By American Bar Association
A new student debt study offers new insights regarding young lawyers’ experiences with the COVID-19 student loan repayment pause, their plans in the event of loan forgiveness, satisfaction with loan servicers and mindsets regarding work-life balance.
ABA student debt surveys in 2020 and 2021 showed that those with the highest debt balances more often reported delaying or forgoing significant life events (e.g., marriage, homebuying and having children).
The 2021 report also showed that lawyers of color are disproportionately likely to have borrowed for their education, carried high debt balances and saw their debt balances grow after graduation. Results of the 2024 survey, conducted by the American Bar Association Young Lawyers Division, illustrate notable differences in borrowing and debt effects by respondent characteristics, including first-generation college status. The findings indicate:
Just over a quarter (27%) of respondents have a current student loan balance that is higher now than when they graduated. Of those, 71% indicate their balance has grown because they are on an income-driven repayment plan and their monthly payments do not cover the principal.
While 70% of respondents who borrowed report they were aware of their student balance each year they were enrolled in law school, only 42% report having an awareness of the impact of compound interest and other fees associated with deferring loan payments. Awareness was even lower for first-generation and racially underrepresented respondents.
Most young lawyers (75%) who borrowed report their debt altered the career plans they had when they entered law school, and 76% report their debt caused them to delay or forgo life plans, such as marriage and children. Over half indicate their debt has prevented them from reaching savings, investment and retirement goals.
Carrying student loan debt also causes stress and anxiety for most young lawyers who borrowed (68%), and 67% of all respondents, including those without debt, report feeling stressed about their finances.
Among respondents who borrowed, 86% report benefiting from the COVID-19 student loan repayment pause.
Of those, 76% indicated the money that would have gone to their monthly payment was instead used for essential expenses, and 54% used the money to pay down other debts.
In the event of total loan forgiveness, half of borrowers would use the money gained to grow their savings, and 44% would contribute it to retirement accounts.
More than half of respondents (54%) report spending less time vacationing, socializing with family and friends or engaging in exercise or self-care because doing so would jeopardize their prospects for a promotion or salary increase.
Despite the burdens that accompany education debt, most respondents (74%) would still get a J.D. if they could go back and do it all over again.
Conducted over four weeks in April and May 2024, more than 700 young lawyers nationwide completed the survey and more than 800 provided partial responses. The data was analyzed by AccessLex Institute.
“The latest Student Debt Report provides a sharper perspective on the challenges recent law graduates face in balancing their loan repayment obligations with their personal and professional aspirations,” said Tiffane Cochran, vice president of research at AccessLex Institute. “For instance, we see that when the student loan repayment pause temporarily removed the specter of education debt, the shadow of other debts remained for over half of respondents who used the relief to pay on those obligations.
“These insights will continue to inform and motivate our efforts to partner with the ABA and others to advance financial well-being among rising legal professionals.”
Among the report’s recommendations:
• Augment student loan counseling and related financial education programming within law school
• Continue educating pre-law students on the legal job market, salary expectations and the financial realities of student loan repayment
• Strengthen the Public Service Loan Forgiveness program to ensure public servants receive the forgiveness they earned in an efficient and timely manner
• Ensure that income-driven repayment plans remain available for borrowers to affordably repay their student loans
• Ease the ability to discharge student loans in bankruptcy
• Support law students and alumni in developing and prioritizing wellness.
(https://www.americanbar.org/news/abanews/aba-news-archives/2024)
A new student debt study offers new insights regarding young lawyers’ experiences with the COVID-19 student loan repayment pause, their plans in the event of loan forgiveness, satisfaction with loan servicers and mindsets regarding work-life balance.
ABA student debt surveys in 2020 and 2021 showed that those with the highest debt balances more often reported delaying or forgoing significant life events (e.g., marriage, homebuying and having children).
The 2021 report also showed that lawyers of color are disproportionately likely to have borrowed for their education, carried high debt balances and saw their debt balances grow after graduation. Results of the 2024 survey, conducted by the American Bar Association Young Lawyers Division, illustrate notable differences in borrowing and debt effects by respondent characteristics, including first-generation college status. The findings indicate:
Just over a quarter (27%) of respondents have a current student loan balance that is higher now than when they graduated. Of those, 71% indicate their balance has grown because they are on an income-driven repayment plan and their monthly payments do not cover the principal.
While 70% of respondents who borrowed report they were aware of their student balance each year they were enrolled in law school, only 42% report having an awareness of the impact of compound interest and other fees associated with deferring loan payments. Awareness was even lower for first-generation and racially underrepresented respondents.
Most young lawyers (75%) who borrowed report their debt altered the career plans they had when they entered law school, and 76% report their debt caused them to delay or forgo life plans, such as marriage and children. Over half indicate their debt has prevented them from reaching savings, investment and retirement goals.
Carrying student loan debt also causes stress and anxiety for most young lawyers who borrowed (68%), and 67% of all respondents, including those without debt, report feeling stressed about their finances.
Among respondents who borrowed, 86% report benefiting from the COVID-19 student loan repayment pause.
Of those, 76% indicated the money that would have gone to their monthly payment was instead used for essential expenses, and 54% used the money to pay down other debts.
In the event of total loan forgiveness, half of borrowers would use the money gained to grow their savings, and 44% would contribute it to retirement accounts.
More than half of respondents (54%) report spending less time vacationing, socializing with family and friends or engaging in exercise or self-care because doing so would jeopardize their prospects for a promotion or salary increase.
Despite the burdens that accompany education debt, most respondents (74%) would still get a J.D. if they could go back and do it all over again.
Conducted over four weeks in April and May 2024, more than 700 young lawyers nationwide completed the survey and more than 800 provided partial responses. The data was analyzed by AccessLex Institute.
“The latest Student Debt Report provides a sharper perspective on the challenges recent law graduates face in balancing their loan repayment obligations with their personal and professional aspirations,” said Tiffane Cochran, vice president of research at AccessLex Institute. “For instance, we see that when the student loan repayment pause temporarily removed the specter of education debt, the shadow of other debts remained for over half of respondents who used the relief to pay on those obligations.
“These insights will continue to inform and motivate our efforts to partner with the ABA and others to advance financial well-being among rising legal professionals.”
Among the report’s recommendations:
• Augment student loan counseling and related financial education programming within law school
• Continue educating pre-law students on the legal job market, salary expectations and the financial realities of student loan repayment
• Strengthen the Public Service Loan Forgiveness program to ensure public servants receive the forgiveness they earned in an efficient and timely manner
• Ensure that income-driven repayment plans remain available for borrowers to affordably repay their student loans
• Ease the ability to discharge student loans in bankruptcy
• Support law students and alumni in developing and prioritizing wellness.
(https://www.americanbar.org/news/abanews/aba-news-archives/2024)
