A dean of a top 20 law school is actively promoting Income-based Repayment as an option that makes law school "affordable" for prospective students:
According to Berman, most of his students who take out loans now borrow solely from the federal government rather than from private lenders, which means that they will be able to take advantage of IBR and will therefore face less financial stress and have greater purchasing power than their predecessors did just a few years ago. “Loans for new students are much more favorable than ever before,” says Berman. “The government has responded to the debt crisis by providing much-needed assistance.”25 (soon to be 20 . . . operators are standing by) years of debt servitude courtesy of unwitting taxpayers are characterized as "much more favorable" terms than ever before. But wait, there's more:
Berman predicts that within the next 5 years or so student loans will be almost entirely federal loans with income-based repayment plans. The national aggregate student loan debt (the $1 trillion we mentioned earlier) is very intimidating, but for most borrowers, the most important issue is not the total debt figure, but the monthly repayment amount. If repayments are lowered based on income, then this will allow young adults to spend and save more of their present earnings rather than being forced to take on high credit card debt, which has been the current trend for many young adults. In speaking about the near future, Berman says, “I think you will see fewer things like bankruptcy and troubling credit card debt because the student loan payments will be capped.”Who says the system doesn't work any more?
The article does note that carrying a lot of debt that isn't being paid down does have bad consequences for mortgage eligibility and the like, but adds "income-based repayment plans wont send you into bankruptcy, and this is a real positive." Of course except in rare instances student loans aren't dischargeable in bankruptcy, which Dean Berman could have made clear to the interviewer, assuming the dean is aware of this fact (something the earlier quote about fewer bankruptcies brings into question).
Berman then says something truly strange:
“The aggregate student loan debt will remain high for a while, but we will start to see improvement thanks to these repayment plans in a couple years.” This is great news for students across the country, especially those looking to go on to professional school. Berman estimates that his students graduate with about $110,000 – $120,000 of student loan debt, [actually $127,360 for the class of 2011; note this is only law school debt] compared to the around $25,000 national average for undergraduates.How in the world is IBR going to, of all things, reduce aggregate student loan debt? People graduating with $150,000 in high interest educational debt (a conservative estimate of what GW's current law students will incur) are going to have to get and keep six-figure salary jobs if their debt loads under IBR are going to do anything but grow. (Around 20% of GW's class of 2011 got such jobs).
Berman goes on to claim that increased awareness about the availability of IBR may help reverse the decline in law school applicants, and then pats himself on the back for raising tuition "less than four percent" (actually 3.98%) this year. This puts GW's estimated cost of attendance at sticker for this year at $77,000, which projects out to about $270,000 if fully debt-financed under the government's great new loan terms, which as Berman points out include the bonus feature of not having to actually pay the money back. That's a relief, since only a small minority of GW grads would be able to do so. (Interestingly GW's financial aid page is now featuring IBR as the first option potential admits may wish to consider for paying back their debt).
Now some people might think that requiring the government to pay your students' educational debts for them indicates that you're actually charging far more for what you're selling than it's actually worth. I'm not sure what the standard legal academic administrative response to this objection is going to be (I suggest "oldthinkers unbellyfeel lawschool"), but I'm sure they're coming up with a good one.
Update: 201 members of the 3L and 2L classes at George Washington last year were transfer students. The school admitted 97 transfers in 2010 and 104 in 2011. Caveat emptor.