attend law school? New student loan restrictions may affect the decision
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