Originally published in Student Lawyer magazine, October 2005 (Vol. 34, No. 2). All rights reserved.

A Capitol Effort for Law Student Loan Reform

The ABA and its law student leaders continue to advocate for increases in Stafford loan limits and loan forgiveness for public interest lawyers. But even as lawmakers advance bills on the issue, federal budget deficits have made the arguments difficult for many to accept

by Stephanie B. Goldberg

"If you told me three years ago that I would be working at a commercial law firm, I never would have believed it,” confides “Karen,” a second-year associate at a large New York firm. Karen, who requested anonymity for this article, is at the pinnacle of the legal profession: A graduate of one of the country’s top law schools, she earns six figures representing corporate clients on challenging legal matters.

But Karen’s job represents a compromise of the dreams that led her to become a lawyer. “I entered law school with the intention of taking a public interest position in the field of human rights,” she says. What changed her mind was the prospect of repaying $145,000 in student loans and $20,000 in credit card debt she accumulated during three years of law school. “I felt I had no other choice than to look for a job in the private sector,” she says.

“I have friends with this kind of debt who chose not to go to law firms,” Karen adds. “But they either have someone providing financial support or a very different psychological relationship to this debt. Personally, I find it nerve wracking.”

Karen’s story is one of 400 accounts the ABA Law Student Division received when it solicited on its web site in early April “personal experiences or hardships relating to … law school debt.” On April 27 and 28, a delegation of law student officers took those stories to Washington, D.C., and visited the offices of 32 members of Congress. Their mission: to drive home the message that the high cost of law school loans is preventing a new generation of lawyers from entering public interest law.

As one student account noted, “Not everyone in law school wants to make a lot of money. Some people see law as a means to getting people to listen, changing our great nation’s public policy, and carving out a life we can look back on with pride.” But at what personal cost, many are wondering.

Take, for example, the typical legal aid lawyer, who earns a salary of $36,000, or $27,000 after taxes. If he has $100,000 in outstanding loans on a 10-year repayment plan, he will pay out $1,065 each month on student loans, leaving just $1,185 for all other expenses, notes Philip Schrag, a professor at Georgetown University Law Center and an expert in student debt issues. Schrag, along with ABA past president Robert Hirshon, current president Michael Greco, Rep. Rick Renzi (R-Ariz.), and former Law Student Division chair Chris Jeter, spoke at a program on student debt and loan forgiveness at Georgetown on April 26. The event, a kickoff to the ABA’s related lobbying activities on Capitol Hill, was sponsored by the ABA Law Student Division, Young Lawyers Division, and Section of Legal Education and Admissions to the Bar.

At the heart of the problem is the rising cost of tuition, which has “risen much more dramatically than the cost of living,” says Schrag, author of Repay As You Earn: The Flawed Government Program to Help Students Have Public Service Careers. From 1992 to 2002, as the cost of living rose 28 percent, tuition rose 100 percent for in-state residents at public schools, 134 percent for out-of-state residents at public schools, and 76 percent at private schools. Law students currently graduate with an average debt load of $66,810 from public schools and $97,763 from private schools, according to Schrag.

That debt is manageable on the median law firm starting salary of $90,000, but it becomes overwhelming for government and nonprofit lawyers, who draw median salaries of $42,000 and $36,000, respectively, he adds.

What are the alternatives? More than 80 law schools and eight states have started loan repayment assistance programs (LRAPs) to forgive the loans of graduates entering public interest or public service work. These programs lower interest rates on loans, defer loan payments, or forgive a percentage of loans for every year a lawyer works in a public-interest-related legal job.

Their drawback, Schrag says, is that they have strict income limits: Lawyers can lose eligibility for a program after receiving a couple of salary raises. And many schools do not yet have these programs or have only a limited amount of funds to dispense.

For broader relief, the ABA has been lobbying for changes in two federal loan programs: raising the annual limit on Stafford unsubsidized loans from $10,000 to $30,000 and improving the usability of the Income-Contingent Repayment (ICR) option of the William D. Ford Federal Direct Lending Program, which currently forgives federal student loans after 25 years of public service.

The Stafford program allows graduate and professional students to borrow $8,500 in subsidized loans and $10,000 in unsubsidized loans annually—an amount that Congress has not increased since 1992. Because $18,500 is insufficient to cover tuition at all but a few law schools, law students are forced to make up the difference by taking out loans from private lenders, which charge exorbitant interest rates.

What makes the situation particularly unfair to proponents of law student loan reform is that the Department of Education raised the annual Stafford unsubsidized loan limit for medical and other health care students to $30,000 in 1999. The ABA argues that all graduate and professional students should receive the same treatment.

The ABA also is urging that student loans be forgiven after 15 years of public service and that the ICR program’s marriage penalty be eliminated. Currently, the program limits annual loan payments to 20 percent of a lawyer’s income, but married lawyers must pay 20 percent of their joint income. Whatever is unpaid each year is added to the principal. “You may actually have to pay more over time,” Schrag cautions.

The most significant drawback to the ICR program in its current state is its 25-year length. “Lawyers balk at paying off their student loans at the same time they are paying for their children’s college education,” Schrag says.

The ABA House of Delegates made lobbying for these changes in the law a priority item in 2003. Two years earlier, then-ABA president Hirshon established a Commission on Loan Repayment and Forgiveness. It produced a report in 2003 titled Lifting the Burden: Law Student Debt As a Barrier to Public Service, which included 19 recommendations to the ABA, states, and law schools.

Every spring, in an event called ABA Day, the association sends its leaders to Washington, D.C., to meet with members of Congress and advocate for issues the ABA designates as legislative priorities. More than 300 lawyers and law students participated this year, speaking about issues such as the need for representation of indigents, funding of the Legal Services Corp., educational debt reform for law students, and loan repayment and forgiveness for lawyers who work in public interest law. This year, for the first time, reform of the ICR option was designated as one of the top three lobbying priorities for ABA Day.

This was the second year Law Student Division officers participated in ABA Day by visiting legislative offices to discuss student debt and loan issues. “We were more sophisticated in our approach this year,” says Lindsay Hansen, a 2005 graduate of Chicago-Kent College of Law and then a student member of the ABA House of Delegates. There was a concerted effort to meet with lawmakers and their aides who sat on the House of Representative’s Education and the Workforce Committee and the Senate’s Health, Education, Labor, and Pensions Committee, which have jurisdiction over the issue.

By the end of ABA Day, the students had met with 32 members of Congress and their staffs on both sides of the aisle, including legislative well-knowns such as Sen. Richard Lugar (R-Ind.), Sen. Barack Obama (D-Ill.), Sen. Elizabeth Dole (R-N.C.), Sen. Hillary Rodham Clinton (D-N.Y.), and House Speaker Dennis Hastert (R-Ill.).

The ABA’s goal of accomplishing student loan reform this year has been especially challenging, as both houses of Congress had been asked by President Bush to cut $12.5 billion out of the education budget. As a result, Republican legislators in particular were loath to support legislation that shortened the length of employment necessary for loan forgiveness under the ICR option.

“No one disagreed with the idea in principle; they just thought we couldn’t afford it,” says Andrew Chiang, a 2005 graduate of Stetson University College of Law who was then the Law Student Division’s vice chair.

The law students did take note that a growing number of groups have expressed support for modifying the ICR option, including the National Association of Social Workers, the U.S. Conference of Mayors, the National Association of Graduate-Professional Students, the Association of American Law Schools, and the American Association of Colleges of Nursing.

Law Student Division chair Vicki Goodman, a student at Widener University School of Law’s Delaware campus, has vowed to continue the fight, which she describes as “of utmost importance to our members.” She will have assistance from ABA president Michael Greco, who describes himself as being passionate about finding ways for lawyers to perform public service.

“I believe that the vast majority of people are attracted to law school because they believe a legal career will not only enable them to do well, but to do good,” Greco says. He points out that financial pressures lead young lawyers to take jobs with six-figure salaries in which they’re expected to work 2,000 to 2,400 hours a year and have time to do little else. “It’s a vicious cycle, and I want to break that cycle,” Greco says. “There’s a sense of fulfillment and satisfaction that only comes when you are volunteering your skills to someone in need.”

The ABA and Law Student Division also have an important ally in Rick Renzi, the Republican congressman from Arizona who introduced the Education for Public Service Act, H.R. 1859, on April 26. His loan forgiveness bill would apply to any lawyer working for the government or employed by a 501C(3) nonprofit organization and would require them to do eight years of public service out of a 15-year time frame.

By not insisting on continuous service, the law allows “young women to go in, leave to have a family and go back in, and lawyers to take time out to serve in the JAG corps,” Renzi told the Georgetown assembly. He admitted that some of his party members “see this as a little bit of a giveaway” and stressed the importance of grassroots support, asking students to write their congressmen.

Rep. Robert Andrews (D-N.J.) is another ardent supporter of student loan reform for lawyers. In March, he introduced H.R. 1293, the Access and Equity in Higher Education Act, which includes a provision to provide loan forgiveness to professionals who work in public service for eight out of 15 years. In April, he introduced H.R. 1753, which provides financial assistance to lawyers doing public interest work. In May, he introduced H.R. 2527, the Residents and Public Interest Attorneys Deferment Act, which allows a two-year loan deferment for public defenders and prosecutors. All three bills were referred to the House Committee on Education and the Workforce, but none acquired significant support from Republicans.

This year, both houses of Congress were under the gun to pass legislation reauthorizing the Higher Education Act, an omnibus bill that provides financial resources to students and educational institutions. The House’s bill, H.R. 609, was passed in July. It increases unsubsidized Stafford loan limits from $10,000 to $12,000 but doesn’t incorporate Renzi’s proposal, noted Alexa Marrero, communications director for the House Committee on Education and the Workforce.

In the Senate, the chairman of the committee that oversees the Higher Education Act, Mike Enzi (R-Wyo.), vowed to produce a bipartisan bill. This fueled hopes from the ABA and other advocates that Sen. Ted Kennedy’s proposal for loan forgiveness for public servants would make it into the bill’s final draft, which the Senate hadn’t voted on as of its August recess. The Massachusetts Democrat’s bill, S. 371, provides for forgiving loans after 10 years of public service work.

Other senators have joined the cause as well. Mike DeWine (R-Ohio) introduced S. 1431, which provides loan forgiveness for public interest lawyers who work with low-income families on domestic relations matters. Dick Durbin (D-Ill.) was expected to include loan forgiveness for prosecutors and public defenders in a broader anti-gang bill. Both proposals would provide for matching payment of $6,000 with a lifetime maximum of $40,000.

Apart from the legislative battles, some lawyers have gone to the courts to be covered by loan forgiveness programs traditionally limited to law enforcement personnel, social workers, and teachers. Earlier this year, the U.S. Court of Appeals for the Second Circuit held that three New York Children’s Service Department lawyers should be allowed to participate in a Perkins loan program that provides loan forgiveness to people who do work with high-risk children.

And so the battle for relief from high student loans continues on multiple fronts. Federal legislative change is “a long process,” says Chris Jeter, the 2004-05 Law Student Division chair. “We’re aware that students are hurting badly, and that’s why we’re doing as much as we can.”

Learn More, Get Involved: Visit the ABA Law Student Division's Legislation and Advocacy web site.


Students Share Their Stories

A wide range of life experiences, law schools, and geographic areas were represented in the stories of loan hardship received by the ABA Law Student Division, but all these
people faced the same reality: They could not practice public interest law without facing decades of crushing debt.

A Vermont student writes:
My goal is to one day head an environmental nonprofit law firm. I have two very bright friends who share the same vision…. However, when we met with our financial aid counselors to discuss our loan repayments, we were taken aback at the prospect of having to pay over $700 a month in loan repayments for the next 30 years. How are we ever going to accomplish our dream yet earn the big bucks we need to repay oppressive loans?

A Colorado student writes:
Federal student loans cover less than half of the law school and living expenses I pay each year.… I project I will owe $110,000 upon graduation from law school. My dream of making a positive difference in our country by working for a nonprofit will have to be placed on hold. If I want to own a home, take care of my parents and family, and pay down my student loan debt, I will have to work in the private sector. I feel very disillusioned.

A Texas student writes:
I didn’t go to law school to make lots of money; I went to become a more effective advocate for my fellow community members. Now I am faced with making the same salary as I did as a social worker but with four times the debt.… There is no possible way I am going to be able to afford even the minimum balance for my expected $80,000 student loan debt. I have never had any credit problems and really don’t want one upon graduation…. I feel that I am trying to serve my community, but I need a little help to do so.

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