It was shortly after his 2012 graduation from George Washington University Law School when the realization hit Michael Lux hard: He had a ton of student loan debt to begin paying back to the federal government.
Like most recent law school graduates, the Indianapolis-based attorney said the future seemed bleak when he considered that a large portion of his hard-earned money had to be paid back to the government to cover the cost of his loans, plus interest. And navigating the rough waters of repayment plans, interest rates and government red tape didn’t make the process any easier.
For Lux, the best solution was a proactive one. He went online, spent hours researching the ins and outs of the student loan process and dubbed himself the “Student Loan Sherpa,” a title he uses at studentloansherpa.com, his online forum where he answers questions other recent graduates pose about their student loan problems.
Latoya Highsaw, a 2016 graduate of Indiana University Robert H. McKinney School of Law, took a similar approach. Though she had scholarships to help her through her three years of law school, Highsaw still had federal loans and a private loan that needed to be repaid after graduation.
Highsaw had received a full-ride scholarship for her undergraduate education, so the world of government borrowing was foreign to her when she enrolled in IU McKinney, and the prospect of having to pay back those loans upon graduation was something she never had to consider during her undergraduate years. So, she looked for the experts, calling loan providers and seeking advice from fellow graduates who were more familiar with the loan repayment process.
But Highsaw and Lux are not necessarily the norm among new lawyers, who are usually less inclined to ask questions about their loans for fear of getting stuck in the muddy waters of repayment plans. That’s why people like Lux, who now runs his website full time, and financial aid administrators at law schools are ramping up their efforts to ensure new lawyers are prepared to handle their loans before they leave school.
During her 3L year at IU McKinney, Highsaw said the school offered informational sessions where students could ask questions about their loans and take home pamphlets that could guide them through the repayment process. But while Highsaw found those meetings useful, Ken Nieman, IU McKinney assistant director of financial aid, said most students didn’t take advantage of the informational sessions.
Instead, Nieman said this year he began offering one-on-one counseling sessions with graduating students in his office, meeting with them to look at the specifics of their individual loans and helping to ensure they don’t get any surprises from their student loan provider after they graduate.
The one-on-one sessions have been well-received, Nieman said, especially since he offered them earlier in the spring semester before the stress of finals and bar preparation set in. Simply coming to terms with the weight of their loans can be a stressful experience for students, Nieman said, especially when they realize they are nearly $100,000 in debt. He recalled one student who, upon reviewing her federal loan documents before her meeting with Nieman, broke down in tears as she realized just how much she would have to pay back.
Once graduates realize the amount of money they owe, that debt can affect plans for their careers. For example, in addition to cost of living and other similar expenses, Highsaw said she also had to consider her monthly student loan payments when determining where she could afford to live and work after law school. She ultimately landed at Massillamany & Jeter LLP in Fishers.
Some new lawyers may let the size of their loans dictate what line of work they choose. Lux, for example, said he always knew he wanted to work in public service, but the federal Public Service Loan Forgiveness program made his goal of government work more enticing.
Through the forgiveness program, people who work for the government or nonprofit organizations can have their loans forgiven after 120 qualifying payments, though there has been uncertainty in recent months as to whether the first round of public service employees, due for forgiveness this year, will actually see their loans forgiven. And there are other requirements that must be met in order to qualify for the forgiveness program, Lux said, such as enrolling in an income-driven repayment plan or the 10-year standard plan.
Many new lawyers aren’t aware of the requirements for enrolling in the Public Service Loan Forgiveness and other repayment programs, Lux said, which is why he started his website to fill in the gaps. He takes the information available on federal loan websites and supplements it with his own student loan experiences to help new lawyers — and anyone struggling with their loans — to develop repayment strategies that fit their individual needs.
Similarly, Nieman has begun disseminating new tools to IU McKinney students that can provide them with more information on how their government debt will affect their futures. For example, AccessLex Institute, a former loan provider that now focuses on legal education research, has created a tool that allows incoming law students to input the cost of their tuition and the amount of any scholarships and grants they received. Based on that information, the program outputs an estimated amount of loans students will have to take out for their legal education, giving them a rough idea of what they will be required to pay back.
But aside from knowing how much you have to pay back, Highsaw said developing a plan for actually paying down student loan debt can be just as confusing. Her original plan had been to make large payments that would pay down her loans quickly, but then life hit her and she realized financially, she couldn’t swing that method.
Instead, Highsaw said she started putting money away while her loans were deferred during her bar preparation period and enrolled in an income-based repayment plan. Through that plan, her monthly payments are lower than what they would be on a standard repayment plan, but she hopes the money she put back will enable her to pay more than her minimum payments each month.
Having that sort of long-term plan in place can mean the difference between financial peace of mind and concern for the future, Lux said. His goal for his website is to help others indebted to the government to develop a plan to eliminate their debt.
“If people just address their loans, if you spend a few hours working on your student loan problems, you might save yourself hundreds of thousands or thousands of dollars,” he said. “It’s one of those things where the longer you ignore it, the worse it gets.”•