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2006 Legislative Priorities
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| Background | Status | ABA Policy | Key Points | Links |
Many people enter law school with a deep commitment to ensuring access
to justice and the courts for all persons. Yet, upon graduation, they
find that they must forego their laudable aspirations in public interest
in light of the significant legal education debt required to graduate.
Studies show that most graduates of law school have a combined debt from
undergraduate and graduate studies in excess of $80,000, or loan payments
of more than $1,100 a month. Only those students with debt burdens half
that size tend to enter public interest positions, where the median starting
salary is $36,000, which does not include regular raises, health care,
retirement savings or other such benefits. Not surprisingly, a recent
study found that law school debt prevented 66% of student respondents
from entering public interest positions. According to legal service providers,
many new lawyers are unable remain in such positions for more than a couple
of years, adversely affecting the professionalism and expertise their
offices are able to deliver.
To assist people committed to public interest work, state and federal
governments have established a few limited loan cancellation or forgiveness
programs. While these would be of great assistance to appropriate lawyers
or legal service providers, lawyers are not currently eligible to participate
in the majority of such programs. Many members of Congress oppose including
lawyers in these programs because they believe loan forgiveness should
be targeted only to persons entering traditionally low paying occupations,
occupations that have severe shortages, or occupations related to a national
need. They suggest lawyers should work in a large firm for several years
to pay back their loans on an expedited basis if they wish to pursue a
public interest career subsequently. However, this view not only discounts
the value of this work and the law graduate's commitment to the issues,
but it ignores the highly-competitive market for such high paying positions
even for those who might be inclined to pursue the option.
In 2001, to study the issue in-depth, the American Bar Association formed
the Commission on Loan Forgiveness and Repayment Assistance. Two years
later, the Commission issued a report including steps that government
and law school officials could take to address the situation. A complete
copy of the report and its recommendations can be found at: http://www.abanet.org/legaled/miscellaneous/lrapfinalreport.pdf.
Following the introduction of a dozen bills in the 108th Congress that
would have benefited lawyers in public service positions, none were approved.
The bills included various proposals supported by the ABA Commission report,
including straight loan forgiveness programs, favorable tax treatment
for student loan payments, as well as proposed amendment the "income
contingent repayment option" of the Federal Direct Student Loan Program
to accelerate forgiveness under that program for those in public service
positions.
Several bills proposing forms of loan forgiveness for public interest lawyers have been introduced in the 109th Congress. On February 14, 2005, Sen. Ted Kennedy (D MA) introduced S. 371 that proposed various changes to the Higher Education Act, including amendment of the Income Contingent Repayment Option to benefit public interest lawyers and others, offering forgiveness of all qualifying loans after 10 years of service and a concurrent 10 years of repayment. On March 15, 2005, Rep. Andrews (D NJ) introduced H.R. 1293 that proposes various amendments to the Higher Education Act including a change to the Income Contingent Repayment Option that would provide forgiveness after 15 years for eight years service in qualifying public interest positions. On April 25, 2005, Rep. Rick Renzi (R AZ) introduced H.R. 1859, the Education for Public Service Act of 2005 that would essentially accomplish the same thing. Congressman Andrews also introduced H.R. 1753, a bill to provide direct relief to public interest lawyers; and H.R. 2527 to give public interest lawyers an extended deferment before their obligation to pay on their appropriate loans comes due following graduation. None of these bills received further consideration. However, provisions of Senator Kennedy’s bill, including the ICR Option changes, were incorporated into the bipartisan Senate bill to reauthorize HEA, S.1614.
No provision for lawyer student loan relief was originally included in H.R. 609, the House Committee on Education and the Workforce bill to reauthorize the Higher Education Act. However, during Floor consideration of H.R. 609 on April 4, 2006, Rep. Jon Porter (R-NV), joined by Reps. Andrews and Renzi, offered an amendment to include public interest workers as a profession of “national need” to Section 428K of the Higher Education Act. This designation would qualify such persons for up to $5,000 in student loan relief after five years of service. Rep. Andrews emphasized the importance of the language but its inadequacy to meet the pressing needs of professional students. H.R. 609 was approved by the House in a largely party line vote, where it was sent to the Senate, read twice and placed on the Senate Floor Calendar. Both it and S.1614 could be taken up on the Senate Floor at any time, but it is unclear precisely when that might be. In the interim, the President had signed into law, H.R. 4911, reauthorizing existing higher education programs through June 30, 2006.
The American Bar Association also supports other legislation to benefit lawyers seeking loan forgiveness including S. 2039, the Prosecutor and Defender Incentive Act of 2005, a bipartisan bill introduced by Senators Durbin (D IL) and Judiciary Chairman Senator Specter (R PA) on November 17, 2005. It would provide student loan forgiveness for prosecutors and public defenders of up to $10,000 per year to a maximum of $60,000 in exchange for a minimum three year commitment. On May 25, 2006, the bill was reported out of committee and placed on the Senate Legislative Calendar (Calendar No. 451) awaiting action by the full Senate. A similar bill introduced in January 2006 by Rep. David Scott (D GA) would provide similar assistance up to $6,000 per year, $40,000 maximum. The American Bar Association also supports S.1431, introduced by Senator Mike DeWine (R-OH) to provide loan forgiveness for lawyers who work with low-income families in domestic relations matters.
The ABA urges law schools, state and local bar associations, and federal and state lawmakers to establish Loan Assistance Repayment, Loan Forgiveness, and Income-Sharing Programs for law school graduates accepting low-paying, legal, public interest employment.
Certain changes should also be made to the Federal student loan program
to help alleviate the debt burden for law students. The ABA supports an
increase to at least $30,000 in the amount of unsubsidized Stafford loans
that a graduate or professional student may borrow annually. The ABA also
strongly supports improvements to the income-contingent repayment option
of the William D. Ford Federal Direct Loan Program. Congress should provide
forgiveness after 15 years for those who have spent a specified number
of years in full-time public service. It should also eliminate or reduce
the program's marriage penalty.
The ABA also supports amending the Internal Revenue Code to permit employers
to provide a benefit for their employees to repay qualifying educational
loans with pre-tax dollars.
Key Points
- It is a worthy pursuit to lower the financial barriers presented to
these graduates who desire to ensure rights and justice for those less
fortunate in our society.
- Students who borrow for law school are graduating with an average
educational debt between $70,000 and $80,000 with monthly payments averaging
$1,100. The median public interest legal salary is approximately $36,000,
which often does not include regular raises, health care, retirement
savings or other such benefits. Clearly, the average law school graduate
carrying a typical educational debt will face tremendous financial burdens
upon entering the comparatively lower paying field of public interest
law.
- This disparity between public interest and government salaries and
the tremendous debt burden faced by a majority of law school graduates
effectively precludes many young lawyers from pursuing a career in public
service.
- The need for legal services attorneys in America has never been greater,
over 80% of the civil legal needs of the poor are not being met.
- The federal government's loan forgiveness programs are severely limited
in scope and impact. Despite the great need for legal services providers,
lawyers are not eligible to participate in most of the current federal
government loan forgiveness programs.
- The current $18,500 cap on Stafford loans for graduate and professional
students is insufficient. This amount, set by Congress in 1992, has
not been adjusted for over ten years and doesn't reflect rises in inflation
or tuition rates since that time. For many students, the capped amount
of $18,500 does not even cover the annual cost of tuition, much less
for living expenses and incidentals. Therefore, students must also borrow
from private lenders, at much higher interest rates, to cover the cost
of their education. (Fact
Sheet on the Stafford Loan Program Increase)
- The 25 year repayment term currently in effect for the income contingent repayment option under the Federal Direct Loan Program discourages graduates from electing this option, as does the option's built-in marriage penalty. Congress should change the law to eliminate the marriage penalty and allow forgiveness of a borrower's remaining debt after 15 years of repayment, rather than 25, once a specified number of years have been spent in full-time public service during the repayment period. (Fact Sheet on the Income Contingent Repayment Option)
One-pager on Proposed amendments to the Income Contingent Repayment Option
ABA Commission on Loan Repayment
and Forgiveness
ABA Letters and Testimony
ABA Grassroots Legislative Action Center
ABA Section of Legal Education and Admissions to the Bar
ABA Law Student Division
ABA Government and Public Sector Lawyers Division
Other Resources
U.S. Department of Education
Equal Justice Works (formerly the National
Association for Public Interest Law)
Congressional Service Report
on Student Loan Forgiveness for Federal Employees
One Page Summary
from American Council of Chief Defenders
Iowa State Bar Association
Letter to Sen. Grassley (R-IA)
Staff Contact: Kenneth J. Goldsmith, Legislative Counsel
Last Updated: September 6, 2006