Will Student Debt Affect Character & Fitness?

There is a new article in the Journal of College and University Law by Kaela Raedel Munster called A Double-Edged Sword: Student Loan Debt Provides Access To A Law Degree But May Ultimately Deny A Bar License that makes the case that student debt might affect Character & Fitness.

From the article:
 “Misconception or not, lawyers are perceived as wealthy, well-to-do, educated professionals with the means to make their student loan payments. This perception, however, may not be consistent with reality.

Consider the following hypothetical:
Lauren, a twenty-six-year old woman and recent law school graduate, pursued a legal education after achieving academic success in her undergraduate studies. In deciding whether to attend law school, Lauren relied on statistical reports that described recent graduates' employment and salary data, financial assistance, and ability to pursue a meaningful career upon graduation. Lauren decided to enroll at an American Bar Association (“ABA”) accredited law school that offered her a substantial merit-based scholarship based on both her Law School Admission Test (“LSAT”) score, as well as her undergraduate academic record. Lauren's scholarship covered seventy-five percent of her tuition expenses, and yearly renewal of Lauren's scholarship was contingent upon her maintaining a minimum 3.0 grade point average. Lauren carried approximately $100,000 of prior academic indebtedness into law school so she relied on the assistance of her scholarship to fund her legal education. After Lauren's first year of law school, she was unable to maintain her scholarship so she subsequently had to take out private loans to offset her tuition and living expenses. Upon graduation from law school, Lauren's academic indebtedness totaled approximately $200,000 and remained at that amount when she sat for her state's Bar Examination. After she passed that exam, the State Bar refused Lauren's admission because the State Supreme Court had affirmed the State Bar Character & Fitness Committee's determination that, because of her high debt load and the fact that she had no reasonable plan for paying off her student loan debt, Lauren was financially irresponsible. After following in the path of countless young professionals who accrue academic debt in the hope of deferred success, Lauren was left destitute and found unfit to practice law.

The Character and Fitness assessment has been criticized by bar applicants, bar members, and scholars because of its arbitrary and unpredictable admission standards. Like many aspects of the legal profession, the Character and Fitness assessment has not evolved to reflect current economic and social trends, as student loans are an integral and pervasive tool for many to attend law school. Thus, basing the determination of an applicant's character and fitness on the concept of financial irresponsibility is an antiquated approach; the process must evolve to accurately reflect the current legal market."

This is a thoughtful piece that should be considered. With the federal government looking to lower aggregate loan limits and state bars potentially limiting the ability to practice law because of loans, law schools need to take a proactive approach and help get law school debt under control.

Law schools can take a cue from an undergraduate institution, Indiana University, that was able to successfully cut student debt. "Studies have shown that many students, some as young as 17 when they first borrow, fail to understand loan terms and find themselves in financial straits when they have to begin repayment years later. Indiana University decided to tell prospective borrowers what their monthly payment would be after graduation and how much they would owe. That information had a dramatic effect on students’ willingness to borrow: Federal undergraduate Stafford loan disbursements at the public university dropped 11 percent, or $31 million, in the nine months that ended March 31 from a year earlier, according to U.S. Department of Education data."

This is a smart idea and makes loan repayment more transparent for the borrower.

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