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Debt-weary lawyers bank on relief with loan forgiveness overhaul

3 minute read

REUTERS/Kevin Lamarque

  • An estimated 550,000 student loan borrowers will benefit from the changes, including many public interest lawyers
  • Many seeking loan forgiveness have been stymied by paperwork problems

(Reuters) - Public interest lawyers and legal educators are hoping an overhaul of the government's Public Service Loan Forgiveness Program announced this week will help many more attorneys discharge their outstanding loan debts.

“These changes should have happened 14 years ago—they are way overdue—and they are wonderful,” said Georgetown University law professor Philip Schrag. “They will certainly benefit many public service lawyers.”

The Department of Education's Wednesday announcement, which eases forgiveness requirements, marks a “historic day for our public service professionals,” said Aoife Delargy Lowe, vice president for law school engagement and advocacy at the non-profit Equal Justice Works. Equal Justice Works helps law students launch public interest careers and leads a coalition of more than 90 organizations that support Public Service Loan Forgiveness (PSLF).

Congress enacted the program in 2007 to encourage people to take lower-paying government and public service positions by forgiving their outstanding federal loan debt after 10 years of qualifying payments. It has made public interest legal jobs more accessible to law graduates, who leave law school with an average $138,500 in student debt, according to the Education Department.

But the program has been hobbled by complexity and bureaucratic red tape for borrowers seeking to discharge their loans. Only 2% of processed applications for forgiveness have been approved since the first wave of borrowers became eligible in 2017.

Under the new policies, the Education Department will count payments on certain loans that previously did not qualify for PSLF as part of a borrower’s decade of repayment and will waive a previous requirement that monthly loan payments be made in full and on time. It will also review PSLF applications that have been denied for errors.

The Education Department estimates that 550,000 student loan borrowers will see an increase in their number of qualifying loan payments—getting credit for two additional years on average.

Among those hoping to benefit is Ben Scheuring, a federal government tax attorney based in Omaha, Neb. He graduated from Creighton University School of Law in 2009 with “significant debt” that has increased despite more than a decade of payments, he said. He took a Legal Aid job in 2012 and should be on track to have his loan debt forgiven next year, but paperwork issues have pushed his current forgiveness timeline back about two years.

“It was frustrating,” Scheuring said Thursday. “Here I had taken all the steps I needed to take, and due to a mistake that wasn’t my fault, I lost credit there."

Schrag sees a benefit not only to borrowers like Scheuring, but also to the federal, state, and local agencies and non-government organizations that can’t compete with private sector legal salaries. The average tenure in many public service jobs is about two years, in part because attorneys can’t afford to stay long-term, he said. A 2018 study by the National Association for Law Placement found that the median starting salary for legal services attorneys was $48,000.

“You almost fantasize about getting that letter that says you’re free and clear,” Scheuring said. “It’s just this weight on your shoulders.”

Read more:

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

ABA backs law school debt assistance and forgiveness for overburdened lawyers

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