"Good morning," said Margaret Cain. Silence from the audience in the University of Virginia Law School auditorium. It was, after all, nine o'clock last Saturday morning. She leaned into the microscope and looked out across the audience, most of whom were women law students, "I said GOOD MORNING!"

For Margaret Cain, they laughed. Talk to students down here about Margaret Cain and they tell you how remarkable she is. They use words like incredible. She has their respect. Margaret Cain has come here all the way from a job in a medical lab in Hampton, from years of night school at local colleges, from motherhood and divorce. For this year at least, Margaret Cain, black, 31, mother of two, is a first-year student at one of the top 10 law schools in the country. For this year, at least, she is doing such things as introducing prominent lawyers at the Virginia Law Women's annual conference. Her story is one that the philosophers from the bootstrap school of public policy ought to take a look at, before they take the boot away.

Margaret Cain worked for 13 years as a medical lab technician after graduating from high school. After separating from her husband, she found herself working seven days a week in the lab and realized that no matter how hard she worked, "the money wasn't going to increase to where I could give my kids the formal education I was hoping I could afford."

She enrolled in night courses at a community college in Hampton. A welfare mother who raised nine children took care of her son and daughter. "She, like, adopted my kids," says Cain. "We still call her grandma."

Then she enrolled in night courses at Christopher Newport, a four-year college in Newport News. She received a $1,000 incentive scholarship for minority students and continued working seven days a week to support her family. Her children stayed home and helped each other at night while she went to school. "They took their baths, fixed dinner, did their homework. They were so emotionally mature they could handle it."

She majored in political science, and took the Law School Aptitude Test in her senior year. She was accepted at William and Mary and U-Va.

"When I was accepted I had to decide what am I going to do with the kids. Could I uproot them from their school and ask them to leave their friends and come and take this chance with Mama for three years? They were in on the decision-making process."

For the first time in years, Margaret Cain has the luxury of going to school in the daytime. Her children leave for school by 8 a.m., she leaves by 9. "It took them a while to adjust to me being there. I was an intrusion, saying don't do this, or do that, or don't watch that on TV."

They do not have the money they had when she was working full-time, although her daughter is still taking piano lessons. "The other students at the law school are very supportive of the fact that I have children. When they have a party or a hike or a softball game, they always say, bring Crystal and Rock. That's helped the children adjust."

There were never any silver spoons around Margaret Cain. She is going to law school now because she was able to get a $1,000 scholarship for first-year students and $9,000 worth of loans. Her tuition is $1,800 and the rest of the money covers her living expenses from August, when school started, to June. She receives a Guaranteed Student Loan, a type of loan which the Reagan administration's proposals would effectively scuttle for graduate students in most states, including Virginia. She received a National Direct Student Loan. The federal government contributes 90 percent of the capital to this program, a total of $200 million in the last fiscal year. The Reagan administration wants to terminate federal involvement in such loans, ending low-cost loans to 266,000 needy students, according to the American Council on Education. Cain also received a Law School Foundation loan and correctly points out that those funds will be even more limited if the federal loan programs disappear.

Cain's chances of finishing law school may well disappear along with those loans. Last November, urban law firm recruiters came here from New York City with starting offers of over $40,000. A recruiter from Washington started at $34,000. That's the kind of money and life with which Margaret Cain could provide for her future and that of her children. She shouldered her family responsibilities; she defied enormous odds. "I am living proof it can be done," she says. And she made it just in time to watch the prophets of the American dream try to shatter hers.