I haven’t seen this posted yet - considering the proposed budget for the Department of Education. The big headlines consider shifting money from public schools to voucher programs but there are other changes. Phasing out subsidized loans for students. Eliminating the Public Service Loan Forgiveness program, which was scheduled to complete its first forgivenesses this fall, etc.
Of course, it’s not a done deal yet but I worry about it. I have a close friend who is 7+ years into the Forgiveness program and I’ve always been worried that the gov’t could just pull the rug out at any time.
The Public Loan Forgiveness program extends to many fields…and makes it possible for some folks to actually practice their profession inna lower paying, and underserved area. Yikes.
It’s particularly sleazy that it hasn’t actually forgiven any loans yet and now it might be ended! If it’s expected to be too expensive, a fairer solution would be to change it gradually and give credit for “time served”, etc.
I believe all the indications are that the rug won’t be pulled out under folks who are planning on forgiveness, and that have graduated. My read is that is only affects new loans, i.e., loans made next year. Of course, Congress can change any law any time, even retro if they desire.
True, thumper, but like all programs, there are unintended consequences. Is it really good public policy to forgive loan balances for JD’s starting at $180k base? (It’s not like the US has a shortage of lawyers. In fact, the US Labor Bureau reports that we currently graduate 2x the number of newly-minted JD’s that the market can absorb.)
We could,dispute that until,the cows come home @bluebayou …but I guess if it means that folks will get legal services who might not otherwise…or a community will have some family practice doctors…when otherwise they would not…well…I think thismis valuable.
In the Stone Age…under an older plan…I worked in a priority school district for five years and my undergrad loans were fully forgiven. I was the first speech pathologist the district had ever had…they didn’t have the salary resources to attract folks…but for me…the loan forgiveness was the tipping point.
Well, people who get the loan forgiveness service must work in low pay jobs or in underserved areas : this applies to social workers, teachers, doctors who work in medical deserts (especially rural areas)…
So even if there are highly paid people in these professions, by definition the beneficiaries aren’t them, at least for a given time that is specified in the loan forgiveness program.
It makes a huge difference to young people who may want to work in these areas but know they can’t because of the loans they took and wouldn’t be able to pay back.
The work-study program would also be cut in half - whereas it’s not even serving all students who need it-, Perkins eliminated, etc.
Except that there is zero evidence that such it actually works that way. Again, according to BLS, today we graduate 2x the number of lawyer that the country can absorb. In other words, ~50% of all law school grads cannot get a job which requires a JD, each and every year. We already have a massive surplus of lawyers in the society. They don’t work in low pay jobs or underserved areas bcos they can’t make a living.
Moreover, unlike medicine – and speech pathology, for that matter – lawyering is not covered by insurance.
Legal aid dollars are minuscule in comparison to what is spent on community health centers. (Not saying that is a bad thing.) Instead of encouraging Public Interest lawyers to attend NYU while assuming $300k in debt, only for the taxpayers to forgive the balance 10 years later, why not pump that money into Legal aid societies and/or grants to state public law schools?
Agree in concept, but do they have to attend the most expensive private professional school? NYU and Columbia are really great, but why not a SUNY? And if someone has the grades to get into NYU, they’d surely receive a nice scholarship from a lower ranked school. (Hint-hint: less debt)
fwiw: A few years ago, Georgetown Law had a video on their website in which a professor basically told the applicants that every student who was considering Public Interest should max out his/her loans every year even if they didn’t need the money. Economically, that is the correct answer for the student – and an unintended consequence of the forgiveness policy. Of course, GULC received a lot of bad press for their honesty and the video so they apologized and took it down. Regardless, the point is still discussed on blogs that focus on law school applicants and students.
^^starting salary of those in what is called Big Law. Generally, 1st year associates will earn a bonus of ~$10k on top of that base. Year 2 in lockstep firms is $190k base, nearly 4 times the US median. (And these folks need federal taxpayer help???)
As an example, a poster in the blog focusing on law schools just reported that s/he has loans of ~$240k, will be using IBR/PAYE for as long as possible, and estimates that the feds will be forgving half of the interest due. That 1st year attorney is currently making ~$130k base in a mid-sized town.
(Now, I take that analysis with a grain of salt since the vast majority of newly-minted JDs were liberal arts majors and therefore, compound interest is gobbledygook, but its just one anecdote of the unintended consequences…)
What “big law” firms are located in rural, underserved areas of this country?
I’m not talking about NYC or D.C. I’m talking about rural areas or even semi rural areas where legal services, medical services, or even teachers are hard to find.
This is about Loan Forgivness not IBR. Loan forgiveness gives just that…forgiveness of loans for those working in areas that are underserved…and where these services might otherwose not be found.
Also, income based repayment cannot go on forever…and any amount forgiven at the end of the process is taxable income. Really…it’s not a free ride.
@bluebayou: OK, so if a lawyer is entering IBR, almost by definition, he/she isn’t entering Big Law. Likewise, someone making $180K wouldn’t be entering a IBR program. So why then would the $180K base figure be germane?
@romanigypsyeyes: I expect pretty crazy changes in society and governmental policy (swinging back and forth) depending on who is running the administration.
No lawyers working for governments or non-profits are making $180k/yr as first years, but lets pretend they are making $100k and that, for easy math sake, 10% repayment for 10 years, that’s $100k. Even (except for interest which could be charged off at the end of the 10 years). If they go on an IBR and the IBR yearly payments go down to $7000/yr, there would be about $30k written off at the end of 10 yrs. That’s assuming no pay increases, no time away from the job (120 payments, all on IBR, all on time).
There are a few outliers. A group of lawyers working for the American Bar Association, a non-profit, filed the correct paperwork and were told they were eligible for discharge, but after a number of years and a ‘policy change’ they were told they aren’t eligible. They are fighting it. Of course the policy wasn’t intended to have people working for the ABA (and certainly not for 10 years) to get loan forgiveness, but the program was expected to work for a majority of rural medical providers and teachers and firemen.
I worked for the government and it was available for us. First, most of us had been lawyers for many years and our loans were long gone. Second, any newer lawyers were NOT making $180k base (and neither were the older lawyers). A brand new lawyer (and we didn’t hire anyone without 2 years of experience) started at about $80k, so their 10% IBR would have been about $6k per year. As the salary increased, so would the IBR payments.
The problem with the program is that there was no cap on the borrowing/forgiveness. If they limited it to $50k or $75k of maximum loan forgiveness, the program would have had about the same cost, yet the outlier lawyers and doctors with $250k in government loans wouldn’t be an issue. Those who had borrowed that much wouldn’t be able to take the job on the Reservation and wouldn’t get to have his loans forgiven (through this program - there are other programs that might take care of the loans).
