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. Joe, you might want to do some reading on the fate of Hoosier whistleblowers before you get your expectations raised up.

  2. I had a hospital and dcs caseworker falsify reports that my child was born with drugs in her system. I filed a complaint with the Indiana department of health....and they found that the hospital falsified drug screens in their investigation. Then I filed a complaint with human health services in Washington DC...dcs drug Testing is unregulated and is indicating false positives...they are currently being investigated by human health services. Then I located an attorney and signed contracts one month ago to sue dcs and Anderson community hospital. Once the suit is filed I am taking out a loan against the suit and paying a law firm to file a writ of mandamus challenging the courts jurisdiction to invoke chins case against me. I also forwarded evidence to a u.s. senator who contacted hhs to push an investigation faster. Once the lawsuit is filed local news stations will be running coverage on the situation. Easy day....people will be losing their jobs soon...and judge pancol...who has attempted to cover up what has happened will also be in trouble. The drug testing is a kids for cash and federal funding situation.

  3. (A)ll (C)riminals (L)ove (U)s is up to their old, "If it's honorable and pro-American, we're against it," nonsense. I'm not a big Pence fan but at least he's showing his patriotism which is something the left won't do.

  4. While if true this auto dealer should be held liable, where was the BMV in all of this? How is it that the dealer was able to get "clean" titles to these vehicles in order to sell them to unsuspecting consumers?

  5. He has refused his Assent to Laws, the most wholesome and necessary for the public good. He has forbidden his Governors to pass Laws of immediate and pressing importance, He has erected a multitude of New Offices, and sent hither swarms of Officers to harrass our people, and eat out their substance. He has combined with others to subject us to a jurisdiction foreign to our constitution, and unacknowledged by our laws; giving his Assent to their Acts of pretended Legislation: For imposing Taxes on us without our Consent: He is at this time transporting large Armies of foreign Mercenaries to compleat the works of death, desolation and tyranny, already begun with circumstances of Cruelty & perfidy scarcely paralleled in the most barbarous ages, and totally unworthy the Head of a civilized nation.. He has excited domestic insurrections amongst us, and has endeavoured to bring on the inhabitants of our frontiers, the merciless [ ] Savages, whose known rule of warfare, is an undistinguished destruction of all ages, sexes and conditions. GOD BLESS THE GOVERNORS RESISTING! Count on the gutless judiciary to tie our children down and facilitate the swords being drawn across their throats. Wake Up America ...