Should You Take Out Student Loans for Law School? The Realities of Debt, Public Interest Drift, and Navigating PSLF Challenges

As JD candidates weigh acceptances from law schools and financial aid packages, many prospective law students face pivotal financial decisions: Should I accept a full scholarship at a “lower ranked” school or rely on loans to attend a higher-ranked law school? Is it better to choose a financial aid package with a heavy reliance on loans or one with a smaller reliance? Does my student loan debt load matter if I’m going to be a lawyer? If you want to pursue a career in public interest law, these questions are important for you to carefully weigh, especially as programs to support law school graduates in public service careers are getting shaken up.

If you are weighing financial aid packages, then you’re in a good position! You studied hard, prepared thoughtful and strategic applications, and earned an admission offer. Congratulations!

But let’s talk about something that isn’t often a part of the conversation when we’re making these big decisions: the realities of student loans. It’s easy to get caught up in the excitement of an acceptance letter or the promise of a prestigious program, but debt can follow you for years—sometimes decades.

The recent 2024 report from California’s Student Loan Ombudsman paints a pretty sobering picture. Over the past few years, we’ve seen federal student loan payment pauses come and go—especially during the pandemic. These pauses can be a lifeline for borrowers but can also cause chaos when payments resume. In Fall 2023, millions of borrowers faced a messy transition back to repayment. Account discrepancies, servicer changes, and financial unpreparedness were just some of the issues borrowers reported. California Department of Financial Protection and Innovation, Annual Report of the Student Loan Ombudsman for 2023, at 2 (2024) https://dfpi.ca.gov/wp-content/uploads/2024/12/AnnualReport_2023_StudentLoanOmbudsman.pdf. And guess what? Loan repayment restarts are a mess for a lot of people. Now with constant litigation surrounding student loans, including one by Republican attorneys general that has led to a pause for millions of borrowers on the SAVE repayment plan, it’s likely that pauses and abrupt restarts will continue to be a reality for borrowers navigating this ever-shifting landscape.

Meanwhile, California alone is home to about 4 million student loan borrowers, holding $148 billion in federal debt. California Department of Financial Protection and Innovation, Annual Report of the Student Loan Ombudsman for 2023, at 2 (2024), https://dfpi.ca.gov/wp-content/uploads/2024/12/AnnualReport_2023_StudentLoanOmbudsman.pdf. That’s billion with a “b.” And a huge chunk of that debt is held by people aged 35-49, with about 800,000 Californians over 50 still paying off loans totaling $35 billion. *Id. *So when people say student loans are a long-term commitment, they aren’t kidding.

And it’s not just about age. The California State Bar’s “Public Interest Drift” study revealed some alarming trends about how debt impacts career choices. The phrase “Public Interest Drift” refers to law students who start out wanting to pursue public interest law but end up changing course because of financial pressures. The State Bar of California, Public Interest Drift: Findings from the 2019 California Law Survey, at 1 (2019), https://www.calbar.ca.gov/Portals/0/documents/accessJustice/California-Law-Student-Survey.pdf. It’s real and it’s pervasive.

Consider this: 78% of California law students took out loans, with a median debt of $120,000. Id. at 6. The study also found that 40% of students who considered public interest work but ultimately chose other paths were not confident the Federal Loan Forgiveness Program would even continue to exist. Based on current news cycles about Republican threats to shrink the program, they were right to be skeptical. Unfortunately, PSLF challenges are not new. PSLF has been riddled with challenges for borrowers nearly since inception. According to the report, “PSLF processed its first cohort of applicants in 2017; as of June 30, 2019, only 1,216 out of 102,051 applications were approved by the U.S. Department of Education, with missing qualifying payments serving as the most common reason for rejection.” Id. at 7.

And when you look at the financial strain, it’s not hard to see why. According to the Cal Bar’s report, 71% of students said they needed to make more money than public interest jobs pay because of their educational debt. And that’s just the beginning. Id. at 5. The report found that 40% were not confident the Federal Loan Forgiveness Program will continue, 32% plan to pursue public interest jobs only after paying off their educational debt, and 28% plan to pursue public interest work only after working in the private sector first. Id. Other reasons included feeling that their law school didn’t have good Loan Repayment Assistance Programs (25%), discovering other fields they were more interested in because of a lack of available public interest jobs (23%), and simply finding a lack of available public interest jobs to begin with (17%). Id. Additionally, 14% said their experiences doing pro bono work or internships made them realize public interest work wasn’t what they wanted to do, and 12% said family expectations for them to make more money influenced their decisions. Id. at 5.

These numbers aren’t just statistics—they reflect the real and difficult choices people are making about their careers. And they reveal a systemic problem: Debt isn’t just about money; it’s about opportunity and access. When the financial burden is too heavy, even the most passionate advocates are often pushed away from public interest work, especially if they’re from communities already underrepresented in the legal profession.

For Black and Latine students, that weight can feel even heavier. According to the same survey, they were more likely to take out loans and had higher median debt levels compared to their white peers. Id. at 6. That’s a reality of the student loan system that can’t be ignored, especially when you’re trying to build a career focused on serving others.

It’s not just about having programs in place—it’s about whether they’re accessible, sufficient, and designed to actually help people build sustainable public interest careers. And the barriers to accessing these programs are making it even harder for public interest lawyers to stay in their roles, especially in the face of mounting debt. LRAP programs are intended to help alleviate a law graduate’s student loan burden when pursuing public service careers or other types of careers where salaries are not competitive. What’s LRAP? Here is a helpful explanation from the report: “A loan repayment assistance program (“LRAP”) is a key tool, which provides financial aid to law school graduates, typically those working in the public interest or government sector. In most cases, this aid is given to graduates in the form of a new and forgivable loan to help them repay their annual educational debt. Upon completion of the required service obligation, the LRAP administrator forgives or cancels the new loan to program participants. Most LRAPs contain limits on the amount of income a recipient can earn while participating in such a program. There are various types of LRAPs, administered by law schools, state bar foundations and federal and state governments, providing debt relief to a limited number of law graduates.” The ABA Commission On Loan Repayment And Forgiveness, Lifting the Burden: Law Student Debt as a Barrier to Public Service, at 9 (2003), https://www.americanbar.org/content/dam/aba/administrative/legal_aid_indigent_defendants/ls_sclaid_lrap_finalreport.pdf. The report makes a series of recommendations on how to facilitate programs to help law graduates remain in public interest careers, including strengthening and expanding the availability of LRAP programs. Since LRAP offerings depend on the law school and the specifics can change over time, be sure to do your research.

And then there’s the Public Service Loan Forgiveness (PSLF) program, which is currently under attack by the federal Republican administration. The National Legal Aid & Defender Association (NLADA) put out a report underscoring how crucial PSLF is for making sure low-income communities have access to legal representation. If PSLF gets cut or restricted, it’s not just about lawyers losing their ability to pay down debt—it’s about clients losing access to justice. National Legal Aid & Defender Association, Public Service Loan Forgiveness and the Justice System, at 19-21 (2017), https://www.nlada.org/pslf-and-justice.

So where does that leave you? If you’re going into public interest law (and weighing the idea of pursuing PSLF (or, like me, you’re already practicing public interest law), then you should know that the program is in trouble. The federal government has introduced an Executive Order that would limit which employers count for PSLF purposes. Basically, they want to narrow the definition of qualifying employers based on the employer’s speech and programs.

For those of us relying on PSLF—and I include myself in that group—this is a big deal. We’re left wondering whether the promises made to us will hold up, or if they’ll be stripped away because of policy changes aimed at discriminating against certain employers. There is a lot of uncertainty that, at times, makes me wonder if staying in public interest, though it’s my passion, continues to make sense for me.

Navigating law school finances is daunting, but understanding these reports and their implications can help you make informed decisions. Whether you opt for a scholarship or decide to rely on loans, knowing the landscape ahead of you is crucial.

So, if you’re weighing between financial aid options, here are some tips:

Take a look at the starting salaries for 3-5 jobs that you would be interested in taking after law school graduation.
For each salary amount, use a loan repayment calculator or similar tool, like this one by Federal Student Aid at https://studentaid.gov/loan-simulator/, to estimate your monthly student loan repayment amount.
Using your salary amount and your monthly expected student loan repayment amount, create a budget for yourself. Will your salary allow you to live a life that aligns with your responsibilities, passions, interests, and values? If the salary is too low or the student loan repayment too high, reconsider whether you can assume the student loan amount you are considering.
If you are going to rely on loans, apply to scholarships on a routine basis! Need help finding scholarships? Check out my free law school scholarship guide at https://stan.store/AnaJD.

If you want more details on how to do this type of planning, I also want to offer you a resource I created to help law students and public interest lawyers weighing these tough financial choices. My workbook, Financial Planning for Aspiring & New Lawyers, walks you through the nitty-gritty details of budgeting, preparing for law school costs, and setting yourself up for a financially stable career. From understanding the expenses associated with applying to law school, to creating a budget as a first-year attorney, and even preparing for bar-related expenses, this guide is designed to guide you from application to practice. If you’re feeling overwhelmed by your financial options and their impact on your financial future, this workbook will give you the clarity and tools to make smart, intentional decisions that align with your values and goals. You can check it out on my website or through my Stan store: Financial Planning for Aspiring & New Lawyers.

If you want to do more research on student loan repayment and forgiveness programs, here are some resources for you to check out: