A frequent misperception is that lawyers consistently earn a lot of money. But this isn’t always the case. Even individuals who earn a six-figure salary are likely to be in severe debt. But you can use student loan forgiveness for lawyers to get out of debt.
Some law school graduates may struggle to find work following graduation. For example, as of April 2020, 6.4 percent of law students who graduated in 2019 from American Bar Association-approved schools were unemployed and looking for work.
Even with school loan debt and various incomes, working in the legal industry can be a rewarding and financially successful career. Depending on your field of practice, there may be law school student loan forgiveness to assist you in paying off your law school debt.
This guide will explore all the areas so you can make the best choice.
Let’s begin.
Various Student Loan Forgiveness For Lawyers To Check Out
If you need assistance paying down your law school student loans, there are various options to explore.
However, it’s vital to distinguish between law school student loan forgiveness and assistance. Only your lender has the power to cancel your loans, although an employer or the government can help you pay off your debt by making payments in your stead.
Also, remember that these programs often require you to commit to a specific professional path. Here’s what’s on offer.
1. Department of Justice Attorney SLRP
In an endeavor to hire and maintain lawyers, the Justice Department offers the Attorney Student SLRP provides a repayment program to pay off their debt.
The organization accepts applications for the assistance program from current employees every spring. Employees of the Justice Department must have a minimum of $10,000 in federal student debt to qualify.
Eligible loans are:
- Defense Loans (made before July 1, 2024)
- Federal Consolidation Loans
- National Direct Student Loans (made between July 1, 1972, and July 1, 2024)
- Supplementary loans
- William D. Ford Direct Student Loans
- Stafford Loans
- Perkins Loans
- The Health Education Assistance Loan Program loans
- The Health Profession Student Loan Program loans
- The Nursing Student Loan Program loans
Candidates who qualify may receive up to $6,000 each academic year, with a lifetime of $60,000 in aid. Your payment will go to your loan servicer rather than you. You must agree to serve for three years with the Justice Department to be considered for the program.
This program’s aid is deemed taxable income and is subject to additional withholdings. So even though this forgiveness program may suit those working for the Justice Department, it’s pretty competitive.
2. Public Service Loan Forgiveness (PSLF)
The Public Service Loan Forgiveness (PSLF) program is an excellent way to acquire law school loan forgiveness if you have federal loans and work in a qualifying public service position.
With no tax consequences, your federal student loan outstanding balance will be erased after 120 monthly payments. For the loan payment to count toward the needed 120, you must be employed full-time with an approved non-profit or government institution.
You must also have federal direct loans and be on an IDR plan to qualify.
Once you’ve made the requisite 120 payments, you can apply for the PSLF to have the remainder of your debt forgiven. Complete the Employment Certification Form every year to verify your employment qualifies and that your payments are correctly counted.
This will give you a breakdown of how many payments you’ve made and how many you still have to make. It’s one of the best student loan forgiveness for lawyers to consider if you want your loans forgiven.
3. Herbert S. Garten LRAP
Work for a legal aid group as an attorney assisting underserved populations. You may have a chance to get your loans forgiven through the Herbert S. Garten LRAP.
You can borrow up to $5,600 each year for three years through this program. These loans will be utilized to repay your law school debt if you qualify. If all program criteria are met, the loans are erased, and you have less student loan debt to pay.
To be eligible, you must be employed by one of the grantees and have a debt of at least $75,000. Then, go to the program’s website and use the online application procedure to apply. A lottery mechanism determines which attorneys are chosen.
4. John R. Justice SLRP
In 2018, the John R. Justice SLRP gave $1.8 million in funding to qualified state and local public prosecutors and defenders. These lawyers agree to continue in a public job for three years in exchange for assistance with student loan repayment.
Technically, you can earn up to $10,000 in repayment assistance every year ($60,000 overall), but the program is underfunded. As a result, you can anticipate receiving a few hundred to a few thousand dollars in assistance.
To apply for the payback program, you must engage with your city or state. Even though the IRS refuses to issue explicit guidance on whether loan payments received via this program are taxable in all cases, they are generally not taxable.
It’s still one of the student loan forgiveness for lawyers to try out, even though it’s underfunded. Any little help can help you repay your student debts.
5. State Specific And School Loan Repayment Assistance Programs (LRAP)
You may qualify for student debt forgiveness for lawyers from your law school if you work in the public interest or for the government. The goal of these programs is to encourage lawyers to pursue careers in these professions by lowering their debt.
These programs help lawyers pay off their student loans by giving them loans to pay off their debt. Once a period of service has been fulfilled, the loans are forgiven. These programs are subject to income restrictions. The LRAPs of the American Bar Association contains a wealth of information on law schools that offer programs.
You might be able to obtain an LRAP program through your state if your law school doesn’t have one. Some of the states that now have programs are as follows:
District Of Columbia
Attorneys working for a qualifying 501(c)(3) delivering civil legal services to low-income DC residents are eligible for forgiving loans of up to $12,000 per year. The deadline for applications is usually in October, and loans are usually issued in January.
Kansas
If you live in a county designated as a Rural Opportunity Zone, you may qualify for up to $15,000 in student loan aid.
Florida.
If you meet the requirements, the Florida Bar Foundation will provide you with a $5,000 loan that you can repay each year. The money will be used to repay student loans. To be eligible, you must work at least 50% of the time for a Florida Bar Foundation-funded civil legal assistance group.
Indiana
You must work for a civil legal assistance organization and earn less than $70,000 per year. In addition, the participant receives a $5,000 loan that must be utilized to pay off student loan debt.
Maine.
Attorneys engaged in public service at a participating legal service provider get support from the Maine Justice Foundation. To see if your employer qualifies for this program, contact them.
Louisiana
The Louisiana Bar Foundation offers attorneys working for legal assistance organizations in the state up to $5,000 per year in loans. After 12 months of working for a legal aid agency, the loan is forgiven.
Minnesota
You must work full-time as an attorney for a qualified non-profit organization to be eligible. Assets and income will be taken into account. The application period is between May and November, and it is a competitive process.
Maryland
Populations of Maryland with an annual salary of less than $60,000 who give public service to low-income or underserved residents may be eligible for a grant to assist them in paying down their college loans. The amount of your compensation is determined by your outstanding student loan debt.
6. Income-driven repayment plans
Many of the assistance programs discussed above demand that you work for a qualifying organization or agency and meet rigorous income requirements. Consider an income-driven repayment plan if you don’t qualify for one of those programs and have federal loans.
These student loan forgiveness for lawyers can also help you pay off your student loans.
Using The IBR Plan
Depending on when you went for your student loan, your monthly payments are set at 10% to 15% of your income. Your planned payment must be less than the 10-year Standard Repayment Plan to be eligible for IBR. The repayment period is 20 to 25 years; any outstanding balance will be forgiven. However, additional taxes may apply.
REPAYE Plan
Payments are limited to 10% of your discretionary income, which is determined by subtracting your adjusted gross income from 150 percent of the poverty level. After 20 years of qualified payments, any remaining student loan balances are forgiven.
PAYE Plan
Payments are limited to 10% of your monthly income. To be eligible, your projected payment must be less than the 10-year Standard Repayment Plan payment. The repayment period is 20 years; any residual sum will be forgiven after that but may be subject to additional taxes.
ICR Plan
In an ICR plan, monthly payments are limited to 20% of your discretionary income. Any leftover balance is forgiven after a 25-year payback period. After that, however, the forgiven debt will be subject to taxes.
Graduating with large law school loans is difficult, but there may be ways to receive help from your company, state, and other sources. Check out these choices to discover whether you’re eligible for student loan forgiveness for lawyers.
Student Loan Forgiveness For Lawyers: Consider Refinancing Your Loans
If you don’t qualify for law school student loan forgiveness, refinancing your student loans could help you pay them off faster.
Several student debt refinancing organizations start with lower interest rates than government student loans. If your credit history and income qualify you, you may be able to lower your monthly payment, cut your interest rate, or both.
If you have a steady income but a poor credit history, you can apply for a loan with a co-signer to increase your chances of getting a low-interest rate.
Private lenders are used to refinancing student loans. This implies it requires a little more effort than some other repayment options. You’ll also need to examine loan choices from various lenders to ensure you get the best offer.
Also, once you refinance your federal loans, you can’t reverse the process. So, if you’re thinking about applying for student loan forgiveness for lawyers or aid program that needs federal loans, you might want to remain with what you already have.
Pay More Than The Minimum On Your Loans
Even if you don’t qualify for loan forgiveness, after 30 years of repayment, your federal loans will be extinguished. What’s the catch? The sum that is refunded is taxed. So you’ll owe a hefty tax bill the year the student loans are forgiven.
So, should you try to pay down your debts with extra payments or consider saving for the tax bill? The answer is determined by the ratio of your debt to your income.
While the exact answer is dependent on several factors, a decent rule of thumb is that if your debt exceeds 1.5 times your income, you should consider loan cancellation rather than repayment.
Consider A Student Loan Lawyer To Help You
A student loan lawyer focuses on assisting borrowers with their student debt issues, such as settling payments that have been sent to collectors or challenging loans from a fraudulent institution.
They can also provide information on your legal rights and choices, which can be essential if a lender or debt collector acts unfairly or abusively.
However, student loan attorneys must work within the confines of the legal system. If you don’t have a valid claim, such as a lifelong handicap, they can’t get your loans canceled. They can’t assist you in getting out of bankruptcy or default right away, but they can point you in the right direction if you have alternative options.
Although hiring a student loan lawyer is expensive, you can save money if the lawyer can help you pay off your student loans or negotiate a lower repayment balance. First, make a list of questions for your first meeting. Then, write down the issues you need to tackle and make sure you know what the lawyer can help you with.
The Ideal Time To Seek A Student Loan Lawyer
It can be smart to hire a lawyer, but only in some situations. We’ll go through such circumstances:
1. You’ve Fallen Behind On Your Student Loans.
Private loan defaulters have fewer choices compared to federal loan defaulters. For example, if your loan servicer succeeds in suing you, they might garnish your salary or other assets. A lawyer can prevent or prevent those losses by representing you in court.
2. Your School Has Defrauded You
A student loan lawyer could assist you in pursuing a discharge of any outstanding debt if you believe your college or university deceived you. For example, if your school knowingly misled you about your employment options after graduation, you may be eligible for debt forgiveness.
3. Filing For Bankruptcy
Student debt relief through bankruptcy is a rigorous and time-consuming process. While student loan discharge in bankruptcy is not impossible, it’s highly uncommon. Hiring an expert student loan lawyer may improve your chances of success or, at the very least, provide you with a realistic assessment of your chances.
4. Your Debt Has Been Collected
If you owe money on your student loans, a debt collector can decide to agree on a payment plan with you. They can also use serious strategies to get their full payment. A student loan attorney can assist you in negotiating with the debt collector to reduce the amount you pay and the impact on your credit score.
Final Thoughts
Student loan forgiveness for lawyers is a viable option for reducing law school debt, but not for everyone. For example, you won’t be eligible for loan forgiveness if you work for a company, earn too much money, are self-employed, or have private loans.
If you’re not eligible for these programs but are still having trouble paying off your student debts, refinancing is an option to investigate.
When you refinance, you engage with a lender to obtain a new loan in the amount of your existing debt, which may include both federal and private loans. Your new loan will have entirely different terms than your old one, including a new interest rate, monthly payment, and repayment period.
You may be eligible for a cheaper rate while utilizing the student loan forgiveness for lawyers program if you have strong credit, allowing you to save money. You might also choose a longer loan term to lower your monthly payment and give yourself more budget flexibility.
