Maryland Bar Bulletin
Publications : Bar Bulletin : March 2008


On a frigid January morning in 1961, John F. Kennedy stood at the eastern front of the U.S. Capitol for his inauguration and delivered his famous line, “Ask not what your country can do for you, but what you can do for your country.” In early 2007, first-term U.S. Congressman John P. Sarbanes (Maryland – District 3) sat in his office in the Cannon Building – roughly two football fields south of where Kennedy made his defining call to the American people – and helped construct a law aimed at enticing citizens to fill vacant government and non-profit jobs with the same fervor as 46 years earlier.

Though that rush may never be entirely duplicated, Sarbanes and his colleagues in Congress’ Education and Labor Committee (ELC) did make strides toward filling the nearly half-million federal positions scheduled to be available within the next two to three years as their federal student loan forgiveness provision was added to the College Cost Reduction and Access Act (CCRA), and signed into law on September 27, 2007.

This law comes on the heels of many private lenders being reprimanded for charging inflated interest rates; furthermore, the National Association for Public Interest Law reported the average law graduate debt is $80,000 and greater – the average at Maryland State law schools is between $50,000 and $60,000.

Heeding a diminished federal staff and an outcry for law school deferral, the ELC crafted a plan that allows those in the public sector – either government or 501(c) 3 organizations – to pay reduced monthly amounts on their federal student loans and, after 10 years of service, have the remaining amount forgiven. It is retroactive in the sense that current public servants who have already taken out a loan and/or graduated can participate; however, the 10 years of service is not accrued and begins on or after October 1, 2007.

“This has a potentially far-reaching impact,” says Sarbanes. “We’re very hopeful that it’s going to incentivize a lot of people to come into public service – and those who are in, to stay in – because they can see their way through to getting out from under these debts.”

As a majority of public servants are in the midst of retiring, the influx to these positions has been dammed mainly by the private sector’s salary capabilities. Increases in expenses, cost-of-living and college loans have made private firms too irresistible, especially in the legal community. During his years working as an attorney in Maryland’s public and private sectors, Sarbanes saw many “wonderful attorneys” who wanted to do non-profit or government work opt for jobs with private firms so they could pay off their mammoth law school debt. The loan forgiveness was originally designed to defuse this occurrence, but branched out into a holistic approach.

“They couldn’t continue to labor under this debt [with] the prospect of it hanging over them for years and years,” explains Sarbanes, noting that the loan forgiveness comes at no cost to the taxpayer and is completely absorbed by the federal government. Moreover, the Congressman indicates the law was specifically written so other occupations in the public sector (i.e. nurses, social workers and others) could qualify for this package.

For nearly 15 years, prominent Georgetown University Law professor Phillip G. Schrag and a slew of other law professors had lobbied for this legislation concerning law school debt relief. They approached Sarbanes at the beginning of his term due to his legal past and current political position. Owing to superb timing with the private lenders scandal, this small delegation was “beside themselves” when their provision was passed into law, though there is some apprehension surrounding the new law as a few regulations have yet to be finalized.

The major hang-up comes from President Bush’s $3 trillion budget plan sent to Congress on February 4, 2008, which contains a legislative proposal for the CCRA that the only people who can qualify are those who take out a federal loan after July 1, 2009. According to Sarbanes, this would “severely limit the benefit of this program and do nothing to retain people who are already in public service, since they already have their loan.”

The budget language, he adds, was “not consistent with what Congress wanted to see happen here,” and that “it would completely up-end the intent of [the CCRA].”

Currently, the ELC is gathering signatures from members for a letter to U.S. Department of Education Secretary Margaret Spellings, essentially saying, “Go no further with this proposal.” The Department will finalize the regulations this spring and Sarbanes, as well as many others in Congress, are keeping a close eye to “make sure the regulations… are as close to the law as they should be.”

Similarly, many law schools have been keeping an eye on the regulations in order to accurately inform their student body as to its requirements. Patricia Scott, Director for Students Financial Aid at the University of Maryland - Baltimore, said of the law: “Students often hear ‘Loan Forgiveness’ and think that after the 120th payment, their loan is forgiven, but there will still be work done on their behalf . . .We are trying to get all the information before students sign on the dotted line.”

Marlene Telak, a law school counselor in the University of Baltimore’s Financial Aid Office, noted that because the law is so new, some gray area remains; yet she harbors “high hopes” for it as long as “you know how to use it.”
“If they [the government] keep it simple,” Telak says, “it will be a great benefit for the people and the state.”

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Publications : Bar Bulletin: March 2008

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