Many of our attorney clients have faced student loan debt – we get that it can be intimidating. When you’re a few years into your career, you might feel motivated to start paying off your student loans faster. Everyone at one point or another focuses on loan repayment programs.
The idea that you may be able to get some repayment assistance is pretty appealing, especially if you’re looking at $70,000-$100,000 in undergraduate loans alone.
Unfortunately, not all repayment or loan forgiveness programs are open for anyone to enroll and receive assistance. Let’s go over a few popular loan repayment programs you may have heard of, and whether or not they can help you knock out your debt.
Public Service Loan Forgiveness (PSLF) is a government program that’s geared toward helping public-service professionals reduce the weight of their student loans. The program is specifically for federal Direct Loans. To qualify, you must:
- Work for a government agency or for certain types of nonprofits
- Work full-time
- Have Direct Loans (or consolidate other federal student loans to qualify)
- Repay your loans on an income-driven repayment plan
- Make 120 qualifying payments toward your loans
Do attorneys qualify?
For the most part, only public defenders, or attorneys who work on for non-profit or pro-bono legal agencies through the American Bar Association, or a 501(c)(3) organization qualify. You don’t qualify for PSLF if you start in public service but move to the private sector – which is something a lot of attorneys do because careers in the private sector are more appealing.
The Loan Repayment Assistance Program (LRAP) is something that individual colleges and universities enroll in to help retain their students. Colleges and universities can choose to use LRAP on a case-by-case basis, or make it available to all students who are enrolled. LRAP offers students of the specific colleges that have enrolled with them with quarterly loan reimbursements. However, students have to:
- Request assistance from LRAP upon graduation
- Start working a full-time job
- Start making payments on your loans
Do attorneys qualify?
Any loans accrued during graduate school aren’t covered by LRAP. LRAP also doesn’t openly list all of the colleges and universities who have enrolled with them. For more information, and to see if you qualify for assistance, you should contact your undergraduate school directly and check out the My LRAP FAQ page to see if you potentially qualify for assistance. Remember, you must qualify for assistance within 18 months of graduation (graduate school counts as an Extension Activity that extends your eligibility window).
Repayment Through Your Employer
With more and more students coming out of undergraduate and graduate school with a mountain of student loan debt, an increasing number of employers are offering student loan repayment as a benefit. In recent years, some law firms are offering cash to help new lawyers pay down their debt. However, most small firms won’t have the cash flow to support this type of costly employee benefit – so you may want to do your research, or ask your HR department for more information.
Department of Justice Attorney Student Loan Repayment Program
The ASLRP (Attorney Student Loan Repayment Program) is a recent effort from the Department of Justice to recruit and retain attorneys. Attorneys who are eligible receive up to $6,000 each year, with a $60,000 cap, to help repay their loans. The payments are sent directly to your loan service provider – not to you. However, you do have to commit to 3 years of working with the Department of Justice to qualify, and the program is relatively competitive.
Other Repayment Options
There are a lot of smaller assistance programs out there that are looking to support attorneys – specifically public defenders. To learn more about a handful of these programs, check out this article on Student Loan Hero.
Key Takeaway: Don’t Rely on Repayment or Forgiveness Programs
It’s tempting to search for a magic solution when you’re desperate to get out from under your student loans. However, the sad truth is that many repayment programs leave attorneys in the private sector out in the cold. A lot of programs assume that just because attorneys have higher salaries out of the gate, that they don’t also have high loan balances. The truth is, you often are dealing with hefty loans, and less time than most to construct a payoff plan because of long hours at work.
Even if you do qualify for a program, like PSLF, as a public defender or attorney who works for a 501(c)(3), there’s no guarantee that the program you’re counting on will always be there. Many federal programs (and private programs, too, for that matter) are steering away from offering so much student loan assistance – because as the cost of education creeps up, so do the costs for those providing loan assistance programs. Even though there aren’t any loan-repayment plans geared toward attorneys, that doesn’t mean you don’t deserve a plan, too!
Your best bet is to create a custom student loan repayment plan based on your income and future financial goals and personal aspirations. If you’re feeling overwhelmed by your debt, and need help creating a strategy, schedule a call with us today. Working with a financial planner can help you organize your debt repayment plan, improve your cash flow, and feel like you’re able to make empowered decisions about your money.