As far as I've been able to determine, the one concrete step that has so far come out of all this back and forth is a pledge by the ABA Section of Legal Education and Admission to the Bar to come up with a benchmark for what constitutes an acceptable default rate on law school loans by graduates of ABA-accredited schools. To that end, the Section has published a proposed revision of Standard 510 of the ABA Standards for the Approval of Law Schools.
At present, Standard 510 requires ABA-accredited law schools to "take reasonable steps to minimize student loan defaults." Reasonable steps shall include provision of debt counseling to students when they first take out law school loans and again before they graduate. (Question: Do any law schools actually provide debt counseling to law students, and if so what does this counseling include?). "Reasonable steps" are not otherwise defined, so under the present rule it appears that law schools which make provision for debt counseling at the appropriate times, or belong to universities which at least nominally provide such counseling (see below), are in compliance with the Standard, as long as they don't fall afoul of Interpretation 510-1 of the Standard, which states vaguely that default rates "shall be considered" in assessing the extent to which schools are complying with this Standard.
So, in response to one of Sen. Grassley's many concerns, the Section is proposing adding a new Interpretation 510-2 to the Standard:
For law schools not affiliated with a university, the school’s student loan cohort default rate shall be sufficient, for purposes of Standard 510, if it is not greater than 10% for any of the three most recently published annual cohort default rates. If the school’s cohort student loan default rate is not sufficient under this Interpretation, the school must submit a plan for approval by the Accreditation Committee for coming into compliance with this requirement.An anonymous commenter has pointed out on this blog and elsewhere that this interpretation of the Standard, if adopted, would allow law schools to advertise extremely low default rates. At present and for the foreseeable future almost all law school loans will be directly from the federal government, and since the students taking out these loans will be eligible for Income Based Repayment, people with no prospect of ever repaying back more than a small portion of what they owe can still avoid default, in the technical sense of default, by staying in IBR for 25 (soon to be 20) years.
The ABA's initial response to Sen. Grassley includes a chart of the law school loan default rates at the 19 independent -- that is, non-university affiliated -- ABA law schools. The overall default rate for the graduating classes of 2006 through 2008 was less than one per cent. Given that these schools include several very low ranked, very expensive instiutions where we can be quite certain that large percentages of the graduating classes are not getting jobs that allow them to make the payments due on their loans, these numbers indicate that the percentage of law graduates in technical default on their loans is a very poor proxy for either the actual financial situation of these graduates, or the risk these loans pose to taxpayers.
The comments here and elsewhere regarding this proposed revision to the Standards don't mention that this new benchmark for unacceptable default rates applies only to law schools not affiliated with universities, which means that 181 of the 200 ABA-accredited law schools would not have to worry about hurdling even this low bar. Each of those 181 schools will be considered in compliance with Standard 510 if "the university, of which the law school is a part, provides to law students the reasonable steps described in this Standard." What this means, I suppose, is that university-affiliated law schools are considered in compliance with Standard 510 if debt counseling is at least nominally available to law students somewhere within the universities with which the schools are affiliated.
I imagine the reason the ABA is considering applying nominally stricter standards to the 19 independent ABA-accredited schools is that those schools are subject to direct regulation by the Department of Education, in a way that university-affiliated law schools are not (I'm guessing that for federal regulatory purposes the default rates that count for university-affiliated law schools are the overall default rates of graduates the universities with which they're affiliated. Hopefully people who know more about this subject than I do can clarify the situation).
Of course if the ABA Section of Legal Education and Admission to the Bar wanted to create benchmarks that would at least begin to measure the extent to which law graduates are having trouble paying back their loans, it could do so quite easily, by for example requiring law schools to report how many of their graduates are eligible for IBR nine months after graduation (at some schools this figure probably approaches 90%). But the Section, whose membership features a large number of law school administrators and faculty members, doesn't seem interested in doing anything like that. Instead it appears to be creating a new standard which, if adopted, certainly won't improve law school transparency, and may well harm it (if for example prospective law students end up interpreting very low default rates as good evidence for the value of law degrees).
In any event, the comment period for the proposed change to Standard 510 runs until Tuesday. Anyone interested in doing so can email a comment to Becky.Stretch@americanbar.org.