Maureen A. O’Rourke
Dean and Professor, Boston University School of Law
2017-2018 Council Chair
The U.S. House of Representatives Committee on Education & the Workforce recently voted to move the Promoting Real Opportunity, Success and Prosperity through Education Reform (PROSPER) Act to the House for a vote. As drafted, PROSPER signifies a dramatic re-thinking of the policy underpinnings of the Higher Education Act of 1965, originally enacted as part of President Lyndon Johnson’s “Great Society” initiative. Here, I discuss those provisions of most interest to law students and schools and the accreditation project. The bill, however, is well worth reading in full to understand the entirety of its implications for higher education and its students.
Major Impacts on Law Students and Schools
Although PROSPER includes a number of provisions relevant to legal education, two are particularly noteworthy: (i) a $28,500 annual cap on government loans for graduate study and $150,000 aggregate limit on all federal student loans; and (ii) elimination of the Public Service Loan Forgiveness (PSLF) program as it is currently operating. Given tuition and living expenses are often in annual excess of $50,000, many students rely on the government for substantially more support than $28,500 on a yearly basis. Additionally, PSLF has helped many students – and the clients they represent – by enabling them to work in public interest jobs they could not otherwise afford to accept. Under PSLF, graduates could have their debt forgiven if they spent 10 or more years working in public service (generally the government or non-profit organizations).
Why would the Committee propose changes that seem destined to put significant financial pressure on many law students and, by extension, their schools, and to decrease particularly the number of students from lower socio-economic brackets and diverse students attending law school? The short answer is – even assuming that all members are working in furtherance of an agreed-upon and appropriate national interest - it’s complicated.
Government loans have played a critical role in enabling generations of students to attend college and graduate school (indeed, I had a Stafford Loan to help pay for law school). By guaranteeing loans regardless of credit status, the government enabled those who could not borrow in the private market to take advantage of higher education. It was well understood that some borrowers would default. But it was more important to the nation to provide a pathway of upward mobility to those in lower socio-economic brackets and/or victims of discrimination, all of whom were unlikely to be served in the private loan market. And it worked well for many years by providing a pathway to the middle class and worthwhile career and professional opportunities for numerous students and their families. The government even made money!
At the same time, guaranteed government loans introduced an imperfection into the higher education market. Essentially, schools’ pricing has not been constrained in the same way it would be if only “normal” lending forces were at work. To simplify dramatically, over time, schools increased tuition exponentially - at a rate faster than inflation - and built campuses, faculties, and services that all need to be attended to. And they haven’t worried too much about how to pay for this infrastructure because tuition would flow straight from the government to the schools, and their graduates would pay the government back. The accreditation process would play a helpful role by ensuring that students received value for tuition, including opportunities for employment upon graduation.
All in all, it seemed like a system in which everyone was reasonably happy. The economics, however, may no longer work. Accreditation efforts may not have been sufficiently rigorous to ensure that students were obtaining value for the money the government was paying. And jobs with sufficient compensation to permit repayment of large loans seem more difficult to obtain, leading to fears of huge defaults from student loan debt that could cause a national financial crisis.
Against this backdrop, the desire for a cap on graduate student borrowing is understandable. Schools need to become less reliant on government funding and bring costs under control. Further, arguably, graduate school is not as imperative to upward mobility as an undergraduate degree is.
Any cap, however, must avoid the error of underestimating the value of graduate education, particularly legal education. One might also question the propriety of lumping all graduate education together without regard for default rates for specific programs. Good lawyers are critical to the maintenance of our system of government - a difficult to quantify benefit, but a substantial one nonetheless. Moreover, relegating many students to the private loan market will adversely impact those already in lower socio-economic groups, closing off upward mobility. And it will hurt diverse students who still suffer discrimination in the lending market. Might it not be better to consider a higher cap or means-testing? A higher cap would give schools time to adjust their economic models while means-testing would ensure that government loans went only to those who truly need them.
Eliminating PSLF raises additional issues. The impetus here seems to spring from concerns that PSLF is overbroad, applying to graduates who could afford to pay their loans back. Additionally, lawmakers may think PSLF uses definitions that extend its benefits to classes of employment with only a tangential relationship to public service. However, the draconian change of essentially eliminating the program seems an out-sized approach to an issue that might be better addressed by means-testing and redrafting troublesome statutory definitions. And it suffers from completely disregarding the role of PSLF in ensuring our democratic society. Our nation is defined by its commitment to the rule of law embodied in the Constitution. If large swaths of our citizenry cannot vindicate their rights because they cannot afford an attorney, the system cannot long endure. Eliminating PSLF fails both to account for this consideration and to acknowledge the cost savings associated with helping less well-off citizens make their way efficiently and effectively through the legal system.
Changes to Accreditation
As I noted above, one could certainly question whether accreditation agencies have done their jobs. PROSPER would make a number of changes to accreditation standards, including removing a number of criteria like resources and faculty and replacing them with a single standard focused on outcomes. Perhaps more interesting to ABA members is that the bill requires the accreditor to be “separately incorporated” not merely “separate and independent” from its associated professional organization (the requirement today). The accreditation project has lived under the ABA umbrella since 1952. If Congress were to enact PROSPER, however, accreditation would have to become legally separate from the larger ABA, raising a host of issues that the Council and the ABA would have to work through.
This greatly simplified review of PROSPER highlights the importance of civic engagement as the government debates its role in fostering opportunities for higher education. An informed and upwardly mobile citizenry is a priceless intangible benefit that, by its nature, defies easy valuation. Nevertheless, when we consider wholesale changes to education financing, we should at least think about them with an appreciation for the role higher education has played in moving our society forward. I expect that each of our congressional representatives would welcome and benefit from hearing the diverse perspectives of their constituents. The U.S. Senate will likely take up its own version of reauthorization of the Higher Education Act shortly, making conveying your thoughts to your Senator a timely and hopefully useful enterprise.