Congress Considers Wide Range of Matters to Help Defender and Civil Legal Aid Attorneys Cope with Law School Debt

10-year Forgiveness Provision Passes Congress

Source: By Don Saunders and Richard Goemann

This article appeared in the September-December 2007 issue of NLADA Cornerstone.

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

As this article goes to press, three major pieces of relevant legislation have either passed or are proceeding successfully through the legislative process.

I. Income-Based Repayment

The College Cost Reduction Act (H.R.2669), passed by Congress in early September, 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.

The bill can be viewed at http://kennedy.senate.gov/imo/media/doc/HR2669_conf_report.pdf. 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/

For more detailed information, contact Don Saunders, NLADA director of Civil Legal Services at d.saunders@nlada.org.

II. John R. Justice Prosecutors and Defenders Incentive Act of 2007

The John R. Justice (JRJ) Prosecutors and Defenders Incentive Act of 2007 would benefit the criminal justice system by creating a student loan repayment program for law school graduates who wish to pursue careers as prosecutors or public defenders.

NLADA began developing support for loan repayment assistance for defenders in the early part of this decade under the leadership of former Defender Legal Services Director Scott Wallace. Over the years we have built partnerships with other advocacy organizations and have returned to the Hill, often supported by dedicated members of the American Council of Chief Defenders. It has been that persistence over the years combined with the dedication of the ACCD and our willingness to reach out to both likely and unlikely allies that has brought us to the brink of passage.

The bill establishes a program of student loan repayment for borrowers who agree to remain employed for at least three years, as state or local prosecutors or as state, local, or federal public defenders (note that federal prosecutors are already eligible for loan relief through existing federal programs). It allows eligible attorneys to receive student loan debt repayments of up to $10,000 per year, with a maximum aggregate over time of $60,000. The legislation would authorize up to $25 million per year for loan repayments. The program would be administered by the Department of Justice.

The chief sponsor of JRJ in the Senate is Senator Richard Durbin (D-IL). Representative David Scott (D-GA) sponsored the House version, which was passed earlier this year on the House floor. The House added several amendments to the Scott version, including a cap and sunset provision, which make it less desirable than the Durbin bill. H.R. 916 rh Link

Due to a hold placed upon the bill by Senator Coburn (R-OK), Senator Durbin moved to include JRJ as an amendment to the Higher Education Amendments (HEA) Act (S.1642) on July 23. The HEA was managed on the floor by Senators Kennedy (D-MA) and Enzi (R-WY). The Durbin motion was agreed to by a voice vote, thus moving the consideration of JRJ to the House Committee on Education and Labor. JRJ Amendment Text Link

For more detailed information, contact Richard Goemann, NLADA director of Defender Legal Services at r.goemann@nlada.org.

III. Harkin Civil Legal Assistance Loan repayment Act

The 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 aforementioned 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. 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.

The amendment is identical in terms to S.1167. That bill can be viewed at http://www.nlada.org/Civil/Civil_GovRelations/Gov_Civil_Legis


PROSPECTS FOR THE FALL

Now that the Higher Education Amendments Act has passed the Senate, we 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 the Durbin/Scott bills and the Harkin legislation. 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.