There’s bad news for students at Florida Coastal School of Law (FCL): The school failed a test by the Department of Education that measures the debt-to-income ratios of graduates. If the school fails again, it could lose its federal funding next year, according to The Florida Times-Union.

The report was created in an attempt to prevent students from accumulating debt that they cannot repay. Schools receive a failing grade if a borrowers’ loan payments are more than 20 percent of discretionary income or 8 percent of total earnings, on average.

Located in Jacksonville, FCL is one of two law schools that failed the test this year, with its students dealing with debt payments at more than 20 percent of their total earnings and payments at more than 30 percent of their discretionary income. Charleston School of Law, a sister school of Florida Coastal in the InfiLaw System, was the other school that failed and lost its access to federal funding as a result.

Department of Education Releases New Guidelines to Increase Access to Higher Education

The school is appealing the results and points out that its graduates have a low default rate of about 2 percent. But it is being proactive and actively looking for ways to improve its gainful employment ratings by increasing scholarships by 30 percent, implementing stricter admission requirements, and improving its bar prep courses and Career Resources department.

There is also the possibility of the school merging with a nonprofit university so the gainful employment doesn’t apply to it. The Department of Education, however, recently rejected a proposal from a chain of for-profit colleges from Utah that wanted to change to nonprofit to protect its federal funding. Regardless, FCL is already in talks with several potential partners.