Loan Forgiveness

Paving the Way to Public Service: The ABA Commission on Loan Repayment and Forgiveness

Originally published in Pass It On, Spring 2002 (Vol. 11, No. 3)

Many of today’s law graduates are faced with law school debt of $80,000 or more upon graduation. For graduates following the standard 10-year repayment schedule, this results in monthly payments of more than $900 for 10 years following graduation. With the average starting public interest salary at $34,000, these mortgage-size debts bar most graduates from pursuing public service legal jobs. Among those graduates who do take such positions, many - when faced with major life decisions such as starting a family - are forced to leave after two to three years of employment.

In response to this problem, ABA President Robert E. Hirshon created the Commission on Loan Repayment and Forgiveness in August 2001. The commission’s job is to examine and report on the effect upon the legal profession of the increasing educational debt burdening law school graduates. In creating the commission, Hirshon noted that many observers believe that fewer lawyers are drawn to pursue public service law positions such as in civil legal services, indigent defense or government, immediately following graduation, and that those who do take these jobs cannot afford to remain in them very long. He believes this phenomenon has immediate and long-term consequences that will harm the profession and the public it serves.

Loan repayment assistance programs (“LRAPs”) have emerged as a solution for relieving the debt burden of some law graduates. LRAPs provide loan forgiveness, lower interest rates on loans, or postponed payment of law school loans to graduates entering specific types of employment, usually law-related public interest jobs. Most LRAPs contain limits on the amount of income a recipient can earn while participating in such a program. There are various types of LRAPs, administered by law schools, state bar foundations and federal and state governments, providing debt relief to some law graduates. However, the number of these programs has not increased appreciably during the past five years, while the average debt burden of law graduates has more than doubled during the same period of time.

The commission will study the impact of the debt burden problem on the ability of law graduates to pursue and remain in public service law jobs and will recommend solutions to the ABA and the profession. During the current bar year (ending in August 2002), the commission will focus on promoting LRAPs and guiding ABA efforts to stimulate more LRAPS and scholarships/fellowships provided by law schools, the federal government, state governments, and other private sources.

The commission is chaired by Curtis M. Caton, a member of the firm of Heller Erhman White & McAuliffe LLP in San Francisco, and Judge Frank M. Coffin of Portland, Maine, a senior judge on the U.S. Court of Appeals for the First Circuit. The ten commission members include leaders in the profession, drawn from the ranks of law school deans and faculty, law students, government, experienced public service lawyers, legislative experts and others. Liaisons to the commission include representatives from many ABA entities, as well as external organizations representing various constituencies, including law schools, labor, public interest attorneys, and corporate counsel.

The commission held its first meeting on October 22-23, 2001, in Washington, DC. The meeting featured a day-long educational forum during which commission members, liaisons and invited guests heard presentations from many experts about the substantive areas impacting the commission’s work, such as the Higher Education Act. Recent law graduates testified about the difficulty of pursuing and remaining in a public interest law job without the benefit of LRAP assistance. Then academics, policy makers, law school faculty, recent law graduates and LRAP administrators provided information about existing programs, policies and laws and suggested possible projects for the commission to consider.

Building on the information and insights generated during the first meeting, the commission established its objectives for the year. Recognizing the need to involve the private and public sectors, the commission is pursuing a multifaceted approach to the problem. Projects include developing sample LRAPs for law schools, drafting sample state LRAP legislation, and undertaking a cohesive legislative and administrative advocacy plan on the federal level. To structure its work, the commission formed three working groups - federal, state and law school - that meet on a regular basis.

The federal work group examined existing ABA policy pertaining to loan repayment and made policy recommendations to the full commission. Based on the group’s recommendations, the commission submitted two resolutions to the House of Delegates for consideration at the 2002 ABA Midyear Meeting.

The first resolution urged the ABA to support improvements to the income-contingent repayment option (“ICR”) of the William D. Ford Federal Direct Loan Program. The ICR was created to enable graduates with high debt, including law students, to take low-paying community service or public interest jobs. The ICR caps annual loan repayment obligations based on a borrower’s income and forgives any balance remaining after 25 years. Because of the excessively long period before loans can be forgiven, very few law graduates participate in this program. The improvements recommended in the resolution would enable ICR to realize its intended goals.

The second resolution supported an increase to at least $30,000 in the amount a law student may borrow annually in unsubsidized loans under the Stafford loan program. This increase would permit more law students to borrow a higher percentage of the funds they need at lower interest rates, while also making a higher percentage of the debt of law graduates eligible for repayment (and eventual forgiveness) under the income-contingent repayment option of the William D. Ford Federal Direct Loan Program.

The ABA House of Delegates adopted both resolutions, Reports 300A and 300B. The Government and Public Sector Lawyers Division, along with several other ABA entities, cosponsored both resolutions.

The commission held its second meeting on February 20, 2002, in New Orleans and discussed progress reports from all of its work groups. The commission will meet again in summer 2002.

The commission faces a challenging and exciting year. It will work together with the leaders within the ABA and many other national organizations involved in this issue, including the National Legal Aid and Defender Association and National Association for Public Interest Law, with the hope of facilitating the cultivation of a new generation of public interest attorneys.

By Curtis M. Caton and Judge Frank M. Coffin. The authors served as the co-chairs of the ABA Commission on Loan Repayment and Forgiveness. The Commission disbanded in Summer 2003.