Growing problem: ABA student loan data puts focus on mounting debt concerns

After graduating from the George Mason University Antonin Scalia Law School, Ann Kossachev found herself facing a problem that is not uncommon among recent law school graduates: six-figure student loan debt.

“It can feel overwhelming, and especially as you’re just starting out your legal career is difficult to manage financially,” Kossachev, now director of regulatory affairs at the National Association of Federally-Insured Credit Unions, said.

As the cost of tuition at America’s colleges and universities has risen over the years, the amount of student debt held by the country’s college graduates continues to rise. According to U.S. News & World Report data, the average college graduate from the class of 2020 borrowed $29,927, roughly $5,000 more than graduates from 2010. Federal Reserve estimates from the second quarter of 2021 place the total amount of national student loan debt at over $1.7 trillion, the highest that mark has ever been.

However, those estimates are for traditional four-year courses of study. For law school graduates, the debt totals are even higher.

With that in mind, the American Bar Association Young Lawyers Division released its 2021 student debt survey last month. The survey, which was administered in the spring of 2021, targeted members age 36 or younger who had graduated from law school in the last 10 years. Over 1,300 young lawyers from throughout the country responded to the survey, which aimed to “understand the impact of student loan debt on the personal and professional lives of relatively new lawyers.”

ABA Survey Results

Roughly 90%of respondents borrowed student loans to finance their legal education or prior college education, with the average borrower owing $130,000 in cumulative loans at graduation. Additionally, 30% of respondents reported borrowing for bar exam preparation, adding an average of $8,785 in debt.

“The ABA and the Young Lawyers Division have recognized, for the last few years especially, that the toll of student debt has been absolutely skyrocketing and taking a tremendous impact on legal graduates,” Chris Jennison, former speaker for the ABA Young Lawyers Division, said. Jennison, who currently serves as an attorney-advisor for the Federal Aviation Administration, also participated in a panel discussion on the survey when the results were released last month.

Jennison noted that one finding from the survey is a “wide, wide discrepancy between the debt load and the borrowing amount from our white graduates versus people of color.” The survey found that graduates identifying as Black were far more likely to report having more student debt than when they graduated than any other racial group surveyed. In total, 26.9% of all respondents reported having more debt now than they did on graduation day, while 15% reported having the same balance.

Kossachev echoed that sentiment, noting it can be difficult to reduce the debt balance.

“For a few years after I graduated, I had difficulty paying off just the monthly interest,” she said. “It’s really tough for a young attorney to be able to make the requisite payments on a monthly basis just to take care of the interest that’s accrued, much less pay down the principal.”

According to the ABA survey, student debt has altered the paths of some of the survey respondents. A majority reported salary concerns impacting their job selection more than anticipated, while some respondents reported taking jobs in public service to qualify for public service loan forgiveness.

Due to law school debt, some attorneys also reported delaying or deciding not to pursue major life milestones. 51.8% of borrowers said they postponed or decided not to buy a home due to debt, while 39% of borrowers delayed having children due to their student loans. The greater the overall debt balance held by the borrower, the more likely they are to delay major life milestones, including marriage and car and home ownership.

“I think we are going to continue to see that student debt is driving people to make decisions that are either delaying milestones or are deciding for them what jobs they can do,” Jennison said.

The survey also found a substantial correlation between debt load and overall stress. While 49.1% of graduates with no debt balance reported high or overwhelming stress, 82.5% of graduates with over $200,000 of student debt reported the same. Overall, nearly two-thirds of respondents said their student debt balance has made them feel anxious or stressed in the last month.

Solutions

In conjunction with the survey’s release, the ABA hosted a “Student Debt Week of Action” from Sept. 20-24. During the week, the ABA encouraged those in the legal community to write to their elected officials and engage members of Congress on the issue and conducted online programming to educate others on student debt.

Jennison said the ABA has a policy and advocacy arm and government affairs office that allows it to advocate in particular areas. Recently, Jennison said the ABA Young Lawyers Division has called for “wholesale reform” on how the legal profession deals with debt.

He added that the ABA supports forgiveness of student debt, although the association did not put a dollar amount on it. During the 2020 presidential campaign, now-President Joe Biden promised to cancel $10,000 in student debt per borrower, although some members of Congress have advocated for higher amounts.

On Oct. 6, the U.S. Department of Education announced changes to the Public Service Loan Forgiveness Program, which wipes out federal student loan debt for borrowers employed in public service. The executive action broadened what payments count towards PSLF, with the Department of Education estimating over 22,000 borrowers will receive “immediate student loan forgiveness” due to the changes.

Jennison said that “the most likely route that we could see in Congress is some measure of bankruptcy reform.” Sponsored by Sen. Richard Durbin (D-IL) and Sen. John Cornyn (R-TX), the Fresh Start Through Bankruptcy Act was introduced in August and would more easily permit student loan discharges under certain conditions under an amended Bankruptcy Code.

“It doesn’t make a whole lot of sense to go through the life-changing process of bankruptcy proceedings and still be saddled by debt because half of your debt load was student debt,” Jennison said.

As for more local-level initiatives, Kossachev said she has done presentations in finance classes in Fairfax County Public Schools, educating students on financial literacy. Kossachev also chairs the Virginia Bar Association Young Lawyers Division’s Credit Issues Project, which serves to educate teenagers on responsible credit and debt management.

Ultimately, Kossachev said it is important for bar groups and attorneys to educate students and young lawyers on the gravity of the debt they are taking on.

“I’m very happy that I decided to go to law school to pursue a legal career,” she said. “But on the back end, it does force you to ask that question of ‘Was it worth it in the first place?’ That is an unfortunate reality that should not be the case for any young professional.”