Lasya, a recent graduate of the UC Berkeley School of Law, is careful to emphasize that she’s relatively fortunate. She’s been gainfully employed throughout the pandemic, making just over $200,000 a year at a BigLaw firm in the San Francisco Bay Area. And when she was in law school, her parents were able to cover those three years of living expenses. (Her name has been changed in this story to protect her privacy.)

Despite these advantages, Lasya still had to take out loans to cover her law school tuition and fees, which for an in-state Berkeley Law student currently costs almost $57,000 a year. Speaking on the phone earlier this month, she said that her current student loan balance is hovering just around $170,000.

“I am in a position of a lot of privilege,” Lasya said. “I went to a name-brand school, I have a BigLaw job.” But when she thinks about that six-figure loan balance, “to be honest, it is super stressful.”

Because Lasya’s student loans are backed by the federal government, she hasn’t been making payments on them for about a year and a half, thanks to a payment freeze the U.S. Department of Education first announced in March 2020 — and has since extended three times across two different administrations — in response to the COVID-19 pandemic.

But in its announcement this month that the moratorium will continue through January 2022, the department stated that this extension will be the final one.

More than 95 percent of law students can’t afford their legal education without taking out loans, according to a report released last year by the American Bar Association. And the average amount these students owe at their law school graduation is almost $165,000.

At the onset of the pandemic in the United States, many of these graduates — as part of the 44.7 million Americans borrowers who owe a total of $1.7 trillion in student loans — received temporary relief from this burden when the Department of Education started the freeze on federal student loan payments. Announcing on Aug. 6 that the most recent extension of that freeze will be the final one, U.S. Secretary of Education Miguel Cardona said that the payment pause “has been a lifeline that allowed millions of Americans to focus on their families, health, and finances instead of student loans during the national emergency.”

“As our nation’s economy continues to recover from a deep hole, this final extension will give students and borrowers the time they need to plan for restart and ensure a smooth pathway back to repayment,” Cardona said.

Meaning that in five months, holders of federal student loans will emerge from a reprieve from those obligations and into what’s likely to be a strained administrative repayment environment. In California, according to the most recent data from the Department of Education, about 3.8 million borrowers currently hold $142.7 billion in federal student debt.

Meanwhile, student loans issued by private lenders were unaffected by the federal moratorium, and most people with those loans have been required to make payments as scheduled over the course of the pandemic’s economic fallout.

The national student debt load is an issue that touches numerous professions. For law school graduates — and particularly those living in a state with a cost of living as high as California’s — the sheer amount of debt can feel crushing even for attorneys with high-paying jobs in BigLaw. For those working in less lucrative areas, and for Black and Latinx law graduates who owe disproportionate amounts of the student debt total, the burden can feel insurmountable.

Kiran Sidhu, an Oakland-based policy counsel at the Center for Responsible Lending — and a graduate of the UC Hastings College of the Law — says that with the federal pause on payments set to lift at the end of January, the student debt load will “make it that much harder” for people who graduated from a California law school to stay in the state to practice.

“If you’re faced with student loan debt, the chance of you being able to set up shop in California and begin your life is severely diminished because of the debt crisis,” Sidhu said.

That crisis has significant implications for individual quality of life, wealth inequity, and access to justice, both in California and nationally.

Uneven debt burdens

Law graduates with student debt are subject to those well-documented problems that tend to affect student borrowers across the board: day-to-day stress from an inability to make rent or afford daily necessities, and resulting physical and mental health issues. Delays of long-term goals like buying a home and having children, and a resulting inability to build family wealth.

Of those law graduates with student loans, “not all law graduates are treated equally,” Sidhu points out. “This crisis in all different types of education is disproportionately impacting Black students and students of color,” she said. “Just because you get the higher education degree doesn’t guarantee the narrowing of the racial wealth gap.”

Jonathan Glater, a law professor at UC Berkeley, has studied this disproportionate impact closely. A 2020 paper he co-authored with Dalié Jiménez, a professor at the UC Irvine School of Law, notes that Black and Latinx students typically “face several challenges to repaying their student loan debt.”

“First, the typical student is less likely to have completed their studies,” the professors write in the paper, published in the Harvard Civil Rights-Civil Liberties Law Review. “Second, they are less likely to be placed in an income-driven repayment plan. Third, when they graduate they face pernicious labor market discrimination and reduced income. Fourth, if they experience any trouble repaying, they have less wealth from which to draw upon to smooth out any shocks.”

According to the paper, Black students are disproportionately likely to take out student loans and to borrow larger amounts, and default on those loans more often than their white peers. Meanwhile, Latinx students are less likely to borrow money for school than white students, “but when they do, they borrow nearly as much, and like Black students are more likely to attend a for-profit institution and more likely to default than White students.”

Bringing these findings into the context of law school, Glater said in a recent phone call that although studies suggest default rates are lower for law graduates and a law degree has a net positive effect on lifetime earnings, that doesn’t diminish the significance of these inequities.

“If history is our guide, a law degree is a good investment,” Glater said. “But as with all things, it can be true overall, and that doesn’t mean the debt burden is not devastating for many, many students.”

Effects on access to justice

It’s especially important to pay attention to how the student debt burden affects not only law graduates’ personal finances but also the type of law they practice, Glater says. For example, a lawyer with a six-figure loan balance may be more likely to accept a job in BigLaw they wouldn’t otherwise pursue than the lower-paid public defender position that was their dream when they started law school.

Attorneys with federal loans who work in public service are nominally eligible to have their loans forgiven through the Department of Education’s Public Service Loan Forgiveness (PSLF) program. But in practice, qualifying for that relief has been a byzantine and often unsuccessful process.

“It’s not surprising that it affects students’ career decisions,” Glater said of law school debt. “That goes to the access to justice problem — do we have enough lawyers that people who need legal representation can afford it?” He points to a 2007 study conducted at New York University’s law school by a researcher at Harvard that studied how two financial aid options — loan repayment assistance and tuition subsidies — affected the career paths of law school admits.

Among other findings, the study found that students who received the outright tuition assistance had a 36 to 45 percent higher rate of placement in public interest law after graduation than those who received help with payments after they’d taken out student loans.

Shoshana Krieger, a 2011 graduate of the UCLA School of Law, currently works at a legal aid nonprofit in Austin, Texas, where she directs a project supporting tenant advocacy. She’s counting on having what are about $200,000 in federal loans forgiven in the next year through the PSLF program, and since graduating law school she’s gotten help with payments through UCLA Law’s loan repayment assistance program, designed to help graduates start legal careers in public service.

If it weren’t for both programs, Krieger says, she wouldn’t have been able to use her law degree to support community organizing, because she wouldn’t have been able to make her loan payments on her current salary.

“I was on law review. I could have gone to a big firm,” Krieger said. “But this is why I went to law school.”

Lasya, the recent UC Berkeley grad working in BigLaw, confirms that her debt burden has influenced her career path. Her high salary combined with her high loan balance has created “golden handcuffs,” she says, where she feels like she can’t leave her job for a lower-paying one that she’s more emotionally invested in.

“This job is really difficult and not really great for anyone’s mental health,” she said. “I never felt super passionate about BigLaw because I always knew the hours were going to be terrible. I want to be able to spend time with my parents and my spouse on weekends. If loans were not an issue, or if it was a little more doable with the cost of living in California, I absolutely would have gone to a smaller firm.”

There also may be reason to believe that the prospect of borrowing deters some folks from attending school at all. Recent research from the University of North Carolina’s Center for Community Capital, for example, found that Latinos experience higher levels of debt aversion related to education debt than non-Latinos at the undergraduate level.

In the law school context, these factors arise among an ongoing shortage of affordable lawyers and underrepresentation of lawyers who aren’t white. In its first annual “report card” on the diversity of California’s legal profession, the State Bar of California found that white attorneys account for nearly 70 percent of the state’s active licensed attorney population while people of color constitute 60 percent of the state’s population total. The report found that Latinos were particularly underrepresented, comprising 36 percent of California’s population but only 7 percent of its attorneys.

Policy solutions

With the pandemic student debt relief measures set to expire in five months, borrowers’ advocates are escalating calls for widespread federal student loan forgiveness. During the 2020 presidential campaign, President Joe Biden said that he supported up to $10,000 in debt cancellation for each borrower if it was done through Congress. Meanwhile, members of Congress including Sen. Elizabeth Warren and Rep. Ayanna Pressley have argued that Biden has the executive authority to cancel up to $50,000 in federal loans per borrower without congressional approval.

Sidhu, of the Center for Responsible Lending, agrees that canceling that amount of debt through executive action “will be the most important thing” in reducing the national student loan burden and the inequities within it. “We helped craft the legal reasoning and really do believe the administration has the ability to do that,” she said, adding that the measure would advance racial equity and boost the economy.

Short of full debt cancellation, experts say there are other policy changes that can be implemented to make higher education less expensive — and, when students take out loans, to make them less onerous to pay back.

“Ideally we would have a system of higher education where the cost allocation didn’t fall on those students,” Glater said. “The decision to make student borrowing such a central component of higher education access was a policy mistake. When I make a mistake, I try and correct it.”

Some of the “micro fixes” Glater would like to see include a default income-based repayment plan for federal loans, and a shift of the burden of enrollment in the PSLF program from borrowers either to employers or the government. He also calls for an end to what he calls the “exceptional bankruptcy treatment” of student debt, under which borrowers who want to discharge student loans in bankruptcy have to enter adversary proceedings to do so.

Critics of widespread loan forgiveness say it would be a regressive policy that would benefit borrowers whose education allows them to go on to high-paying careers. To that concern, Glater says his response would be to “fix that through the tax code.”

Student debt is such a contentious policy issue, Glater says, because there are plenty of legitimate criticisms of it as a primary funding source for higher education, but “at the same time, it puts this wonderful experience within reach of people who wouldn’t otherwise be able to afford it.”

“You don’t want to cut off access. You don’t want to penalize people who take advantage of the policy,” Glater said. But “if your policy tool doesn’t work, you put it down and pick up another one.”

It remains to be seen whether and how any of these policy changes might be implemented. For now, law graduates and millions of other borrowers across the country are looking at a return to the status quo next February.

But Lasya points out that this status quo might seem less immutable to those borrowers, after a year and a half of emergency relief has given them a taste of the alternative.

“This pause was a great reprieve for a lot of people,” she said. “And it showed us a world of what life would be like if we didn’t have student loan debt.”

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