Jarvis Speaks on New Law Helping Students Pursuing Public Interest Pay Off Debt
The U.S. Congress has finally caught on to the need of graduating students who have excessive loans. Equal Justice Works Senior Program Manager Heather Jarvis spoke to law students March 19 about The College Cost Reduction and Access Act of 2007.
As a graduate of Duke University School of Law and an attorney who works tirelessly for the poor, Jarvis said she understands the financial barriers that exist with practicing public interest law. But thanks to Congress there is finally a law on the books to help students with particularly high debt and low salaries.
The new law helps students who plan to pursue public interest careers with debt in two ways: significantly lowering the monthly student loan payments with Income-Based Repayment (IBR) and canceling a student’s remaining debt after 10 years of public service with Loan Forgiveness for Public Service.
The new law is very exciting news for public interest law attorneys and other public interest workers with high student debt but doesn’t come without setbacks. It is important for students to realize that not all loans are eligible for the two provisions and for Loan Forgiveness for Public Service only a certain loan is accepted. Only Federal Direct Loans are eligible for public service loan forgiveness, Jarvis said.
The Income-Based Repayment option will be available for both federal direct loans and federally guaranteed loans. These loans include Stafford, GradPlus and federal consolidation loans. But Loan Forgiveness for Public Service only applies to federal direct loans, including federal direct consolidation loans. Students with federal loans that are not already in Federal Direct may consolidate into Federal Direct to take advantage of public service loan forgiveness. Jarvis said she couldn’t stress it enough that “only federal direct loans are eligible for the new public service loan forgiveness.”
Students can find out what kind of loans they have by visiting the National Student Loan Data System at www.nslds.ed.gov.
Loan Forgiveness for Public Service requires the federal government to cancel the remaining student loan balance after a borrower makes 120 qualifying loan payments, which is once a month for 10 years, while working full-time in a qualifying public service position after October 1, 2007. The 10 years in public service does not have to be consecutive, but individuals do have to be in a qualifying public service position when loan forgiveness is requested.
Whereas the Loan Forgiveness for Public Service is very specific, the Income-Based Repayment provision is available for all students with high debt and low salaries. The provision requires borrowers to have a partial financial hardship, which “it’s not hard to have a partial financial hardship when you have a law degree,” Jarvis said.
The downside of the Income-Based Repayment provision is that it will not go into effect until July 1, 2009. Income-Based Repayment has it’s own loan cancellation provision, which cancels any remaining debt after 25 years of making Income-Based repayments.
While most people think a career in public service only encompasses a small portion of jobs, the definition of public service within the new law is much broader than first anticipated. It defines public service as any full-time job in government or a 501(c)(3). This allows for many people to take full advantage of the program, Jarvis said.
The presentation was sponsored by the Florida Bar Foundation. For additional information about the new law and its provisions visit www.equaljusticeworks.org.