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Originally published in Student
Lawyer magazine, October 2004 (Vol. 33, No. 2). All rights
reserved.
Loan Relief Gets Respect
Backed by student advocacy and a major ABA lobbying effort,
loan repayment programs and Stafford loan reform are gaining the
attention of lawmakers and the legal community.
How to Take Action on Loan Relief
by Stephanie B. Goldberg
Nothing impresses legislators like the voices of their constituents,
thought Michael Pellicciotti, immediate past chair of the ABA Law
Student Division. So, during his final months as chair last April,
he e-mailed the association’s law student membership, soliciting
stories about their difficulties with student loans. In May, he’d
be traveling to Washington, D.C., with a delegation of Division
officers to take part in the annual ABA Day, when ABA leaders meet
with lawmakers to discuss issues of concern to the legal profession.
The students’ goal for ABA Day was to bring a message to
members of Congress and their staffs: Crushing educational debt
loads make it impossible for law students to consider careers as
prosecutors, public defenders, and other public interest positions.
Pellicciotti, then a 3L at Gonzaga University, was inundated with
e-mails from students—250 in the space of a week. The picture
that emerged was one of deep distress.
“My financial burdens are so enormous that I have considered
filing for bankruptcy just to get these creditors to leave me alone,”
one student wrote. “Last month, my water, electricity, and
phone were cut off because I could not pay the bills. I tried to
get a private loan, but was turned down. … [T]he reason I
came to law school in the first place was to pursue my life-long
dream of practicing public interest law. Now I am afraid that I
will not be able to do so because of the massive amount of student
loan debt I will be facing when I graduate.”
A pair of social workers attending night school was devastated
by the double whammy of tuition hikes and medical bills from a car
accident: “I will graduate this month. [My partner] has another
semester [and] is currently … training to be a public defender.
We both would like to continue our public service work … but
the cost of living compared with low public interest salaries does
not add up. How can we serve marginalized communities when we can’t
afford to pay our loans?”
Still another wrote: “As I enter into my third year of law
school, I am already haunted by the notion that when all is said
and done, I will owe approximately $135,000 for my law school education
alone. … My dreams of becoming a public service lawyer, so
that I might be able to help alleviate the need for young Spanish-speaking
lawyers, is not one that I am going to be able to realize because
I simply won’t make enough money to survive on my own.”
Says Pellicciotti: “The stories that touched me the most
dealt with basic access to education—students being forced
to drop out of law school because their loans were so large that
a co-signer was required even if they had a perfect credit history.”
Many whom the student delegation met on Capitol Hill—including
an education staffer for Sen. Richard Durbin (D-Ill.), the sponsor
of several bills to create loan repayment programs for prosecutors
and public defenders—were more than sympathetic. Others were
either unaware of the issue or skeptical that any lawyer would need
financial assistance.
“It was a challenge,” says Chicago-Kent 3L Lindsay
Hansen, who accompanied Pellicciotti to Washington as a student
member of the ABA House of Delegates. “We faced some resistance,
but, for the most part, there was recognition that it was important
to remove obstacles to public service.”
The dialogue with Congress is likely to continue for some time
as the ABA gears up for a coordinated national effort to provide
debt relief for young lawyers who take public interest jobs. In
2001, the ABA established the Commission on Loan Repayment and Forgiveness
to study the problem and make recommendations. Two years later,
the commission completed its work, publishing a report titled Lifting
the Burden: Law Student Debt as a Barrier to Public Service.
At the commission’s urging, the loan repayment issue has become
an ABA top-12 lobbying priority.
“The primary role for the ABA is to elevate this issue so
that the problem is universally understood,” says San Francisco
lawyer Curt Caton, the commission’s chair.
In that objective, the commission appears to have succeeded, having
brought the issue to the attention of legal and policy-making heavy
hitters. Chief among them is U.S. Supreme Court Justice Anthony
Kennedy, who says the commission’s report was a “revelation.”
Eager to help publicize the problem, Kennedy gave introductory remarks
when the panel unveiled Lifting the Burden at the ABA’s 2003
annual meeting. He noted that it was “the duty of the profession
to make public service professions economically viable.”
The commission’s recommendations are far reaching, envisioning
the creation of loan repayment assistance programs— LRAPs
(pronounced EL raps)—at the federal, state, and law school
levels. The panel also suggested changes in federal law to allow
employers to include LRAPs in their cafeteria benefits plans and
students to fully deduct interest on student loans. In addition,
it recommended creating incentives for public service employer-based
programs, boosting the annual payment for loan repayment for federal
employees from $6,000 to $10,000, and establishing LRAPs for Legal
Services Corp. lawyers.
But the lion’s share of the ABA’s lobbying efforts
is directed at two of the commission’s proposals. One would
increase the cap on unsubsidized Stafford loans for law students
from $10,000 to $30,000. The second, for law graduates who commit
to government or public interest work, would slice a decade off
the current 25-year, income-contingent repayment period, after which
the remaining loan balance is forgiven.
“We think many more students would take advantage of this
program if the repayment term was shortened to 15 years,”
says Ken Goldsmith of the ABA Governmental Affairs Office in Washington,
D.C.
If you do the math, it’s easy to see why law students are
getting caught in the crunch. As of 2002, the average cost of tuition
was $24,920 at private schools, $9,252 for in-state residents of
public schools, and $18,131 for nonresidents. Almost 87 percent
of all law students have to take out loans to finance their education,
preferring to participate in the federal student loan program with
its low interest rates and deferment and consolidation options.
The problem is that the federal Stafford loan limits of $18,500
a year—$10,000 for unsubsidized loans (on which interest is
compounded immediately) and $8,500 for subsidized loans (on which
interest begins accruing at the time of repayment)—are too
low to cover tuition at most private and several state schools.
To bridge the gap, students must take out private loans with higher
interest rates and sometimes onerous requirements. By the time they
graduate, they’re substantially in debt—averaging $45,763
for public school graduates and $72,893 for private school graduates
in 2003.
Most private practice lawyers can shoulder the burden, but with
an average salary of $36,000, public interest lawyers struggle to
make ends meet. The average monthly loan payments of $451 for public
school graduates and $718 for private school graduates account for
as much as a third of their salaries.
“Without my school’s loan repayment program, I couldn’t
afford to do this work,” says Virginia Karstens, who earns
$32,000 a year as a staff attorney representing indigents in deportation
proceedings at the Florence Immigrant Refugee Rights Project in
Florence, Ariz. “I’d have to take a second job.”
Karstens’ alma mater, Northeastern Law School in Boston, is
paying three-quarters of her $600 monthly loan.
Those less fortunate, says commission chair Caton, will “struggle
for a year or two and then throw up their hands and say, ‘There’s
no way out of this unless I switch to private practice.’”
The result is fewer lawyers to meet the needs of poor people,
says Cedar Rapids, Iowa, lawyer Diane Kutzko, a member of the ABA
Standing Committee for Legal Aid and Indigent Defendants, which
now oversees the association’s LRAP efforts. “As a former
president of Legal Aid in Iowa, I saw many lawyers leave when it
came time to buy a house or have children,” she says. Loan
repayment assistance “is critical to retaining public interest
lawyers.”
How will increasing the Stafford unsubsidized loan limits to $30,000—the
same level now available to medical students—ameliorate the
problem? “We see this as a core issue because everything relates
back to that,” says Chris Jeter, chair of the ABA Law Student
Division and a third-year student at George Washington University
Law School. “We think LRAP programs are important, but you’re
not going to need as many of them if you increase the Stafford loan
limits because students won’t be as heavily in debt.”
Because the last Stafford loan limit increase was in 1992, many
on Capitol Hill acknowledge the need to raise the limits but can’t
agree on the size of the raise and who should receive it. The ABA
wants relief solely for law students, but Republicans favor an across-the-board
boost of $2,000, says Ryan McCormick, a 2L at the University of
Texas and consultant with the ABA Governmental Affairs Office. The
ABA hired the former congressional staffer to help implement the
loan repayment commission’s federal legislative recommendations.
Rep. Robert Andrews (D-N.J.) has introduced H.R. 4102, the Access
in Equity and Higher Education Act, which calls for raising the
annual loan limit for unsubsidized Stafford loans to $25,000 minus
whatever a student receives in subsidized Stafford loans. It remains
to be seen whether Andrews’ plan will be incorporated into
the Higher Education Reauthorization Act—the omnibus legislation
that supplies funding for the federal government’s student
loan programs. Moreover, McCormick says, passage of major legislation
is unlikely in an election year.
By contrast, the ABA’s proposed changes for the income contingent
repayment option of the William D. Ford Federal Direct Loan Program
has found broader support. The proposal is to shorten the 25-year
repayment period to 15 years for anyone—lawyers and non-lawyers—working
in public service. “We originally advocated changing it exclusively
for lawyers but found that [the Republican majority] was far more
receptive when we broadened its scope,” Goldsmith says.
The stumbling block now is that House Republicans “insist
they need to know how much this bill is going to cost,” Goldsmith
says. “They’re under pressure to produce a revenue-neutral
bill—one in which any expenditures are offset by corresponding
cuts.”
Also pending is legislation that would fund a pilot LRAP program
for legal aid lawyers. H.R. 4754, an appropriations bill passed
by the House of Representatives in July, allows the Legal Services
Corp. to spend up to $1 million for a law school loan repayment
program in 2005. The Senate had not yet acted on its version of
the bill when it adjourned for the August recess.
Julie Strandlie, legislative counsel in the ABA Governmental Affairs
Office, is hopeful the bill ultimately enacted will include the
provision. She credits the “strong support” of House
subcommittee chair Frank Wolf (R-Va.) and ranking member Jose Serrano
(D-N.Y.) in the matter.
Rather than wait for federal reforms, many law schools and a number
of states have swung into action. Nine states—Arizona, Florida,
Maine, Maryland, Minnesota, New Hampshire, New York, North Carolina,
and Texas—already have LRAP programs. Indiana, Kentucky, Missouri,
and Pennsylvania are actively exploring the possibility of creating
them, says ABA consultant Susan Curry. These state LRAPs differ
in organization, eligibility requirements, and funding sources—some
use IOLTA (Interest on Lawyers’ Trust Accounts) proceeds or
state funds; others use private donations. Many are starting small,
Curry points out. Texas’ program, for example, is state administered
but privately funded through a $25,000 donation meant as a stopgap
until the legislature approves funding.
The prime mover in helping students set up law school LRAPs is
the Washington, D.C.-based Equal Justice Works, which reports the
movement is burgeoning. The number of law school LRAPs has doubled
since 2000, and the total amount of financial assistance has risen
by close to 30 percent. In all, 81 schools have LRAPs, disbursing
approximately $10.6 million in funding, and they’re in the
planning stages at 22 law schools.
That’s an encouraging start, but there’s still much
work to be done, says Mary Mulvenon, program manager at Equal Justice
Works. The 81 law schools with LRAPs represent less than half of
all ABA-approved schools, and many of the programs have limited
funding and stringent requirements that exclude all but a handful
of lawyers, she points out. Nineteen schools—nearly one-fourth
of schools with LRAPs—limit aid to those making $45,000 or
less, with no provision for annual salary raises.
At some schools, law students are doing both the research and
drafting to set up LRAPs and the legwork to find donors. It’s
an intricate process, reports ABA Law Student Division delegate
Hansen, who’s working with the Chicago-Kent Law School administration
to get an effort off the ground.
“It comes down to money most of the time,” she says.
“They cost a lot of money if you want the aid to be substantial.
Determining the source of the funding and the administration takes
a lot of time and manpower.”
Hansen is creating a Law Student Division resource packet to give
law students a leg up in their efforts. Instead of feeling overwhelmed,
students can be part of the solution.
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Student
Lawyer home page
How to Take Action on Loan Relief
Law students have worked to set up loan repayment assistance programs
(LRAPs) at the law school, employer, and state levels. These resources
can get you started:
ABA
Law Student Division
Visit for updates on the Division’s efforts on loan repayment
issues.
ABA
Division for Legal Services
State
LRAP Tool Kit: A Resource Guide for Creating State Loan Repayment
Assistance Programs for Public Service Lawyers
Lifting
the Burden: Law Student Debt as a Barrier to Public Service
Equal
Justice Works
Web site provides information on law school, state, and
employer LRAPs.
Paper
Chase to Money Chase: Law School Debt Diverts Road to Public Service
ABA student grassroots efforts
Law students who want to help advocate for the ABA’s student
loan initiatives are encouraged to contact ABA consultant Ryan McCormick,
mccormir@staff.abanet.org,
for more information.
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