- White House extended moratorium on student loan repayments until January 31, 2022
- The move will benefit young lawyers, many of whom are struggling with heavy student debt
(Reuters) – Marcella Jayne earns more than $ 200,000 as a third-year litigation partner at Foley & Lardner, a salary she knows is eye-catching to many people.
Yet the monthly student loan payment of $ 2,200 on her $ 180,000 balance – acquired from her undergraduate years and from Fordham University School of Law JD – is more than the rent the single mother of two pays. for his apartment in Manhattan.
“It’s a seemingly absurd position: you can make enough money to be in a very high income tax bracket, but home ownership is completely out of reach,” she told About struggling to repay her loans while looking after her children, one of whom has special needs. “I say this as someone who feels very lucky.”
Jayne is among thousands of lawyers who have benefited from a moratorium on federal student loan payments that began as the pandemic escalated in March 2020, and which the White House announced on August 6 would be extended. one last time, until January 31. , 2022. This freed up money to enroll one of Jayne’s children in a private school and pay for the extra services she needs.
“We were heading for the cliff,” Jayne said of growing expenses for her daughter.
The moratorium on student loan payments and the related 0% interest rate for that period were due to expire on September 31. The extension means that many student loan borrowers will go almost two years with no payment required and without seeing their loan amount increase due to the interest compounding.
BEARED BY DEBT
The student loan policy is a major problem for lawyers, who earn an average of $ 138,500 in student loans, more than any other field except medicine, according to data from the US Department of Education. MBA graduates, on the other hand, leave campus with an average of $ 59,400 in student loans.
Debt can end up shaping the career decisions of young lawyers, said Jolie Steppe, a research consultant for recruiting firm Greene-Levin-Snyder. Some associates will turn down internal lawyer positions or internships because they can’t afford a pay cut, she said.
“The younger associates seem to be really very aware of the debt. I wasn’t 20 years ago, ”said Steppe, who graduated from New York University law school in 2000 with student loans estimated at $ 200,000, which she has since cut to less than $ 200,000. $ 20,000.
Yet lawyers on the whole have done relatively well during the recession, said Chris Chapman, president of the AccessLex Institute, a nonprofit group that lobbies to make law schools more affordable and accessible. Law firms have not made many layoffs and most courts have resumed operations after brief shutdowns at the start of the pandemic, he said.
Andrew Jack VanSingel, who works as a tax lawyer at a federal government agency, said he felt somewhat guilty about the nearly $ 20,000 advantage he received during the moratorium on loan repayments, noting that he had not lost any income during the pandemic. He will be eligible to have his $ 350,000 student loan balance written off in December through the civil service loan forgiveness program, whereby a borrower’s loan balance is forgiven after 10 years of employment. in the eligible public service.
But VanSingel’s debt load, which rose from $ 210,000 when he graduated from Touro College Jacob D. Fuchsberg Law Center in 2010, has taken a heavy toll on him over the past decade.
“The amount of my debt has transformed my life,” said VanSingel. “Currently, I am not married. I have no children. I don’t own a house. All of those things that I felt like I couldn’t participate in until these loans ran out and / or I made more.
He said he used some of his $ 20,000 in moratorium savings to invest in the stock market and increase his charitable donations.
For Jo Bahn, a 2016 graduate of New York Law School who works at a government agency and lives in Washington, DC, the student loan moratorium has given her growing family a financial breath. Despite a partial scholarship, she graduated from law school with about $ 170,000 in loans, which have since grown to over $ 200,000 due to compound interest. (Bahn’s monthly payments are capped at a percentage of her income, and she also works on remitting civil service loans.)
Not having a monthly loan payment of $ 700 allowed Bahn and her husband to make improvements to the house they bought just before the pandemic started and to pay for child care for their toddler and their four-month-old child, she said.
“The end of the moratorium is certainly going to be a stressor when the student loan payment equals about a week of daycare,” Bahn said. “It’s really the difference in perspective for me. Basically it’s like paying for five weeks of child care instead of four.
At the behest of its younger members, the American Bar Association has made student debt a higher priority in recent months. Its governing body, the House of Delegates, overwhelmingly passed a resolution in February supporting the cancellation of student loans and measures that would make it easier for student loan borrowers to make their monthly payments.
The House of Delegates passed a separate resolution on Tuesday asking the organization to lobby federal lawmakers to make it easier to repay student loans in bankruptcy, which is now extremely difficult to do. This measure is sponsored by the Young Lawyers and Law Students Divisions of the ABA.
Jayne said she was grateful for the temporary stay offered by the moratorium on loan payments, but would like to see more meaningful and permanent changes in student loan policy.
“I feel like it’s a band-aid,” she said of the moratorium. “I want policy changes.”
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Additional reporting by David Thomas