Janice Lozano
While law firms themselves don't offer loan forgiveness, some large law firms provide student loan repayment assistance as part of their benefits package. This can include direct monthly payments toward your loans, helping to reduce the balance over time. In some cases, these payments are capped annually, and certain service requirements may apply, meaning you'll need to stay at the firm for a set period to maximize the benefit. Additionally, lawyers who own their practices have the potential to make more money and pay off their debts faster. However, starting a practice often requires taking on more debt, which can be daunting. Nevertheless, with proper financial planning and advice, it is possible for lawyers to pay off their student loans, even on a county or entry-level salary.
| Characteristics | Values |
|---|---|
| Average law school debt | $145,500 |
| Average law school debt for graduates in 2020 | $118,400 |
| Average time taken to pay off student loans | 18 years |
| Average monthly payment for student loans | $1,000 |
| Law firm loan forgiveness | No |
| Student loan repayment assistance by law firms | Yes |
| Student loan repayment assistance eligibility | Annual caps, service requirements |
| Federal student loan repayment plans | Standard, extended, graduated, income contingent, income-based |
| Student loan refinancing eligibility | Owe less than 1.5 times your income |
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What You'll Learn
Law firms don't offer loan forgiveness
The U.S. Department of Justice (DOJ) offers one of the most generous loan assistance programs for new lawyers. For each year that you work for the DOJ, you can earn up to $6,000 in loan assistance, with a lifetime maximum of $60,000. The Attorney Student Loan Repayment Program (ASLRP) is another option where the Department of Justice will match up to $6,000 of your student loan payments.
Some large law firms provide student loan repayment assistance as part of their benefits package. Firms like Orrick, Herrington & Sutcliffe, and Kirkland & Ellis offer direct monthly payments toward your loans, helping to reduce the balance. These programs are not the same as loan forgiveness, as they don't eliminate the loan balance in one go, but they can make a significant impact over time. In some cases, these payments are capped annually, and certain service requirements may apply, meaning you'll need to stay at the firm for a set period to maximize the benefit.
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Some large firms provide student loan repayment assistance
Although law firms themselves do not provide loan forgiveness, some large law firms do offer student loan repayment assistance as part of their benefits package. This means that they will contribute a set amount toward your loans each month, helping to reduce the balance over time. For example, firms like Orrick, Herrington & Sutcliffe, and Kirkland & Ellis offer direct monthly payments toward loans.
These contributions are often focused on federal law school debt and may be capped annually. Certain service requirements may also apply, meaning you will need to stay at the firm for a set period to maximize the benefit. While it is more common at large corporate firms, student loan repayment assistance can ease the financial burden, especially if forgiveness or other federal programs are not an option.
Lawyers who graduated in 2020 had an average law school debt load of $118,400, and it takes an average of 18 years to pay back these loans. With such high debt loads and long repayment periods, it is no surprise that law professionals seek out firms that offer student loan repayment assistance.
It is important to note that student loan repayment assistance programs do not eliminate the loan balance in one go, but they can make a significant impact over time. These programs are designed to help law professionals manage their debt and ease their financial burden.
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Federal student loan repayment plans
While law firms themselves do not provide loan forgiveness, some large law firms do offer student loan repayment assistance as part of their benefits package. These programs help lawyers reduce their loan balance over time by providing monthly contributions toward their debt. However, these programs do not eliminate the loan balance and are typically not available to those working in private practice or corporate law.
Federal student loan repayment programs permit agencies to repay federally insured student loans as a recruitment or retention incentive for candidates or current employees. These programs are implemented under 5 U.S.C. 5379, which authorises agencies to set up their own student loan repayment programs to attract or retain highly qualified employees. Any employee is eligible, except those occupying a position excepted from the competitive civil service because of their confidential, policy-determining, policy-making, or policy-advocating nature.
There are several federal forgiveness programs designed to help reduce or eliminate student loan debt for law professionals. These include:
- Public Service Loan Forgiveness (PSLF): This program is available for lawyers working in public interest roles, such as those employed by government agencies or nonprofit organisations. PSLF forgives your remaining federal student loans after you make 120 qualifying monthly payments (typically over 10 years), and the forgiveness is tax-free at the federal level.
- Income-Driven Repayment (IDR): This is an income-based repayment plan that allows you to pay back your student loans based on your income.
- Loan Repayment Assistance Program (LRAP): Over 20 states offer LRAPs, and the Department of Justice will match up to $6,000 of your student loan payments through the Attorney Student Loan Repayment Program (ASLRP).
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Loan repayment assistance programs (LRAP)
Loan Repayment Assistance Programs (LRAPs) are a valuable option for law professionals working in public service roles, such as those employed by government agencies, nonprofits, or public defender's offices. LRAPs are not loan forgiveness programs, but they do provide financial assistance to help lawyers manage their student loan debt. This assistance is typically capped annually and may be subject to service requirements, such as remaining with the firm for a specified period.
LRAPs are designed to alleviate concerns about repaying student and parent loans, allowing graduates to pursue their career passions without the burden of educational debt. Assistance is based on the graduate's income, helping to repay federal, private alternative, and parent PLUS loans. If a graduate's income is modest, LRAP can provide quarterly reimbursements on their loan payments until their income surpasses the specified limit or their loans are fully repaid.
Over 20 states in the US offer LRAPs, and some large law firms also provide student loan repayment assistance as part of their benefits package. For example, firms like Orrick, Herrington & Sutcliffe, and Kirkland & Ellis offer direct monthly payments toward employees' loans. Additionally, the Department of Justice will match up to $6,000 of student loan payments through the Attorney Student Loan Repayment Program (ASLRP).
FFLA's LRAP is another example, providing benefits of $10,000 per calendar year per person in the form of a loan. This program is specifically designed to support the recruitment and retention of qualified civil legal aid staff attorneys employed by grant-funded legal assistance organizations. Applicants must meet eligibility standards, including full-time employment or a minimum part-time percentage with a civil legal aid organization receiving an FFLA grant.
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Student loan refinancing options
Student loan refinancing is a viable option for law school graduates who want to pay off their loans quickly. However, it is important to note that refinancing federal student loans means losing access to federal benefits such as income-driven repayment plans, loan forgiveness, deferment, and federal hardship programs. Therefore, refinancing federal loans may not be a good idea if you are eligible for broad-based forgiveness plans or federal programs like the Public Service Loan Forgiveness (PSLF) program, Income-Driven Repayment (IDR), REPAYE, or PAYE.
If you are considering refinancing, you should review your credit score, as private lenders determine interest rates and eligibility based on credit history. The lowest rates are typically reserved for applicants with very good to excellent credit, defined as a FICO score of 740 or higher. If you have fair or bad credit, you may need a creditworthy co-signer.
There are several private lenders that offer refinancing options, including SoFi, Citizens, and ELFI. SoFi offers fixed rates starting as low as 4.49% APR with autopay, but borrowers should be aware that refinancing federal loans with SoFi means forfeiting eligibility for all federal loan benefits. ELFI offers refinancing through an online application process with no origination or application fees, but borrowers must have at least a 680 FICO credit score and refinance at least $10,000. Citizens provides refinancing options for both student and parent loans, and borrowers can save 0.25 of a percentage point by setting up autopay.
If you are a lawyer working in a law firm, it is important to note that while law firms themselves don't provide loan forgiveness, some large firms may offer student loan repayment assistance as part of their benefits package. These programs provide monthly contributions toward your debt to help reduce your loan balance over time but do not eliminate your loan balance in one go.
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Frequently asked questions
Law firms don't offer loan forgiveness, but some large firms provide student loan repayment assistance as part of their benefits package.
Firms contribute a set amount toward your loans each month, often focused on federal law school debt. Some firms limit how much they'll pay in a year, and certain service requirements may apply.
Federal student loans, such as Stafford and PLUS loans, can be repaid according to one of four plans: standard, extended, graduated, and income contingent. You can also look into income-driven repayment (IDR) plans, such as PAYE or REPAYE, or the PSLF program.
On average, law school graduates take 18 years to pay back their student loans. However, this varies depending on income, loan amount, and repayment strategy.
