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By Noah Austin

This post is part of a series related to ����Ӱҵ’s new report, ����Ӱҵ’s Knowledge Report: 2024-2025 Test Takers.

Changes to federal student loans have already added uncertainty for those considering a legal education, with more LSAT takers now saying they aren’t sure they’ll be able to enroll at their law school of choice — and citing financial worries atop their list of concerns.

For law schools, many of the effects of the federal student loan revisions and other changes enacted last July, with the signing of the Budget Reconciliation Act, have yet to arrive. But that day is coming soon — too soon, admissions officials and other observers say — and law schools are already reconsidering many of the ways they help their students pursue and afford a legal education.

“I think schools are thinking about everything, and everything is on the table,” said Megan Glinski, manager of financial aid education at ����Ӱҵ. She added that the next several months, before the changes take effect, are “going to be full of throwing stuff at the wall and seeing what sticks — what’s helpful, what’s not, what works, what doesn’t.”

Iain Davis, assistant dean of admissions and student financial management at the University of Denver Sturm College of Law, said there’s a saying in law school admissions: “‘Oh, it’s another interesting year.’ This truly is an interesting year, if ever there was an interesting year in my 28 years in higher education.”

Goodbye, Grad PLUS

For decades, law students have relied on federal loans for costs of attendance not covered by other means, such as scholarships and grants. And since 2007, Grad PLUS loans have been an important part of that equation — both because they’re unlimited and because they’re typically easier to obtain than a private loan.

“If a student does borrow it, they get a credit check from the Department of Education, but it’s not a normal credit check,” Glinski said. “They’re only looking for adverse credit history.” In other words, bankruptcy or missed payments can cause a denial, but a lower credit score or a lack of credit history isn’t an issue.

For students starting law school in July 2026 or later, though, Grad PLUS loans are no longer an option. And while the other federal loan option, the unsubsidized loan, will see its limits increase to $50,000 per academic year, that won’t cover the full cost of attendance at most three-year JD programs — meaning students (and schools) will need to consider other, non-federal funding methods to make up the difference.

For many students, that will mean relying on private loans, but those do require a traditional credit check, putting them out of reach for many students who haven’t had an opportunity to build a solid credit history. “Some schools have talked about getting into risk-sharing agreements with lenders for students who are below certain credit scores,” Glinski said, potentially making private loans accessible to more students. Importantly, though, those loans’ interest rates and repayment terms are set by the lender, rather than by Congress.

That’s just one thing Glinski said schools are already considering as they navigate this new landscape. “I’ve heard of schools trying to award enough scholarships to ensure that with the $50,000 [unsubsidized loan], they can at least cover tuition,” she said. “But that’s going to leave the most vulnerable populations still at a disadvantage, because they’re the ones that’ll also have to come up with the living-expense portion of the cost of attendance.”

That could mean, she added, that those students end up working a part-time job during law school — something that’s long been discouraged, especially during the 1L year, because of the time commitment that succeeding in law school requires.

For some students and schools, outside-the-box solutions could help reduce reliance on private loans. Davis noted that of the nearly 200 law schools accredited by the American Bar Association, only seven have an annual cost of attendance that’s within the new annual limit of $50,000 for federal unsubsidized loans.

However, he added, that limit applies for four years of professional study, whereas a full-time JD program typically covers only three years. Spreading those classes across four years instead of three would enable students to borrow $200,000 in federal loans instead of $150,000, provided they still met the school’s definition of full-time status each semester. That arrangement would also reduce their course load so they could work part time to further account for school expenses.

Such a program could appeal to students planning to work in public service, since , which applies only to federal loans. Those students, then, would be particularly incentivized to maximize federal loans and minimize private loans. “The downside is, you’re in law school one year longer and you’re having to work at the same time, and that’s certainly not ideal,” Davis said. “The upside is, all of your loan is forgivable, so for one [additional] year, you can knock off so many years of debt.”

Gisele Joachim, vice president for law school engagement at ����Ӱҵ, has worked in higher education for four decades. She noted that Grad PLUS loans haven’t existed forever, and in that sense, law school financial aid is returning to the way it used to be, with unsubsidized federal loans covering a portion of the cost of attendance and private loans filling the gap. “The difference is that law schools, even comparatively to that time — when you look at inflation and everything — are just more expensive now,” she said. “So, it’s a bigger hole to fill.”

What isn’t likely to happen, she said, is law schools reducing tuition, an idea federal lawmakers suggested could be an effect of the legislation. “There have been experiments,” she said, “certainly at the college level, where, with great fanfare, schools — private schools in particular — have announced that they’re lowering their tuition, and it has not ever, to my knowledge, resulted in great success.” If anything, she added, schools might aim to limit tuition increases from year to year.

Davis agreed, at least in the short term. “I think it’s unreasonable to expect universities to completely change their financial model as an institution in six to nine months,” he said. “It’s just not realistic.”

Rethinking Need-Based Aid

With federal loans being widely available, need-based financial aid at law schools is nearly nonexistent today. Given what’s coming, that’s likely to change. “Law schools have a long history of being invested in ensuring that all folks can attend law school,” Joachim said, adding that current conversations are around schools “trying to rejigger the way they distribute their financial aid — particularly grant and scholarship money, which has been heavily tipped toward merit for many years now.”

That’s largely been driven, she added, by each school’s desire to increase its students’ average LSAT score and undergraduate GPA. Now, she said, schools are beginning “a more thoughtful conversation of at least trying to take some of that merit money and distribute it based on financial need — the idea being that you’d be able to better help those students who may have trouble getting those private loans.”

The problem, Joachim said, is that right now, law schools lack the tools to truly determine financial need. When it comes to undergraduate students, family income and assets are part of that calculation on the Free Application for Federal Student Aid (FAFSA). But law students, like other graduate and professional students, are considered independent, meaning only their own income and assets apply. “And for the large number of law students who come directly out of undergraduate colleges, they all look like they qualify for need-based aid,” Joachim said, “because they’ve made no money, because they’ve been in school for four years.”

Graduate and professional programs, then, will need a more sophisticated way of determining need. Davis said he envisions the creation of either a universal needs-assessment form for law schools, or school-specific forms that consider each institution’s mission. “There are some schools that are very focused on public service, so they may have additional provisions for any of the aid that they do,” he said. Such forms could also be used to match endowed funds to a student based on that student’s financial profile. “So, these forms, I think, can get very complex, and they need time and a thoughtful process to develop them,” Davis said.

But not all law schools are created equal, and even with better ways to assess need, some may be able to improve access more than others. “Some schools do have the financial wherewithal to create a situation where they can give need-based aid to anybody who needs it,” Joachim said. “But at most law schools ... it’s going to be more shaping around the edges and setting up programs and situations that speak to whatever their individual missions are.”

That could include, for example, law schools at state universities directing more need-based aid toward residents of that state. Joachim pointed to Franklin & Marshall College, which recently announced that Pennsylvania residents with annual household incomes of less than $75,000 can attend tuition-free. “Even though this isn't a law school,” she said, “I do think this is the type of thing we can expect to see more of, even in the law school space: grants and scholarships that are designed with some financial need component but also designed to fulfill the institutional mission.” 

Such grants and scholarships, she added, are attractive to potential donors, too. “Some of my admissions colleagues have mentioned to me that this change has spurred their development officers and fundraising arms to focus on these students who may have the most trouble getting a [private] loan,” she said. “If schools can channel that energy that way, that would be a good outcome.”

A Ticking Clock

The other major provision of the Budget Reconciliation Act that affects law schools is the “Gainful Employment for All” mechanism. Simply put, it compares the earnings of graduate and professional degree recipients to those of bachelor’s degree recipients to ensure that the higher-degree recipients are making more money after graduation. If that isn’t the case in a given year, it triggers mandatory disclosures to enrolled students; if that occurs in two out of three years, the program loses access to federal loans.

The experts interviewed for this story said the gainful-employment provision isn’t likely to jeopardize loan access for law schools, at least when it comes to JD programs. That’s because, although economic conditions are certainly a factor when it comes to job placement, JD graduates typically land relatively high-paying jobs. “They have far better career prospects, and well-paid career prospects, than other graduate programs,” Davis said. And while a system for reporting graduates’ earnings to the federal government will have to be created, law schools already collect that data for ABA accreditation.

What schools don’t have, though, is time. Time to shore up funding options for vulnerable candidates. Time to make more need-based aid available or come up with a way to identify the students who truly qualify for it. Or time or create a robust four-year JD program that allows more students to make the most of federal loans. The start of the 2026-27 academic year is just nine months away, and Davis said that’s not nearly long enough.

“You need to give two- or three-years’ lead time for schools to be able to adjust,” he said. “And that’s the problem: They haven’t done that. They’ve done it immediately, and schools just can’t respond that quickly.”

Davis, who admitted he’s a “glass-half-empty sort of chap,” imagined a scenario where an understaffed Department of Education fails to set up the new loan infrastructure by July, leading to federal money not being disbursed in time for the fall semester. Another possibility: “Are there going to be students who still owe money after their first day of class, and they still are trying to figure out private loans? So, then there’s a receivable at the university.”

Davis added that while law students can, and likely will, change their behavior to adapt to the new landscape, law schools work further ahead. If, for example, faculty class assignments are already locked in for fall 2026, a school will have trouble increasing capacity to accommodate more students turning to a four-year JD plan.

It all adds up to “another interesting year” for law schools — and Davis said that label carries particular meaning now.

“I think this almost beats the Great Recession,” he said, in terms of the challenges law schools are facing. “The fallout from the Great Recession occurred over a two- or three-year period, so we had time to adjust. The economy just unraveled the way it did, and it took time for that to happen.” This time, he added, the disruption is on a much shorter time frame, as a result of lawmakers’ actions. “And I worry,” he said, “that they don’t truly understand what the potential fallout could be.”
 

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