Wednesday, April 10, 2013

Law School Tuition Cuts and Increased Student Loan Rates: Where Is This Going?

Calls for law schools to make tuition cuts have finally been answered – or at least attempted.  Recently, The University of Arizona James E. Rogers College of Law decided to decrease the amount charged for tuition.  Tuition for resident students was decreased by 10.6% and nonresident students’ tuition decreased by 8.2%. These changes are set to be implemented in the 2013-2014 academic year – tough luck Class of 2013!

The law school states its motivation to make the change was driven by the realization that tuition costs were too high adding pressure to the already difficult job market.  But, I have to wonder why this change wasn’t made sooner.  To me, it appears to be a response to the declining applications this past year.  The news to decrease tuition comes right on the heels of admissions season.  While the offer is tempting, students should proceed with caution.  If the amount of applications increases due to the tuition change, will the tuition increase again?  Will students who decided to attend the school based on the competitive prices be able to lock in the price for their remaining years?  A representative of the school said, “The idea is to keep us on the most affordable end of the spectrum.”  If they can maintain these prices, it may challenge other schools to follow suit, benefiting all students in the long run.  Keep your fingers crossed, but don’t count on it when making your decision to attend law school.

Drexel University Earle Mack School of Law has taken a different approach in cutting costs for its students.  Recently, the law school developed an accelerated program where certain students will receive a law degree in two years.  While the curriculum and cost of tuition will be the same as the three year program, there is one less year of additional costs such as room and board and students are able to enter the workforce one year earlier.  Is this truly a bargain?  If there are no changes in tuition, then you are paying the school for a three year program and only taking up two years of their space and resources.  You are adding more work and potentially harming your education by cramming the extra year into your schedule.  And, the only savings being promoted are room and board (I'm pretty sure you still have to pay for rent and food after you leave law school) and a year earlier into a workforce that is currently suffering.  Maybe the offer is just a wolf in sheep’s clothing?

Despite possible cuts in tuition, the ability for students to pay off their debt is also being affected.  Nearly 80% of law students rely on student loans to finance their education.  However, the decision to accept certain loans may be more daunting as soon as July 1st.  If Congress fails to extend the current 3.4% interest rate on its subsidized Stafford Loan, then the rate will double (6.4%).  Presently, nonsubsidized loan rates are not expected to change.  While law students are unable to obtain the subsidized Stafford Loan because this loan is for undergraduate students only, those undergraduate students considering law school may have to think twice as to whether to accept this loan.  Can you afford an interest rate such as this added to your undergraduate debt; especially when you will amass significant debt through law school?  As the budget debate continues in Congress, topics such as student loan interest rates may fall to the wayside.  Hone in your inner Big Brother and keep an eye on this issue.

The key is to get involved and focus on the financial aspects of your educational investment.  Use the decline of admissions to your favor.  Talk to admissions offices about the tuition cuts at other schools and see what they may offer.   On the other hand, if admissions are low enough to cause a change in prices, then you may reconsider even attending law school.  If you plan to finance your education with student loans, shop around for the best interest rates and repayment plans.  If government student aid continues to increase, get politically charged.  The only way to be heard is to make noise!

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