'A drop in the bucket.' Some lawyers pan $10,000 student debt plan
(Reuters) - A potential move by the Biden administration to cancel $10,000 in federal student loan debt would not do much to alleviate the heavy debt burden many lawyers face, law graduates and policy experts said.
Nearly 71% of law students leave campus with student loans, according to the U.S. Department of Education, and their average debt hovers around $138,500—higher than any other field besides medicine. A 2020 American Bar Association survey found that student debt leads many lawyers to put off getting married or buying homes and can drive lasting stress and anxiety.
“When you have six figures in debt, $10,000 is a drop in the bucket,” said Marcella Jayne, a single mother of two and an associate at Foley & Lardner who has a student loan balance of $173,000 after graduating from Fordham University School of Law in 2018.
President Joe Biden is reportedly moving to finalize a plan that would erase $10,000 from student borrowers' existing federal loan balances. The details have not been announced, including whether the government will impose an income cap that would reduce the number of law graduates who are eligible. The administration could also opt to apply forgiveness only to undergraduate loans.
But even if they are eligible, some lawyers say a one-time debt cancellation deal would not help future borrowers or address underlying issues that leave law grads particularly indebted. The Bureau of Labor Statistics last year estimated the mean annual wage for all U.S. lawyers at $148,030, but that figure is skewed by high salaries at a relatively small number of law firms and corporations.
“This doesn’t do anything to structurally reform how student loans operate,” said Chris Jennison, a 2016 law graduate who has worked on lawyer debt matters with the ABA’s Young Lawyers Division. “We’ll find ourselves back here in a year or five with only a compounded problem at that point.”
Significantly reducing the interest rate the federal government charges graduate-level borrowers and ending loan origination fees would be a lasting and more equitable way to lower debt loads, said Chris Chapman, president of AccessLex Institute, a nonprofit that lobbies to make law school more affordable and accessible.
Dropping the interest rate from 7% to 3%—which would cover the government’s approximate cost to borrow and service loans—would save someone with $150,000 in loans about $11,000 in interest over two years for those on a 30-year repayment plan, he said.
Federal loan borrowers have not been required to make payments or been charged interest since March 2020 as a pandemic measure, but interest and payments are set to resume in September.
Jayne and Chapman said they are worried that the focus on erasing $10,000 in debt will sap any momentum or appetite among federal lawmakers to pursue larger-scale loan reforms.
“It’s not a bad measure, but you can’t throw your hands up and say, ‘Well, we fixed the problem, we’re out of here.’” Jayne said. “And that’s what I’m scared will happen.”
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