By Carolyn B. Lamm
President, American Bar Association
Every year, law students embark on a three-year course of study that will prepare them for a rewarding profession, but will also likely leave many of them with more than $80,000 of debt. It is increasingly common for law graduates to owe $100,000 or $150,000 and even more. Despite these statistics, most law school students pursue this rewarding education with zeal and to fulfill their dream to practice law, to help the public and to make a difference in their communities.
Most law students apply for and are granted loans through federal lending programs. But, there is a limit to the amount of money a student can borrow under them, and many students turn to alternatives to bridge the gap, including private loans.
While federal programs have mechanisms that permit students to deal with the economic crisis and facilitate repayment, state and private loan programs do not usually have these features. For example, federal loan repayments can be deferred -- in whole or in part -- for up to three years under current federal law, and in certain circumstances can be forgiven entirely after a term of public service with government or 501c3 organizations (through provisions enacted under P.L. 110-84) . Private lenders, however, do not typically offer such flexibility.
Congress recognized that our economy is unpredictable. It wisely implemented deferrals and forbearances to ensure that new students continue to enter school with the promise that, if the economy falters, they will have some additional time to pay back the nation in full – with interest – for the educational opportunity federal loans have provided.
The ABA has for many years -- regardless of economic climate -- advocated for federal laws that would ease the repayment burden on law students who found public service jobs. It’s time to explore creating additional methods to relieve repayment burdens for new graduates or new lawyers who have either been unable to find employment, have had their jobs deferred or have lost their jobs.
One possibility is to give law school student loan borrowers with private sector educational loans the same protections and flexibility as available under the federal student loan programs, such as deferment and forbearance. This solution could be achieved a number of ways, ranging from establishing a voluntary, retroactive agreement by lenders to extend terms of deferral and forbearance to current borrowers, to allowing students, and even alumni, to borrow additional federal funds – with their built-in flexibility – to be used for the purpose of retiring private loans.
Investment in students is an investment in our nation’s future. The federally insured loan program assures that all students -- regardless of economic circumstance -- are able to pursue their dreams. Lawyers in all practices – from family law practitioners to commercial litigators – are an integral part of our economy. Every entrepreneurial venture; home purchase, sale and bankruptcy negotiation; every business transaction; and family financial planning decision carries with it legal issues and the need for expert views or an advocate.
The ABA recently formed the Commission on the Impact of the Economic Crisis on the Profession and Legal Needs. This commission will consider new loan legislation and regulations while guiding the association’s continued response to the recession, which includes providing online resources for job searches, networking and career transitions.
Commission members are investigating ways to connect underutilized lawyers with people who need legal services, and are developing an additional series of free teleconferences for lawyers. Further, the ABA Judicial Division has worked to obtain internships for deferred lawyers with federal and state judges. Judicial internships for that program are posted online at http://www.pslawnet.org/deferredassociateopportunitieswithjudges .
The ABA’s Standing Committee on Legal Aid and Indigent Defendants has a detailed guide to help students find information about each state’s current or pending legislation related to loan repayment. There are other sites, such as EqualJusticeWorks.org and FinAid.org that can help law school students and graduates research requirements for loan repayment programs. The ABA’s new commission will explore ways to consolidate this information.
According to the National Association for Law Placement, more than half of the members of the Class of 2008 took private sector jobs, while just more than a quarter went to work in public service. Rather than a reflection of the motivations of individual students, studies show that these graduates have limited choices when facing substantial repayment obligations upon graduation. For example, one study noted that two-thirds of law students said law school debt prevented them from pursuing a public service career.
Even those who work in the private sector do not earn what lawyers are often portrayed in the media as making. According to the National Association for Law Placement, most average starting salaries for those in small and mid-sized firms, let alone public service, fall under $100,000. While it is true that private sector lawyers often do make a comfortable living during better times, it also means that these persons face an exceptional stress, from particularly their private loans, during a period of decline in or loss of employment.
Now is the time for modest changes in current federal student loan programs to increase the amount that law students may borrow, and to bring existing private loans into the federal student loan system.
No one with the talent, ability and desire to become a lawyer should forgo the opportunity to attend law school because of price. And no one who has successfully completed the study of law should be forced to make a career decision based on what he or she owes. Law students should be able to choose the career path – public or private -- that they believe will be the most fulfilling and will best serve their communities.
Other Items of Interest: