IDEA GAINING CURRENCY

Loan repayment programs that help lawyers entering public service are rapidly gaining currency in varied sectors of the bar. In the past decade, law school tuition has increased dramatically. Tuition at public law schools rose 138 percent for residents and 119 percent for non-residents from 1992 to 2002, according to a 2003 report by the ABA Commission on Loan Repayment and Forgiveness. Tuition at private law schools rose 76 percent in that same span, hitting $30,000 a year at some institutions.

“The cost of a legal education is growing and the debt itself is getting proportionately bigger,” says Samuel Milkes, executive director of Pennsylvania Legal Services and a member of the LSC Advisory Committee for the pilot LRAP. “Legal services are not able to keep up.”

To pay for their legal educations, law students borrow…and then borrow some more. Many take on six-figure law-school loans despite still being deep in debt from deferred undergraduate loans. A juris doctor is earned today with accompanying promissory notes that, on average, are double what graduates faced 10 years ago, according to the ABA report.

“I didn’t have anyone to foot the bill. I had to borrow the whole way through,” says Kelly Carrubba, the sole legal services attorney serving a two-county area for the Tunkhannock office of North Penn Legal Services. A 1992 graduate of Widener University School of Law in Harrisburg, Pa., Carrubba is the mother of two children, ages 7 and 9. She figures that she will still have years of loans to pay off when her children enter college. Carrubba says her loan payments take one-quarter of her salary, even as she earns less than her truck-driver husband. Still, the myth persists that all lawyers make plenty of money. “I don’t think my clients or family have a clue,” she says, “and some days I get really frustrated with the situation.”

“Whenever you talk about it, people get very animated,” agrees Joe Cam­pagna, Jr., a senior staff attorney at North Penn Legal Services who has advocated for debt relief for legal services attorneys.

Loan repayment assistance softens the blow of school debt for attorneys willing to forsake the comparatively high salaries of the private sector for a job in the public interest. Entry-level salaries in legal aid are roughly one-third the size of the starting wage at private firms, where new lawyers can expect to earn an average of $90,000 out of law school, according to the ABA report.

“We hope the pilot LRAP will allow programs to recruit well-qualified graduates with a passion for public service,” LSC’s Barnett says. “We also hope it will help more experienced lawyers remain in legal services, which will help improve the quality of program staff and result in higher-quality service for our clients.”

Signs are promising, judging by the experiences of the several dozen LSC programs that have funded their own LRAPs. “We now receive more applications from law graduates of major law schools,” says one legal services director with an employee LRAP. “The program signals to staff that we care about their financial situation.”

An opportunity to qualify for loan repayment assistance certainly made a difference to Jodi Mount, a 2004 graduate of Georgia State University College of Law. Mount now works for the Atlanta Legal Aid Society’s Senior Citizen Law Program. “I wouldn’t have been able to take the job here without loan assistance,” she says.

Hanging in Mount’s office, not far from her diploma, is a colorful painting of six women dancing, arms raised, with one breaking free to head to the top of a hill. “I feel like I had that breaking-away,” Mount says of her own career choice. Now 46 years old, she entered law school after raising two sons with her husband, an environmental clean-up estimator.

Mount wanted to pursue a career in elder law after caring for a grandmother and great aunt, both important influences in her life. “I enjoy interacting with elderly people,” Mount says. In her legal services position, she makes rounds at senior homes and visits with clients in wheelchairs. She helped one 87-year-old woman with a hip injury to secure coverage for nursing-home costs. “She had grown very depressed, just wished she was out of the way,” Mount says. “You can see you’ve taken a lot of pressure off their lives. It makes you feel good.”

Yet Mount almost did not get the chance to help. The amount of debt Mount incurred for her legal studies, $62,000, nearly kept her from her dream job. “I wasn’t even going to apply to legal aid,” she says. “But when I interviewed, they told me about the loan assistance. I talked to my husband and did the math, and we decided it was worth it.”

The Atlanta Legal Aid Society has funded its own loan assistance program since 1977, says Steve Gottlieb, the program’s executive director. The LRAP is structured to provide a maximum of $500 per month after recipients pay a monthly deductible of $65. Mount says she is eligible for $3,600 per year in repayment help—enough to make a decisive difference. “Everybody asks about the program,” Gottlieb says. “It’s absolutely clear that we are able to recruit new lawyers with it.”

Lawyers from approximately 10 LSC-funded programs will be selected to participate in the federally funded LRAP this year, according to LSC Program Counsel John Eidleman, who has been involved in the pilot’s design. Many tough questions had to be addressed about eligibility in order to make the program fair, reach the neediest, and provide for a reliable evaluation mechanism, he says.

For the programs selected, the pilot will permit new hires or lawyers with less than three years of service to apply for loan repayment assistance. Those selected will be eligible to receive as much as $5,000 per year for three years. Participating attorneys must have an outstanding annual debt of at least $2,400 from eligible sources, such as federal Stafford loans and Law Access Loans. Under a means analysis, they must have annual salaries under $45,000, household incomes under $90,000, and be subject to other limitations on assets to qualify. In addition, the lawyers must commit to stay with the legal services program for the period of the pilot, which is expected to be three years.

One difference between the loan assistance offered through local legal services offices and the assistance offered by LSC may lie in the tax implications. Employer-based loan repayment assistance is taxed as income, but non-employer loan assistance is not taxable. Experts who have reviewed the LSC pilot contend that the federal loan assistance should be exempt from taxes, although no definitive Internal Revenue Service ruling addresses the subject, Eidleman says. The tax savings could make a difference of $300 to $400 each month for the lawyer-recipients, says Atlanta’s Gottlieb.

LSC’s approach models the loan repayment assistance programs established using state Interest on Lawyers’ Trust Accounts (IOLTA) funds. Paul Doyle, director of the Florida Bar Foundation’s LRAP program for legal aid attorneys, says his Foundation is able to provide debt relief to 50 attorneys in public interest jobs up to a maximum of $6,000 annually, and the funds are not taxable because they are not paid by the employer. Lawyers in Florida are eligible for loan assistance if they have between two and five years of employment with legal services. “We designed it to target the years of most vulnerability,” Doyle says.  “A number of lawyers come out of school and take a job at legal services and don’t really realize the impact their loans will have until they start work. The feedback we’ve gotten from staff attorneys is overwhelmingly positive.”

Law schools are also trying to ameliorate the loan burdens with their own LRAP programs, according to Karen Lash, formerly of Equal Justice Works, a Washington D.C.-based organization that advocates for law students pursuing public-interest careers. A Fall 2004 Equal Justice Works report found that 81 of 243 law schools across the country offer some form of loan repayment assistance and another 22 schools were considering endowing LRAPs. By comparison, only 47 law schools had LRAPs in 2000.

The federal government also offers loan assistance to certain employees in sensitive jobs. For instance, 160 Department of Justice lawyers are able to take advantage of loan forgiveness each year. However, prior to the LSC program, lawmakers offered little to assist non-government lawyers—certainly nothing that matches incentives offered to medical school graduates who go to work in underserved areas. “There is much more aid going to relieve doctor debt than lawyer debt,” Lash notes.

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