By Heather Varanini
[Heather Varanini is the Associate Director of Academic Achievement and an Adjunct Professor at Golden Gate University School of Law in San Francisco. She serves as a Member at Large for the California Young Lawyers Association.]
The student debt crisis is a big one, especially for new lawyers. In a 2020 report by the American Bar Association (ABA) Young Lawyers Division, more than 95% of the new lawyers surveyed took out loans to attend law school.1 The average amount of law school debt is approximately $117,000.2 The ABA survey found that more than one in every four graduates has $200,000 of school debt or more, and more than 75% graduated with at least $100,000 in student loans.3
The appendix to Chief Justice John Roberts’s 16th year-end report since he was appointed chief justice4 details the federal courts’ workload with facts and figures about the increase and decrease of filings.5 Buried in the section on federal courts of appeals, the report states that “[c]ases with the United States as a plaintiff declined 16 percent, mainly because courts received fewer actions related to defaulted student loans.”6 This decrease in cases is likely a direct result of the relief action taken by the United States Department of Education (ED) regarding federal student loans on March 20, 2020 where it stopped collection on defaulted loans, suspended loan payments, and temporarily set interest rates at 0%.7
Most likely, the main reason for the decline in cases at the federal courts of appeals by the United States is because the ED stopped collection on defaulted student loans. It is also likely that the two other relief measures provided by the ED contributed to a decline
in borrowers defaulting on their federal student loans.
First, when loan payments are suspended, borrowers have a brief reprieve from their monthly loan payments typically in the form of a deferment or forbearance.8 This is especially important as borrowers across the country navigate the stressful and unpredictable financial circumstances brought on by the pandemic, racial injustice, and failures at the highest levels of government leadership. For example, if a borrower is furloughed or laid off from their job, the suspension in payment could mean they will not have to choose between paying their student loans and paying their rent.9
Further, setting loan rates at 0% interest means that no additional federal loan debt accrues during the period from March 20, 2020 to September 30, 2021. This is significant because the daily accrual of interest on large-balance loans, like student loans, makes it difficult for many borrowers to pay off their debt, especially when most new lawyers have salaries of less than $75,000 per year.10 As a result, the 0% interest is likely another contributing factor to the decrease in student-loan litigation resulting from default.
Disproportionate Impact on Borrowers of Color
Another critical factor to consider when discussing student loan debt is the disproportionate impact that lawyers of color face as the ABA report found that a third or more of Asian, Black, Hispanic, and multiracial respondents had $200,000 in federal student loan debt upon graduation, while only a fourth of white respondents had that same amount of debt.11 The contrast is enhanced when reviewing the average debt upon graduation and percentage of students that graduate with more than $200,000 in student loans: Asian or Pacific Islander respondents graduated with $188,510 in debt on average and 40% left school with $200,000 or more in student debt—more than any other group; Black or African American respondents graduated with $184,007 in debt on average and 36.40% graduated with more than $200,000 in student debt; Hispanic or Latinx respondents graduated with $180,177 in debt on average graduation and 34.50% graduated with more than $200,000 in student debt; and multiracial respondents left school with $179,029 in debt on average and 33.80% graduated with over $200,000 in student debt.12 Compare these results to white or Caucasian respondents that graduated with an average of $156,115 in debt and 24.90% that graduated with over $200,000 in student debt.13 White respondents graduated with less debt overall than the students in the next closest group, with approximately $22,000 less in student debt on average and almost 10% less of white respondents graduated with more than $200,000 in student debt.14
As the report indicates, student loan debt represents additional systemic barriers that litter the landscape of law school and the legal profession faced by lawyers of color.15
What’s Next for Federal Courts and Borrowers?
Eliminating student loan debt would have an immediate impact on graduates16 and on the federal judiciary. The ED would no longer bring cases against borrowers for default, thereby freeing up judicial resources for other important cases. Additionally, the United States could redirect the money it would normally spend to litigate default cases on other resources that serve borrowers more effectively, like additional programming on managing and eliminating student debt.
Unfortunately, borrowers should not hold their breath to wait for this solution. During the presidential campaign, President Biden shared his vision for supporting students and borrowers, but it did not include wholly eliminating student debt.17 On his first day in office, President Biden asked the Acting Secretary of Education to continue the pause on federal student loan collections and payments, and to keep the interest rates at 0%,18 which the Secretary agreed to do through September 30, 2021.19 However, in a February Town Hall with CNN, President Biden rejected the $50,000 per borrower student loan debt forgiveness plan proffered by some Democrats,20 saying “I am prepared to write off the $10,000 debt but not 50.”21
As the repayment date approaches, borrowers can protect their rights and prepare for beginning repayment by reviewing: the terms of your federal loans, the amount due, and the due date. This information is critically important because the financial situation has changed for many since March 20, 2020. Log into your online federal loan account and review any correspondence from the ED.22
Lastly, discussions about student loans must be destigmatized.23 The majority of new attorneys have student loans and do not need to suffer in silence. The ABA report and common sense indicate that debt negatively impacts mental health.24 As the profession’s newest members, this group is the most susceptible to suffering from a mental health crisis as well as substance use and abuse issues.25 To help ourselves, each other, and future young lawyers, each of us in the profession must talk openly about the student debt crisis and the problems we face.
1 A.B.A., 2020 Law School Student Loan Debt Survey Report 7 (2020), https://www.americanbar.org/content/dam/aba/administrative/young_lawyers/2020-student-loansurvey.
2 AccessLex: What do we know about law school indebtedness?, TaxProf Blog (Sept. 24, 2019), https://www.accesslex.org/xblog/what-do-we-know-about-law-student-indebtedness.
3 A.B.A., 2020 Law School Student Loan Debt Survey Report 3 (2020), https://www.americanbar.org/content/dam/aba/administrative/young_lawyers/2020-student-loansurvey.
4 Chief Justice Roberts Issues 2020 Year-End Report, U.S. Courts (Dec. 31, 2020), https://www.uscourts.gov/news/2020/12/31/chief-justice-roberts-issues-2020-year-end-report.
5 John G. Roberts, Jr., 2020 Year-End Report on the Federal Judiciary (2020), https://www.supremecourt.gov/publicinfo/year-end/2020year-endreport.pdf.
6 John G. Roberts, Jr., 2020 Year-End Report on the Federal Judiciary 6 (2020), https://www.supremecourt.gov/publicinfo/year-end/2020year-endreport.pdf. The report covers the time period from September 2019 to September 2020 only.
7 Coronavirus and Forbearance Info for Students, Borrowers, and Parents, Federal Student Aid, https://studentaid.gov/announcements-events/coronavirus (last visited Jan. 24, 2021).
8 Deferments and Forbearances, FedLoan Servicing, https://myfedloan.org/borrowers/postponingpayments/
deferments-forbearances (last visited Jan. 24, 2021).
9 In December 2020, American employers eliminated 140,000 jobs. Women accounted for all of the losses, losing 156,000 jobs. Black and Latina women lost jobs while white men and women made gains. Annalyn Kurtz, The US Economy Lost 140,000 Jobs in December. All of Them Were Held by Women, CNN (Jan. 8, 2021 9:25 PM), https://www.cnn.com/2021/01/08/economy/women-job-lossespandemic/
index.html. Student loan debt impacts women disproportionately as 7.9% of women graduate from law school owing more than $200,000 compared to 5.5% of men. The Law Sch. Survey of Student Engmn’t, 2019 Annual Survey Results: The Cost of Women’s Success 9 (2020), https://lssse.indiana.edu/wp-content/uploads/2015/12/LSSSE-AnnualSurvey-Gender-Final.pdf.
10 Salary Distribution Curves, Nat’l Ass’n for Law Placement, https://www.nalp.org/salarydistrib (last visited Jan. 18, 2021).
11 A.B.A., 2020 Law School Student Loan Debt Survey Report 17 (2020), https://www.americanbar.org/content/dam/aba/administrative/young_lawyers/2020-student-loansurvey.
12 A.B.A., 2020 Law School Student Loan Debt Survey Report 17-18 (2020), https://www.americanbar.org/content/dam/aba/administrative/young_lawyers/2020-student-loansurvey.pdf.
13 A.B.A., 2020 Law School Student Loan Debt Survey Report 17-18 (2020), https://www.americanbar.org/content/dam/aba/administrative/young_lawyers/2020-student-loansurvey.
14 A.B.A., 2020 Law School Student Loan Debt Survey Report 29-31 (2020), https://www.americanbar.org/content/dam/aba/administrative/young_lawyers/2020-student-loansurvey.
15 A.B.A., 2020 Law School Student Loan Debt Survey Report 18-19 (2020), https://www.americanbar.org/content/dam/aba/administrative/young_lawyers/2020-student-loansurvey.
16 “Canceling student debt could also mean currently monthly payments could go toward savings or other spending … that is essentially putting almost $3,000 back in Americans’ pockets each year, which could help boost the economy.” Hillary Hoffower & Madison Hoff, The Case for Canceling Student Debt Isn’t Political—It’s Practical. Here Are the Benefits of Erasing $1.6 Trillion, No Strings Attached, Business Insider (Dec. 5, 2020, 6:20 AM), https://www.businessinsider.com/economic-benefits-of-student-debtforgiveness-
17 The Biden Plan for Education Beyond High School, Joe Biden for President, https://joebiden.com/beyondhs/ (last visited Jan. 24, 2020). This includes $10,000 in student loan forgiveness and full loan forgiveness for some college graduates, among other ideas.
18 Pausing Federal Student Loan Payments, The White House (Jan. 20, 2021), https://www.whitehouse.gov/briefing-room/statements-releases/2021/01/20/pausing-federal-student-loanpayments/.
19 Coronavirus and Forbearance Info for Students, Borrowers, and Parents, Federal Student Aid, https://studentaid.gov/announcements-events/coronavirus (last visited Jan. 24, 2021).
20 Annie Nova, $10,000? $50,000? What Different Amounts of Student Loan Forgiveness Would Mean for Borrowers (Feb. 10, 2021, 1:00 PM), https://www.cnbc.com/2021/02/10/10000-50000-the-possibilities-forstudent-loan-forgiveness-.html.
21 Part 1: Entire CNN Presidential Town Hall with Joe Biden (February 16), CNN, https://www.cnn.com/videos/politics/2021/02/17/part-1-entire-joe-biden-town-hall-february-16-vpx.cnn.
22 FedLoan Servicing, https://myfedloan.org/ (last visited Jan. 24, 2021).
23 A.B.A., 2020 Law School Student Loan Debt Survey Report 29-31 (2020), https://www.americanbar.org/content/dam/aba/administrative/young_lawyers/2020-student-loansurvey.pdf.
24 A.B.A., 2020 Law School Student Loan Debt Survey Report 19 (2020),
25 “[B]eing in the early stages of one’s legal career is strongly correlated with a high risk of developing an alcohol use disorder. … Levels of depression, anxiety, and stress among attorneys reported here are significant … these mental health concerns manifested on a similar trajectory to alcohol use disorders, in that they generally decreased as both age and years in the field increased.” Patrick R. Krill, Ryan
Johnson & Linda Albert, The Prevalence of Substance Use and Other Mental Health Concerns Among American Attorneys, 10 J. Addct’n Med. 46, 51 (2016), https://journals.lww.com/journaladdictionmedicine/fulltext/2016/02000/the_prevalence_of_substance_use