Law school offers its own student loans as US borrowing cap looms

March 2 (Reuters) – A top U.S. law school is tapping its own university’s funds to offer students $25,000 guaranteed annual loans after new federal borrowing limits altered the financial landscape for law students.
Washington University in St. Louis School of Law announced the private ​loan program on Friday, becoming the second U.S. law school to offer direct loans since the federal government adopted ‌a $50,000 annual limit on professional student borrowing, with a $200,000 total cap.
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The federal borrowing cap—which takes effect in July—has left law schools and incoming students scrambling to figure out how to fund tuition and living costs beyond the $50,000 cap.
Many top law schools estimate total attendance costs above $100,000, though financial aid frequently brings down ​the total. Average U.S. law school tuition in 2024 ranged from $57,860 at private schools to $31,431 at public universities, according to ​data from AccessLex Institute. Experts said that the federal lending cap will steer students to private loans ⁠that may charge higher interest rates and require co-signers.
“For Wash U students, this is a great program—guaranteed gap funding at a ​very reasonable, and, likely below market, fixed interest rate,” said AccessLex Institute President Chris Chapman, whose organization advocates for access and affordability in ​legal education.
Under Washington University’s new direct loan program, incoming students may borrow up to $25,000 at a fixed 7.5% interest rate. Students won’t have to pass a credit check, provide collateral, or pay origination fees. ​The university is providing the loan funds, said Carrie Burns, the law school’s director of financial aid. It’s not yet clear how ​many students will take out those loans and what the program will cost, she said.