The New Law School Funding Gap: Why Scholarships Are No Longer Optional

Following the passage of the One Big Beautiful Bill Act, student loans—and specifically graduate student loans—are in flux. This legislation and recent policy decisions underscore how the federal government has fundamentally altered graduate school education funding. 

Here’s what you need to know: 

First, the Saving on a Valuable Education (SAVE) plan, which offered lower monthly payments and prevented interest from ballooning, has officially ended following a December 2025 settlement between the Department of Education and several states. 

This means that: 

• New borrowers can no longer enroll in SAVE, and those previously in the plan are being transitioned to other repayment options, often with higher monthly payments and without the generous interest subsidies that prevented balances from growing. 

• For new borrowers starting after July 1, 2026, repayment options will be limited to a new Standard Repayment Plan (with terms ranging from 10 to 25 years based on debt size) and the Repayment Assistance Plan (RAP), a more restrictive income-driven option.

The long-standing Grad PLUS loan, which aimed to bridge the gap between base federal loans and the actual cost of attendance (which includes living expenses, other fees, textbook costs etc.), is being replaced by annual and lifetime borrowing limits for new federal direct unsubsidized loans. 

Law school and other professional degrees have a cap of up to $50,000 per year with a $200,000 lifetime cap (which includes undergraduate debt); other graduate programs have a $20,500 annual cap and a $100,000 lifetime cap.

In regard to law school specifically, these caps will likely not entirely cover the full aggregate cost of a three-year Juris Doctor (J.D.) degree at many institutions. Furthermore, stricter eligibility for Pell Grants, additional caps on Parents PLUS loans, and the phasing out of many income-driven repayment plans leaves students with fewer choices when evaluating the financial feasibility of attending law school. 

What does this mean for incoming law students? 

First and foremost, scholarships are now even more of a necessity than in prior years. With federal borrowing capped at $50,000 per year, many students will face a "funding gap." This means, for example, if your tuition is $65,000 and your cost of living is $25,000, you are looking at a $40,000 shortfall every year that federal loans will not cover. While private student loans remain an option, they often come with higher interest rates, fewer consumer protections, and no path toward Public Service Loan Forgiveness (PSLF). 

As a result, the most viable path forward is a shift in focus from "how much can I borrow?" to "how much merit aid can I get?" Pursuing merit-based scholarships is no longer just a way to save money—it is becoming a prerequisite for many to attend law school at all. To navigate this new era, prospective students should:

1. Prioritize the LSAT: Higher scores remain the primary lever for securing "merit aid" that doesn't need to be repaid.

2. Cast a Wider Net: Apply to schools where your numbers put you in the top 25% of the applicant pool, as these schools are most likely to offer significant scholarship packages.

3. Evaluate Cost, Not Just Rank: In a world with hard borrowing caps, a full ride at a lower-ranked school may be a more viable financial decision than a sticker-price seat at a prestigious one.

The gutting of federal student loan infrastructure means the government is no longer an easy option to obtain funds for your legal education. Planning your scholarship strategy is now just as important as planning your law school applications. 

At JurisPrep, we continue to prioritize both academic success and financial security so students can attend law school without being saddled with an enormous bill at the end of their three-year degree. Read about the ROI of working with JurisPrep here, or book a free consultation to see how you can get a full-ride to law school.