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'Debt transformed my life': Lawyers weigh in on student loan reprieve

7 minute read

The top of the cap of a graduating student is pictured during their graduation ceremony at UC San Diego in San Diego, California. REUTERS/Mike Blake

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  • The White House has extended a moratorium on student loan payments through Jan. 31, 2022
  • The move will benefit young lawyers, many of whom struggle with large educational debt loads

(Reuters) - Marcella Jayne makes more than $200,000 as a third-year litigation associate at Foley & Lardner, a salary she knows is eye-popping to many people.

Yet the $2,200 monthly student loan payment on her $180,000 balance — acquired from her undergraduate years and Fordham University School of Law J.D. — is more than the rent the single mother of two pays on her Manhattan apartment.

“It’s a seemingly absurd position: You can make enough money to be in a very high-income tax bracket, but home ownership is completely out of reach,” she said of the struggle to pay down her loans while caring for her kids, one of whom has special needs. “I’m saying that as someone who feels very lucky.”

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Jayne is among the thousands of lawyers who have benefited from a moratorium on federal student loan payments that began as the pandemic gained steam in March 2020, and which the White House announced on Aug. 6 would be extended one final time, through Jan. 31, 2022. It has freed up money to put one of Jayne’s children into a private school and pay for the extra services she needs.

“We were headed toward the cliff,” Jayne said of the mounting expenses for her daughter.

The student loan payment moratorium and related 0% interest rate for that period had been set to expire on Sept. 31. The extension means many student loan borrowers will go nearly two years without a required payment and without seeing their loan amounts grow due to compounding interest.

DRIVEN BY DEBT

Student loan policy is a major issue for lawyers, who graduate with an average $138,500 in student loans, more than any field but medicine, according to data from the U.S. Department of Education. MBA graduates, in contrast, leave campus with an average of $59,400 in student loans.

The debt load can wind up shaping young lawyers' career decisions, said Jolie Steppe, a search consultant at the recruiting firm Greene-Levin-Snyder. Some associates will turn down in-house counsel roles or clerkships because they cannot afford to take a pay cut, she said.

“The younger associates really seem to be very conscious of the debt. I wasn’t 20 years ago,” said Steppe, who graduated from New York University School of Law in 2000 with an estimated $200,000 in student loans, which she has since whittled down to less than $20,000.

Still, lawyers overall have fared relatively well during the recession, said Chris Chapman, president of AccessLex Institute, a nonprofit group that lobbies to make law school more affordable and accessible. Law firms did not conduct many layoffs and most courts resumed their business after brief closures early in the pandemic, he said.

Andrew Jack VanSingel, who works as a tax lawyer in a federal government agency, said he feels somewhat guilty about the nearly $20,000 benefit he has enjoyed during the loan payment moratorium, noting that he didn’t lose any income during the pandemic. He will be eligible to have his $350,000 student loan balance wiped out in December through the Public Service Loan Forgiveness program, under which a borrower’s loan balance is forgiven after 10 years of working in a qualifying public service job.

But VanSingel's debt load, which grew from $210,000 when he graduated from Touro College Jacob D. Fuchsberg Law Center in 2010, has weighed heavily on him for the past decade.

“The amount of debt I have has transformed my life,” VanSingel said. “Currently, I’m not married. I don’t have kids. I don’t own a home. All those things I felt like I could not participate in until those loans were gone and/or I was making more.”

He said he has used some his $20,000 moratorium savings to invest in the stock market and increase his charitable giving.

For Jo Bahn, a 2016 graduate of New York Law School who works at a government agency and lives in Washington, D.C., the student loan moratorium has provided financial breathing room for her growing family. Despite a partial scholarship, she graduated from law school with about $170,000 in loans, which has since grown to more than $200,000 due to compounding interest. (Bahn’s monthly payments are capped at a percentage of her income, and she is also working toward Public Service Loan Forgiveness.)

Not having a $700 monthly loan payment has allowed Bahn and her husband to make improvements to the home they purchased right before the start of the pandemic and to pay for daycare for their toddler and four-month-old, she said.

“The moratorium ending is certainly going to be a stressor when the student loan payment is going to equate to right around one week of daycare,” Bahn said. “That’s really what the difference in perspective is for me. It’s basically like paying for five weeks of daycare instead of four.”

At the urging of its younger members, the American Bar Association has made student debt a bigger focus in recent months. Its policy making body, the House of Delegates, in February overwhelmingly adopted a resolution backing student loan forgiveness and measures that would make it easier for student loan borrowers to make their monthly payments.

The House of Delegates on Tuesday passed a separate resolution asking the organization to lobby federal lawmakers to make it easier to discharge student loans in bankruptcy, which is now extremely difficult to do. That measure is being sponsored by the ABA’s young lawyer and law student divisions.

Jayne said she is grateful for the temporary reprieve offered by the loan payment moratorium, but would like to see more meaningful, permanent changes in student loan policy.

“I feel like it’s a band aid,” she said of the moratorium. “I want policy changes.”

Read More:

ABA will press Congress to ease student loan discharge in bankruptcy

Young lawyers ask ABA for help on student loan discharges

ABA backs law school debt assistance and forgiveness for overburdened lawyers

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Additional reporting by David Thomas

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