Guest Post: Paying for Law School and the Public Service Loan Forgiveness Program

Guest Post by CJ Ryan, J.D., Ph.D.

Associate Professor of Law, Roger Williams University School of Law
Affiliated Scholar - American Bar Foundation

Legal education in 2019 is a costly proposition for most law students. The average cost of tuition and fees at private law schools was $49,095 and $40,725 at public law schools, for out-of-state students, in the 2018-2019 academic year, to say nothing of living expenses and other costs that students pay out of pocket.[1] As a result, many law school graduates carry significant student loan debt upon completing their studies. In fact, the average amount borrowed by law school graduates totaled $115,481 for the graduating class of 2018.[2]

When discussing student loan debt, it is easy to fixate on the aggregate impact of the burdens this debt places on tax payers, the economy, and borrowers alike, such as the depressive effects that law school loan debt has on homeownership and entrepreneurship.[3] Yet, a discussion of which graduates are saddled with the largest student loans is often absent from conversations about student debt.

The results of the 2018 Law School Survey of Student Engagement (LSSSE) reveal that students from the lowest socio-economic backgrounds, as proxied by parental education, expect the greatest debt loads upon graduating from law school. In fact, among students expecting to owe between $180,000 and $200,000,  40% of these students have parents whose highest level of educational attainment was less than a baccalaureate degree, and the proportion jumps to 42% of students who expect to owe more than $200,000 in student loans from attending law school. Thus, unsurprisingly, students from the lowest socio-economic backgrounds borrow the most to finance their legal education and, perhaps as a result, are on the hook for the largest debt sums.

Furthermore, students from racial minority groups account for the largest expected law school debt loads. Of the students surveyed by LSSSE who expected to owe more than $200,000 in law school loans following their graduation, 53% identified with a racial group other than White. Thus, the disparate impact of the highest law school loans is greatest among racial minorities.

Fortunately, income-based repayment options for student loans make paying back significant debt loads for law school graduates more manageable. One repayment option, the Public Service Loan Forgiveness (PSLF) program, even forgives borrowers a portion of their student loan debt, subject to paying into the program for 10 years of full-time employment with a government organization, or a qualifying public service or tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code.[4] However, the future of the PSLF remains uncertain, as the Department of Education, as well as President Trump, have announced plans to eliminate PSLF.[5]

In the fall of 2017, I administered the Law School Choice Survey at four law schools: a private elite law school; a public flagship law school; a public regional law school; and a private new law school.[6] The response rate within this sample of law students was quite robust—45%, 34%, 40% and 43%, respectively—and respondents to the survey were representative of their law school’s entire population on the basis of race and gender, within two%, in each category.[7] The survey queried current law students about their career aspirations and whether they planned to take advantage of the PSLF program to repay their student loans. Responses from students at the public flagship law school indicated that 16% of White students planned to enroll in or were already enrolled in PSLF, but 20% of the African-American students and half of the Hispanic/Latino students planned to enroll in or were already enrolled in PSLF. At the public regional law school, nearly 29% of White students indicated that they planned to enroll in or had already paid into PSLF, but half of the Hispanic/Latino students and 70% of African-American students planned to enroll in or had already paid into PSLF. At the private new law school, 33% of African-American students and over 35% of White students surveyed indicated that they plan to avail themselves of PSLF.[8] Furthermore, nearly 77% of students at the public flagship law school, and over 55% of students at the public regional and private new law schools, with expected law school loan debt exceeding $100K, indicated that they plan to enroll or were enrolled in PSLF. These results demonstrate that a significant proportion of racial minority students, as well as their White counterparts, and students with the greatest expected debt loads view the PSLF as their primary recourse for repaying their law school loans.

Likewise, 40% of the students whose parents earned a combined income of less than $50,000 annually plan to enroll or were already enrolled in the PSLF program at the public flagship law school. At the public regional law school, over 21% of students whose parents earned less than $50,000—but more than 44% of the students who parents earned less than $60,000 annually—are counting on the PSLF program. And over 58% of the students whose parents earned less than $50,000 annually at the private new law school indicated that they plan to use or are enrolled in the PSLF to repay their student loans.

Additionally, over 35% of students who planned to enter a career in traditional public interest sectors indicated that they planned to or had already enrolled in PSLF.[9] More than 54% of students who sought a career in a public interest sector at the public regional law school indicated that PSLF was a part of their loan repayment plans. And over 30% of students at the new private law school who plan to enter a career in the public interest sector reported that they plan to repay using PSLF.

Taken together, these results suggest that that the students who most need relief for their substantial law school loans—students from lower socio-economic backgrounds, students from diverse racial backgrounds, students considering careers in public interest law, and students carrying the highest debt loads, most of whom are the same students across these four categories—are the students most likely to enroll in the PSLF program. Thus, despite the administrative challenges associated with the PSLF program,[10] it has succeeded in attracting law graduates to careers in the public interests, and particularly racial minority law graduates.[11] As such, it presents the most viable path to ensuring diversity in the legal profession, in terms of socio-economic status and race, but it also has substantial implications for ensuring access to justice. PSLF provides an important pathway for lawyers willing to serve in public interest roles, often at dramatically lower salaries than their peers who pursue careers in the private sector, to repay their loans, while helping to address the unmet demand for legal services for those with the greatest need in our society.[12] To eliminate the PSLF program, and these important goals that it accomplishes, would be a mistake.

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[1] See, e.g., Ilana Kowarski, See the Price, Payoff of Law School before Enrolling, U.S. News & World Report, March 12, 2019, https://www.usnews.com/education/best-graduate-schools/top-law-schools/articles/law-school-cost-starting-salary.

[2] Law School Costs, Law School Transparency, https://data.lawschooltransparency.com/costs/debt/.

[3] Alvaro Mezza, Daniel Ringo, and Kamila Sommer, Can Student Loan Debt Explain Low Homeownership Rates for Young Adults?, Federal Reserve Board, January 2019, https://www.federalreserve.gov/publications/files/consumer-community-context-201901.pdf; see also, Vadim Revzin and Segei Revzin, Student Debt Is Stopping U.S. Millenials from Becoming Entrepreneurs, Harvard Business Review, April 26, 2019, https://hbr.org/2019/04/student-debt-is-stopping-u-s-millennials-from-becoming-entrepreneurs.

[4] The Public Service Loan Forgiveness Program, Federal Student Aid, https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/public-service#qualifying-employment.

[5] Zack Friedman, Trump Proposes to End Student Loan Forgiveness Program, Forbes, March 12, 2019, https://www.forbes.com/sites/zackfriedman/2019/03/12/trump-proposes-to-end-student-loan-forgiveness-program/#3cb3d8e5415e.

[6] See Christopher J. Ryan, Jr., Analyzing Law School Choice, 2020 Ill. L. Rev. ___ (forthcoming 2020), available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3309815. As a condition of their participation in the survey, the law schools at which the survey was administered asked to remain anonymous and only be identified by descriptive terms. The administration at the private elite law school would not permit me to ask whether students at the law school were planning to enroll or had already paid into the PSLF program; however, all other survey questions were common between law schools.

[7] See id.

[8] Curiously, no Hispanic/Latino students surveyed at the new private law school indicated that PSLF was included in their loan repayment plans but both of the Asian-American law students surveyed indicated that they planned to enroll or were enrolled in the PSLF program. However, it should be noted that the private new law school is not terribly diverse in terms of race.

[9] These law career sectors included: children’s law/ juvenile justice; civil liberties and civil rights; criminal law; education law; employment/labor law; family law; general legal services; government law; housing law; immigration law; and public interest law.

[10] Zack Friedman, 99.5% of People Are Rejected for Student Loan Forgiveness Program, Forbes, January 3, 2019, https://www.forbes.com/sites/zackfriedman/2019/01/03/student-loan-forgiveness-data/#14c9cb3e68d0.

[11] See, e.g., Public Service Loan Forgiveness Data, Dept. of Educ., March 2019, available at https://studentaid.ed.gov/sa/about/data-center/student/loan-forgiveness/pslf-data.

[12] For example, it is estimated that legal aid lawyers “are estimated to provide just 1 percent of the total legal needs in the United States each year[.]” Three Ways to Meet the “Staggering” Amount to Unmet Legal Needs, Am. Bar Ass’n J., June 26, 2018, https://www.americanbar.org/news/abanews/publications/youraba/2018/july-2018/3-ways-to-meet-the-staggering-amount-of-unmet-legal-needs-/.


Preferences & Expectations for Employment After Law School by Student Debt Level

The newly released LSSSE 2017 Annual Results explore the relationship between students’ preferred and expected work settings post-graduation. Our most recent post looked at the settings in which male and female student prefer and expect to work. In the final post in this series, we examine how students with varying debt levels approach the question of where they prefer and expect to work after graduation.

The role of student loan debt is important to consider in the context of student career preferences and expectations because earning potential varies tremendously across work settings within the legal profession. LSSSE asks respondents to estimate the amount of law school debt they expect to incur by graduation. Forty percent of respondents who expect to owe more than $200,000 prefer to work in a public service setting, the highest proportion of all student debt groupings. At 31%, respondents who expect no debt are least likely to prefer working in public service.

 

Expectations of working in public service decrease slightly relative to preferences for each of the student debt groups; but expectations of working in public service increase with expected debt. There is no evidence of high levels of expected debt prompting respondents who prefer public service settings to nonetheless expect to work in private settings (due to the prospect of higher pay). In fact, respondents who expect to owe more than $200,000 are most likely to prefer and expect to work in public service settings. Respondents expecting to owe more than $100,000 are mostly likely to prefer to work in private settings but expect to work in public service.

The motivation for pursuing legal work in one setting versus another is likely driven by a variety of factors rather than simple personal economics. The promise of programs like Public Service Loan Forgiveness (PSLF) may temper the negative financial ramifications of pursuing lower-paying public service careers among students in the highest student debt groupings. The relative popularity of public service work among Black and Latinx students coupled with the disproportionate student loan burden (pdf) shouldered by these students is likely another contributing factor to the trends we see here.


Trends in Preferences & Expectations for Employment After Law School

The newly released LSSSE 2017 Annual Results explore the relationship between students’ preferred and expected work settings post-graduation. In a series of related blog posts, we will share tidbits of information about where law students hope to work, where they expect to work, and how these preferences and expectations vary by race and gender. In our final post, we will look at patterns in students’ preferred and expected work settings relative to their projected levels of student loan debt.

LSSSE asks respondents to identify the setting in which they would most prefer to work after graduation and the setting in which they most expect to work. Preferences can be seen as representing a respondent’s ideal outcome; expectations can be seen as representing perceptions of a realistic outcome. For both questions, respondents are asked to choose between sixteen answer options.

For purposes of much of the analyses in this report, the answer options were divided into two broad groups:

Public Service Settings

  • Academic
  • Government agency
  • Judicial clerkship
  • Legislative office
  • Military
  • Prosecutor’s office
  • Public defender’s office
  • Public interest group

 Private Settings

  • Accounting firm
  • Business and industry
  • Nonlegal organization
  • Private firm – small (fewer than 10 attorneys)
  • Private firm – medium (10-50 attorneys)
  • Private firm – large (more than 50 attorneys)
  • Solo practice

The “Other” response was removed from our analysis. The primary factor underlying the assignment of an answer option to one of the two groupings was whether a person working in that setting would likely qualify for Public Service Loan Forgiveness (PSLF), which typically requires one to be employed in the government or non-profit sector. There is naturally some imprecision in the assignments.

Sixty-four percent of respondents indicate a preference for working in one of the private settings, with the remaining 36% preferring public service. This proportion is unchanged from five survey administrations ago (2012) and higher than the 30% public service proportion ten administrations ago (2008).

 

Seventeen percent of respondents would prefer to work in medium-sized law firms, making this category the most popular private setting and the most popular setting overall. Government agencies are the most popular public setting, with 11% of respondents indicating that preference. Medium-sized law firms are also the most commonly expected private work setting, accounting for 20% of respondents. Small law firms are the fourth most preferred private setting yet the second most common expected setting. Government agencies are the most commonly expected public service setting.

Forty-four percent of respondents indicate a different expected work setting than their preferred setting. Respondents who prefer to work in an academic setting are least likely to expect to work in that setting, with only about one-in-five matching preference with expectation. Respondents who prefer to work in large law firms or as prosecutors are most likely to also expect to work in those settings.

Forty-six percent of respondents who prefer one of the public service settings expect to work in a non-preferred setting, including one-quarter who expect to work in private settings instead. Forty-one percent of respondents who prefer one of the private settings expect to work in a different setting, but only 12% of students who prefer to work in a private setting expect to work in public service instead.


LSSSE Annual Results: Higher Debt, Lower Student Satisfaction (Part 2)

This is the sixth installment in a series of posts centered around data from the 2015 LSSSE Survey administration and the 2015 Annual Report, which provides a retrospective glimpse into law student debt trends over a 10-year period, 2006 to 2015, with 2011 as a midpoint. This post discusses student debt and the student satisfaction.

The LSSSE Survey is designed to measure the effects of legal education on law students.  Student satisfaction is related to those effects; therefore, respondents are asked:

If you could start over again, would you go to the same law school you are now attending?

The purpose of this question is to, again, prompt respondents to consider and assess their law school experiences, but this time in the context of the opportunity costs.  Respondents are given the following four answer choices:

  • Definitely yes
  • Probably yes
  • Probably no
  • Definitely no

In the analyses below, the favorable responses (Definitely yes and Probably yes) are combined, as are the unfavorable responses (Probably no and Definitely no).

In each survey year, respondents who expected to owe more than $120,000 were noticeably less likely to respond favorably to the satisfaction questions.  In 2006, 75% of these respondents had favorable views of their law school experiences, compared to the overall rate of 80%.  Similar differences were observed in 2011 and 2015.

The effects of debt seemed even more apparent in the responses to the “same law school” question.  With a few slight exceptions, in every survey year, respondents were less likely to state that they would attend the same law school as expected debt increased.  At the level of more than $120,000 in expected the debt, 70% of respondents in 2006 said they would attend the same law school, compared to 82% of those who expected no debt.  In 2011, the favorable response rate among these high-debt respondents was 74%, compared to 83% of those who expected no debt.  And lastly, in 2015, 74% of these high-debt respondents stated they would attend the same school, compared to 87% of those expecting no debt.  This 13-percentage point difference was the largest among the three survey years.

figure 12 would attend the same law school

 

 

 

 


LSSSE Annual Results: Higher Debt, Lower Student Satisfaction (Part 1)

This is the fifth installment in a series of posts centered around data from the 2015 LSSSE Survey administration and the 2015 Annual Report, which provides a retrospective glimpse into law student debt trends over a 10-year period, 2006 to 2015, with 2011 as a midpoint. This post discusses student debt and the student experience.

The LSSSE Survey is designed to measure the effects of legal education on law students.  Student satisfaction is related to those effects; therefore, respondents are asked:

How would you evaluate your entire educational experience at your law school?

The purpose of this question is to prompt respondents to consider and assess their law school experiences.  This is, in essence, a question regarding satisfaction, a perceptional concept.  As such, respondents are given the following four answer choices:

  • Excellent
  • Good
  • Fair
  • Poor

In the analyses below, the favorable responses (Excellent and Good) are combined, as are the unfavorable responses (Fair and Poor).

As a general proposition, LSSSE respondents reported high levels of satisfaction with their law school experience in each of the survey years.  In 2015, 84% of respondents rated their law school experiences “excellent” or “good.” [i]  Eighty-one percent stated that they would definitely or probably attend their same law school again. [ii]  Interestingly, these proportions were higher than in both 2011 and 2006.  This is noteworthy, given the increased costs of legal education and the handwringing about whether the endeavor is worth those costs.

A possible theory for these higher expressions of satisfaction might be that those who have opted to attend law school in spite of the unflattering scrutiny of late are more likely to have an affinity for the endeavor that transcends some of the most common practical considerations.  Put simply, current law students may be more apt to be satisfied with the experience compared to past cohorts.  Another theory could be that law schools have adapted to changing student needs and demands in ways that have increased satisfaction.  In any case, the trend was somewhat surprising to us.

But in each survey year, respondents who expected to owe more than $120,000 were noticeably less likely to respond favorably to the satisfaction questions.  In 2006, 75% of these respondents had favorable views of their law school experiences, compared to the overall rate of 80%.  Similar differences were observed in 2011 and 2015. [iii]

[i]. Overall Satisfaction with “Entire Law School Experience” response proportions

fig 9 overall satisfaction

[ii]. Overall “Same Law School” response proportions

fig 10 overall same law school

 

[iii]. Satisfaction with “Entire Law School Experience,” more than $120K

satisfaction with law school more than 120k


LSSSE Annual Results: Lower LSAT Score, Higher Debt

This is the fourth installment in a series of posts centered around data from the 2015 LSSSE Survey administration and the 2015 Annual Report, which provides a retrospective glimpse into law student debt trends over a 10-year period, 2006 to 2015, with 2011 as a midpoint. This post discusses student debt trends through the lens of LSAT scores.

The Law School Admission Test (LSAT) looms large in the law school admissions process. Applicants with high scores tend to have the best chances of being offered both admission and lucrative scholarships. The latter trend has potential implications on student debt trends. The more that a student’s costs of attendance are discounted, the less that student has to borrow. And across the entire system of legal education, it seems logical that student debt trends would share some relationship with trends pertaining to the awarding of scholarships and grants.

For each LSAT grouping, the proportion of respondents who expected to owe more than $120,000 was higher in 2015 than in 2006.  But the intensity of these increases was greater for respondents with LSAT scores of 155 or below.  In 2006, the proportion of these “lower-LSAT” respondents who expected to owe more than $120,000 was 16%–the same proportion as their “higher-LSAT” peers.  By 2015, however, the proportion for the lower-LSAT group was 37%, almost double the 20% proportion of the higher-LSAT group.  The trends were even starker for respondents with LSAT scores of 145 or below. In 2006, 15% of these respondents expected to owe more than $120,000; in 2015, that proportion was 52%. [i]

At the other end, in each survey year, respondents in the higher-LSAT groupings were more likely to expect no debt than other respondents; but these trends became more apparent in 2015.  In 2006, 12% of respondents with LSAT scores of 156 or above expected no debt, compared to 10% of respondents with lower scores.  In 2015, the proportion of no-debt expectations within the higher-LSAT group increased to 20%, while the proportion within the lower-median group remained at 10%.

[i]. Proportion of expected debt, by LSAT Scores

Debt LSAT

 


LSSSE Annual Results: Black and Latino Respondents Expected The Most Debt

This is the third installment in a series of posts centered around data from the 2015 LSSSE Survey administration and the 2015 Annual Report, which provides a retrospective glimpse into law student debt trends over a 10-year period, 2006 to 2015, with 2011 as a midpoint. This post discusses student debt trends based on race and ethnicity. For sake of clearer explication of trends, this post focuses on respondents who identified as Asian, Black, Hispanic/Latino, or White.

Reliance on student loans is largely a reflection of wealth and access to alternative sources of funds. Students from less affluent backgrounds tend to rely on student loans to greater extents than their more affluent peers. This means that the large racial and ethnic wealth disparities in the U.S. have broad implications on student debt trends.

In each of the survey years, white and Asian respondents were more likely than black and Latino respondents to expect no debt.  Regarding high debt, a telling trend was observed.  In 2006, there were only marginal racial and ethnic differences in expectations of more than $100,000 in debt.  By 2011, however, clear disparities emerged, with black and Latino respondents more likely to expect debt at this level.  By 2015, the disparities became more intense, with 61% of black respondents and 56% of Latino respondents expecting debt at this level, compared to about 40% of white and Asian respondents.  That year, 43% of black respondents expected to owe more than $120,000—the first time a racial or ethnic group crossed the 40% threshold on any LSSSE debt category.[i]

[i]. Proportion of expected debt at various levels, by race

debt by race


LSSSE Annual Results: Ten Years of (Ever-rising) Law Student Debt

This is the first in a series of posts centered around data from the 2015 LSSSE Survey administration and the 2015 Annual Report, which provides a retrospective glimpse into law student debt trends over a 10-year period, using survey years 2006 and 2015 as bookends. Survey year 2011 will be used as a midpoint in much of the analyses—2011 is noteworthy because a record number of students—157,298—enrolled in U.S. law schools that year. This post discusses the increase in law student debt over the 10-year period.

The vast majority of law students— almost 90%, according to LSSSE Survey data and estimates by the American Bar Association—rely on student loans to finance their education. The typical law school graduate is part of a relatively rarefied group of debtors with student loan balances approaching, if not exceeding $100,000. In 2012, the average debt for graduates of private law schools was $127,000; $88,000 for public law school graduates. These amounts represented inflation-adjusted increases of one-quarter and one-third respectively in just seven years.

The LSSSE Survey asks respondents the following question:

“How much educational debt from attending law school do you expect to have upon your graduation?”

In order to account for the inherent imprecision of speculating about the future, the response options appearing on the survey are presented mostly as ranges in $20,000 intervals, with two outer options:

  • $0
  • $1- $20,000
  • $20,001 – $40,000
  • $40,001 – $60,000
  • $60,001 – $80,000
  • $80,001 – $100,000
  • $100,001 – $120,000
  • More than $120,000

For much of the analyses in this series of posts, the six intermediate ranges are compressed into three $40,000 ranges, with the outer options remaining the same:

  • $0
  • $1- $40,000
  • $40,001 – $80,000
  • $80,001 – $120,000
  • More than $120,000

Unsurprisingly, over the 10-year timeframe, increasing proportions of LSSSE respondents reported expecting high law school debt.  In 2006, 32% of respondents expected to incur more than $100,000 in debt during their law school matriculation.  By 2011, that proportion had increased to 44%, a level at which it remained in 2015.  The differences in expected debt were particularly acute at the highest level—more than $120,000.  Roughly 30% of respondents in both 2011 and 2015 expected debt above $120,000, compared to 16% in 2006.

An analysis of the subgroups of “high-debt” respondents really highlights the prevailing trends.  We measured the proportional split between respondents who expected to owe $100,001-$120,000 and those who expected to owe more than $120,000.  In 2006, 51% of respondents in this high-debt subgroup expected to owe more than $120,000 (leaving 49% expecting to owe $100,001-$120,000).  By 2015, 67% of this high-debt subgroup expected to owe more than $120,000.