Paul L. Caron
Dean


Saturday, July 16, 2016

NY Times:  Law Firms Offer Cash to Help New Lawyers Pay Student Loans—Like 'Sushi In The Workplace Cafeteria'?

NY Times Dealbook (2013)New York Times Deal Book: Firms Offer Cash to Help New Lawyers Pay Student Debt, by Elizabeth Olson:

Young lawyers, struggling with tens of thousands of dollars in student debt, are finding relief from a new source: their employers.

Some law firms are starting to contribute cash to help their newly hired lawyers meet monthly payments on education loans that can be as large as a mortgage payment on a house. That is a step beyond what some law firms now do in helping their junior lawyers refinance with lower-interest loan

Orrick, Herrington & Sutcliffe, a large firm founded in San Francisco that specializes in technology, energy and infrastructure law, plans to announce on Friday that it will contribute a monthly amount to its new associates to offset accumulated education debt. Other firms are also beginning to embrace the idea, seeing substantial debt as a big worry for their entry-level lawyers. ...

Orrick, which has more than 1,000 lawyers, is offering $100 a month for starting lawyers for 18 months. After that, the junior lawyers will be eligible to receive a bonus from the firm. The program, which starts Sept. 1, is being offered to associates who are on the track to becoming partners as well as to those who choose the less intensive career associate track. ...

Graduates arrive at law firms with an average of $185,000 in student debt, Mark Kantrowitz, a higher-education expert who tracks student debt, estimates. That compares to $75,000 a decade ago, he found. ...

But there are drawbacks to such programs. Law firm contributions are taxed as earnings. Several proposals are percolating in Congress to exempt taxation, up to a yearly maximum, on company tuition debt contributions — but none have passed.

Economists like Ms. Akers at Brookings question the wisdom of such plans. She points out that they benefit one class of employees — the debtors — over others, and draw from the same employee benefit pool that could be used to augment other universal benefits like health insurance.

“It’s a little bit like serving sushi in the workplace cafeteria,” Ms. Akers said. “It’s great for those who want it, but not so much for those who don’t.”

Wall Street Journal Law Bog, Orrick Pitching in to Pay Off Associate Student Loans:

Taxed or not, as law school student debt loads veer into the $200,000+ category, every little bit helps.

See also NY Times, The Next Big Thing In Employee Benefits: 401(k)s For Student Loan Repayment

https://taxprof.typepad.com/taxprof_blog/2016/07/ny-timeslaw-firms-offer-cash-to-help-new-lawyers-pay-student-debtslike-sushi-in-the-workplace-cafete.html

Legal Education | Permalink

Comments

I can't say I'd turn away any extra cash my employer wanted to contribute toward my loan payments, but $1800 isn't making much of a dent. Refinancing, though, can have a big impact. I recently trimmed more than twelve years of payments by refinancing: https://marklyon.org/2016/05/refinancing-student-loans/

Posted by: Mark Lyon | Jul 16, 2016 8:22:46 AM

$100 per month, eh? Wow. Of course, someone who paid sticker to attend HLS or CLS - two top law schools where 3/5 to 2/3 of the student bodies do pay sticker - the standard student loan payment will be somewhere between $3500 per month and $4000 per month, depending on one's undergrad debt.

It should be mentioned that refinancing your federal student loans effectively transforms them into private student loans, so if you are among the vast, vast majority of biglaw associates whose stint is many years shorter than your loan repayment period, there is no longer any ability to go on IBR/PAYE/REPAYE/PSLF when and if you fail to make a decent lateral transition or go into government/public interest or whatever. Plenty of ex-Biglaw associates on the doc review circuits these days...

Posted by: Unemployed Northeastern | Jul 16, 2016 10:15:54 AM

I'm sure that by next week "employers help new hires pay off law school debt" will be trumpeted by at least some of the law schools as part of their pitch to students and prospective students, that law school debt doesn't matter.

Posted by: Old Ruster from JD Junkyard | Jul 16, 2016 11:05:59 AM

"Of course, someone who paid sticker to attend HLS or CLS - two top law schools where 3/5 to 2/3 of the student bodies do pay sticker - the standard student loan payment will be somewhere between $3500 per month and $4000 per month..."

But UNE, I thought that the elite law schools were the only ones worth attending in your philosophy (such as it is)? "Job placement correlates almost perfectly with median LSAT," "Enduring Hierachies," and all that.

Posted by: Anon | Jul 16, 2016 6:23:28 PM

@Anon,

I don't see a judgment call about whether or not to attend an elite law school in my post. That's because I didn't write one. What I wrote is that Orrick's SL repayment assistance would only cover a few percent of the monthly payment for someone who paid sticker to attend one of those schools. This is a factual statement. That refinancing federal student loans makes them ineligible for IBR/PAYE/REPAYE/PSLF is similarly factual, and needs to be more widely known. And 80% of associates are gone by year five, one way or the other, while the standard (and shortest) repayment period is ten years.

Posted by: Unemployed Northeastern | Jul 17, 2016 5:59:48 AM

UNE,

As you well know, I wasn't referencing your comment in this particular post in isolation: I was contrasting it with your contradictory lengthy obsessive posting history about the value of elite status/ranking.

Posted by: Anon | Jul 17, 2016 10:29:22 AM

"I was contrasting it with your contradictory lengthy obsessive posting history about the value of elite status/ranking"

Thanks for planting those words in my mouth. It's amazing how often purported lawyers/law professors result to middle school argumentation in these threads.

Posted by: Unemployed Northeastern | Jul 17, 2016 3:29:29 PM

Oh, UNE... I needn't plant any words in your mouth because they're already there. See, inter alia, your comments here:

http://taxprof.typepad.com/taxprof_blog/2015/10/the-best-us-news-peer-reputation-bling-texas-am.html

Posted by: Anon | Jul 17, 2016 7:15:25 PM

Yes, bring up a post from nine months ago that is in no way relevant to what I wrote in my original post on this thread. Build those strawmen, dear. Am I wrong that $100 per month is a drop in the bucket towards a $3500 to $4000 per month student loan payment? Am I wrong that refinancing federal student loans makes them ineligible for any income-based repayment plan? Am I wrong that the vast majority of biglaw associates are gone by year five and that the standard loan repayment period is ten years? Or will you really blow me away with your rhetoric prowess by bringing up more off-topic posts of mine from years past?

Posted by: Unemployed Northeastern | Jul 17, 2016 9:01:30 PM

No worries, UNE. Feel free to keep deflecting my point, which is your contradictory positions.

Posted by: Anon | Jul 18, 2016 4:22:39 PM

And feel free to keep posting red herrings. I'll take it by your silence on the matter that you agree with what I have actually posited in THIS thread.

Posted by: Unemployed Northeastern | Jul 18, 2016 6:38:56 PM