College Cost Reduction and Access Act (pdf, 199 Kb)

The Notice of Proposed Rulemaking (pdf, 242 Kb) (NPRM) that would implement the Title IV loan provisions in the College Cost Reduction and Access Act of 2007 (CCRAA) was published in the Federal Register on July 1, 2008. Interested parties have until Friday, August 15 to submit comments on the proposed regulations. Learn more about the drafting of the proposed regulations here.

10-Year Forgiveness Provision Passes Congress

Washington’s long, hot summer has provided supporters of loan repayment assistance legislation with real reason for hope for relief for attorneys faced with staggering levels of law school debt. For many of these attorneys, debt load and relatively low public interest salaries are impenetrable barriers preventing them from pursuing public interest careers.

Income-Based Repayment

The College Cost Reduction Act (H.R.2669), passed by Congress in early September 2007, includes Sections 203 and 401 providing for "income-based repayment (IBR)" options for federal educational debt for public interest lawyers (and many others embarked on long-term public service careers).

Section 203. This provision, created by Senator Edward Kennedy (D-MA), provides a new repayment/forgiveness option, an improved model of the prior "income-contingent repayment (ICR)" program which has been on the books since 1993. Most government-guaranteed loans are eligible for participation under Section 203 and there is no prerequisite requirement to consolidate loans prior to electing an IBR plan. The essential benefit of an IBR plan is that it caps a borrower’s payment at roughly 15% of her adjusted gross income minus 150% of the poverty level.

Professor Philip Schrag from Georgetown Law School, a leading proponent of the legislation, estimates that, for a typical borrower owing $100,000 with a $40,000 salary, monthly payments during the first year would be reduced from $1,151/month to $309/month.

After 25 years, the IBR plan allows the remainder of the loan to be forgiven. This program is most valuable for helping make loan payments affordable for attorneys with particular financial needs during a given period. Few will likely see the 25-year forgiveness period as an incentive to stay in public interest law. The provision is not tied to the performance of public interest work by the participant.

Section 401. In combination with Section 203, this section provides a very promising approach to enabling public interest lawyers to pursue careers in indigent defense or civil legal aid. A borrower may use the affordable IBR repayment level specified by Sec. 203, but if the borrower either has a federal direct loan or consolidates her education debt into a federal direct consolidation loan before starting to repay the debt and then works in full-time public service for 10 years, the remaining balance is forgiven at the end of that time, rather than after 25 years. The bill guarantees borrowers with government-guaranteed bank loans the right to consolidate to take advantage of this program. Public service includes civil legal aid, public defense, and, in addition, all employment by governments and by organizations that are exempt from tax under Sec. 501(c)(3) of the tax law. Borrowers who have direct loans or who consolidate now may start counting the ten years on Oct. 1, 2007. The provisions of this debt relief and 10-year forgiveness bill hold great potential in helping employers to retain civil legal aid and criminal indigent defense attorneys.

An excellent article by Professor Schrag explaining the program and how to use it can be found at http://www.law.georgetown.edu/news/releases/documents/Forgiveness.pdf . A good Web site containing additional information can be found at http://projectonstudentdebt.org/ .

Harkin Civil Legal Assistance Loan Repayment Act

A civil repayment bill, introduced by Senator Tom Harkin (D-IA), authorizes up to $10,000,000 for aid to "civil legal assistance" attorneys. Participants can receive up to $6,000 per year up to a total amount of $40,000 per participant. Under the bill, the Department of Education would be the agency administering the program.

During the Senate consideration of the Higher Education Amendments Act, Senators Harkin and Ben Cardin (D-MD) moved to include the civil bill as a second degree amendment to the John R. Justice amendment, a bill creating a student loan repayment program for law school graduates who wish to pursue careers as prosecutors or public defenders sponsored by Senator Richard Durbin (D-IL). Senator Durbin agreed to the inclusion and the Harkin civil loan repayment measure was likewise added to the HEA. That bill passed the full Senate on July 24, 2007.

The Harkin amendment is identical in terms to S.1167. That bill can be viewed here .

Now that the Higher Education Amendments Act has passed the Senate, NLADA will turn our attention to the House to ensure the inclusion of similar authorizing language for the John R. Justice bill and the Harkin measure covering civil legal assistance attorneys.

While no House version of the HEA has been introduced to date, proponents speculate that the House will consider its own version of the HEA prior to the fall adjournment. Chairman George Miller (D-CA) has indicated his intention to do so once the committee takes up the No Child Left Behind legislation.

NLADA is working in coalition with a number of groups in support of both bills. We are acutely aware of the huge hurdles faced by public defenders and civil legal aid attorneys when confronted by their often colossal debt burdens and will take every possible step to ensure the successful passage of both of these bills.

With the income-based repayment and forgiveness provision already enacted and a positive outlook with regard to the two direct payment bills pending in the House, we are very optimistic that some meaningful federal loan repayment assistance will become a reality this fall.

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