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Squeezed out of the loan game

It looks like the lender who provided me with the financial opportunity to complete law school has been squeezed out of the game.

Access Group Inc. said last month it would no longer lend to new students and is laying off most of its staff, according to the National Law Journal. In its early years, Access provided student loans to 75-to-80 percent of law students, and recently was still providing approximately $850 million in loans to 25,000-to-30,000 law students.

But Access — as well as numerous other student loan lenders — have fallen victim to the Health Care and Education Reconciliation Act of 2010, which made the U.S. Department of Education the sole provider of federally-guaranteed student loans.

In 2006, the government created Graduate PLUS loans, which allow students to borrow the full amount of the costs of their graduate education with federally-guaranteed loans. With the ever-tightening restrictions in private lending after 2008, this provides only one outlet for post-baccalaureate students to pursue graduate school using student loans to fund their education.

Doesn’t seem like too big of a deal, right? After all, it’s not like the government is eliminating the ability to borrow any money for graduate school. However, when reviewing my own, very lengthy Access account statement, I noticed that the interest rate on my Graduate PLUS loans is the worst out of all the different loan types (Subsidized Stafford, Unsubsidized Stafford, and Private) that I used.

In fact, the private loan I took out in my first year of law school is at least 3 percentage points lower than my federal loans. Furthermore, the Budget Control Act of 2011 eliminated subsidized Stafford loans for graduate students starting next summer. Now, those loans unfortunately will accrue interest while the recipients are still in school, which will add an extra $5,000 in debt for the typical law school borrower.

Meanwhile, President Obama recently announced several federal student loan reforms. While most of the reforms were geared to benefit undergraduate borrowers, one change that could help law school graduates is the option to consolidate your loans for 0.25-t0-0.5 percent less than the 6.8 percent interest rate attached to your loans now. While it does not sound like much, over the course of 20 years, it will definitely make a difference.

What are you doing to ease the pain of student loans? What did you do while you were in school to limit how much money you had to borrow? Did you specifically choose a public interest position after graduation to qualify for income-based repayment or loan forgiveness? If not, how much of your take-home income is eaten up by your student loan payments per month? Share your misery with the rest of us.


  1. Alisa Bralove-Scherr

    I didn’t specifically plan on a career in public service, but now that I have one, I’m disappointed that I don’t qualify for loan forgiveness. Unfortunately, the state’s lrap sees my position as administrative in nature, even though I am directly assisting low-income people on a daily basis. The part that really hurts is that if I had a higher-paying job in my organization, I probably would have qualifed.

    The president’s plan won’t help me either, because I graduated from law school in 2003.

  2. talking to these darn collectors!