National Jurist - February 2008 - (Page 16) No more debt burden? Students pursuing public interest will have a large portion of their debt forgiven thanks to a new law. new Federal loan repayment program will reduce debt for law students who work in government or public interest jobs, making it easier for students to fulfill their passion without putting their future in hock. “This really makes it possible for anybody to go into public service and not be burdened with essenBy Karen Dybis tially another mortgage for the rest of their lives,” said Peter A. Winograd, a law professor at University of New Mexico School of Law and chair of the ABA committee on student financial aid. The College Cost Reduction and Access Act of 2007, also known as the CCRAA, became law in September. It allows all public servants — including all government workers and non-profit employees — to have a large portion of their educational debt forgiven after making reduced payments over a 10-year period. Borrowers will be able to base payments on their incomes. Starting on July 1, 2009, the law permits a borrower to limit annual debt repayment to 15 percent of discretionary income (that is, 15 percent of adjusted gross income minus 150 percent of the poverty level). For example, under standard ten-year repayment, a law-school graduate who owes $100,000 and has an income of $40,000 would have to pay more than $1,100 monthly toward that debt. Under this new program, that same student would make payments of about $300 a month. The federal government will forgive the remaining debt after the graduate has performed 10 years of full time public service. Critics argue that there is no long-term research that shows that debt forgiveness programs have any positive effect on the number of students going into publicservice careers. But Winograd said he feels this new program just makes it easier for students to follow their passions without financial headaches. “What I like about it is you have to put in 10 years of public-service employment. My hope is people are not going to devote a decade of their lives to something unless they want to do it,” Winograd said. “It’s a major change that makes it possible for people to do what they really want to do. In other words, they can follow their dreams instead of trying to scrape by and take care of their loans.” Here’s how the CCRAA works. The PHOTO BY BILL PETROS loans if they want to qualify for forgiveness under the public interest program. Only payments made on or after Oct. 1, 2007, qualify to be counted toward the 120 required monthly payments. To qualify for forgiveness, graduates must have worked full time for 120 months in a public-service job. The law defines such jobs very broadly to include all employment by government agencies and all employment by organizations that are tax-exempt under Section 501(c)(3) of the tax law. Other, non-legal careers such Georgetown Law professor Philip Schrag, who lobbied heavily for additional debt relief, talks with students who could possibly benefit from this program. borrower must have made 120 payments through the Direct Loan program to benefit from loan forgiveness. Most law students have government-guaranteed loans rather than direct loans, but starting next July, any graduating student with government-guaranteed loans can consolidate them into federal direct consolidation 16 THE NATIONAL JURIST February 2008 as social work, law enforcement or public child care also qualify for the repayment program. Another long-term proponent of the CCRAA is Professor Philip Schrag of Georgetown University Law Center. He serves as vice chair of the ABA’s committee on government relations and student
For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.