Lifting the Burden: Law Student Debt as a Barrier to Public Service

Executive Summary12• Congress and/or the U.S. Department of Education should increase to at least$30,000 the amount a law student may borrow annually in unsubsidized loans underthe Stafford Loan Program. This amount should be reviewed periodically thereafterand, at a minimum, adjusted for inflation and rising higher education costs.• Congress should create loan repayment/forgiveness programs for lawyers inpublic service under the Stafford Loan Program.•Congress should extend loan forgiveness under the Perkins Loan Program toattorneys working in public service, such as public defenders and legal aid attorneys.• Congress should amend Section 125 of the Internal Revenue Code of 1986 toinclude an educational loan repayment program as part of a qualified benefitassistance program (cafeteria plan) that can be sponsored by employers andoffered to employees.• Congress should enact legislation to give incentives to public service employersto provide educational loan repayment programs.• Pursuant to 5 U.S.C. § 5379, Congress authorized federal agencies to set up loanrepayment programs to repay federally insured student loans when necessary torecruit or retain highly qualified professional, technical, or administrativepersonnel. Congress currently authorizes the agencies to pay up to $6,000 inassistance to an employee in a calendar year, with an aggregate cap of $40,000.Congress should increase the annual cap to at least $10,000, increase theaggregate cap, provide for inflation increases to keep pace with tuition increasesand provide funding for federal agencies to implement these programs.• Congress should amend the Internal Revenue Code to allow a full deduction forinterest paid on student loans obtained for the purpose of attending an institutionof post-secondary education.• The Legal Services Corporation should make loan repayment assistance andforgiveness a priority, by such means as promoting these programs to its granteesand/or exploring the creation of a loan repayment assistance program for its grantees.Law Schools• Law schools should create programs to help reduce student debt burdens andfacilitate a student’s decision to enter and remain in a public service job. Theseprograms should include financial aid programs, such as loan repaymentassistance programs (“LRAPs”), public service scholarships and post-graduatepublic service fellowships.• Law schools should treat as a priority the funding of programs, such asLRAPs, designed to make public service work financially feasible for graduates.• Law schools should assure that their LRAPs have a solid funding base toenable them to be effective.• Law schools with LRAPs should continually evaluate them to determinewhether they are effectively meeting a school’s goals.• Law schools should provide more financial planning and guidance counseling tolaw students prior to matriculation, while enrolled, and following graduation, tohelp reduce debt load while attending law school, as well as adopt measures toachieve debt consolidation and reasonable payment scheduling to minimizedefault. At a minimum, the debt counseling function of a law school shouldinclude discussions of such methods of debt reduction as LRAPs, fellowships andother similar programs.