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One of the bedrock principles on which the our country was founded is the idea that “all men are created equal and independent, that from that equal creation they derive rights inherent and inalienable, among which are the preservation of life, and liberty, and the pursuit of happiness.”[1]  The founders tried to protect these rights from tyranny by establishing “a government of laws, and not men.”[2]

  To this end, we have had to create a great deal of law, both substantive and procedural.  Each level of government, from federal down to local, has enacted statutes, regulations, and rules.[3]  Our court system has interpreted these legislative and executive enactments, issuing legally binding opinions.[4]  The result of this tremendous amount of lawmaking is that “the law” is beyond most citizens’ ability to comprehend.  The Supreme Court recognized as much, concluding that “[e]ven the intelligent and educated layman has small and sometimes no skill in the science of law.”[5]

     The sheer quantity of law, combined with citizen inability to understand it all, has elevated the importance of the attorney in our society.  The founders recognized this importance.  The Sixth Amendment provides that “In all criminal prosecutions, the accused shall enjoy the right…to have the Assistance of Counsel for his defence.”[6]  The Supreme Court held that this right “is one of the safeguards of the Sixth Amendment deemed necessary to insure fundamental human rights of life and liberty.”[7]  The Court also stated that “reason and reflection require us to recognize that…any person haled into court, who is too poor to hire a lawyer, cannot be assured of a fair trial unless counsel is provided for him.  This seems to us to be an obvious truth.”[8]  While these statements were made in a criminal law context, their message is universal.

     It is an attorney’s job to understand the law and be able to apply it for the benefit of his client.  The skill necessary to do this job effectively is costly to obtain.  An aspiring lawyer must complete a four-year undergraduate degree and three years of law school.  He must pass several rigorous and demanding qualification tests.  Once admitted to practice, he will probably have to work under an experienced attorney for a period of time.

     Not only is it costly to become a lawyer, it is costly to hire a lawyer, for several reasons.  Because some form of legal rule governs many facets of our daily life, legal services are in great demand.  Licensed attorneys have a monopoly on providing these services, which leads to higher costs for the client.  Many lawyers are also trying to pay off a great deal of student loan debt.

     These high costs are not an issue for some members of society.  Wealthy Americans can easily afford legal services whenever needed.  Larger businesses and corporations are in a similar position.  The Constitution requires the government to provide an attorney, at no expense, to most criminal defendants.[9]

     The majority of our society, however, cannot so easily utilize the services of an attorney.  For the average, middle-class citizen or small business, a several thousand dollar legal bill may prove difficult to pay.  For the poor, such a bill may simply be beyond their ability to satisfy.

     The conflict, then, comes down to this:  ours is a nation of laws while our citizenry is divided between legal “haves” and “have-nots.”  Ours is a nation of equality, however, a portion of our population can use the laws to their benefit with ease, while another portion has no realistic access to those same laws.

This disconnect between aspiration and reality brings with it some undesirable consequences.  First, those unable to afford legal services are at the whim of the “powerful.”  The underprivileged may find their constitutional rights violated and yet be unable to seek redress in a court of law.  The founders warned us of just such a problem.  In Federalist 51, Madison wrote, “It is of great importance in a republic…to guard one part of the society against the injustice of the other part.”  Jefferson warned that “the minority possesses their equal rights, which equal law must protect, and to violate would be oppression.”[10]  Second, “People crushed by law have no hopes but from power.  If laws are their enemies, they will be enemies to laws.”[11]  For example, why should a slave in the pre-Civil War South respect the rule of law when it is the same law that is keeping him in bondage?  Additionally, without legal services, the poor cannot even achieve common legal objectives, such as properly drafting a will, getting a divorce, seeking compensation for a personal injury, and so on.

This is not to say that there is no one willing to help the poor in our society.  A recent study of law students at Georgetown revealed some interesting trends concerning the willingness of law students to perform public interest work:[12]

1.  67% of respondents would ideally spend at least 1/3 of their career doing public interest work.[13]

2.  Of the 33% who did not want public interest careers, 43% stated that the primary reason was that they needed or expected more money than such a career would pay.[14]

3.  Out of the 67% who were interested in public interest work, only 48% actually expected to spend at least 1/3 of their career doing such work.[15]

4.  Of the half who did not expect to do public interest work, 90% cited the inability to repay their student loan debt as the reason.[16]

As these numbers show, students are generally unwilling to accept a public interest position because of the low pay.  This leads directly to the conclusion that, if those students received some form of financial incentive, they would choose a public interest career.  With more attorneys performing such work, legal services for the underprivileged would become more available.  As the poor gained legal strength through this increased representation, their position in society would move up to more closely resemble that of the privileged.  With power spread more uniformly throughout society, we would be much closer to realizing the founders’ goal of the rule of law being applied equally to all citizens.  The societal cost of providing that financial incentive to aspiring public interest lawyers is low in comparison with the benefits we all receive from living in a country where everyone is truly equal.

Current Programs
 

     There are a number of programs currently available that help a law student pay for his education.  Follow the links below for specific information on a particular program.

Student Loans
What would a student loan cost me?
Can I deduct educational expenses on my federal income tax return?
My monthly payment is too high.  Do I have any other options?
I don’t want to repay my student loan.  Can I file for bankruptcy?
Loan Repayment Assistance Programs (LRAPs)

Does my law school offer a LRAP?
How does a law school LRAP work?
Do law firms offer any assistance?
Which states offer a LRAP?
Federal Programs
Are there any federal programs that I can take advantage of?
5 C.F.R. §537- Repayment of Student Loans.
34 C.F.R. §685.209- Income Contingent Repayment Plan.
34 C.F.R. 674.57- Cancellation for law enforcement or corrections officer service.
Peace Corps.
Can the military help me pay for law school?
 

Scholars have criticized several of the above-listed programs.  Amy J. Oliver[17] has offered suggestions for improving the federal income tax code, and Philip G Schrag has offered suggestions for improving the federal income contingent repayment plan.[18]

How can the current programs be improved?
Tax code reform.
Modify the federal income contingent repayment plan.
 

Suggestions for New Programs

While some level of government funds nearly all of the above-mentioned programs, it is possible to have a loan repayment assistance program that is not paid for by the taxpayer.  Following are two examples:  law firm funding of legal education and a self-sufficient, government-operated loan program that utilizes the federal income tax system.[19]

Law firm funded education
 

Currently, the law student takes out loans for three years to pay the cost of attending school, then gets a job and spends the next ten years making payments.  As shown in FAQ #1, the accrued interest on these loans greatly increases the total cost to the student.  If the student could avoid borrowing money for school, he could avoid the accrued interest as well.  That is where the law firm program could help.  Rather than hiring a third-year student who has already incurred a great deal of debt, the firm will hire a first-year student and pay his tuition for him.

     Upon acceptance to law school, the candidate can enroll in the program.  The candidate will fill out a form, indicating such information as his undergraduate record, LSAT score, career goals such as desired practice area and geographic area, and any other pertinent information.  The candidate will also pay a fee that will cover the program’s operational costs.

     After all candidates submit their information, a firm can search the database for potential recruits.  The firm may want graduates from a particular school such as Harvard.  Perhaps the firm is looking for a particular area of legal or undergraduate specialization.  Maybe the firm is located in North Dakota and is looking for anybody willing to work in that part of the country.  The firm would then be able to interview candidates that meet its hiring criteria.

     Once the firm selects its recruit, it hires that recruit and sends him to law school.  The firm pays all of the student’s school expenses, including tuition, books, room, and board.  The student attends school during the fall and spring semesters and works at the firm during the summer, just as students who currently serve as summer associates.  Following graduation, the student goes to work full time at the firm as a first-year associate.

In exchange for this economic assistance, the recruit will have to sign a contract agreeing to certain things.  First and foremost, the recruit will have to agree to a certain number of years of service at the firm following graduation, much like a military recruit must serve for a certain number of years.  If the firm is interested in a graduate with a particular area of legal knowledge, the recruit will have to agree to take a particular set of classes while in law school.  For example, if the firm is looking for a criminal defense attorney, the recruit will have to take classes such as criminal procedure, evidence, criminal law, etc.  Third, the recruit must agree to reimburse the firm for all its expenses if the recruit does not finish school or meet the requirements set forth by the firm.

Such a program has several benefits.  First, the student is able to avoid paying thousands of dollars in interest on education loans.  The student is also free from needing to work part-time during school as well as searching for a job during his final year of school.  The firm will get a new associate that it itself molded for the position.

As with any program, this one does have some drawbacks. The biggest of these is the cost to the firm.  This cost can be offset, however, by appropriate terms in the service agreement between the firm and recruit.  The firm is also taking a risk by hiring an associate three years before that associate has completed his legal education.  The firm faces the possibility that the student will perform poorly or that the position will no longer be open once the student graduates.  In actuality, though, the firm faces these risks to a certain extent today when it hires a student ten months before that student graduates.  Additionally, it is unlikely that all of the students wishing to participate would be able to find a sponsoring firm.  These students would still be able to utilize traditional funding sources.

A less ambitious program could approximate the results of the above plan without the bureaucracy.  Currently, the firm pays its new associate who then makes his student loan payment, including interest, for a period of several years.  Instead, the firm could pay the new associate’s entire loan amount upon hiring, eliminating interest accrual on the remaining unpaid balance.  The associate would then agree to work for the firm for a certain period at a reduced salary, until he had completely reimbursed the firm for its outlay.  By avoiding the interest, the associate can repay the debt in a much shorter time.

Example:

Education debt:
 Monthly pmt.

 
 Total pmt.

 
 Accrued interest

    @8.25%
 Term

(months)
 
$40,000
 $490.61
 $58,873.29
 $18,873.29
 120
 
$40,000
 $490.61
 $40,000
 $0.00
 82
 

The initial cost to the firm, particularly a larger firm, would be minimal, while the cost savings to the associate would be substantial.

     Income tax based repayment program

     It is possible to create a government program that is both responsible for funding educational loans and cost-free to the taxpayer.  Such a program would only require a handful of steps:

A controlling agency must be created which both disburses financial assistance and receives payments from the participants.
The agency determines the total amount of debt the participating graduates have accumulated in their academic career.  This would be relatively simple, as the agency would already have a record of the amount disbursed to the students.
The agency would then divide the total amount by a fixed number of years, such as the current system’s ten-year term, to determine the total annual repayment amount.
The following year, the agency uses the participants’ income tax returns to determine the group’s total gross income.
Once the agency has these numbers, it simply divides the annual repayment amount by the total gross income to arrive at a payback percentage.
The procedure is repeated for the next nine years until the entire total group debt is retired.  An additional payment in the 11th year could be applied to cover the agency’s operating expenses.
 

The following example will clarify how the program would work.  In the example, there are ten law school graduates with debt ranging from $5,000 to $100,000 and incomes ranging from $15,000 t0 $125,000.

STUDENT
 TOTAL DEBT
 ANNUAL INCOME
 ANNUAL PMT
 TOTAL PMT
 
albert
 10,000
 40,000
 3320
 36520
 
betty
 20,000
 50,000
 4150
 45650
 
cleo
 50,000
 25,000
 2075
 22825
 
don
 5,000
 30,000
 2490
 27390
 
ethel
 80,000
 75,000
 6225
 68475
 
frieda
 35,000
 50,000
 4150
 45650
 
george
 15,000
 35,000
 2905
 31955
 
herbert
 100,000
 20,000
 1660
 18260
 
iva
 40,000
 125,000
 10375
 114125
 
jack
 30,000
 15,000
 1245
 13695
 
 
 
 
 
 
 
TOTAL
 385,000
 465,000
 38595
 424545
 

     The total group debt is $385,000, which mandates a total annual repayment amount of $38,500.  This number is then divided by the group’s total annual income of $465,000 to arrive at a payback percentage of 8.3%. For simplicity, the incomes are assumed to be static for the entire payback term.  The final column shows the total amount repaid by each graduate at the conclusion of the eleventh year.

     As you can see, this program succeeds in alleviating over-burdensome loan payments for those attorneys earning a low annual salary.  Jack, who is earning only $15,000 a year, only has to make an annual loan payment of $1,245.  His total payment over the eleven-year period is $13,695, well below his total debt amount of $30,000.  When it comes to payments versus debt, Herbert fairs even better than Jack.  Herbert graduated law school with a total debt of $100,000, but, because of his good nature and concern for the downtrodden, has accepted a public interest position that can only pay him $20,000 per year.  With an annual payment of only $1,660, Herbert’s total payments amount to only $18,260, less than twenty percent of his total debt.

     In contrast, the attorneys with the largest annual income bear the burden of paying off most of the group’s total debt.  Iva, who is earning a healthy $125,000 per year, must make an annual loan payment of $10,375.  Her total payment into the program comes to a whopping $114,125, which is nearly triple her total debt amount of $40,000.

Comparing Jack and Herbert with Iva vividly demonstrates one of this program’s benefits, as well as one of its drawbacks.  Jack and Herbert are able to take a low-income public interest position without worrying about how they will meet their yearly law school loan responsibilities.  Because the program is designed to pay off the entire debt in eleven years, the two socially conscious attorneys also do not have to worry about spending the rest of their lives making loan payments.  At the same time, Iva is in effect being punished for her economic success.  Not only must she make yearly payments that are eight times greater than Jack’s, but she also must pay substantially more than she owes.

Several factors help to blunt Iva’s complaint of unfairness.  First, no one forced her to participate in the loan program.  If, when she was first examining her financial aid options, she was concerned about the possibility of paying back more than she owed, she could have looked elsewhere for assistance.  She should not be allowed to take advantage of the aid program to pay for her education and then refuse to meet her obligations after graduation.  Second, even though her actual dollar payment is much greater than Jack’s, the percentage is the same for each graduate.  At the end of the year, Iva is still taking home $114,625, compared to Jack’s $13,755.  If Iva is so concerned about the actual dollars she pays, she could easily resign her high paying position and go to work at Jack’s firm.

Conclusion
 

     The founders established lofty goals for our country.  Among those goals were the concepts of equality of citizens and the rule of law.  Due to the proliferation of statutes, rules, regulations, and judicial opinions, the law is beyond the grasp of the average citizen.  Attorneys are there to use the law in a way that benefits their clients, but not all citizens can afford legal representation.  This lack of representation creates a divide in society, with the wealthy and powerful being able to use the law at the expense of the poor and underprivileged.

     There are people in the legal profession who want to help, but are unable to because of the high cost of obtaining a legal education and the low pay of public interest positions.  Some programs are currently available to provide financial assistance.  However, most of these programs are government-sponsored.  Any expansion of the current programs would require either a cut in government spending on other programs or an increase in revenue by higher taxes.  It is possible to create new, innovative programs that do not require government funding.  Through a combination of current and newly created programs, we can relieve the law school graduate from over burdensome debt payments and thereby free him to serve all citizens regardless of their income.

Frequently Asked Questions
 

What would a student loan cost me?

     Under a standard 10-year term with 8.25% interest, a $40,000 law school debt would result in monthly payments of $490.61 and a total cost to the student of $58,873.29.  To compute the monthly payment and total cost on a different principal amount, visit www.finaid.org/calculators/loanpayments.phtml

     The graduate can choose to make only the interest portion of his monthly payment for the first part of the repayment term.[20]  This option is helpful if the graduate does not find a job immediately following graduation or incurs other expenses such as moving.  Using the above figures, an interest-only payment, beginning at the start of the repayment period, would be $275.  When the graduate finally starts repaying the principal, the monthly payments will be much higher.  The total cost of the loan increases as well.  If he pays only the interest for the first two years, his monthly payment for the final eight years will be $570.56, with a total loan cost of $61,374.17.  With a four-year interest only plan, his payment for the final six years would be $706.22, with a total cost of $64,048.07.

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Can I deduct educational expenses on my federal income tax return?

The current federal income tax code provides education expense relief in three ways:

Student Loan Interest Deduction- the graduate can make a deduction of up to $2,500 per year for interest paid on a qualified education loan.[21]  The graduate can take this deduction only on interest paid for the first sixty months of his repayment term.[22]
Lifetime Learning Credit- the Lifetime Learning Credit is available to a student for every year of post-secondary education except the first two, which are covered by the HOPE Credit, described below.[23]  This credit allows the student to take a credit of 20% of the first $5,000 spent on qualified education expenses during the year.[24]  This amount will increase to 20% of the first $10,000 in the year 2003.[25]
HOPE Scholarship Credit- The HOPE credit is available for only the first two years of post-secondary education.  A student may take a credit on 100% of the first $1,000 in qualified education expenses,[26] and 50% of qualified education expenses on the second $1,000.[27]
 

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My monthly payment is too high.  Do I have any other options?

     A graduate with federal student loans has several options in addition to the standard 10-year repayment plan.

     1. Extended term repayment plan.  A graduate can choose to extend the repayment term from 10 to as much as 20 years.[28]  In the case of a graduate with $40,000 in loan debt, the monthly payment drops from $490.61 to $340.83.  While the monthly payment drops by around 30%, the total cost of the loan increases by 40%, from $58,873.20 to $81,796.29.  Future inflation will discount this additional interest accumulation to an extent, but the total cost is still much higher for an extended term plan.

     2. Graduated repayment plan.  If the graduate was planning on spending his entire career in a low-paying job, for instance, he could choose a graduated repayment option.  This option does two things:

·        Extend the term of the loan.

·        Start with lower payments that gradually increase over the term of the loan.[29]

While this plan reduces the monthly payments a great deal, particularly in the early years of the repayment period, the total cost increases dramatically.

     3. Deferment.  It is possible to defer the entire monthly loan payment.  A graduate can defer his payment if he is studying part-time, unemployed, or suffering an economic hardship.[30]  For non-subsidized loans, the interest continues to accrue and is added to the total amount owed.

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I don’t want to repay my student loan.  Can I file for bankruptcy?

     11 U.S.C. §523(a)(8) exempts a “loan made, insured or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit…” from discharge through bankruptcy.  This section only allows two exceptions to the general rule:

Loans that became due more than seven years prior to the filing of bankruptcy.[31]
When repayment would impose an “undue hardship” on the debtor.[32]
For a more detailed analysis of student loans and bankruptcy, visit www.finaid.org/questions/bankruptcy.phtml

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Does my law school offer a LRAP?

     According to the National Association of Public Interest Lawyers (NAPIL), 48 law schools currently offer some form of loan repayment assistance program.[33]  For a complete list, visit the group’s website at www.napil.org.

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How does a law school LRAP work?

     Although these programs vary from school to school, they each have roughly the same goal in mind.  Upon graduation, the LRAP participant does qualifying public interest work for a specified length of time.  The participant must also meet certain maximum income limits.  The school then cancels a portion of the participant’s education loan debt.  For more detailed information about specific programs, follow the links to a particular law school’s website:

Harvard- www.law.harvard.edu/studorgs/spin/primer.html
Georgetown- www.law.georgetown.edu/finaid/lrap.htm
Stanford- www.law.stanford.edu/admissions/lrap.shtml
 

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Do law firms offer any assistance?

     Most firms do not offer loan repayment assistance.  With salaries for first-year associates approaching $125,000,[34] there is really no need for the top firms to have such a program.

     Skadden, Arps, Slate, Meagher & Flom L.L.P. is a notable exception.  The nation’s second largest firm[35] has created the Skadden Fellowship Foundation. The foundation awards 31 fellowships per year to graduating law students, with the expectation that the fellowships will be renewed for a second year.[36]  Participants perform public interest legal work in exchange for a modest salary, benefit package, and loan repayment assistance for the duration of the fellowship.[37]  More information is available at the firm’s website: www.skadden.com.

     A few firms do offer a repayment assistance program.  For example, Bradley & Riley PC, located in Cedar Rapids, Iowa, will contribute $2,000 per year for up to five years toward a new associate’s education debt.[38]

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Which states offer a LRAP?

     Currently, only five states have a loan repayment assistance program: North Carolina, New Hampshire, Maryland, Arizona, and Minnesota.[39]  These programs are similar to law school LRAPs, with certain employment and income requirements.  For details on the Minnesota LRAP, visit the program’s website at www.lrapmn.org.

     The Texas legislature is currently considering a loan repayment assistance program that is not tied to public interest work.  Senate Bill 792, introduced on February 21, 2001, would provide student loan repayment assistance to lawyers employed by the state attorney general’s office.  For the complete text of the bill, as well as its current legislative status, consult the Texas legislature website at www.capitol.state.tx.us.

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Are there any federal programs that I can take advantage of?

     The federal government has created several student loan repayment assistance programs that may help a law school graduate.

5 C.F.R. §537- Repayment of Student Loans.  This program allows individual federal agencies to create loan assistance programs for their employees.  The goal of the program is to help the agency recruit and retain “highly qualified personnel.”[40]  The employee must agree to work for the agency for at least three years in order to participate in the program.[41]  The agency may pay up to $6,000 per year up to a total amount of $40,000 toward the employee’s student loan debt.[42]  Each agency creates and operates its own program, so a person interested in participating must contact the departments individually for more information.
 

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34 C.F.R. §685.209- Income Contingent Repayment Plan.  The Federal Income Contingent Repayment Program is designed to help graduates with high student loan debt and low income meet their debt service.  Participants in this program usually pay only 20% of their discretionary income toward student loan repayment.[43]  The participant pays this amount for twenty-five years, or until his debt is retired, whichever comes first.[44]  If, after twenty-five years, there is still a balance remaining, that balance is forgiven and the participant is not required to make any further payments.[45]
 

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34 C.F.R. 674.57- Cancellation for law enforcement or corrections officer service.  Under this regulation, “an institution must cancel up to 100 percent of the outstanding balance on a borrower’s Federal Perkins or NDSL” loan if the borrower meets certain employment qualifications.[46]  To qualify, the employee must be a law enforcement officer, a corrections officer, or a “person whose principal responsibilities are unique to the criminal justice system.”[47]  The employee may work for a local, state, or federal law enforcement or corrections agency, provided the agency is public-funded and focuses principally on crime prevention, control, or reduction or the enforcement of criminal law.[48]  If the employee meets these requirements, he is eligible to have his education debt cancelled over the course of five years.[49]
 

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Peace Corps.  The Peace Corps offers a modest educational loan forgiveness program.  Volunteers may have a portion of their Perkins Loan forgiven, based on their length of service.  The program cancels 15 percent of the loan for each of the first two years and 20 percent for years three and four, for a total of 70 percent.[50]
 

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Can the military help me pay for law school?

     The various branches of the military offer financial assistance to graduates as well as prospective students.  The army offers the most generous assistance:

 
 Active duty
 Reserves
 
 

Tuition

Assistance
 

Up to $50,000 depending upon:

·         Length of enlistment

·         Which Military Occupational Specialty student chooses

·         Education level[51]

  Full-time student (12 credit hours or more) earns $263 per academic month for up to 36 months[52]

Loan Repayment Assistance
 

Up to $65,000 of college loan
Payment is 1/3 of the debt per year[53]
 
 

Up to $20,000 depending on military specialty and unit
Payment is 15% per year[54]
 
 

For further information, access the army’s website at www.goarmy.com.

The navy offers a graduate up to $10,000 in tuition repayment assistance if he qualifies for “nuclear jobs or other critical ratings.”[55]  The navy also offers several programs that allow a person to earn money for college, including

The Montgomery G.I. Bill, which pays up to $23,400.
The Navy College Fund, which pays up to an additional $15,000.
The Navy College Assistance/Student Headstart, which provides qualified recipients with full navy pay and benefits while they attend college for up to twelve months.
Naval Reserve Officers Training Corps, which awards a scholarship to entering college freshmen who are commissioned as officers upon graduation.[56]
For additional information about navy programs, see www.navy.com.

The air force will pay up to $10,000 for student loan repayment to new recruits who sign up for either a four or six year enlistment.  See www.airforce.com.

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How can the current programs be improved?

     Although the current programs provide some relief, minor changes in several of these programs would go a long way in helping the law school graduate repay his financial obligations.

Tax code reform[57]
 

The following changes to these three provisions would greatly ease the tax burden on graduates who are paying back a student loan:

Student Loan Interest Deduction- The sixty-month limitation should be eliminated, as most federal student loans are repaid over a term of ten years.[58]  The payments remain constant over the full term, so why should the deduction be available for only the first half?  Additionally, the maximum allowable deduction should be greater than $2,500.[59]  A law school graduate with $40,000 of debt pays slightly over $3,200 in interest alone during his first year of loan repayment.[60]  The $2,500 deduction provides little real relief.
Lifetime Learning Credit- The $1,000 limit provides little, if any, real assistance when compared to the total cost of attending law school.  The relatively inexpensive University of Iowa College of Law has an estimated cost of attendance for the 2001-02 year of just over $15,000.[61]  In fact, this $1,000 barely covers the cost of “transportation” when attending this school, which is estimated at $960.[62]  The limit on this credit should be increased.
HOPE Scholarship Credit- The credit limit should be increased to more closely represent the actual cost of one year of undergraduate education.[63]  At the time of this writing, the Iowa Board of Regents is considering a plan to raise in-state tuition and fees at the University of Iowa from $3,522 per year to $4,191 per year.[64]  The tuition and fees alone are already more than double the maximum allowable credit, and with substantial annual increases, the HOPE Credit provides little relief.  Second, the HOPE Credit, once increased, should cover all four years of a student’s undergraduate education rather than just the first two.[65]  Although the Lifetime Learning Credit currently covers the third and fourth undergraduate year, as discussed above this credit provides even less actual assistance than the HOPE Credit.
 

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Modify the federal income contingent repayment plan
 

     In order to better help those law graduates who choose low paying public interest employment this program needs several changes.[66]

The repayment period needs to be shortened from 25 years.[67]  The current term’s length discourages graduates from utilizing the program. A shorter repayment period would be more palatable to prospective participants.  If a shorter term for all participants proves too costly, the shorter term could be limited to those graduates who meet some form of public service requirement.[68]
The dollar limit on borrowing under the Stafford Loan Program needs to be raised.[69]  This will allow the student to take advantage of the Stafford Program’s lower interest rate.[70]  Additionally, money borrowed through the Stafford Program is included in the income contingent repayment plan, whereas money borrowed from a private lender is not.[71]
The amount and quality of information concerning this program must be improved.[72]  This author is currently a third-year law student and, prior to researching programs for this paper, had heard nothing about the program.
The repayment formula needs to be simplified so that the average student can make and understand the necessary calculations.[73]  Students are much less likely to participate in a program they do not understand.
 

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--------------------------------------------------------------------------------

[1] Thomas Jefferson, rough draft of the Declaration of Independence, from Papers of Thomas Jefferson, vol. 1, (1950), by J.P. Boyd et al.  Reprinted in The Oxford Dictionary of Political Quotations, 2nd ed. Oxford University Press, 2001, Antony Jay, editor, at 185.

[2] John Adams, quoted in the Boston Gazette, 1774.  Reprinted in The Oxford Dictionary of Political Quotations, 2nd ed. Oxford University Press, 2001, Antony Jay, editor, at 3.

[3] For example, the U.S.C.A alone runs 252 volumes, excluding supplements

[4] For example, there are just shy of 12,000 volumes of standard reporters:

Reporter
 volumes
 Reporter
 volumes
 Reporter
 volumes
 
A
 100
 P
 300
 F Supp
 999
 
A2d
 778
 P2d
 999
 FSupp2d
 158
 
Cal
 286
 P3d
 31
 F
 300
 
Cal2d
 111
 SE
 200
 F2d
 999
 
NY Supp
 300
 SE2d
 551
 F3d
 263
 
NySupp2d
 729
 SW
 300
 US
 530
 
NE
 200
 SW2d
 999
 
 
 
NE2d
 754
 SW3d
 53
 
 
 
NW
 300
 S
 200
 
 
 
NW2d
 633
 S2d
 792
 
 
 

[5] Powell v. Alabama, 287 U.S. 45, 69 (1932).

[6] U.S. Const. Amendment 6.

[7] Johnson v. Zerbst, 304 U.S. 458, 462 (1938).

[8] Gideon v. Wainwright, 372 U.S. 335, 344 (1962).

[9] See, i.e., Gideon, supra note 8, Scott v. Illinois, 440 U.S. 367 (1979)(holding that the Constitution requires “only that no indigent criminal defendant be sentenced to a term of imprisonment unless the State has afforded him the right to assistance of appointed counsel in his defense.”)

[10] President Thomas Jefferson, First inaugural address (March 4, 1801), reprinted in The Oxford Dictionary of Political Quotations, 2nd ed. Oxford University Press, 2001, Antony Jay, editor, at 186.

[11] Letter from Edmund Burke to Charles James Fox, 8 Oct 1777, reprinted in The Oxford Dictionary of Political Quotations, 2nd ed. Oxford University Press, 2001, Antony Jay, editor, at 60.

[12] Philip G. Schrag, The Federal Income-Contingent Repayment Option for Law Student Loans, 29 Hofstra L. Rev. 733, 778 (2001).

[13] id. at 778.

[14] id. at 780.

[15] id. at 781.

[16] id. at 782.

[17] Amy J. Oliver received her J.D. from Harvard Law School.  She is an Associate at Lathan & Watkins, Washington, D.C.

[18] Philip J. Schrag is Professor of Law and Director of the Center for Applied Legal Studies, Georgetown University Law Center.

[19] The income tax based program is based on a suggestion from Nicholas Johnson, the professor of the class for which I am writing this paper.

[20] Tracey Longo, Payback Time for Recent Grads, Kiplinger’s Personal Finance Magazine, October 1996, at 89.

[21] I.R.C. §221(b)(1).

[22] I.R.C. §221(d).

[23] I.R.C. §25A(c)(2)(B).

[24] I.R.C. §25A(c)(1).

[25] id.

[26] I.R.C. §25A(b)(1)(A).

[27] I.R.C. §25A(b)(1)(B), (b)(4).

[28] id.

[29] id.

[30] id.

[31] 11 U.S.C. §523(a)(8)(A)

[32] 11 U.S.C. §523(a)(8)(B)

[33] www.napil.org

[34] see www.law.com/special/professionals/nlj250/nlj250_2000_fin.html

[35] id.

[36] www.skadden.com

[37] id.

[38] From Bradley & Riley PC 2000 Small Employer Data Sheet, National Association for Lawyer Placement, filed with the University of Iowa College of Law’s Career Services office, September 20, 2001.

[39] www.napil.org

[40] 5 C.F.R. §537.101

[41] 5 C.F.R. §537.107

[42] 5 C.F.R. §537.106

[43] 34 C.F.R. §685.209(a)(2)(ii)

[44] 34 C.F.R. §685.209(c)(4)(i)

[45] 34 C.F.R. §685.209(c)(4)(iv)

[46] 34 C.F.R. §674.57(a)(1)

[47] 34 C.F.R. §674.57(a)(5)(i), (ii)

[48] 34 C.F.R. §674.57(a)(3)(i)-(iii)

[49] 34 C.F.R. §674.57(b)(2)(i)-(iii)

[50] www.peacecorps.gov/benefits/loan.ctm

[51] www.goarmy.com/programs/mgib/mgib.htm

[52] www.goarmyreserve.com, then select “frequently asked questions”

[53] www.goarmy.com/programs/tuition/repay.htm

[54] www.goarmyreserve.com/benefits.htm

[55] www.navy.com/coneducation/student_loans.jsp

[56] www.navy.com/coneducation/money_for_college.jsp

[57] Proposals in this part for improving the tax code come from Amy J. Oliver, Improving the Tax Code to Provide Meaningful and Effective Tax Incentives for Higher Education, 12 U. Fla. J.L. & Pub. Pol’y 91 (2000).

[58] id. at 142.

[59] id.

[60] $40,000 total debt, 10-year payment term at 8.25% interest rate.

[61] This cost is taken from the author’s financial aid award notification letter.

[62] id.

[63] Oliver, supra note 57, at 139.

[64] Megan L. Eckhardt, Regents eye 19% hike, The Daily Iowan, October 11, 2001, at 1A.

[65] Oliver, supra note 57, at 140.

[66] Suggestions from Philip G. Schrag, supra note 12.

[67] id. at 845-6.

[68] id. at 850.

[69] id.

[70] id. at 850.

[71] id.

[72] id. at 855.

[73] id. at 854.