Angie Robertson graduated from Loyola University Chicago School of Law in 2010. She has experience with public interest law, family law, legal document review and sales. When she is not reading or writing about law, she enjoys live music, exploring Chicago, watching roller-derby, and spending time with her husband and her dog.
I had to open a new bank account recently. My old bank was charging new fees and so I took a stance by moving whatever petty amount of money that was in my checking account to a bank with no fees. I was between temp jobs, had just made a student loan payment, and my balance was dismal. The young banker who was opening my account had to ask me a series of demographic questions, including my occupation. I let out a long sigh and murmured, “I’m a lawyer.”
The word “lawyer” switched on a “commission!” light bulb in the banker’s eyes. He exclaimed, “A lawyer? Really? That is great news for you! We have a savings account with the highest interest available with a minimum balance of $50,000!”
“Not today,” I responded, deadpan.
Doing the “right thing” financially for a new lawyer in-between jobs can be a bit of a gambit, to say the least. Sadly, contributing to a 401k, IRA, or even making a monthly health insurance payment aren’t always options when there is no stable source of income. New lawyers have the added stress of astronomical student loans. If one is lucky enough to have a few extra unspent dollars in a given month, investing that money is risky if one doesn’t know whether they will have another temp job the following month. It’s enough to make Suze Orman’s head spin.
My one piece of advice for every new attorney or recent law school grad is to consolidate your loans and take advantage of the College Cost Reduction and Access Act. Consolidation is a tedious process, so cross your t’s and dot your i’s. The gist of the Act is that if you work in public service for at least 10 years, your loans are forgiven if you pay 10 percent of your adjustable gross income monthly for 10 years. If you are not in public service, depending on your income,* your loans are forgiven if you pay 10 percent of your adjustable gross income monthly for 25 years. If you want to pay your loans off sooner, your options include marrying rich, winning the lottery and forming a Google-esque startup. Also, you could get promoted in your career the traditional way, continue to live modestly, and make larger loan payments, if that works into your life plan.
The promise of the College Cost Reduction and Access Act is not a complete solution to the lack of congruity between law school debt and current salaries for law grads. The benefits of the Act cannot be reaped for 10 to 25 years in the future, which makes appeal or amendment a serious threat to law graduates with loan debt. While this fairly new Act has remained intact so far, part of the recent debt-ceiling deal removes federal subsidies for interest on Stafford loans for current graduate students after 2012, which means all future law grads will have to pay interest accrued on those loans while in school. As the loan burden for law students gets increasingly worse and our aspirations for an improvement in the legal market are somewhat speculative, we all need to come up with financial plans that include more than switching banks to avoid monthly fees.
*Here are two websites that helped me navigate the process of consolidating loans with the federal government.