Law Schools Look to In-House Loans to Help Navigate Financial Aid Uncertainty

By Noah Austin

Impending changes to federal student loans continue to roil the world of higher education, with law schools and other graduate and professional programs grappling with how to ensure that new federal loan limits of $50,000 per academic year, for those starting law school after July 1, don’t price students out of a legal education.

And two law schools — so far — are responding by taking student loans into their own hands.

This spring, the Washington University School of Law announced it will offer supplemental loans to law school applicants who have exhausted federal loan options. The move made the St. Louis-based school the first private law school in the U.S. to create an in-house loan program; the first law school overall was the University of Kansas School of Law, which announced its J-HELPS loan program in January.

The WashU Law loan program will enable students to borrow up to $25,000 per academic year at a fixed 7.5% interest rate, with no credit check or origination fees. And while in-house loan programs are new to law schools, they aren’t new to higher education. Carrie Burns, WashU Law’s director of financial aid and student life, said the program was modeled, in part, after other school-run loan programs, including a successful one at the university’s Olin Business School.

But that doesn’t mean it was easy to put together; Burns said the program began taking shape in October, when WashU Law saw the need for a stopgap solution for its incoming class. “Once we made the announcement [in April], schools started reaching out to us” about the idea of setting up their own programs, Burns said. “And I didn’t mean to be discouraging, but it took us a long time.”

Part of that process involved considering the risk the law school would be taking on by becoming a lender. It helped, Burns said, that those who earn a JD degree from WashU Law typically have good employment outcomes and low rates of default on other loans. “We thought it was probably a good investment for our students,” she said.

Similarly, the J-HELPS program at KU Law will enable students who’ve exceeded the federal limits, and who have at least a 2.0 GPA, to borrow up to $12,000 per academic year, with an aggregate of $24,000 over three years of law school. Because KU Law has a relatively low cost of attendance, the school says it’s unlikely any student would exceed those limits. (KU Law referred questions about the J-HELPS program to the university’s Office of Public Affairs, which did not respond to a request for comment.)

Such programs are just one way law schools, both public and private, are getting creative to ensure the new federal loan caps don’t put a law degree out of reach for aspiring lawyers, said Shani J.P. Butts, assistant dean for admissions, financial aid, and community engagement at the Catholic University of America's Columbus School of Law. She added that Catholic Law has talked about creating an in-house loan program but ultimately decided against it for the 2026-27 school year.

There are many factors, Butts said, that might determine whether in-house loans are feasible for a law school. “Typically speaking, public schools tend to have a lower cost of attendance, so administering a program for them might be a little more manageable,” she said. “Then again, you have to navigate all of the state rules and regulations around that.” Additionally, a law school affiliated with a larger university might be able to absorb more of the risk that comes with offering its own loans, she added.

And even if a school clears all those hurdles, local regulations might make such a program impossible to implement. “I’m sure there are some states that will say, ‘Schools are not going to get into the loan business — that’s just not what we’re going to allow you to do,’” Butts said. “So that’s not even an option.”

Megan Glinski, LSAC’s manager of financial aid education, said the ongoing uncertainty around federal loans likely accounts, at least in part, for KU Law and WashU Law being the only two law schools to have launched in-house loan programs in time for the 2026 incoming 1L class — the first for whom the new federal limits will apply. As things settle down, she added, “I think we’ll see a lot more schools looking to those two as an example of how it went and whether they’re going to be able to do something similar.”

In the meantime, she noted, law schools are taking other routes to ease financial insecurity for their students. “Schools that are not able to offer their own institutional funds, I think, are looking harder at the preferred lender list route, where they’re negotiating with private lenders to get better interest rates or terms for their students,” she said. A handful of others, she added, have exploited a loophole of sorts by allowing incoming 1Ls to enroll and receive loan money before July 1, thus bypassing the new limits.

“Schools are just trying their best to educate students on the different options,” Butts said. Rather than a preferred lender list, she added, schools might publish historical lender lists to help students get a better handle on what’s available in the private loan space.

Importantly, even a school-run loan program isn’t an identical replacement for federal loans from a student perspective — particularly when it comes to Public Service Loan Forgiveness, which typically isn’t a feature of any non-federal loan and isn’t part of either the KU Law or the WashU Law loan program. In the long term, that could make public service jobs less attractive to law graduates.

That’s just one example of something the experts interviewed for this story agreed on: The ongoing uncertainty about federal loans is going to make the 2026-27 school year very interesting — particularly when so much of that uncertainty is being driven by a political environment that could change significantly by the summer of 2027.

“The sad thing about how quickly these [federal] provisions are being put into place is that there just isn’t time to get a lot of these programs up and running,” Glinski said. “So, I think we’ll see a lot of movement next year on a lot of these things.”

Butts added, “I think everyone wants to see: What does this look like? We’re not even sure what the federal loan program is going to look like at the moment, because they keep changing that every other day. So, it’s good to have options.”