Dear Patty and Sandy,
I'm a law student in my final year, pondering my career plans. I'll be clerking for a judge for one year following law school but am torn as to where I'll go next. Law school usually results in an enormous amount of student loan debt, and I'll be no exception: I'm looking at roughly $100,000. I've always been driven toward public service and government work, and wanted a career in law in order to help those unable to help themselves. I'm considering a career in refugee law or perhaps as a public defender or district attorney. The trouble, of course, is that these positions pay salaries that would present a challenge even without law school loans to pay off. The conventional wisdom from a number of friends, family, and fellow students seems to be taking a high-paying job with a private law firm for a few years in order to pay off loans is the prudent course, particularly in difficult economic times. I don't want to work for a law firm: When I was a little girl, I dreamed of saving the world, not of billing hours. Still ... $100,000 is a daunting number. Any advice?
While nonprofit workers have higher ratings of job satisfaction, work-life balance, and confidence in their organizational mission, doinggood doesn't always correlate with doing well financially. Your chosen profession, law, has one of the highest differences in average salaries between for-profit and nonprofit work. A 2006 Bureau of Labor Statistics survey showed the average hourly wage for lawyers was $41.08 in nonprofit work, $43.50 in government, and $58.09 in for-profit. That means lawyers working for nonprofits earn approximately $35,000 less per year.
But let's get to your particular problem. It sounds like you wouldn't be happy working in corporate law. There are several new programs that may help you to follow your dream to help people rather than bill hours, while making sure that you don't have to take on a second job to cover your debt. The first program won't be up and running until July 2009, but it could certainly benefit many underpaid and overdebted do-gooders. The Department of Education's Income Based Repayment Plan essentially caps the percentage of your discretionary income you are expected to pay toward your student loan debt. (This calculator can help you determine whether you are eligible, but only the department can give you a final verdict.) Heather Jarvis of Equal Justice Works (on their very useful student loan podcast) says that an easy calculation is that anyone who owes more than their annual salary will likely be eligible. Take extra caution if you are married and filing jointly: Both spouses' income will be counted to determine your eligibility. Also be sure to pay attention to what type of loans you have, as not all types of federal loans are eligible.
The Public Service Loan Forgiveness program is another possibility for you. This new program requires individuals to make 120 eligible monthly payments toward their qualifying student loans while working full-time in government, at a 501(c)(3), or in another qualifying profession (including early-childhood education, social work, faculty teaching in high-need areas …). At the end of that period, the government will forgive the remaining balance. This program is intricate: Be sure to read more about it or even use this checklist as a guide.
You should also investigate social-service fellowships (e.g., Peace Corps or Americorps) that help with loan repayment in return for a set time of public service, and loan repayment programs for special professional groups. The FinAid Web site gives a wide range of resources and programs that support these goals.
I can't add much to Sandy's suggestions except to say that there seem to be a range of organizations and a range of partial solutions—though none is perfect. You should also go back to your college financial aid officer, your employers, and prospective employers' human resources departments and ask about loan forgiveness programs they know of. You should also ask if they, or their network of colleagues, know about other resources.
Choosing a public service career requires you to become a very good personal finance manager and a good personal networker. Even if you find a way to reduce that loan burden, you need to ensure that you are armed with some basic tools for personal budgeting. If you find yourself living beyond your means, the satisfaction of a career in public service will be offset at least in part by the pain and stress of financial worries. Personal budgeting can be a simple exercise, but, like flossing, it is one we do too seldom. Our hometown University of Washington has a two-page personal budgeting guide, as do scores of other personal finance sites. Idealist has a simple primer on "personal profit in a nonprofit world." Financial health will help your mental health, and mental health means you will be far more successful in whatever public service you pursue.
Do you have a real-life do-gooding dilemma? Please send it to firstname.lastname@example.org and Patty and Sandy will try to answer it.
In our ongoing effort to do better ourselves, we're donating 25 percent of the proceeds from this column to ONE.org—an organization committed to raising public awareness about the issues of global poverty, hunger, and disease and the efforts to fight such problems in the world's poorest countries.