Presenting Operation Dumpster Phoenix.

A while back we ran a survey to get a feel for what kind of debt everyone is taking on and how they plan to cope with it. It turns out /r/lawschool’s user base is a pretty normal reflection of law students at large and the kind of debt they take on. A lot of you are currently in law school so this might not be super useful to you right away but is something to keep in the back of your mind.

Many of you already graduated or will graduate soon. This is for you.

Nearly 20% of people responding to our survey said they will refinance. Due to Covid all interest and payments are frozen. Obviously, you don’t have to refi right away. Generally speaking, you’re not really going to beat 0% interest and no payments. If you already have a private loan these offers could be useful. Because the /r/lawschool community is so active we could negotiate some special perks for people refinancing. The more people that use it the better perks we can negotiate. (Like getting cash ASAP for the trouble of doing a refi) As a disclosure—they are affiliate links. That’s how we can get those perks. Some money flows to the mods but as far as I can tell it’s definitely not quit-your-career-as-a-lawyer-money. On the off-chance this makes any money, we intend to use some of that money to reinvest in /r/lawschool and related communities by, e.g., getting a professional software developer to upgrade the /r/LawSchoolOutlines admissions bot that /u/oscar_the_couch wrote. His bot is useful, but he’s also a lawyer who doesn’t do that kind of work professionally, which is why it crashes a few times a week and doesn’t run on a dedicated server. Plus, the service itself is a benefit to the users, which is why it’s there. The mods that worked on this all have full time jobs.

If you don’t want to refi skip that section. The next largest cohort response in our survey was that people had no idea what to do with their debt. If you don’t know where to start there are some spreadsheets/tools to help you figure out what your situation is so you can make some choices. Refinancing does not make sense for everyone. There are programs like PSLF where 10 years working in public service and you can get your debt forgiven (though it appears a far fewer number of people than expected are actually eligible for forgiveness https://www.cnbc.com/2021/03/23/the-us-already-has-student-debt-forgivenessbut-barely-anyone-gets-it.html). And currently the tax bomb, where your forgiven debt gets treated like income, is suspended until December 31, 2025. So if you’re coming up on forgiveness between now and then you’re stoked.

Like I mentioned, payments and interest are suspended until September 30, 2021. If it were up to me that would be extended further and fixing the tax bomb would be permanent. And while the government is being relatively benevolent right now they could always switch to Darth Vader mode and alter the terms of the deal in ways you won’t like.

But as of right now it’s looking like at a minimum this September is going to be a day of financial reckoning where the government will get its pound of flesh.

It’s important to remember that you’re not alone and you didn’t do something stupid or reckless trying to improve your life. The practice of law often isn’t super transparent so it’s hard as an undergrad to get your head around what it’s all about before you signed up for all this debt. And even if your post-grad life isn’t necessarily what you thought it would be you can still manage this debt burden and do things like start a family, buy a car, buy a home, or manage a career. It’s easy to fall into a hole of despair and “I don’t want to think about it so I won’t look at it.” Don’t do that. You can do this.

A couple of quick policy advocacy points from me as a moderator and practicing attorney: 1) Covid relief for student loans should last longer than September 30, 2) Federal interest rates should be set to 0 permanently with interest accrued wiped out, 3) the tax bomb for forgiven debt that counts it as income should be permanently fixed, not just implemented until 2025. I don’t have an answer for what to do with law schools charging appalling rates for tuition but the system of debt-driven indentured servitude brought about by federal student loans needs to change.

Check out Dumpster Phoenix.

I had some fun building this project out with a couple of the other mods. (Thank you guys) In addition to fine tuning this project as people use it (or don't use it) I was considering fleshing out how to little guide to starting a law practice if that's something people are interested in.