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Federal loan repayment program set for expansion

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The Obama administration’s move to expand its student loan repayment assistance program – an initiative which may help some lawyers struggling with debt – has put another spotlight on the debate over the rising cost of law school tuition.

President Barack Obama signed an executive order June 9 that would expand the Pay As You Earn program to 5 million more borrowers. This program caps federal student loan payments at 10 percent of the borrower’s income and forgives any amount left unpaid after 20 years.

Currently, PAYE is available only to those who graduated in 2010 and later. The president is proposing the initiative be offered to those who borrowed before October 2007 or ceased borrowing by October 2011.

However, as some point out, the executive order does little to address the problem of ballooning college costs.

While Christopher Chapman, executive director of Access Group Inc., praised the expansion of PAYE, he said many factors contribute to the problem of student loan debt. Part of the solution will have to come from schools making changes to their cost structure.

“No business can consistently increase the price of a product beyond the income of the customer without a negative impact,” Chapman said, adding schools have been taking “simple steps” to curb costs and provide more value to students.

Access Group Inc., a nonprofit comprised of 192 American Bar Association-approved law schools, educates and advises student borrowers who are seeking a professional degree.

Austen Parrish, dean of the Indiana University Maurer School of Law, noted tuition is a complicated issue. Often, he said, the sticker price is not the true cost law students pay because many receive financial assistance from the school.

He estimated that at IU Maurer, more than 90 percent of the students have been awarded reduced tuition rates with the average amount of reduction being between $22,000 and $25,000 annually.

In addition, providing a “rich intellectual environment” is not a cheap endeavor, Parrish continued. To be among the top ranked, law schools must offer students practical experience through clinics and externships with quality faculty and practitioners.

“It’s unclear that you can provide a high-quality law school education at a bargain basement price,” Parrish said. “I think the brightest students want to go to a place that provides a full range” of experiences.

The PAYE expansion will not happen immediately. The president has charged the Department of Education with developing the regulations and having the program available to more borrowers by the end of 2015.

Marvin Smith, director of student financial services at Indiana University-Purdue University Indianapolis, said questions surrounding how the expansion will be implemented make it difficult to determine how beneficial the program will be to students on the IUPUI campus, including those enrolled at the Indiana University Robert H. McKinney School of Law.

One very worrisome issue for law school graduates is the president’s apparent contradictory moves. On the one hand, he wants to increase PAYE while, on the other hand, his FY 2015 budget request would lower loan forgiveness amounts of borrowers who are in professional and graduate schools.

The White House is proposing to lower the amount of a graduate student’s debt that can be wiped away under the Public Service Loan Forgiveness program, according to an article written by José Espada, director of medical student financial aid at the IU School of Medicine. Under Obama’s budget, loan forgiveness would be capped at $57,500.

Chapman sees the expansion of PAYE as a positive move since it will make more student borrowers eligible for repayment assistance. PAYE and other similar loan repayment programs are good tools for law students and others with high debt and low salaries, he said.

However, Smith and Chapman said borrowers could actually end up owing more if they participate in the PAYE program. While the monthly payment will be lowered, the interest rate will not decrease so the balance on the loan could grow. Chapman also noted that the amount erased is counted as taxable income in the year it is forgiven, requiring borrowers to declare more in income for that year.•
 

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  1. Bob Leonard killed two people named Jennifer and Dion Longworth. There were no Smiths involved.

  2. Being on this journey from the beginning has convinced me the justice system really doesn't care about the welfare of the child. The trial court judge knew the child belonged with the mother. The father having total disregard for the rules of the court. Not only did this cost the mother and child valuable time together but thousands in legal fees. When the child was with the father the mother paid her child support. When the child was finally with the right parent somehow the father got away without having to pay one penny of child support. He had to be in control. Since he withheld all information regarding the child's welfare he put her in harms way. Mother took the child to the doctor when she got sick and was totally embarrassed she knew nothing regarding the medical information especially the allergies, The mother texted the father (from the doctors office) and he replied call his attorney. To me this doesn't seem like a concerned father. Seeing the child upset when she had to go back to the father. What upset me the most was finding out the child sleeps with him. Sometimes in the nude. Maybe I don't understand all the rules of the law but I thought this was also morally wrong. A concerned parent would allow the child to finish the school year. Say goodbye to her friends. It saddens me to know the child will not have contact with the sisters, aunts, uncles and the 87 year old grandfather. He didn't allow it before. Only the mother is allowed to talk to the child. I don't think now will be any different. I hope the decision the courts made would've been the same one if this was a member of their family. Someday this child will end up in therapy if allowed to remain with the father.

  3. Ok attorney Straw ... if that be a good idea ... And I am not saying it is ... but if it were ... would that be ripe prior to her suffering an embarrassing remand from the Seventh? Seems more than a tad premature here soldier. One putting on the armor should not boast liked one taking it off.

  4. The judge thinks that she is so cute to deny jurisdiction, but without jurisdiction, she loses her immunity. She did not give me any due process hearing or any discovery, like the Middlesex case provided for that lawyer. Because she has refused to protect me and she has no immunity because she rejected jurisdiction, I am now suing her in her district.

  5. Sam Bradbury was never a resident of Lafayette he lived in rural Tippecanoe County, Thats an error.

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