While applications to law schools are on the rise this year, this trend may be cut short if Congress passes the House Republican plan to overhaul the federal student loan program.
Higher education experts say that’s because law students overwhelming rely on federal loans to finance their legal education, and the proposed changes could make it more costly to attend law school.
“It could absolutely make the debt situation for law students much more challenging to repay, depending on how much they make after school,” says Colleen Campbell, associate director for postsecondary education at the Center for American Progress, a nonpartisan policy institute. “Some students would definitely be deterred from law school.”
The Higher Education Act of 1965, the primary law that authorizes federal student aid, is overdue for an update. GOP members introduced a House bill in December, known as the PROSPER Act, to reform HEA.
The bill, if passed, would lead to the elimination of Public Service Loan Forgiveness and place a cap on federal graduate student loan borrowing, to name a couple of the reforms that may affect prospective law students. PSLF is a federal program that forgives debt after 10 years of full-time work in public service if the borrower makes 120 qualified monthly payments.
The GOP House bill isn’t the only call for the elimination of PSLF and other federal student loan reforms. President Donald Trump’s proposed 2019 budget supports terminating the program for future borrowers and curbing federal financial aid spending.
[Read why law school applications increased during Trump’s first year.]
But legal educators say PSLF is important for law students.
“This is a significant program for law graduates who go into jobs like prosecutors or legal aid-type jobs that are the core center of our justice system but don’t pay very much,” says Wendy Collins Perdue, dean of the University of Richmond School of Law and the current president of the Association of American Law Schools.
In fact, 19 percent of law graduates from the class of 2016 pursued work in public interest or with the government or military, according to a 2017 report by the National Association for Law Placement . These employment areas qualify for PSLF, provided the graduates don’t shift careers before the 10-year mark.
Survey data collected for Sallie Mae’s inaugural report on ” How America Pays for Graduate School” found that 39 percent of law students who borrowed loans to pay for their degree expect to receive PSLF after they graduate and meet the program’s eligibility requirements.
While a few law schools offer loan protection programs aimed at J.D. grads who pursue lower-paid legal jobs, these are limited to universities with large endowments, such as Harvard Law School and Cornell University Law School.
These programs are fundamentally dependent on philanthropy and limited to wealthier law schools, Perdue says. Since only a few schools offer loan protection programs, the elimination of PSLF would have a wider effect on students, she adds.
[Learn which law schools offer loan assistance programs to debt-burdened grads.]
Federal loan forgiveness programs, such as PSLF, have become a component in financing legal education based on certain career paths, higher education experts say.
“Many law school financial aid programs use federal loan forgiveness programs as guidance for their policies,” says Cameron Clark, a third-year Harvard Law student who is interested in public interest law.
The 23-year-old adds: “Those who pursue public interest careers are likely to make between $40,000 and $60,000 in fellowship positions right out of law school. This, keeping in mind that public interest students leave law school with nearly $200,000 in loans, can be a daunting challenge for students.”
Some higher education experts say it’s not only the proposed elimination of PSLF that could affect prospective law students but also the proposed cap on graduate student loan borrowing.
[Compare different law school loans.]
The PROSPER Act calls for restricting federal student loan borrowing for graduate students to $28,500 a year. Currently, law students can borrow up to $20,500 a year in direct unsubsidized Stafford loans and up to the cost of attendance with Graduate PLUS. The PROSPER Act would eliminate the Stafford and PLUS loans and create the Federal ONE Loan.
“The proposed cap is pretty low — it’s $28,500 — and that would be borrowing for both tuition and cost of living. There are not many schools, including state schools, where tuition and cost of living are less than $28,500,” says Perdue, who adds that low federal limits would push some students to borrow more in private education loans.
The average tuition and fees for attending a private law school in 2016-2017, for example, cost around $43,020 per year compared with $26,264 for state residents and $39,612 for out-of-state students at a public law school, according to data reported to U.S. News in an annual survey.
While some students may secure private loans at lower interest rates than a federal one, “private loans don’t have the features that can be significant such as income-driven loan repayment options,” Perdue says.
Students may also be concerned about borrowing large private loan balances if they already owe near the federal limit in undergraduate student loans, says Campbell from the Center for American Progress.
“Those students would be the ones who don’t have the resources to enroll without taking on substantial student loan debt. And those students we know are particularly students of color, first-generation students and low-income students,” she says.
Searching for a law school? Get our complete rankings of Best Law Schools.
More from U.S. News
What to Expect When Paying for College, Grad School in 2019
Potential Effects of PROSPER Act on Student Loans
The Best Private Student Loans of 2018
Proposed Student Loan Changes May Deter Law School Applicants originally appeared on usnews.com
