Law Schools

Law School Grads To Pay 'Significantly More' On Their Loans Under Trump's Budget Proposal

Many law school graduates will be screwed by Trump’s budget plan.

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If President Donald Trump’s budget plan is approved as is, it will not be kind to future law school graduates.

Released yesterday, Trump’s spending plan eliminates subsidized loans, consolidates income-based student (IBR) loan repayment plans, and completely does away with Public Service Loan Forgiveness — just as he hinted he would do while still on the campaign trail.

Under Trump’s budget, there will be only one income-based repayment plan, and borrowers’ monthly payments will be capped at 12.5 percent of their discretionary income, with the remaining balance being forgiven after 15 years. Under the current IBR plan, payments are capped at 10 or 15 percent (depending on whether the last date borrowed was on or after July 1, 2014), and the earliest borrowers can have their remaining balance forgiven is 25 years. Under the current Pay As You Earn (PAYE) plan, payments are capped at 10 percent of discretionary income, and the earliest borrowers can have their remaining balance forgiven is 20 years.

That’s not so bad, you may be thinking. Law school graduates will be paying just a little more per month, but less overall. Before you get too comfortable with that thought, you should know that under Trump’s plan, graduate students will have to wait 30 years before the remaining balances on their student loans are forgiven. Graduate students will not just pay more, but “significantly more,” according to student loan expert Mark Kantrowitz. With typical law school debt resting in the six-figure range, relying upon IBR to make loan payments for three decades will become even more painful for the average law school graduate with financial hardship.

That’s not the only way law school graduates will be screwed by Trump’s budget plan. Here are some additional details, courtesy of CNBC:

The Public Service Loan Forgiveness Program is eliminated in the proposed budget. This program allows former students who fulfill certain public service positions — such as public school teachers or health researchers — to have their loans erased after 10 years of on-time payments. Nearly two-thirds of student loan borrowers who’ve shown interest in the Public Service Loan Forgiveness earn less than $50,000 a year.

“You may have fewer people pursuing degrees in areas that will lead to public service occupations,” said Kantrowitz. “You won’t have as many prosecutors and public defenders.”

If the goal here was to make public servants with law degrees suffer, then erasing PSLF from the books will surely help to achieve that goal quite quickly. This is completely unfair, and penalizes those who took on significant debts in order to dedicate their lives to serving their communities.

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Elie Mystal, Joe Patrice, and Slate’s Jordan Weissmann talked about how some of these changes would likely affect borrowers, here on Thinking Like A Lawyer.

The only bright spot here is the fact that, if approved, these changes to student loans will not come into effect until July 1, 2019, and will not apply to loans provided to borrowers to finish their current education.

How are you going to tackle your law school debt now? We hope you have a plan.

Trump’s budget would end student loan forgiveness program [CNBC]

Earlier: What Are Donald Trump’s Plans For Law School Debt?

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Staci ZaretskyStaci Zaretsky has been an editor at Above the Law since 2011. She’d love to hear from you, so please feel free to email her with any tips, questions, comments, or critiques. You can follow her on Twitter or connect with her on LinkedIn.

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