The Federal Cap Left a Hole in Your Law School Bill. Two Schools Now Lend at 5% and 7.5%.

If you started law school this fall and the federal loan ran out before the bill did, the school itself may hand you an application. Kansas will lend you the difference at 5% fixed. Washington University in St. Louis will lend it at 7.50% fixed with no fees and no credit check.

Both of those beat the 8.07% you are paying on the federal loan you already maxed out. Both are private loans. That trade is the entire story.

The caps landed July 1. Professional students, meaning law, medicine, dentistry and the like, can borrow $50,000 a year and $200,000 total. General graduate programs get $20,500 and $100,000. There is a $257,500 lifetime ceiling across everything, and Grad PLUS, which used to cover the full cost of attendance, is gone for new borrowers.

Two law schools answered by becoming the lender.

KU’s program is called J-HELPS, funded out of the university’s own endowment. Five percent fixed, a 2% origination fee, up to $12,000 a year and $24,000 across three years, ten-year term, no cosigner, no payments while you are enrolled, five months of forbearance after you graduate. Steven Freedman, KU’s associate dean of admissions, named the reason it exists: “We found that the co-signer requirement was one of the key concerns among students when considering loans.” Compared with walking into a private bank at 22 with no income, this is a better door.

WashU goes bigger, up to $25,000 a year at 7.50%, with no origination fee, no guarantee fee, no repayment fee, no points, no credit check, no collateral.

What the rate doesn’t tell you

The rate is better. Everything wrapped around the rate is worse, and WashU says the important part out loud on its own page: “Because it is a private loan, the WashU Law Supplemental Loan is not eligible for Public Service Loan Forgiveness.”

No PSLF. No income-driven repayment through the Education Department. If your plan is a prosecutor’s office, a public defender, legal aid, or anything else where PSLF was doing the heavy lifting, this money never joins that count. It sits outside and gets paid in full.

Run the numbers. Three years of WashU’s $25,000 is $75,000. Paid off over ten years at 7.50%, that is roughly $890 a month and about $31,800 in interest. KU’s smaller $24,000 at 5% is closer to $255 a month. Neither of those is a bad loan. Neither of them is forgivable, ever, no matter where you work.

And notice what did not happen. The cap changed. The tuition did not. At these two schools the price stayed where it was and the lender changed.

Before you sign

Take every federal dollar first. Both programs require it anyway, and the federal loan is the only one carrying forgiveness and income-driven repayment.

Then get three answers from the aid office in writing: does interest accrue while you are enrolled, what happens to the loan if you withdraw or transfer, and is there any hardship or income-based option if you graduate into a job that pays less than the brochure implied. Ask them to put the school loan’s total cost on the page next to the federal loan’s total cost. Not the rates. The totals.

Run your own number through our loan calculator at the full three-year amount before you sign the first year. More on borrowing order is in our education hub.

A school loan at 5% beats a private bank at 12%. It is still not the federal loan, and the person handing you the application is also the person setting your tuition.

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