Carrying a heavy load: Student loan debt weighing down law students, recent grads

Student loan debt can present steep financial obstacles for young attorneys once they graduate from law school, and the Trump administration’s more aggressive collection practices is increasing the struggle.

The median amount of law school loan debt is $112,500, according to the 2024 Student Loan Survey by the Young Lawyers Division of the American Bar Association, with the median amount of all student loan debt (including undergrad) after law school graduation coming in at $137,500.

Paul Leopold, director of financial aid at Indiana University Maurer School of Law, said it’s an “unusual period of time,” given the uncertainty swirling about the student loan repayment process and where it may be heading.

Leopold said one example is that it looks like the Saving on a Valuable Education, or SAVE, program, could be eliminated by Congress this summer.

Former President Joe Biden created SAVE last year to replace other existing income-based repayment plans offered by the federal government. It resulted in more borrowers being eligible to have their monthly payments reduced to $0, and many will qualify for lower payments compared to other repayment plans.

However, a federal court in Missouri blocked the SAVE plan, which offered a faster path to loan forgiveness.

The Associated Press reported the judge’s order also blocked parts of other repayment plans, prompting the Education Department to pause income-driven applications entirely.

Amid pressure from advocates, the department reopened the applications on May 10.

Leopold said a lot of Maurer students signed up for SAVE.

“Many borrowers are simply stuck right now,” Leopold said.

The Education Data Institute issued a report that estimates that the average law school graduate owes $130,000 in student loan debt. According to the institute, 71% of law school students graduate in debt, with $119,292 being the average amount students borrow just to attend law school.

When advising students about loan repayments, Leopold said what he tells them depends on what area of law they’re entering upon graduation and where they’re living.

He said the first question he asks law students is if they have a job lined up immediately after they graduate.

If the answer is yes, Leopold then asks if they are working for a private firm, a large or small firm, or in the public sector or for a nonprofit organization.

Where a student works factors into what kind of loan repayment plan they should choose, Leopold said.

Location and cost of living also matters.

“The student living in Chicago is going to be different than Indianapolis in terms of cost of living,” Leopold said.

Shelley Gupta, associate general counsel at Health and Hospital Corporation of Marion County, said she opted for the Public Service Loan Forgiveness program when she was a law student at Ohio Northern University.

According to the Department of Education, the program forgives the remaining balance on a borrower’s direct loans after they have made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer.

Gupta, who has been practicing for 12 years and previously worked for the Elkhart County and Marion County prosecutor’s office, said it took her 10 years to pay off her student loans.

She said the pandemic, with the federal government’s pause on student loan repayment, was helpful for borrowers.

As far as the student loan debt incurred by young attorneys, Gupta said most just accept that repaying those loans are “just part of life.”

“It definitely impacts your lifestyle,” Gupta said, describing times post-graduation where she’s worked three jobs and didn’t get time off on the weekends.

Changes in student loan repayment

Given the current uncertainty of student loan repayment and how it is going to work, Gupta said she is glad she was able to pay off her student loans during the Biden Administration.

She said it was clear to her where Biden and Vice President Kamala Harris stood on student loans and how the repayment process should look like. But that’s not the case any more.

According to Chase, during the student loan payment pause — which began on March 13, 2020, and was also known as an administrative forbearance — eligible borrowers didn’t have to make payments and interest rates were placed at zero percent.

That meant their loans weren’t accumulating interest.

Most federal student loan borrowers’ first student loan payments following the pause were due in October 2023.

After that, the Department of Education implemented a one-year “on-ramp” period in which missed, partial, or late payments weren’t reported to credit agencies. Federal student loans also didn’t go into default or get deferred to debt collection agencies during this period. This was in effect from Oct. 1, 2023, and continued until Sept. 30, 2024.

Even though student loan borrowers didn’t see delinquent payments appear on their credit reports, their payments were still due, and their outstanding loans still accrued interest in the background as of September 2023.

In the meantime, the Department of Education reopened online applications for income-driven repayment plans for student loan borrowers.

The applications had been taken down in response to a February court ruling, which blocked the Biden administration’s SAVE plan and parts of other income-driven repayment plans

The department also announced in May it would start involuntary collections on defaulted loans, meaning the roughly 5.3 million borrowers who are in default could have their wages garnished by the federal government.

Leopold said, in general, student loan defaults are rare for law students and young attorneys.

During the 2023-2024 school year at Maurer, there were 196 graduates, of which 121 had taken out student loans, Leopold said.

The average debt for students with at least one student loan was just under $75,000, he added.

Leopold said that was lower than in the past, when the average debt load tended to be in the $80,000 to $90,000 range, and he noted that the pandemic had some effect on student borrowing habits.

Will Congress make changes?

Leopold said there should be more clarity later this summer on how student loan repayment will work for students at Maurer and across the country, as the U.S. House and Senate work to pass a budget reconciliation bill.

USA Today reported that on June 10, GOP lawmakers in the U.S. Senate proposed their version of the higher education section of President Trump’s tax and spending megabill. The 71-page portion of the so-called “One Big Beautiful Bill Act” would set new caps on student loan borrowing while drastically cutting the number of repayment plans.

Like the House bill, the Senate measure proposes cutting the number of student loan repayment plans to just two. That change would kill Biden’s SAVE program.

The National Association of Student Financial Aid Administrators and other groups have weighed in on some of the congressional proposals regarding changes to student loans and aid.

NASFAA President & CEO Melanie Storey released the following statement about proposed student financial aid changes:

“We are relieved and grateful that the Senate rejected some of the most harmful provisions from the House-passed bill that would have limited opportunity and access for low-income students pursuing a college education,” he said.

“Still, there are several concerning aspects of this bill that would ultimately make college less affordable for students … At its core, the Higher Education Act reflects a promise that no student should be denied a college education because of cost. It stands as a reminder that investing in financial aid is investing in the potential of every student to shape a better future for themselves and their communities. We urge Congress to hold that promise close as they take the next steps in finalizing this legislation.”

Financial aid directors like Leopold are keeping a close eye on the reconciliation bill.

He said it’s hard to give sound advice right now with the bill’s final impact on student loans and repayment still unknown.

He said it appears the House and Senate bills both preserve a form of income-driven repayment for borrowers.

“Retaining that income-driven repayment option is crucial,” he said.

Leopold said it also looks like the public service loan forgiveness program will not be largely impacted by Congress.•