Student Loan Forgiveness for Lawyers – Forbes Advisor
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The average law school debt of lawyers 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 forgiveness options, especially if you work in public interest law for a government or nonprofit agency.
Here are the student loan forgiveness options available to lawyers and how to qualify.
How does student loan forgiveness for lawyers work?
Many attorney rebate programs have been created in recognition of the high amount of student loans debt law interns often take on compared to the low salaries they typically earn in the public sector.
Some programs focus on supporting public defenders and attorneys who serve low-income clients. Others have broader eligibility criteria and help any attorney doing public service work. There are also additional loan repayment assistance programs offered by some employers that serve lawyers working in the private sector.
Tip: Keep in mind that in some cases, the type of loan you have (federal or private) will affect which programs you qualify for.
Federal loan forgiveness for lawyers
If you have federal student loans, you will have the opportunity to apply for some of the most generous forgiveness programs on the market. This is why it is important as a law student to borrow what you can in federal loans before considering private student loans.
Here are the federal loan forgiveness programs you should consider as a lawyer:.
Cancellation of civil service loans
The Public Service Loan Relief (PSLF) provides tax relief on direct federal loans to borrowers who work for public service employers. As an attorney, you must make 120 qualifying payments before you qualify for a discount, which means working full-time for a government entity or 501(c)(3) nonprofit organization. You can confirm that your employment is eligible by completing an attestation of employment form.
To see if you qualify for the program and track your progress, you can use Federal Student Aid PSLF Helper Tool.
Income Oriented Repayment
No matter what type of job you do, you can get student loan forgiveness on federal loans by enrolling in an income-contingent repayment (IDR) plan. You will be required to make payments for 20 or 25 years (depending on the plan), and the balance returned may be taxed as income when you reach that milestone.
The IDR opens the pardon to lawyers who do not work in the public service or who decide to move to the private sector before the end of their 120 payments for PSLF. The IDR will also reduce payouts to 10%-20% of your Discretionary Income, making repayment less burdensome for a limited salary.
You can subscribe to IDR online at the Federal Student Aid website.
Perkins loan forgiveness
Federal Perkins loans are no longer available to new borrowers, but if you already took them out to attend an undergraduate or graduate school, there are legal careers that can help you get them off. Perkins Loan Forgiveness is an option for full-time public or community defenders who can get 100% of those loans phased out over five years of service.
Other types of lawyers, even those working in the civil service, are not eligible; instead, you can consolidate Perkins loans into a direct consolidation loan to qualify for PSLF. But check with your school or service provider to weigh the pros and cons of federal student loan consolidation before doing so.
National Reimbursement Programs for Lawyers
There are also a few national loan cancellation and repayment programs. These programs typically offer loan forgiveness in the form of repayment assistance up to an annual or total limit.
Here are the requirements for each and what you need to know before applying:
Agency specific loan repayment assistance programs
In order to recruit and retain excellent employees working in various federal agencies, any agency can start a Loan Repayment Assistance Program (LRAP). Lawyers can access programs from agencies such as Ministries of Agriculture, Commerce, Defence, Education, etc. These programs have a service requirement and an annual and total assistance cap.
For example, the Department of Justice’s Student Loan Repayment Program provides up to $6,000 per year in loan repayment assistance, to an overall maximum of $60,000. Only federal loans are eligible and employees must commit to a three-year service contract. Extensions to this initial service agreement are also available, but are not guaranteed.
Herbert S. Garten Loan Repayment Assistance Program
Administered by the Legal Services Corporation (LSC), this program provides repayable loans to attorneys employed by LSC-funded legal aid organizations, which participants can then use to pay off law school debt. Participants cannot be employed by an eligible organization for more than five years to qualify.
LSC selects recipients by lottery and applicants must have at least $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 canceled if you remain in good standing and continue to work full time. Beneficiaries can receive up to $5,600 per year.
Many state-based legal aid organizations also have their own reimbursement assistance programs that you can consider.
John R. Justice Student Loan Repayment Program
This program provides reimbursement assistance to prosecutors and public defenders who work full-time for state or local agencies or nonprofit organizations under contract with state or local governments for at least three years. The funds can be used to repay federal student loans only, and the money received is not taxable as income.
The federal government allocates program funds to the states each fiscal year based on population. Individuals can receive up to $10,000 per year and $60,000 total in repayment assistance, but it’s unlikely that everyone will get that amount because states only receive a limited amount per year.
To check if your state participates and apply for this program, contact your state agency.
State-Based Law School Loan Waiver
Many states also provide loan repayment assistance to public service attorneys. These programs may target certain types of public interest lawyers.
For example, New York is offering up to $20,400 in loan repayment assistance specifically to indigent district attorneys, assistant district attorneys, and legal services attorneys. The Florida Bar Foundation program, meanwhile, is open to employees of foundation-funded legal aid organizations and provides up to $5,000 a year in forgivable loans.
You can find a list of statewide LRAPs and who to contact for more information via the American Bar Association.
Law School Pardon Options
Beyond the available federal and state programs, law schools themselves also offer LRAPs to attorneys entering low-paying fields after graduation. Similar to the Herbert S. Garten Loan Repayment Assistance Program, this assistance is often structured as a loan to be used for loan repayment, which is then canceled after a specific period of service.
The American Bar Association maintains a list of schools with the LRAPs.
Assistance offered by the employer
Private sector employers are also joining the PALL bandwagon. Many companies offer loan repayment assistance as a benefit to employees. Law school graduates can take advantage of this option whether or not they work as practicing attorneys at the participating firm. But check with your human resources department for any service requirements and limitations.