IBR to the rescue?
Ashley Fisher, a student at Wayne Law, has posed a fair question: How are law school graduates supposed to reconcile a desire to serve underrepresented people with the need to pay off substantial student loan debt? One answer may be the Income-Based Repayment (IBR) Plan for federal student loans. IBR caps monthly payments at an amount intended to be affordable based on income and family size. As a general proposition, repayment is capped at 15% of discretionary income (adjusted gross income minus an amount based on family size). After 25 years, the remaining debt is forgiven (10 years if the borrower has been engaged in public service). There is talk in the Obama Administration about making the terms more favorable. Lest I mislead people with this rather simplistic description of IBR, see http://studentaid.ed.gov/PORTALSWebApp/students/english/IBRPlan.jsp. Professor Philip Schrag of Georgetown Law is an expert on IBR; some helpful articles he has written or co-authored can be found at 36 Hofstra L.Rev. 27 (2007) and 60 J. Legal Educ. 583 (2011).
One can see how even a student with significant debt can manage repayment through IBR. A recent law school graduate could take on a modestly-paying job or even hang out her own shingle (a daunting proposition for some, but one which might be ameliorated through supports like mentoring and office-sharing), make a modest income, remain current on loan payments, and still have enough left over to live decently (though not luxuriously).
What’s the downside? I see two potential problems:
1. Interest continues to accrue on loans during repayment. In some instances, the monthly repayment may be too small to cover interest, let alone retire principal. So the balance of the loan might increase over time. This may be tolerable, if the borrower is able to increase earnings over time, so as to move over to the plus side of the ledger, or if the borrower devotes ten years to public service, at which time the loan is forgiven. But for people (like me) who do not like to be in debt, an increase in the loan balance even as one is working to pay off the loan may be regarded as undesirable.
2. IBR potentially represents a tremendous federal subsidy to student loans. At some point, Congress may decide that a debt-plagued government can no longer afford to finance this venture.
And so while it may be helpful to some, IBR is not a panacea. I encourage students to investigate the possibility, but to determine how it applies to your circumstances, and use with caution.
So what about tuition? I wish I could say that Wayne Law takes in thousands of dollars of surplus tuition, and that we could take the simple step of lowering tuition, or at least putting the brakes on future tuition increases. Unfortunately, that is not the case. Most of our tuition goes to long-term, fixed costs, like salaries. Other costs, like operating expenses (supplies, travel, equipment, etc.) have already been significantly reduced in the recent series of legislatively-imposed budget cuts. Could we pare down more? Possibly. But we cannot take significant cuts without slashing programs that inure to our students’ benefit. As between charging a little less tuition and maintaining the current level of Career Services staffing and programming, Public Interest Law Fellowships, a Program for International Legal Studies, and new clinics in Transnational Environmental Law and Asylum and Immigration Law (to cite just a few examples), we’ve chosen to do the latter – that is, to support programs that position our students to succeed in the legal marketplace. We think this helps our students in the long run.
I have heard many law deans share the same lament: at a time during which we are asked to keep a lid on tuition, we are also being asked to provide more training in the skills demanded by our profession, typically through costly programs like clinics. Law firms no longer have the luxury of providing much in the way of in-house training, so they look to law schools to provide more practice skills training during the three or so years we have. (At the same time, some cost-conscious critics are calling for reducing law school to two years.) Our faculty will continue to develop offerings conducive to professional skills development; the trick will be to do so within our current budget envelope, so as not to impose an additional cost burden on our students.
We will continue to appeal to our alumni and friends to pass on the benefit of a Wayne education to our students through increased philanthropy. They are a generous group, so I hope some of them are reading this, and are motivated accordingly.