In Response To Defenders Of The Public Service Loan Forgiveness Program

Public interest work is important, but PSLF is not the best way to promote such service.

student loan repayment law school debt.jpgWhen I wrote my piece last week calling for the elimination and replacement of the Public Service Loan Forgiveness (PSLF) program, I knew that it would upset some people. Because I knew the repeal would not be retroactive, I figured it would be safe to write about this, and the backlash would be minimal.

The negative responses to my piece were numerous and passionate. And some had very good points. While I think some of the responses were motivated by self-interest, it was understandable. My piece was not meant to insult anyone who works in public service. I will acknowledge that many people went to law school to help people while living comfortably, and not for riches, and I fully support those people and all lawyers who work in public-interest jobs.

My intent is not to denigrate public interest work, but to call out the very small but growing minority who were never interested in public service but planned to use PSLF as a student loan bailout. Because of people like you, it became harder for those who are genuinely interested in public service to get jobs. What triggers me is that some of these people have the means and the family to pay their student loans off without creating a major financial hardship, but why use your money when you can use someone else’s?

I want to take this opportunity to address some of the better criticisms of my piece.

Abolishing PSLF will affect not just lawyers but teachers, social workers, and others seeking to work in public service.

I understand that other professions will also suffer if PSLF is repealed or modified. I am aware that many people with Ph.Ds are having difficulty finding tenure-track professor positions and have to get by being adjuncts with no job security. And I am also aware of grade school teachers who are underpaid due to low tax revenue and who teach in dangerous neighborhoods trying to educate (and sometimes be surrogate parents to) at-risk students.

I sometimes wonder what society would be like if the salaries of teachers and lawyers were reversed.

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That being said, the plight of other public service professions deserve attention, just not here. My goal was to focus on lawyers and whether PSLF should still be available to them.

So a few people may be abusing PSLF. Does this mean that it should be abolished altogether?

In its current form, absolutely (we can certainly talk about possible reforms as well). The amount of loan forgiveness is predicted to increase year after year in light of tuition increases and disincentives for bargaining. This will increase the incentive to abuse the system in the future. PSLF is analogous to a benign cancer that must be treated before it metastasizes into a “too-big-to-fail” backdoor education subsidy.

Why I am treating loan forgiveness different from salary?

Last week, I wrote that something is wrong when people are choosing their careers based on the potential for loan forgiveness. Instead, they should choose a career that would help them pay off their loans. Someone asked if there is a difference.

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Yes. When you choose a job that pays a modest salary in exchange for more generous loan forgiveness, your forgone salary constructively pays down the loans in the form of forgiveness. On the other hand, if you choose a job that pays a higher salary, the extra money might be used to pay down the loans. Or you may choose to spend the money on other things. You may need to fix the roof. Or pay for emergency surgery. Or you may buy a sports car to alleviate your midlife crisis.

The difference is ultimately irrelevant. My intent is to show that PSLF will eventually create a moral hazard in two ways. Those who intend to go into public service work will have no incentive to minimize loans since they will be forgiven anyway. Also, the very small minority who never gave a [spit] about the marginalized, overborrowed for their education, and didn’t get on the career track of their choice will pursue a public interest career to get a loan bailout.

The government should go after the schools that are charging excessive tuition. Repealing PSLF only punishes the students who want to do the right thing.

I have problems with this line of thought. When it comes to identifying the bad actors, people point to every school except theirs. For some strange reason, everyone argues that their school is not part of the problem. And if their school charges higher tuition, there are good reasons for it.

Some blamed low-ranked “diploma mill” law schools for luring their students into public service work in order to gain loan forgiveness. But this practice is not just limited to the low-ranked and for-profit schools. Even the top-tier schools are doing this.

As for terms of alternatives to PSLF, I don’t believe that the government should force schools to give tuition discounts to students who say they are committed to public service, even if it is a condition to be eligible for federal student loans. Such a commitment will be difficult to monitor and enforce. Also, schools may discourage students from seeking government work and might even disallow government and public interest firms from recruiting at their campus.

Repealing PSLF will make it harder for legal aid organizations to recruit top quality lawyers for moderate pay.

I do not know what these people meant when they wrote “top quality,” but I’ll assume they are not being academically elitist. Great lawyers come from a wide range of schools and don’t all have perfect transcripts.

Yes, an effect on recruiting is a possibility, but I think government and established legal aid organizations will not be affected too harshly. I graduated before PSLF, and back then, many entry-level government and paid legal aid positions were still competitive.

I think that startup 501(c)(3) organizations stand to suffer the most since they do not have name recognition. But this problem can be minimized if the startup associates itself with an established non-profit and shares resources.

My reasons for repealing PSLF are shared by many conservatives. But I would like to end this piece by giving two additional reasons that I hope will resonate with liberals. After all, President Obama also called for a modification to PSLF’s provisions.

The first is that PSLF as it stands has the potential to worsen economic inequality in the legal profession. PSLF was originally meant to level the financial playing field for those who want to work in public service. But as I mentioned in the beginning, as time passes, more people applying for PSLF will come from the upper class, with independent means to eventually pay off their loans. But those who want to work in public service but don’t have the grades, connections, or independent resources will have difficulty finding work. This will put them in a severe financial hardship.

The second reason is that PSLF as it stands will threaten to reduce diversity in the legal profession even further. As the generous loan forgiveness provisions make public service jobs more attractive and competitive, it is very likely that people of color will have a harder time obtaining these jobs. While I believe every lawyer regardless of background will do their best, I should note that many ethnic minorities can be better helped on a holistic level by those who speak their language, understand their culture, and look like them.

If anyone wants to discuss this with me further, I will respond via email or Twitter. Obviously, my responses do not represent the thoughts of Above The Law nor its staff and other columnists — indeed, I suspect many of my fellow writers disagree with my views — so please direct all comments on this subject to me.

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Shannon Achimalbe was a former solo practitioner for five years before deciding to sell out and get back on the corporate ladder. Shannon can be reached by email at sachimalbe@excite.com and via Twitter: @ShanonAchimalbe.