Will the new student loan law hobble some law schools' reliance on non-JD forms of revenue?

Law schools have increasingly relied on non-JD tuition in the last decade. Will limits on federal student loans disproportionately affect some schools?

I wrote earlier about how law schools are unprepared for a new cap on federal student loans. The new law caps the amount a student can borrow in any one year of a JD programs at $50,000 and at $200,000 over the course of legal education. It will likely be a cost handed down to law student without much consideration from law schools (sadly), I noted, as other costs of legal education have been passed along. I noted a few things about the private loan market and how some schools might have to internalize higher costs for income-based repayment programs.

Over at Bluesky, Professor Milan Markovic notes one additional wrinkle: how this affects non-JD legal education.

While “professional” school students will be limited to $50,000 per year in federally-backed student loans, “graduate” school students will be capped at $20,500 per year. That’s a significant difference.

“Professional” degrees are defined as:

A degree that signifies both completion of the academic requirements for beginning practice in a given profession and a level of professional skill beyond that normally required for a bachelor's degree. Professional licensure is also generally required. Examples of a professional degree include but are not limited to Pharmacy (Pharm.D.), Dentistry (D.D.S. or D.M.D.), Veterinary Medicine (D.V.M.), Chiropractic (D.C. or D.C.M.), Law (L.L.B. or J.D.), Medicine (M.D.), Optometry (O.D.), Osteopathic Medicine (D.O.), Podiatry (D.P.M., D.P., or Pod.D.), and Theology (M.Div., or M.H.L.).

As I’ve chronicled, law schools have increasingly relied on non-JD enrollment as a source of revenue. About 1 in 6 enrollees in law school is enrolled in a non-JD program:

A handful of schools disproportionately rely on non-JD revenue. Here are the 11 schools that had at least 40% of their enrollment in non-JD programs:

For many years, the value proposition of these non-JD programs has been the subject of some debate. I tried to track non-JD debt and earnings without much success. Some of these are LLM programs, which are primarily designed to help foreign-trained attorneys to be eligible to take the bar exam (but foreign students typically would not get federally-backed loans, anyway). Some are undergraduate programs subject to other limitations in the new law. But many are master’s degrees in legal studies, often one-year programs.

The tuition for these programs varies wildly. Glancing at some of these schools, they can range from $17,400, to $22,000 to $25,000, to $32,000 or so, to $35,000, to $68,000 or $69,000. These suggest significant differences in how a $20,500 per year cap might affect some schools—how much they might have to increase scholarship budgets, or how much they may need to work with private lenders.

Some of these programs find significant cohorts of students who receive employer subsidies to take the classes. How differentiated that remains across institutions remains to be seen.

Alternatively, schools might press toward more “part time” programs to allow the cost of tuition to be spread out across academic years, allowing easier access to federally-backed loans.

Another option, already present in some of these programs, is a preference for online programs. Online programs reduce the need for master’s students to need access to room and board costs to be covered, which come above and beyond tuition and are still subject to that $20,500 cap. (This might be a new move for JD programs—more of that for another post.)

If the value proposition of the non-JD degree remains more contestable, it remains to be seen how the private loan market reacts to such degrees. That said, if the total tuition is substantially smaller than a JD program, the risks would appear to be lower. And if many students in non-JD programs are, say, government employees looking for a step-up in salary, it becomes more attractive for the private market to offer loans.

But if the private market balks at some of these programs or disproportionate number of students pursuing the degrees in these programs, a few schools that have been heavily reliant on non-JD funding will face a reckoning. As I’ve already suggested, I doubt schools will reduce tuition in response to the federal loan cap. They are more inclined to pass the cost along to students. The only question is whether they will be able to do so for privately-backed loans. For the JD program, that seems feasible at many institutions. For the non-JD, it’s something to watch closely in the years ahead.