When Kristen Stumpo graduated with honors from Quinnipiac University School of Law last year, she not only had a degree to show for her efforts but a daunting student loan debt. Relatively though, she considers herself lucky.
A year after passing the Connecticut bar exam, she has a good job and is making steady payments toward her federal student loans. That’s in contrast to some of her classmates, who have been unable to find work after taking out six figures worth of loans from both federal sources and commercial lenders.
“I would definitely say it’s a problem among all recent graduates,” said Stumpo, an associate at Tang & Maravelis in New London. “I lucked out a little bit. I know there are students who haven’t found jobs yet.”
Whether or not a graduate has a job, most private loans come due six months after graduation. Under federal law, a student can seek to defer repayment of a federal loan under certain circumstances, such as when they are unemployed, or opt for a plan tying payments to income levels. The American Bar Association, noting enormous student debt loads, now wants Congress to help by extending federal payback provisions to private loans and expanding loan forgiveness programs for public service lawyers.
Keith Bradoc “Brad” Gallant, president of the Connecticut Bar Association, said the student debt load was a major topic of concern at the ABA annual meeting recently held in Toronto. “What really troubles me is not so much the cost of law school,” Gallant said. “The question is, how do they pay for it? How do they get to the point where they’ve got this education and there are no jobs? It’s just such a tragic situation.”
Even graduates who do not have six-figure debts say they feel the burden. James M. Harrington, a 2010 honors graduate of Western New England University School of Law, has about $80,000 worth of federal student loans to pay back, but says interest costs over the years will inflate that figure to $200,000.
An associate at the law firm of Polito & Quinn, Harrington knows he is in a much better position than classmates who could not find jobs. Still, the loan payments compete with other bills.
“Even with having a job, when you factor in loan payments of anywhere between $600 and $1,000 a month; it’s like a mortgage payment,” he said. “I do have a mortgage on top of this.”
Harrington, who worked full time while in law school and received some small merit scholarships, said he is glad the ABA is trying to find at least some relief for graduates struggling with enormous debt.
Likewise with Christina Hage, a 26-year-old associate with Murtha Cullina’s New Haven office. Thanks to her frugality during her undergraduate years and help from her parents, she graduated from law school at Seton Hall University in New Jersey debt free. That was not the case for many of her classmates, many of whom were forced to take out private loans on top of federal loans to pay expenses, including after law school when they studied for the bar.
“A lot of my friends are really struggling,” said Hage. “The job market isn’t all that great. The debt load is pretty significant. I’ve looked at the ABA proposal, and it definitely looks like something that would help.”
Almost a third of law students who took part in a national survey last year said they expected to graduate with more than $120,000 in student loan debt. While the student debt load issue is of great concern to the state bar association, Gallant said the ABA is best equipped to push Congress to make changes in the law to make it easier for students to pay back private loans.
For example, federal legislation which took effect in 2009 reduced repayment requirements for law graduates taking jobs in public service or legal aid for a certain number of years.
The latest ABA proposal calls for the federal government to allow students to take out additional federal loans to repay private debt. That would enable these graduates to qualify for the federal payback provisions — including deferments for unemployment and payment schedules tied to income.
At the same time, the ABA wants private lenders to make available the same, more lenient repayment guidelines when they issue future loans. Full details of the proposal have not been worked out.
Transparency On Jobs
One reason that law school loan repayment is a growing problem, according to a growing number of observers, is that many students enter law school with unrealistic job and salary expectations upon graduation. Much of the blame has been placed on law schools, which release figures showing how many students are employed a certain period of time after graduation.
Critics say those numbers are often misleading and inflated, because they don’t differentiate between graduates who are working as lawyers and others who have other — often lower-paying and temporary — positions in other fields.
Toward that end, the ABA also passed a resolution encouraging law schools to be as transparent as possible about jobs obtained by graduates so that those considering law school have a realistic picture of career possibilities. Gallant said he believes most law schools in the region are not promising more than they can deliver.
“A lot of young lawyers have said to me, ‘Nobody told me I wasn’t going to find a job.’ It may be an important part of learning to be a lawyer,” Gallant said. “You’ve got to ask the right questions.”
The CBA is reaching out to new graduates by offering mentoring, opportunities for legal training and reduced rates for new lawyers and those in economic distress, Gallant said. Stephen Hurley, treasurer of the CBA and chair of its membership committee, said there has been a slight uptick in requests for fee waivers relating to the economy from 2008 to this July. He added that improvements are being made to the organization’s job posting site to make it more attractive and affordable.
Compounding the problem for some law graduates and others is the fact that student loan debt is not dischargeable in bankruptcy, said Andrew D. Balbus, a Danbury attorney whose practice focuses on bankruptcy law. Balbus, a 1981 Harvard Law School graduate who recently got a master’s degree in bankruptcy law from St. John’s University, said he believes federal government spending and borrowing policies will ultimately lead to an economic meltdown.
“It’s going to be a gigantic problem,” Balbus said. “Imagine that we finally have a big recession; when that recession ends you have almost a generation of students, law and others, who will have no jobs and no way to satisfy those debts.”
The situation for law graduates today is like night and day from three decades ago, Balbus said. “In 1981, people didn’t encourage gigantic amounts of debt; school wasn’t as expensive. My parents didn’t incur any debt.”
And today? “Whatever it cost to go through one year in college then is probably what it costs for a week now.”
In addition to the ABA call to make loan payback easier, U.S. Sen. Dick Durbin, D.-Ill., and others are pushing legislation that would allow college graduates to discharge private loan debt in bankruptcy. Federal loan debt would still be non-dischargeable to protect the government’s investment in education.
“Students, especially those at for-profit schools, who find themselves unable to get enough government aid to pay their high tuition are turning to private loans to fill the gap,” said Durbin when he introduced the legislation in May. “Unlike federal student loans, there are few consumer protections available for these private student loans, leaving some students stuck with this debt for the rest of their lives.”
Interest rates on federal student loans for graduate school generally range from 5 to 8 percent. The lowest interest rate loan, a Perkins loan, is available only to those who can demonstrate low income and is capped at $6,000 per year of graduate education.
Mark Dubois, the state’s former chief disciplinary counsel, also teaches law at the University of Connecticut and Quinnipiac. He said he has seen an increasing number of students graduating with huge debt loads at a time when the economy is not providing jobs. At the same time, he said, there are an increasing number of self-represented people in need of legal services.
‘You have people who have the skills and people who need it,” said Dubois. “If they developed something where young people could retire their debt by doing pro bono services for a few years, it would be great. But what does that take? Money.”
With both the federal and state governments under the gun to shrink spending, money for innovative solutions is hard to come by, he said. Ultimately, Dubois believes, more and more students may realize that law school is not an automatic ticket to financial success.
“Everybody figures they’re going grab the brass ring; you can tell them [otherwise], but they don’t want to hear it.”