Student Loan Forgiveness for Lawyers – Forbes Advisor
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The average law school debt among attorneys age 36 or younger who graduated in the past 10 years was $108,000, according to the American Bar Association. If you’re a lawyer who left school with a lot of student loan debt, you have several avenues for forgiveness — particularly if you work in the public interest for a government agency or nonprofit organization.
Here are the student loan forgiveness options available to attorneys and how you can qualify.
How Does Student Loan Forgiveness For Lawyers Work?
Many attorney forgiveness programs have been created in recognition of the high level of student loan debt that trainee attorneys incur compared to the low salaries they typically earn in the public sector.
Some programs focus on supporting public defenders and prosecutors serving low-income clients. Others have broader eligibility criteria and support any attorney working in the public interest. There are also additional loan repayment assistance programs offered by some employers that serve attorneys working in the private sector.
Tip: Keep in mind that in some cases, the type of credit you have—government or private—affects which programs you may qualify for.
Federal Loan Decree for Attorneys
If you have federal student loans, you have the opportunity to apply for some of the most generous forgiveness programs out there. For this reason, it’s important that you, as a law student, borrow as much as possible on federal loans before looking at private student loans.
Here are the federal loan forgiveness programs you should consider as an attorney:
Government loan forgiveness
Public Service Loan Forgiveness (PSLF) offers tax-free forgiveness of federal direct loans to borrowers who work for government employers. As an attorney, you must make 120 qualifying payments before you are eligible for remission, which means you are working full-time for a government agency or 501(c)(3) non-profit organization. You can confirm that your employment is eligible by completing an employment certification form.
To see if you qualify for the program and to track your progress, you can use the Federal Student Aid PSLF help tool.
Income dependent repayment
Regardless of what type of work you do, you can qualify for federal student loan forgiveness by enrolling in an income-based repayment (IDR) plan. You’ll have to make payments for 20 or 25 years (depending on the plan), and the balance waived can be taxed as income until you reach that milestone.
IDR allows forgiveness for attorneys who do not work in the public sector or decide to move to the private sector before their 120 PSLF payments expire. IDR also lowers payments to 10% to 20% of your discretionary income, making repayment a lesser burden on a capped salary.
You can Sign up for IDR online via the website of the Federal Student Union.
Perkins Loan Forgiveness
Federal Perkins loans are no longer available to new borrowers, but if you previously took them on to attend elementary school or graduate school, certain legal careers can help you cancel them. Perkins Loan Forgiveness is an option for full-time public or local government defenders who can have 100% of these loans forgiven gradually over five years of service.
Other types of lawyers, including those working in the public sector, are not eligible; Instead, you can consolidate Perkins loans into a direct consolidation loan to qualify for PSLF. However, check with your school or servicer to weigh the pros and cons of consolidating federal student loans before doing so.
National Payback Programs for Attorneys
There are also some statewide loan forgiveness and repayment programs. These programs generally offer loan forgiveness in the form of repayment assistance of up to a year or a lump sum.
Here are the requirements of each and what you need to know before applying:
Agency specific loan repayment assistance programs
In an effort to recruit and retain excellent employees to work at various federal agencies, each agency can start a Loan Repayment Assistance Program (LRAP). Attorneys can access programs from agencies such as the Departments of Agriculture, Commerce, Defense, Education and more. These programs include a service requirement and both an annual and overall support cap.
For example, the Department of Justice Student Loan Repayment Program for Attorneys offers up to $6,000 per year in loan repayment assistance, up to a total maximum of $60,000. Only federal loans are eligible, and employees must commit to a three-year service contract. Renewals of this initial service contract are also available but not guaranteed.
Herbert S. Garten Loan Repayment Assistance Program
Administered by Legal Services Corporation (LSC), this program provides forgivable loans to attorneys employed by LSC-funded legal aid organizations, which participants can then use to pay off law school debts. Entrants must not have been employed by an eligible organization for more than five years in order to qualify.
LSC selects grantees by lottery, and applicants must have a minimum of $75,000 in law school loans and not exceed certain income limits. Forgivable loans are granted once a year for a total of up to three years, which can then be forgone if you remain in good standing and continue to work full-time. Grant recipients can receive up to $5,600 per year.
Many state legal aid organizations also have their own repayment assistance programs that you may want to consider.
John R. Justice Student Loan Repayment Program
This program provides repayment assistance to prosecutors and public defenders who have worked full-time for at least three years for state or local agencies or non-profit organizations contracted by state or local governments. The funds can only be used to pay back federal student loans, and the money received is not taxable as income.
The federal government allocates the program funds to the federal states in each budget year on the basis of the number of inhabitants. Individuals can get up to $10,000 a year and a total of $60,000 in repayment assistance — but not everyone is likely to get that full amount, as states only get a limited amount a year.
To determine if your state participates in this program and to apply for this program, contact your state authority.
Forgiveness of loans to state law schools
Many states also offer loan repayment assistance to attorneys who specialize in public service. These programs may target specific types of public interest attorneys.
For example, New York is offering up to $20,400 in loan repayment assistance specifically for district attorneys, assistant district attorneys, and penniless attorneys. The Florida Bar Foundation’s program, on the other hand, is open to employees of foundation-funded legal aid organizations and provides up to $5,000 annually in forgivable loans.
A list of LRAPs nationwide and contacts for more information can be found at American Bar Association.
Law School Forgiveness Options
In addition to the available federal and state programs, law schools themselves offer LRAPs to attorneys who enter low-paying fields after graduation. Similar to the Herbert S. Garten loan repayment assistance program, this assistance is often structured as a loan that is used to repay the loan, which is then forgiven after a specified period of service.
The American Bar Association maintains a list of schools with LRAPs.
Assistance offered by the employer
Private-sector employers are also joining the LRAP train. Many companies offer loan repayment assistance as an employee perk. Law graduates can take advantage of this opportunity, regardless of whether they are practicing lawyers in the participating society or not. However, check with your human resources department for service requirements and limitations.