A new federal program promises student loan forgiveness for people who qualify after they’ve dutifully paid their debts for ten years. The program will also cap monthly loan payments depending on income. The act, passed in 2007, is set to become effective on July 1st. The National Law Journal reports the awesome news:
Some members of the class of 2009 will have less to complain about, however. A new federal program intended to help borrowers manage their student debt goes into effect on July 1. The legislation — called the College Cost Reduction & Access Act — will cap monthly loan payments according to income and forgive student debt balances after designated periods of time. For attorneys, the main beneficiaries will be those who go on to have long-term public interest careers. But the program will also make loan payments more affordable for all attorneys with high debt loads and relatively low incomes.
“There are a lot of things that are making it tough for new graduates, with the tight job market and the deferrals,” said Heather Jarvis, a senior program manager at Equal Justice Works, an organization that encourages attorneys to undertake public interest law careers. “But there has never been a better time to graduate, as far as student loans.”
Essentially this is the best piece of news for the class of 2009 since they got into law school in the first place. The government will forgive outstanding loans after ten years of payments for people who work in public interest and other qualifying organizations.
Obviously this program is geared towards students who take public interest jobs. Biglaw lawyers are still on their own with their debts:
This option wouldn’t make sense for graduates who take jobs at large firms paying upwards of $100,000, Jarvis said, but it might be right for the sizable segment of law school graduates who don’t earn that kind of money.
“The reality is that most law graduates don’t take those jobs and earn those salaries,” she said. “A lot of people make $60,000 or $70,000 a year. At these salaries, they would qualify for the income-based repayment plan. Debt loads are getting so high that it’s typical for someone to graduate from law school with $100,000 or more in debt. If you were going to stretch out paying your debt anyway, [income-based repayment] is a good option to consider.”
Right now, it appears that many students who can qualify for the program don’t even know it exists. More details after the jump.
Law schools are not doing a great job of explaining loan repayment options to students. That makes sense. Surely you don’t expect law schools to help you with any practical knowledge about actually functioning as a lawyer:
Several organizations — including Equal Justice Works, NASFFA and The Institute for College Access & Success — have launched educational campaigns or Web sites to help students understand their loan-repayment options. Several law school administrators said they are trying to spread the word to students, but largely are relying on the expertise of outside organizations to help students understand the fine details of the program. Northeastern University School of Law — which is know for its strong public interest program — held two sessions during the past academic year to familiarize students with the program, said financial aid director Linda Schoendorf. But the coaching isn’t too detailed.
“We’re giving them basic information. We don’t go into the nitty-gritty,” Schoendorf said. “We’re referring them to the experts for that.”
Even the Department of Education doesn’t yet have the applicable forms available online. Don’t expect to be spoon fed the tools you need to pay off your loans.
But this program should be more reliable than state-funded loan forgiveness. Earlier this month, the state of North Carolina essentially ran out of loan forgiveness money. We can hope that the U.S. Treasury has a deeper well of Yen that it can drawn on.
As long as law schools continue their Viking-esque philosophy of rape and pillage of the nation’s future lawyers, it can’t hurt for the government to step in and help low income lawyers.
Help is nigh on the student loan front [National Law Journal]
Student Loan Relief On the Way For Law Grads [ABA Journal]
Summary Of The College Cost Reduction And Access Act (H.R. 2669) [NAFSAA]
Earlier: UNC Law Abruptly Ends Loan Repayment Assistance Program
Student Loan Bailout: Are Loan Forgiveness Programs In Danger?
Minnesota: Protects College Students, Sticks it to Law Students