The so-called Big Beautiful Bill caps an individual’s aggregate government student loans for professional school education at $150,000. For many people, that wouldn’t be enough to cover the cost of attending, for example, a law or medical school. A 2021 ABA study that surveyed more than 1300 lawyers who had graduated or been licensed in the ten previous years reported that the respondents averaged $108,000 in student loan debt incurred in law school. That average is below the cap, but some respondents reported more than $200,000 in law school debt, well over the cap. And it’s not as if expenses have gone down since then. Medical school, which runs four years, is likely to generate an even higher percentage of students who exceed the cap.
A cap could keep some students from attending professional schools. But students might have another option once they max out on government loans: private loans. Private student loans, however, lack the repayment flexibility of government student loans in that repayments tend not to be based on how much students earn or whether they work at a public interest job. Put another way, if the cap did not dissuade students from attending professional schools, it would make it harder and more expensive for them to repay some portion of their student loans. That could in turn force new lawyers, doctors, etc. to take higher-paying jobs rather than, say, public interest jobs. Alternatively, it would increase the incentive for students to attend schools that award high scholarships or have low tuition, like a state school, rather than paying more to attend, say, a more highly ranked school or a school that had a particular strength in an area they are interested in. And whether fewer people attend professional schools or pay more for the privilege of doing so, we are likely to see fewer professionals serving in lower-paying jobs. All this will also make it harder for lower income students to attend professional schools.
How would it affect law schools? It would probably exert downward pressure on tuition. Up until US News reduced the weight given to the LSAT and undergraduate GPA in the rankings, some (many?) law schools tried to elevate their standing in the rankings by offering merit-based scholarships to students who would pull up the median credentials of the school’s students. Those schools paid for that by offering fewer or smaller scholarships to students who would not help the law school in the rankings, and it was those students who paid much of the cost of operating the law school. I’m not sure how much of that still goes on, but it may still occur because US News now gives more weight to outputs–bar passage and employment–and on average, schools that enter a better class probably graduate more students who pass the bar and get jobs. In any event, it may become harder to use that strategy because many students who pay full price or close to it will end up paying more because of their private student loans. And if law schools can no longer turn to students with weaker credentials to pay for their programs, they may have to charge more or offer smaller scholarships to students with stronger credentials.
Perhaps the Senate will eliminate the cap, though I haven’t heard of any attempts to get it to do so.
I wonder how many of these possible consequences are intended.
