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

Lifting the Burden:The Problem and Its Solutions20Ms. Median’s Total Expenses (including Tuition) during Law School: $108,113Ms. Median’s Total Borrowing to Attend Law School: $70,299As you see, Ms. Median does not borrow the entire $108,113 that she will spendon tuition and living expenses. She borrows $70,299, and like most other lawstudents, works during the school year 16 and during the summer between schoolyears to earn the remaining $37,814. For example, by working for 12 weeks duringthe summer after her second year at a 30-lawyer firm, Ms. Median is able to earn$12,600, the median amount paid in the United States to summer associates by firmswith 26-50 lawyers. 17 Some of her classmates who want experience in a public servicesetting will work in a legal services office, earning less than a third as much as Ms.Median. Also, during the school years, Ms. Median takes a job waiting tables in arestaurant to earn extra money.Ms. Median’s Total Earned Income during Law School: $37,814Where does Ms. Median find the $70,299 in loans to pay for her law school tuitionand living costs? Like most other law students, she will turn to the financial aidoffice of her law school. She will be able to borrow $55,500 through the Stafford Loanprogram, which is part of the Federal Family Education Loan Program. 18 The StaffordProgram offers a subsidized interest rate, and on the first $8,500 borrowed each year,the Federal government pays the interest during the period the student is in school.In addition to the $55,500, she will need to borrow $14,799 from private sources. Todo so, she is likely to turn to Access Group, the largest private loan program for lawstudents and borrow the $14,799 across three years at roughly 8.5% interest, withpayments deferred until the end of law school. 19The Sources of Ms. Median’s Law School Loans:Subsidized Stafford Loans: $25,500Unsubsidized Stafford Loans: $30,000Loans from Private Lenders: $14,799$70,299It is now the fall of Ms. Median’s third year of law school. She has been living quitefrugally for the past three years. She still shares a small apartment with three otherstudents and has gotten by without an automobile. She has been looking forward tofinishing law school and beginning full-time work. By the end of her schooling, shewill have law school loans totaling $70,299. Coupled with her undergraduate loan of$16,079, she will owe a total of $86,378.Ms. Median’s Total Borrowing to Attend College and Law School: $86,378Ms. Median would like to pay her loans off over ten years, which is the standardrepayment period for federal educational loans, and among payment schemes, the16About 60% of law students work at least part-time during the terms they are in law school. NCES at 8.Fewer than 60% work during their first year, while more than 60% work during their second and third years.17National Association for Law Placement, Summary of 2002 Associate Salary Survey, available atwww.nalp.org.1820 U.S.C. §§ 1071 to 1087-4.19The interest rate will vary. This is the rate Access Group uses when developing projections (representing a“worst-case” scenario). Interest rates have been higher in the past, but recently, interest rates have been historicallylow. The current interest rate for Law Access Loans is 3.98% (effective July 1, 2003 throughSeptember 30, 2003). The interest rate for Law Access Loans is based on 3-month LIBOR (London InterBankOffered rate, plus 2.7%) and adjusted quarterly.