Most prospective students considering a college and/or advanced professional degree can only afford to finance their education through student loans. The collective level of student loan debt has now surpassed $1.5 trillion, affecting nearly 45 million borrowers. This mind-boggling figure continues to surge as the cost of higher education has increased faster than the rate of inflation.
High levels of student loan debt have now begun to detrimentally impact borrowers in fundamental ways that go well beyond an individual’s inability to afford luxury items or services. For example, the Student Debt: The Holistic Impact on Today’s Young Lawyer study published by the ABA’s Young Lawyer Division (YLD), found that an increasing number of law school graduates make a conscious decision to delay or permanently forgo having a family due to student loan debt.
The Biden Administration has taken several substantive steps to address the current student debt crisis by, among other things, extending the federal student loan payment pause through August 31, 2022. The federal loan forbearance includes the suspension of federal student loan payments and permits borrowers to repay their loans at a zero percent interest rate.
This welcomed news followed the lobbying efforts from legal advocates during ABA Day which took place from April 5-6, in addition to the collective advocacy by the legal profession and other professionals requiring a higher education during the ABA’s Student Debt Week of Action in September 2021.
These measures provide a much-needed, yet temporary reprieve. Current student loan borrowers, as well as prospective borrowers, need policymakers to enact a permanent solution. This is particularly important to the legal profession where the average law school graduate incurs over $100,000 in student loan debt. Extremely large debt levels have resulted in 40 percent of recent law school graduates reporting that their loan balances have actually increased since earning their degree because the monthly payment often does not even cover the constantly accumulating interest. This is one reason the ABA supports options that would provide borrowers with more flexibility to reduce the interest rate on their loans, so that their payments would at least begin to reduce the principal balance.
Besides extending the student loan forbearance period to August 2022, the Biden Administration has also taken positive steps to improve the Public Service Loan Forgiveness (PSLF) program.
Following our Student Debt Week of Action last September, the Department of Education announced a temporary waiver of certain PSLF rules that will remain in effect only through October 31, 2022. In part, these rules expand qualifying periods of repayment, regardless of loan program, repayment plan, or whether the payment was made in full or on time, thereby making more people eligible for loan forgiveness.
The latest federal action improving the PSLF program took place on April 19 when the Department of Education publicly announced that it will act to “bring borrowers closer to public service loan and income-driven repayment (IDR) forgiveness by addressing historical failures in the administration of the federal student loan programs. Federal Student Aid (FSA) estimates that these changes will result in immediate debt cancellation for at least 40,000 borrowers under the [PSLF] Program. Several thousand borrowers with older loans will also receive forgiveness through IDR. More than 3.6 million borrowers will also receive at least three years of additional credit toward IDR forgiveness.”
Borrowers previously denied relief under the PSLF should review the new rules to see if they might now be eligible for relief. Remember to act fast though – some of these policy changes are only temporary.
If you would like to contact your members of Congress to advocate for more permanent student debt relief, please click here to send a letter through our Congressional Messaging Portal. For ongoing updates, please feel free to follow the ABA Governmental Affairs Office on Twitter here.