For many former law school students, being a lawyer meant serving the government, protecting the weaker party, working long hours or helping broker million-dollar transactions. Many students looked forward to a great career, one that is stimulating and rewarding, both financially and mentally.
However, the law profession has greatly suffered due to the recession. There are fewer corporate transactions, and the need for lawyers has reduced dramatically. Many government agencies, companies and law firms put a hiring freeze on associates. As a result, many law students find themselves jobless, even months after graduation.
While the economic crisis has affected every profession, for law students, the situation is particularly dire due to the huge school loans most of them have. According to the American Bar Association (ABA), the typical public law school graduate borrows about $60,000 for law school. Private law school students borrow more than $90,000. Most students finance their education using a combination of federal and private loans.
Even though many law graduates have been unable to find jobs after graduation, the letters in the mail seeking loan payments have begun, stressing out these young, jobless lawyers. Recognizing this problem, the ABA has proposed some measures to help.
The ABA is lobbying Congress to give assistance to recent law school graduates who are carrying a large debt and have been unable to find jobs. The ABA proposes the government help these new lawyers out by letting them convert their private loans to federal loans. The government would increase the maximum amount a student can borrow from the federal government, and then make that figure retroactive. That way, the student will still carry a debt, but it'll be in the form of federal loans, not private loans.
Why Converting Loans Helps Law Graduates
Students who took out federal loans have the ability to defer paying them until they have a job. This deferment period can be as long as three years. However, private loans kick in right away. If approved, this relief measure would allow unemployed recent law graduates to defer repaying those loans for as long as three years, giving them breathing room to find a job without the added stress of being in default.
When Will This Relief Measure Begin?
The program is in its beginning stages. The ABA is meeting with federal education and government officials in Congress and in the White House to discuss the proposal. So far, it's been reported that the plan is well received.
Besides helping desperate law graduates who don't have the ability to currently pay back their loans due to the recession, this plan will also help to the private loan providers. They're guaranteed a payout rather than the anticipated defaults that would occur in the near future. This plan also helps the government, giving them a positive income for the next several years.
ABA representatives hope that the relief can be made through government regulation. Otherwise, they expect legislation would be tacked onto, a bill before the end of this current Congressional session.
In the meanwhile, if you are a law graduate who could use this relief plan, you can check for updates to the Loan Repayment Assistance Program on the ABA web site.
Questions for Your Attorney
- I've gotten letters saying my student loans are in default. What can I do?
- Can I defer my private loans?
- How do I make sure my loans will be covered by the new ABA program?