Stafford Loan Limits and Law School Tuition

I wish I could say Hurricane Sandy has kept me from blogging, but in truth, work has been the culprit.

In my last article for the Am Law Daily, I wrote something like:

[L]aw school tuition increases regardless of changes to loan availability (Grad PLUS Loans displacing private loans, 2006; elimination of Subsidized Stafford Loans, 2012), loan borrowing limits (annual and aggregate), new repayment options (IBR, 2009) and even bankruptcy protections (1990, 1998 for federal loans; 2005 for private loans).

I thought it was a good zinger, but I’m returning to it because the decision to take Grad PLUS Loans came up in a conversation I had with some recent law school grads last weekend (I don’t think any of them took them), and I don’t think I’ve ever looked through all the changes to the Stafford Loan program over the years. It’s an important historical exercise because “increasing the loan limits” was the ABA’s mantra for dealing with over-indebted, under-incomed law school graduates, as this line from former ABA president Carolyn Lamm in “Law School Education Debt Has a Manageable Solution” attests:

Now is the time for modest changes in current federal student loan programs to increase the amount that law students may borrow, and to bring existing private loans into the federal student loan system.

This was published in November 2009, well after the advent of Grad PLUS loans and mere months after IBR went into effect, but it embraces a pre-2006 thinking: What the government won’t give you in Subsidized and Unsubsidized Staffords, you must get from your parents via a PLUS loan or private lenders. Thanks to the diligence of FinAid.org, here’re the Stafford Loan limits (both Sub’d and Unsub’d) charted over time against median law school tuition.

Why median and not mean tuition? I was hoping that medians would weaken the effects public law schools that have gone off the state dole have on mean public law school tuition. Instead, it appears the ABA’s median non-resident public law school tuition is just plain wrong for 2009 and 2010. Both years appear to be using Wisconsin’s non-resident tuition, but Wisconsin was the 16th and 17th highest in those two years, certainly not, you know, number 40 as one would expect with a median. The correct numbers should be $30,519 (Missouri-Columbia) and $32,882 (Northern Kentucky), before adjusting for inflation, of course. So, it’s just another lesson in distrusting the numbers the ABA puts into its publications.

Since the mid-1990s, the likelihood that private law school students would have to go beyond Staffords has steadily increased due to both tuition inflation and regular inflation melting away the annual Stafford limits. You can see why the ABA was so keen on increasing the limits, not that it would’ve made legal education any cheaper, which the ABA is not serious about. What’s really surprising, I guess, is that private lenders would be so eager to make these loans back when they were readily dischargeable in a Chapter 7 bankruptcy. Maybe it was because things were so much better in the late 90s that lenders didn’t care, but as the Lamm quote above implies, don’t expect anyone at the ABA to endorse Congressional efforts to repeal that odious section of the BAPCPA.

For those interested here are the aggregate debt limits against three years of median law school tuition. I don’t think it’s ever been a problem, but some part-time students may’ve run into them.

I’m not going to look into changes in interest rates today, but the point, though, is similar to why I bother listing all those tuition numbers going back nearly a decade: The deal changes for each incoming class with the asymmetry very much in law schools’ favor, and Grad PLUS Loans plus IBR aside, in strict dollar terms prior classes usually got a better deal.

6 Responses

  1. Law school truly is a terrible gamble, in light of the staggering debt and the skrinking U.S. legal job market.

  2. Good work – again!

    Ever think about putting together an e-book for sale?

    Perhaps you could partner up with Law School Transparency – they need revenue.

    Perhaps financed by a Kickstarter project? Unique nature of the project would likely get some additional press…

    • God if I could figure out a way to monetize my work/abilities.

      • Consult/expert witness for the firms suing the schools?

        They are probably fairly small plaintiff firms – but there might be *some* money there – one reason why I mentioned focusing on the *placement data* as well as the tuition/debt side of things a while back.

        Also, a greater focus on the placement/law practice economy side would necessarily entail skills/knowledge useful in law firm marketing as well, etc.

        Clearly there is a *need* (if perhaps not equivalent *funds*) for law firm marketing consultancies – especially for the firms with fewer than say 25 attys.

        As far as I know, Martindale-Hubbell has never really sliced and diced their magnificent database of firms for analytic insights anywhere near to the extent they could have…

        In general, this profession is *insanely* under analyzed from a business perspective and a legacy of ruin is the result…

        Hang in there – without people like you, the unbelievably sh*tty behavior of the schools would have continued to have gone unrecognized for many more years, decades.

      • There’d definitely be a conflict of interest for the law school lawsuits that would create credibility issues, at least on the witness stand.

        However, I have been toying around with the idea of reaching out to the more traditional business-side institutions in the profession (NALP, Martindale, etc.), so I may resume working on the employment data side of things.

  3. “conflict of interest”

    Not entirely sure what your direct financial interest might be that could be used to discredit any anti-law school testimony.

    Sure, you are a well-established public critic but that does not prevent you from providing data-driven testimony.

    The only “conflict” inducing financial aspect I can see is the remarkably broad one that you (along with 1.5 million other JDs – along with the US Government, guarantor) would benefit from a more fully informed marketplace that would bring supply and demand in balance.

    Anyway, just a thought – it is difficult to tell how much legal/data horsepower the current plaintiff side firms have in the current scamlaw cases against the schools.

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