Savanna Hoffman
While law firms themselves don't offer student loan forgiveness, some large law firms provide student loan repayment assistance as part of their benefits package. This means that they contribute a set amount towards their employees' loans each month, helping to reduce the balance over time. This is usually offered to newly hired lawyers who are struggling with large amounts of student debt. Additionally, there are several federal forgiveness programs designed to help lawyers reduce or eliminate student loan debt, such as the Public Service Loan Forgiveness (PSLF) program, which is available to public-interest lawyers.
| Characteristics | Values |
|---|---|
| Do law firms pay off student loans? | No, law firms don't pay off student loans or offer loan forgiveness. |
| Law firms' assistance with student loans | Some large law firms provide student loan repayment assistance as part of their benefits package. |
| Law firms' student loan repayment assistance | Firms contribute a set amount toward loans each month, often focused on federal law school debt. |
| Student loan repayment assistance caps | Some firms limit how much they'll pay in a year. |
| Student loan repayment assistance service requirements | To maximize the benefit, lawyers may need to stay at the firm for a set period. |
| Student loan forgiveness programs | Public Service Loan Forgiveness (PSLF), Income-Driven Repayment (IDR), and Lower Interest Rate Refinancing are some of the federal loan forgiveness programs available. |
| PSLF eligibility | Lawyers working in public interest roles, such as those employed by government agencies, nonprofit organizations, and public defender's offices, are eligible for PSLF. |
| PSLF benefits | PSLF forgives remaining federal student loans after 120 qualifying monthly payments (typically over 10 years) and is tax-free at the federal level. |
| IDR plans | IBR, REPAYE, and PAYE are examples of IDR plans, which cap payments at a percentage of discretionary income. |
| IDR benefits | Under IDR, any remaining loan balance after 25 years is forgiven, and REPAYE provides an interest subsidy. |
| Student loan repayment strategies | Refinancing to a lower interest rate, making extra principal-only payments, and applying bonuses to the loan balance can help pay off loans faster. |
| Student loan repayment challenges | Law school graduates often face high tuition rates and six-figure student loans, while new lawyers may not earn six-figure salaries right away, making it challenging to pay off loans quickly. |
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What You'll Learn
Student loan repayment assistance as part of benefits package
While law firms don't offer loan forgiveness, some large law firms provide student loan repayment assistance as part of their benefits package. This means that they contribute a set amount toward their employees' 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 their employees' loans. These payments are sometimes capped annually, and certain service requirements may apply, meaning employees will need to stay at the firm for a set period to maximize the benefit.
Some law firms are starting to contribute cash to help their newly hired lawyers meet monthly payments on education loans. This trend is part of a wave of workplaces providing student loan repayment programs to attract and retain millennial employees.
It's important to note that law firm loan repayment assistance programs are not the same as loan forgiveness programs like PSLF or IDR. Law professionals can access several federal forgiveness programs designed to reduce or eliminate student loan debt. For example, the PSLF Program forgives remaining federal student loans for lawyers working in public interest roles after they make 120 qualifying monthly payments, typically over 10 years. This forgiveness is also tax-free at the federal level.
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Federal loan forgiveness programs
While law firms themselves do not offer loan forgiveness, some large law firms provide student loan repayment assistance as part of their benefits package. These programs help lawyers by providing monthly contributions toward their debt, but they do not eliminate the loan balance and are usually not available to those working in private practice or corporate law.
Law professionals can access several federal forgiveness programs designed to reduce or eliminate student loan debt. Here are some of the key programs:
Public Service Loan Forgiveness (PSLF)
The PSLF program is available to lawyers working in public interest roles, such as those employed by government agencies or nonprofit organizations. This program forgives the remaining federal student loans after the borrower has made 120 qualifying monthly payments (typically over 10 years). The forgiveness is tax-free at the federal level.
Income-Driven Repayment (IDR) Forgiveness
IDR plans, such as IBR, REPAYE, and PAYE, cap monthly payments at a percentage of the borrower's discretionary income. These payments can go on for up to 25 years, after which any remaining loan balance is forgiven. However, the forgiven balance is taxable.
Loan Repayment Assistance Programs (LRAPs)
LRAPs are offered by law schools to their graduates and by states to public interest attorneys. These programs provide repayment assistance but do not eliminate the entire loan balance.
Repayment Assistance for Federal Employees
This program offers repayment assistance for federally insured loans to employees of certain federal agencies.
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Student loan refinancing
Lawyers who work in the private sector are typically good candidates for student loan refinancing. This is because they generally have high incomes and do not qualify for federal loan benefits, such as loan forgiveness programs. The federal plans have benefits not offered by private companies, including income-driven repayment options, forbearance, and deferment.
If you work at a large law firm or other private-sector employers and have excellent credit and a history of timely debt payments, you may qualify for a low refinance rate. The median lawyer starting salary at private-sector firms was $155,000 in 2019, according to the National Association of Law Placement. Borrowers with solid earnings may not need federal options that reduce payments based on income.
If you have private student loans, it makes sense to refinance them if you qualify for a lower interest rate. Private loans will not qualify for federal repayment programs. You can refinance student loans as many times as you want. For example, you may want to refinance right after finishing law school and again after making a partner. You may get a lower rate as you earn more money or raise your credit score.
Some large law firms provide student loan repayment assistance as part of their benefits package, which can help reduce your loan balance over time. However, these programs do not eliminate your loan balance in one go. Firms like Orrick, Herrington & Sutcliffe, and Kirkland & Ellis offer direct monthly payments toward your loans, helping to reduce the balance while you work.
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Student loan repayment programs to retain employees
Law firms do not offer student loan forgiveness, but some large law firms provide 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. For instance, firms like Orrick, Herrington & Sutcliffe and Kirkland & Ellis offer direct monthly payments toward loans, helping to reduce the balance while the employee works.
Student loan repayment programs are an attractive perk that can help employers retain top talent. Amidst a labour shortage, companies are getting creative about benefits to stay competitive. With student loan debt skyrocketing, repayment programs can be an effective way to attract and retain employees. Studies indicate that 86% of workers would commit to an employer for five years if the employer offered student loan support.
Under federal law, employers who have educational assistance programs can use them to help pay student loan obligations for their employees. Employers who don't have an educational assistance program may want to consider setting one up. These programs must be in writing and cannot discriminate in favour of highly compensated employees.
Federal agencies are authorized to implement a program under which they may agree to repay certain types of student loans as a recruitment or retention incentive for highly qualified personnel. This program is intended to facilitate the recruitment and retention of highly qualified employees by allowing agencies to repay part or all of their federally insured student loans.
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Student loan repayment benefits from employers
Some employers are unaware of their ability to establish Educational Assistance Programs that allow employees to repay educational loans with pre-tax dollars. Under federal law, employers with educational assistance programs can use them to help pay student loan obligations for their employees. This provision is currently in place until December 31, 2025, and repayments will be considered a qualifying "educational assistance", excluded from employee income and, in most cases, excluded from federal withholding, Social Security, Medicare, and Federal FUTA tax.
Law professionals can also access several federal forgiveness programs designed to reduce or eliminate student loan debt, such as Public Service Loan Forgiveness (PSLF) and Income-Driven Repayment (IDR) forgiveness. PSLF is a valuable option for lawyers working in public interest roles, such as those employed by government agencies or nonprofit organizations, and it fully forgives remaining federal student loans after 120 qualifying monthly payments (typically over 10 years). While law firms do not directly offer loan forgiveness, some firms' repayment assistance programs can help ease the financial burden of lawyers struggling with student loan debt.
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Frequently asked questions
No, law firms do not offer loan forgiveness, but some large law 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 may limit how much they pay in a year.
You can explore federal forgiveness programs such as Public Service Loan Forgiveness (PSLF) and Income-Driven Repayment (IDR) Forgiveness. PSLF is available to public-interest lawyers, including some public defenders, legal aid workers, and lawyers who work for the government or eligible nonprofits. IDR plans include IBR, REPAYE, and PAYE, which cap your loan payments at a percentage of your income.
You can focus on making extra principal-only student loan payments with any bonuses or raises you receive. Additionally, refinancing your loans can help you negotiate a better interest rate, which can save you money in the long term.
