Can law students really prosper under The PROSPER Act?
While a career as an attorney is an extraordinary calling, we all pursue the path for different reasons. Some are fueled by their passion for the pursuit of justice. Others champion legal causes for the greater good of society. Regardless of what motivates you, we are all tied together by a common thread – student loan debt. All it takes is one, swift hit from the fist of reality via a glance at your credit report to remember that. Fortunately, most us took advantage of federal student loans, which offer a more flexible repayment option and more opportunities for payment relief than loans funded by private or institutional sources. However, future attorneys in San Diego and across the country may be faced with a different scenario.
On December 1, 2017, Chairwoman Virginia Foxx introduced a bill called the “Promoting Real Opportunity, Success, and Prosperity through Education Reform Act” (the “PROSPER Act”) in the House Education and Workforce Committee. While the stated objective of the bill is to reauthorize the Higher Education Act, the modifications it makes to Public Service Loan Forgiveness, interest rates on student loans, and graduate borrowing limits will exacerbate the increasing burden of student debt.
The greatest impact will come for those interested in earning Public Service Loan Forgiveness (PSLF) for their work in the public sector. While the bill does not outright eliminate the program, it does make eligibility essentially impossible for new borrowers by eliminating the Federal Direct Loans and repayment plans eligible for PSLF, and instead creating new “Federal ONE Loans” with limited repayment options that are not eligible. Thus, the PROSPER Act would effectively make PSLF unattainable for any new borrowers.
Not only does the PROSPER Act limit PSLF, but it would implement new, limited repayment options for Federal ONE Loans, with a new income-driven repayment plan. This new repayment plan would not be eligible for PSLF and departs from most of the current income-driven repayment plans available. For married borrowers, the new repayment plan will base monthly payments on the combined income of the borrower and their spouse, no matter how they file their taxes. This translates to a drastic increase in monthly payments for public servants who have a spouse working in the private sector, making substantially more than them.
In addition, graduate students will see their federal loan limits set at $28,500 under the PROSPER Act, as opposed to the current limit, which is the total cost of attendance. This cap would force many borrowers to seek additional aid through private loans, which lack the borrower protections of federal loans. With higher interest rates and less favorable terms, increased private loans are likely to make the repayment process even more burdensome for student loan borrowers.
We all know becoming a lawyer is an enormous undertaking in terms of time commitment and financial investment. The PROSPER Act would make higher education less affordable, saddle students with greater debt, and push more students into loan default. I know for me personally, my likelihood of attending law school would have been decreased had my financing been restrained by the PROSPER Act. While the PROSPER Act does not directly impact current attorneys or students near graduation, it is important we all recognize the repercussions for our future legal community.
Rio Schwarting is a 3L at California Western School of Law, an especially gifted napper, and superb at parallel parking.