Editor's Note: Since the writing of this article, President Biden signed the debt ceiling bill on June 4, canceling the federal student loan payment pause as of Aug 30, or “60 days after June 30.” Later this month, the Supreme Court will decide whether the Biden-Harris Administration’s Student Debt Relief Program can proceed. Loan payments are expected to resume in October.
In August 2022, President Biden announced his student loan forgiveness plan. Federal student loan borrowers earning up to $125,000 (as individuals) or $250,000 for those filing jointly may qualify for up to $10,000 in forgiveness. Pell Grant recipients may qualify for up to $20,000 in forgiveness.
This is great news for law school grads. On average, private law school costs $53,000 annually in tuition and fees, according to U.S. News. But law school loan forgiveness is not the only way to cut down your monthly payments — and it may not be the best choice for you, depending on the type of law you plan to practice.
What Is Law School Loan Forgiveness and Repayment?
Law school student loan forgiveness programs are typically intended to help lawyers in public service with lower incomes. Eligibility may be based on the sector you practice in, your income, the kinds of student loans you have, and your original loan balance.
While loan forgiveness sounds like a dream, there are downsides, too. Income-based or income-driven repayment plans are typically tied to how much you earn. If you’re not earning much in relation to your loan balance — and as a result are making very small payments — then you might end up paying a hefty amount of interest over the long run. (Learn why making minimum student loan payments isn’t enough.)
A Loan Repayment Assistance Program (LRAP) is one type of financial assistance provided to law school graduates in government and lower paying legal fields. LRAPs may be run by the state, state bar, federal government, or individual law schools.
In many cases, funds are provided via a forgivable loan that is canceled when the recipient’s service obligation is completed. These loans are structured in a way that they are not taxable income, unlike grants. If you receive loan repayment assistance, it’s important to find out if your funds are taxable. (Learn how to find your student loan tax form.)
An LRAP shouldn’t be confused with the repayment plan borrowers agree to when they first sign for their loans. Most people with federal student loans are on the Standard Repayment Plan, meaning they pay a fixed amount every month for up to 10 years.
5 Law School Loan Forgiveness and Repayment Programs
Below are the five most widely used law school student loan forgiveness and repayment programs. If you’re already receiving one or more of these benefits, remember that you have to reapply each year.
You may apply to as many law school debt forgiveness programs as you qualify for. In some cases, you may even accept more than one grant or loan at a time, but check the fine print on your program applications.
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Public Service Loan Forgiveness (PSLF)
Best for: Lawyers who plan to work for the government or in the nonprofit sector.
The Public Service Loan Forgiveness program may be the most well-known option in terms of loan forgiveness for lawyers. The premise is simple: If you work in a qualifying public service field, then the remainder of your direct student loans can be forgiven after you make 120 consecutive qualifying monthly payments over 10 years. However, many people attempting to meet those requirements can find the process confusing and difficult.
The first step to qualifying for public service loan forgiveness is filling out the employment certification form. In order to earn loan forgiveness, you must work for a qualifying government organization or tax-exempt non-profit organization, and you must be enrolled in a qualifying repayment plan — generally a federal income-driven repayment plan.
The next step is to make your monthly loan payments promptly. If you meet all those requirements and payments, then at the end of 10 years, the remainder of your debt could be forgiven.
Obviously, if you put all that time and money in and then it doesn’t pay off, it could cost you. Since the original Public Service Loan Forgiveness program went into effect in 2007, the first students eligible were set to have their loans discharged in October 2017.
Yet the Department of Education reported that out of about 7,500 applications only around 1,000 were expected to qualify for loan forgiveness. That was mostly due to misinformation and borrowers believing they were making qualifying payments only to find out after the fact they’d been given incorrect info by their loan providers.
Income-driven Repayment Plans (IDR)
Best for: Lawyers with low incomes.
An income-driven repayment plan sets your monthly student loan payment based on your income and family size. Most federal student loans are eligible for at least one income-driven repayment plan. If your income is low enough, your payment could be $0 per month. There are four income-driven repayment plans:
• Revised Pay As You Earn Repayment Plan (REPAYE Plan)
• Pay As You Earn Repayment Plan (PAYE Plan)
• Income-Based Repayment Plan (IBR Plan)
• Income-Contingent Repayment Plan (ICR Plan)
The Federal Student Aid website breaks down the eligibility for each program. If you have Parent PLUS loans, you must consolidate your loans to become eligible for an IDR plan.
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State Loan Repayment Assistance Programs
Best for: Lawyers who qualify for their state’s program.
Most states have LRAPs providing a type of law school loan forgiveness if you work in that state — often in the public sector, for a qualifying nonprofit, or in underserved communities. These programs offer up to $10,000 annually in loan repayment assistance, with a lifetime maximum of $60,000.
Law School-Based Loan Repayment Assistance Programs
Best for: Lawyers with low incomes or those who work in high-need areas.
Many schools offer their own LRAPs for lawyers. Applicants for the 2023 funding cycle must have had at least $75,000 in eligible law school loans and a maximum income of $62,500 in most states.
The specifics of the loan repayment assistance programs vary from school to school, so you’ll have to check with your law school’s financial aid office. Here is a comprehensive list of law schools with LRAPs.
Up to $5,600 each is awarded to each of around 125 attorneys annually through an application process that opens in August.
Department of Justice Attorney Student Loan Repayment Program
Best for: Lawyers who work for the Department of Justice.
The Department of Justice Attorney Student Loan Repayment program is a type of law school loan forgiveness aimed at encouraging newly minted attorneys to work for the Department of Justice. Applications for the program open in the spring (typically on March 1).
In return, you can receive up to $6,000 per year (for a maximum of $60,000 total) paid toward your student loans. It’s not exactly law school loan forgiveness, but it is law school loan repayment.
The fine print: You must commit to three years of full-time employment for the Department of Justice, and if you don’t fulfill your commitment then you could be on the hook for any loan payments made on your behalf. You must have at least $10,000 in eligible student loans, which includes Stafford Loans, PLUS loans, Perkins Loans, and a few other types of student loans. (All criteria information is available on the Department of Justice’s program website.)
Payments are made directly to the loan servicer and all loan repayments made by the Department of Justice ASLRP are considered taxable income. It’s also a highly competitive program, but if you’re looking at a career working for the DOJ, then it could be a great way to get your start and wipe out some debt.
The Takeaway
Law school loan forgiveness sounds great, but it can cost you money in the long run if you end up paying higher interest rates or don’t pursue the career you want in the hope of securing loan forgiveness. Consolidating federal student loans is an option, but it can be complicated. Through the Direct Loan Consolidation program, your new interest rate is the weighted average of your existing loans’ rates.
On the other hand, refinancing student loans at a lower interest rate can reduce the amount of money you pay over the life of the loan — but you lose access to federal debt forgiveness.
If your income exceeds the cap allowed for federal debt forgiveness or you want to save money on interest, consider refinancing with SoFi. Borrowers with strong credit histories may be able to lower their interest rate or their monthly payments, potentially saving tens of thousands over the life of the loan.
Consider refinancing your law school loans with SoFi. It takes only 60 seconds to check your rate!
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SoFi Student Loan Refinance
If you are looking to refinance federal student loans, please be aware that the White House has announced up to $20,000 of student loan forgiveness for Pell Grant recipients and $10,000 for qualifying borrowers whose student loans are federally held. Additionally, the federal student loan payment pause and interest holiday has been extended beyond December 31, 2022. Please carefully consider these changes before refinancing federally held loans with SoFi, since the amount or portion of your federal student debt that you refinance will no longer qualify for the federal loan payment suspension, interest waiver, or any other current or future benefits applicable to federal loans. If you qualify for federal student loan forgiveness and still wish to refinance, leave unrefinanced the amount you expect to be forgiven to receive your federal benefit.
CLICK HERE for more information.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
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