Thursday, September 2, 2010

Student Loan Debt: ABA Concern, Action & Relevancy

While researching student loan repayment and forgiveness options, I was surprised to see the abundance of resources that the American Bar Association had on this topic. Talk about irrelevance, here I am along with thousands of other lawyers in the midst of the greatest issue of our legal careers and I didn’t even bother to see what the Guardian of the Legal Profession – the ABA had to say. So I decided to venture further into what the ABA’s position is on the issue of overwhelming student loan debt and what resources they are providing to the profession.

I was surprised to see that former ABA President, Carolyn Lamm, wrote a letter to Congress  about the staggering student loan debt and pushing Congressional Bills S. 3219 - Fairness for Struggling Students Act of 2010 and H.R. 5043 Private Student Loan Bankruptcy Fairness Act of 2010. What peaked my interest the most however, was her statement, “relaxing the criteria and provisions of income-based repayment (IBR) and other federal loan programs so more may qualify are all options that would assist students and graduates” found in the second to last paragraph. All that bankruptcy stuff is cool, but I’m really not trying to declare bankruptcy. But I am open to any and all levels of practical assistance to ease my student loan debt burden. If I could qualify for IBR without having to have 6 kids that would be a plus for all involved – me, my husband, child welfare, you and every other taxpayer.

It was sobering to read her statement: “In 2009, the United States' largest law firms suffered the deepest cuts in their attorney numbers in more than 30 years. According to the Bureau of Labor Statistics, in the twelve months ending in November 2009, the legal industry as a whole lost approximately 42,000 jobs. The current job market makes it difficult for many borrowers to find gainful employment to enable them to pay back their student loans; the number of associates in large firms shrank by almost nine percent last year, and forty-two percent of incoming first-year associates had deferred start dates.” It puts some realistic and depressing numerical context around a profession that has historically been touted for its economic weathering power and high salary prowess. All of that has vanished. POOF! Gone. Lawyers working at Starbucks, moving back home with mom & dad and being unable to pay their student loan bills is becoming the norm not just for new lawyers, but for mid-level and seasoned lawyers as well.

The ABA’s Law Student Division mentioned Lamm’s letter as well in one of their monthly newsletters. Nothing earth-shattering which made me wonder if law students are paying close attention to this issue? Or are they still bright-eyed and bushy-tailed about their ability to repay their student loans and their job prospects. I also wonder if the Law Student Division or the Young Lawyer’s Division is doing anything proactive to build awareness in this area? Seems like student loan repayment is a topic that goes hand-in-hand with employment; both of which are super relevant to both law students and young lawyers. A lot of people talk about the ABA not being relevant, but then I found out that Carolyn Lamm created the Commission on the Impact of the Economic Crisis on the Profession and Legal Needs. Ugh. “Commission” that means a “talk about it tank” which is just one rung below a “think tank” on the Do Nothing Hierarchy.  The members of the Commission can be found in this press release, but I wonder if any of them are law students, young lawyers, recently unemployed lawyers or employed lawyers with over $150K in student loan debt like myself. It seemed sooo promising. Hmmm, I wonder how effective and relevant this Commission will be going forward especially since Stephen Zack has taken over the presidency; perhaps it will be downgraded to a “think tank”.

What I found most disappointing was the ABA Journal’s podcast How Law Schools Can Help Next Gen Lawyers Take Gamble Out of Hefty Tuition.  I think the title just misled me into believing it had to do with reducing law school tuition…hmmm, don’t know why I thought that. It’s really a couple of academics’ views of how law school tuition got to be the way it is and the incorrect and misleading employment statistics that law schools post. Useless to me and my plight nonetheless. The ABA Journal did have some other articles that detailed the ABA’s “concern” in this area.
  1. President Lamm Hopes Full ABA Backing Will Help Win Loan Breaks for Law Grads
  2. ABA Lobbies for Student Loan Relief for Unemployed Attorneys
  3. Leadership When It’s Needed Most
Damn, does that add up to only 3 articles on this topic???  That is some level of concern. (Disclaimer: this is all I could find, hopefully there is more on the ABA website and if you find it let me know) I read the first article and I had to wonder whether the ABA really has a grasp on the bigger and more subtle issue like CAPITALIZED INTEREST!!!A true alternative is passing legislation that caps capitalized interest on deferred or forborne loans at a percentage of the of the loan like 5%.  Another alternative is to put a cap on accrued interest.

I’ve exasperated my research in this area and conclude that just like my student loan payments, there are no viable options for me – a working, underemployed attorney. That is, other than to find another job that pays more and well, have you seen the job market lately? I also concluded that the ABA has to go deeper and not just talk about surface of an issue if it wants to be relevant to the profession and its constituents – seriously, go hard or go home isn’t that what I pay my membership dues for? (Well, used to pay b/c now that payment goes to student loans).


  1. There is no logical argument for capitalized interest

    It is usurios in my opinion. IBR is a capitalization trap. It only makes sense if you stay poor

  2. I would assume that a good chunk of your student loans are subsidized, right? Maybe subsizided Staffords? Did you know if you go back to a qualifying school that those loans will go back into deferrment - no interest, no payments - for as long as you are in school? Also, that the school could be a community college with really cheap tuition that you only have to take 2 classes a semester - and that some offer classes over the internet at your own pace?
    Here's more about my experiences with this -