Posted Mar 01, 2013 07:50 am CST
Posed by a law school dean, the question above comes amid reports of rising student loan default rates. Although 1.6 million borrowers had applied for income-based repayment as of fall 2012, far too many young lawyers continue to overlook alternatives such as the government’s new Pay as You Earn program.
“If every graduate student, medical student and law student took action on the options available, my partner and I—and the handful of other student loan lawyers in the country—wouldn’t be able to handle the flood of work,” says consumer bankruptcy lawyer Jay S. Fleischman, a partner at Shaev & Fleischman in New York City. “There’d be 25,000 student loan lawyers and we’d all be busy.”
Although the U.S. Department of Education website offers information on many loan programs, lack of easy access to distilled details is the greatest barrier for many indebted grads. “People just don’t realize the federal government has options available to them,” Fleischman says.
And those borrowers looking to lenders—who are not incentivized to work with debtors before they default—or law schools for help may be out of luck.
“Even if you’re aware of your responsibilities and actively working to situate your loans, it’s so hard,” says student loan expert Heather Jarvis, who notes the notoriously bad rap given to loan administrators and the horror stories of lost forms and complicated regulations.
At many law schools, financial aid offices are shared with undergraduate colleges, leaving them short-staffed and overwhelmed by mountains of paperwork, adds Jarvis of Wilmington, N.C. “I’ve gotten many phone calls from my school asking for money,” says 2008 law grad Daniel B. Goldman, a staff attorney at Jenner & Block in Chicago, “but I’ve never once received a phone call asking if I’m managing my debt or need help.” When Goldman repeatedly called his school’s financial aid office for advice, he says, counselors didn’t have adequate knowledge about the changing laws regarding repayment options.
And many law students aren’t focused on the financial consequences of six-figure student loans until after they graduate, Jarvis says. “Maybe grad school is too expensive,” she says, “but these students shouldn’t be left out to dry.”