2019 has been a very exciting year for many law school students. Many of us who graduated from law school in 2018 found out that we are eligible for loan forgiveness. This is great news for many of us, and it opens up a lot of possibilities. Many of us are wondering about our finances and our legal options going forward.
With the post-graduate debt crisis in full swing, you’ve likely seen stories about how the U.S. Department of Education is loosening certain repayment requirements for graduate students. But while the Department’s loan plans for all but the worst cases may be getting easier to follow, meeting the standards may be a daunting task for even the savviest law student. In this article, we’ll discuss the key requirements for loan forgiveness, as well as how to meet them.
For law students, the lure of a lucrative career can make it easy to carry an ever-increasing loan balance. But once you leave school, reality sets in – and it can be overwhelming. Becoming a lawyer is more expensive than ever, and it’s not uncommon for graduates to begin their careers with debt of $200,000 or more. Not to mention the most expensive law schools like Harvard.
Even in a field that usually offers six-figure salaries, it’s still hard to stomach. The sooner you can pay off your student debt, the easier it will be to achieve your other financial and personal goals. Here are some options you can consider to get your law student loan forgiven or other forms of support, as well as other repayment options if you are on your own.
Remission and assistance to law students
If you are looking for help repaying your student loan, there are several options you can consider. However, it is important to distinguish between aid and loan forgiveness for law school. Only your lender can forgive your loans, while your employer or the government can help you with your student loans by making payments on your behalf. Also, keep in mind that you usually have to follow a certain career path in order to participate in these programs. Here’s what’s available.
Utility Loan Facility (ULF)
The Public Service Concessionary Loan Program is offered by the Department of Education. To qualify for this program, you must make 120 qualifying payments – they do not have to be consecutive – on federal student loans while working for an eligible employer, which includes government agencies and certain nonprofit organizations. Unlike most other programs, there is no limit to the amount of debt forgiveness a person can receive under the PSLF program.
Instead, participants shall receive forgiveness of the remaining debt once they reach the threshold of 120 eligible payments. While the idea of getting the full balance waived sounds exciting, the PSLF program requires a 10-year commitment to work in the public sector, which may not pay as well as what you could earn in the private sector. In addition, only direct federal loans can be made. However, Perkins and FFEL loans may qualify if they are combined into direct consolidation loans.
Department of Justice Lawyer Student Loan Repayment Program (LSLRP)
If you have worked at the Department of Justice for at least three years, you can get up to $6,000 a year in loan assistance if you make payments. To qualify for this program, you must have at least $10,000 in federal loan debt. The maximum amount of assistance you can receive is $60,000.
John R. Justice (JRJ) Grant Program
The JRJ Grant Program is a student loan support program for local, state and federal public defenders, as well as local and state attorneys. To qualify for the program, you must have worked as a public defender or prosecutor for three years. If you qualify, you can receive up to $10,000 per calendar year, but no more than $60,000 over your lifetime.
Air Force JAG Student Loan Repayment Program
You can take advantage of this offer by joining the Air Force as a Judge Advocate General (JAG). After one year of JAG service, participants can receive up to $65,000 in student loan repayments over the next three years. Get personal advice on student loans in law
Depending on where you live, your state may offer a loan repayment assistance program (LRAP) to help you pay off your benefit debt. Many of these programs are only open to lawyers who provide services in the public interest. Gross income limits are also common. While the list is not exhaustive, here is a list of some of the states that offer LRAP:
- District of Columbia
- New Mexico
- Big Apple
- North Carolina
Note that if your government employment entitles you to PSLF, there is a good chance you may also qualify for some of the LRAPs listed above. By applying for both programs, you can get help paying off your short-term loan while making qualified future PSLF cancellation payments on your remaining balance. Refer to this ABA resource for more information on the student loan repayment programs available to you and the requirements.
More than 100 law schools currently offer the LRAP. See the full list here. Most school programs also have income requirements. The program can take into account the annual income of your spouse or partner, in addition to your own. For example, Lewis & Clark Law School’s LRAP has an income limit of $65,000 to $70,000. Participants who are married or have a cohabiting partner are considered to have the greater of their individual income or half of their joint income. You can apply up to five years after graduation, but you must reaffirm your household income before each payment.
Duty drawback plan options
Whether you qualify for loan forgiveness or law school assistance, the Department of Education’s income-driven installment plans can help you better pay your monthly repayments. You can choose from four installment plans depending on your financial needs. Each plan reduces your monthly payment to a certain percentage of your income and extends the repayment period. If you still have a balance at the end of the extended period, the balance will be cancelled. Here’s what you can expect from the four plans:
- The PAYE (Pay As You Earn) plan: Student loans have a longer repayment period of up to 20 years, and the monthly payment is usually 10% of your disposable income. To qualify for a PAYE plan, you must demonstrate financial need.
- Revised Pay As You Earn (REPAYE) plan : Your payment is usually 10% of your disposable income and the repayment period is usually 25 years. Any borrower can apply for a REPAYE plan.
- Income-based repayment plan (IBR): IBR increases your monthly payment to 10 or 15% of your disposable income, and the repayment period increases to 20 or 25 years. The actual terms you get will depend on when you took out the loan. To qualify, you must prove financial need.
- Income-based repayment plan (IBP) : The ICR plan is available to all federal borrowers. It reduces your monthly payment to the lesser of 20% of your disposable income or what you would pay under a plan with a 12-year repayment period. Your new expiration date will be 25 years.
Please note that income-contingent installment plans are only available for federal loans. If you have private loans, you are not eligible for these repayment options.
Refinancing of student loans
If you don’t qualify for debt forgiveness and don’t want to use an income-driven repayment plan, you can pay off your student loans faster by refinancing. Many student loan refinance companies offer interest rates lower than federal student loans. If you qualify based on your income and credit history, you can lower your interest rate, your monthly payment, or both.
If you have a solid income but a weak credit profile – or vice versa – you can apply with a co-borrower to increase your chances of getting a low-interest loan. Student loans are refinanced by private lenders. This means that a little more work needs to be done in this case than in the other repayment strategies we examined.
You should also compare loan options from multiple lenders to ensure you get the best deal. Also remember that you can’t go back when you refinance your federal student loans. Therefore, if you are considering a loan forgiveness or straight school aid program that requires you to have federal loans, it may be best to stick with what you have.
You don’t have to do it alone
It takes a great deal of time and effort, either on your own or with the help of a third party, to explore the various law school waiver options. If you find yourself too busy to find the right strategy, consider asking for help. Student Loan Planner® can help you by creating a customized plan to help you get out of student debt. Depending on your situation, this assistance can save you time and money, and those are valuable commodities in the legal world. Get a customized student loan plan Are you an attorney considering forgiving your student loans? What options are you thinking of? Refinance your student loan and receive a bonus in 2021.
Frequently Asked Questions
How do I get my law school loans forgiven?
While the government program started in 2013, it only covers loans for those who have attended school since 2007. The program is set to expire next year, and while it may be extended, it is clear that it will not cover the cost of all the eligible loans. So, what is the best solution? While there are a number of options, we recommend consolidating your loans and working with a loan servicer that offers loan forgiveness.
Many law students have a great amount of student loan debt, which can make the very thought of entering the legal profession an intimidating and daunting prospect. In this guide, we will explain what happens to your loans as well as the general process for getting them forgiven and how the forgiveness process will differ from one school to another.
Will student loans take my tax refund 2021?
Student loans are now the second largest debt in the country. The average graduate owes over $37,000, with a total outstanding debt of over $1.5 trillion. Not only does that mean student loans are taking a chunk of your tax refund, it also means you could be missing out on valuable tax credits that could be earned by investing the money instead.
As the economy continues to slip further and further into the red, the federal government has come up with a new way to save money: bank on students. As of 2021, the federal government has decided that instead of giving tax cuts and tax refunds to the average American, it will just give money to millions of students who went to college. And to make sure the students don’t get too full of themselves, the government will skim off a portion of their earnings for the rest of their lives.
Can law school loans be forgiven?
The future of education is something people debate. Some say technology will never take over the teaching staff, others argue that it is inevitable. The debate over the future of the legal profession is one that has been taking place since time immemorial. Questions have been asked before, as new things have come up. What will the profession be like? Will legal services be covered by insurance? Will the economy be okay? Will law school loans be forgiven? Will law schools go out of business?
Will lawyers be able to practice law in other countries? Many law students have taken out loans to pay for their education, and some—like me—are now struggling to make their monthly payments. Unfortunately, the current law does not provide a path for law school graduates to have these loans forgiven. Which means many people who don’t make their payments for a long time often get hit with stiff penalties for missing their debts.