Student loan caps could hit minorities, low-ranked law schools the hardest

Reuters

23-06-2025

June 23 (Reuters) - Aspiring attorneys who can't afford full law school tuition could end up paying more for their degrees while some might get shut out of law school altogether under a pending Republican proposal to cap student loan borrowing, according to three legal education finance experts and three law deans.
The budget reconciliation bill was passed by the U.S. House of Representatives in May and is currently under consideration by the U.S. Senate, with proposed annual caps ranging from $50,000 to about $77,000 and aggregate borrowing caps of $150,000 to $200,000 for professional degrees. The House and Senate proposals differ slightly.
The current federal loan system allows students to borrow the total amount of their tuition and living expenses at fixed interest rates. An earlier federal cap on graduate loans was eliminated in 2006 under George W. Bush's presidency.
The proposed cap would require students who hit the limit to secure private loans if they need more money, which could mean higher interest rates for borrowers. It would apply to all professional degree programs, but students pursuing high-cost programs including law and medical degrees would feel its impact most heavily, education experts said.
Law students on average borrowed $146,800 in 2020, the most recent data from AccessLex Institute shows — the highest outside of medical degree programs. The percentage of law students who took out loans for law schools was 76%, up from 71% four years earlier, according to AccessLex.
The average annual tuition at private law schools was $57,860 in 2024, while public school tuition was an average $31,431, the AccessLex data shows, though financial aid brings those totals down for many students.
Proponents of capping loans say the current system has incentivized colleges and universities to increase tuition and has made it too easy for students to enroll in programs with low employment outcomes at taxpayers' expense. Graduates are then saddled with decades of student loan payments.
"By capping inflationary graduate loan programs, we prevent students from overborrowing and put downward pressure on rising college costs," said U.S. Senator Bill Cassidy, chair of the U.S. Senate Committee on Health, Education, Labor and Pensions and a Republican, in an email to Reuters last week.
The cap would be felt most deeply at low-ranked and unranked law schools because some students will struggle to secure private loans, said AccessLex President Chris Chapman, whose organization previously issued private graduate loans but is now a nonprofit advocate for law school access and affordability.
Those law schools tend to have lower employment rates and higher borrowing — red flags for lenders. Lenders are likely to examine applicants' grades and scholarships in addition to their job prospects and finances, Chapman said, and those deemed too risky could be denied.
Particularly vulnerable are less-affluent students who may have trouble securing loan co-signers, said University of California, Irvine School of Law Dean Austen Parrish.
A 2023 analysis, opens new tab of law school debt-to-income ratios by Notre Dame law professor Derek Muller had found that at more than a quarter of American Bar Association-accredited law schools, graduates had a median cumulative debt that was more than twice their annual income one year after graduation.
For example, the median debt of graduates of unranked Cooley Law School, which has campuses in Lansing, Michigan, and Tampa, Florida, was $202,668, while their median earnings were $40,967, the study showed. Cooley did not respond to Reuters' requests for comment.
Atlanta's John Marshall Law School, also unranked, had a median debt of $193,041 and median $48,790 in annual earnings, the study found. The school declined to comment.
Lower-ranked and unranked law schools in general have higher minority and first-generation enrollment. A study, opens new tab by the Law School Admission Council found that minority students made up 42% of 2024's first-year class among the top quarter of schools when grouped by their selectivity, but 51% at the bottom quarter of schools. Cooley's most recent first-year class was 36% students of color — just below the national average of 37% — while Atlanta's John Marshall was much higher at nearly 76%, American Bar Association data shows.
If students at lower-ranked and unranked law schools hit the cap but can't secure private loans or enough financial aid, it could mean a decline in law student racial and socioeconomic diversity, said Ronald Weich, dean of Seton Hall University School of Law — a private law school with $67,300 in annual tuition and a first-year class that was nearly 38% students of color in 2024.
'This will make the profession less inclusive,' Weich said.
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