ABA President Seeks Help for Law Students and Recent Law Graduates

From the ABA Washington Letter, April 2010

ABA President Carolyn B. Lamm stressed to Congress and the Department of Education last month that assistance with student loans is needed now for recent and upcoming law school graduates struggling in the current economy.

In letters to House and Senate leaders during consideration last month of H.R. 4872, health and education reconciliation legislation, Lamm urged that the Stafford loan limit of $20,500 for law students be elevated to at least $30,000 per year to help law students cover the cost of law school tuition. She explained that the average law student graduates with $85,000 in debt, and raising the limit for law students provides parity with medical students, who are able to borrow above the current cap for law students.

Another important reform would permit refinancing under the federal loan system to provide relief to those unable to repay their loans due to unemployment or underemployment, she wrote, noting that legal employers had some of their largest layoffs on record last year.

“Allowing borrowers to refinance or consolidate loans into the federal system would provide lower interest rates and other government benefits for recent law school graduates carrying large debts from private loans,” she said.

She also proposed allowing loans for bar study courses, which can cost between $2,000 and $3,500, to be considered education loans.

The final reconciliation bill signed by the president March 30, was enacted in conjunction with health care reform and includes ABA-supported provisions modifying the income-based repayment system. The provisions lower the cap on IBR assistance from 15 percent to 10 percent of a borrower’s adjusted income and reduce the forgiveness of remaining balances to 20 years from the current 25-year period.

In a March 26 letter to Secretary of Education Arne Duncan, Lamm urged Duncan to use his rulemaking authority to advance the effective date for modifications to the IBR system. She emphasized that the proposed effective date of July 1, 2014, will not provide relief for law school graduates struggling with unemployment and underemployment now. She pointed out that most law students will graduate prior to 2014, and relief is needed more immediately in this economic climate.

In addition to IBR modifications, more law school graduates would benefit from increased time to seek employment before beginning loan repayment, Lamm wrote. She recommended that the department consider extending the period for unemployed graduates from six months to nine months or a year. Similarly, extending the economic hardship deferral from one year to 15 months or 18 months would be a tremendous help, she said.

For a video of Lamm’s presentation, click here.

The ABA Washington Letter is a monthly publication produced by the ABA Governmental Affairs Office to report and analyze congressional and executive branch action on legislative issues of interest to the ABA and the legal profession. The newsletter highlights ABA involvement in the federal legislative process and focuses on the association’s legislative and governmental priorities and other issues on which the ABA has policy.