For many years, the Martin Center has been arguing that to bring some sanity to federal student lending, the schools that receive the money ought to be held accountable if their graduates aren’t able to repay the loans. Legislation to accomplish that has been introduced, but has never become law.

Here’s a ray of light, though. As Graham Hillard reports in today’s Martin Center article, two law schools are making a “skin in the game” move.

Earlier this year, the University of Kansas School of Law announced a new institutionally sponsored student-loan program in response to the One Big Beautiful Bill Act. Because that law caps professional-program student lending at $50,000 a year (with a $200,000 lifetime maximum), the occasional legal Jayhawk may need private loan dollars to bridge the tuition-and-expenses gap. Now, that money will come from — and be owed back to — the institution’s endowment. If law-school graduates fail to repay what they’ve borrowed, KU will have at least some modest skin in the game.

Earlier this year, the University of Kansas School of Law announced a new institutionally sponsored student-loan program in response to the One Big Beautiful Bill Act. Because that law caps professional-program student lending at $50,000 a year (with a $200,000 lifetime maximum), the occasional legal Jayhawk may need private loan dollars to bridge the tuition-and-expenses gap. Now, that money will come from — and be owed back to — the institution’s endowment. If law-school graduates fail to repay what they’ve borrowed, KU will have at least some modest skin in the game.

The same thing has happened at the Washington University in St. Louis law school.

Hillard rightly observes:

Rather than contributing to the vicious circle by which federal-loan availability drives up tuition, institutional lending is likely to create a virtuous one. Poor repayment rates may force the programs in question to lower costs or raise the quality of their academic offerings — or both. (Neither school will be checking students’ credit scores or histories.) At the margins, students who ought not to be spending tens or hundreds of thousands of dollars on a legal education in the first place might be persuaded by market signals not to do so.

Rather than contributing to the vicious circle by which federal-loan availability drives up tuition, institutional lending is likely to create a virtuous one. Poor repayment rates may force the programs in question to lower costs or raise the quality of their academic offerings — or both. (Neither school will be checking students’ credit scores or histories.) At the margins, students who ought not to be spending tens or hundreds of thousands of dollars on a legal education in the first place might be persuaded by market signals not to do so.

More like those, please.

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