Loan Forgiveness Programs: Should Applicants Consider Them?

Obviously, one of the primary factors that govern a graduate school applicant's enrollment decision is The Almighty Dollar. As in: how much will this cost, what kind of aid can I get, and what sort of earning potential am I looking at once I finish? Analyzing educational cost is a complicated task because students must first identify actual numbers (sticker price - available scholarship and grant money) and then put those numbers in the proper context by understanding loan repayment and properly estimating future salary figures.

See, complicated.

One thing that is further complicating this financial aid stew is the addition of loan forgiveness programs. Popularized by elite law schools, the concept is a relatively simple one: eschew the big paychecks (and long hours) of a big law firm in favor of public interest work and, in exchange, you will get help paying back your enormous graduate student loans. Law schools have discovered that an attractive loan forgiveness program is a terrific marketing tool. This is primarily due to the fact that a huge number of law school applicants (especially those who are qualified to land admission spots in the elite programs) are highly optimistic people who view themselves as truth-seeking, freedom-fighting altruistic beings. In other words, everyone thinks they are going to do public interest work when they first apply to law school.

This poses an interesting question: how much stock should a top-flight candidate put in a school's loan forgiveness program?

A quick look at any reputable survey (I'm too lazy to find one at present) will tell you that the number of law school graduates who ultimately do public interest work is far, far less than the number of law school applicants who say they will one day do public interest work. There are many factors that play a role in this phenomenon. It is easier for a student at an elite law school to secure a summer associate position at a law firm than with a cutting edge public interest entity. Public interest firms and groups have fewer recruiting resources. The pressure to work in the big legal markets like New York or L.A. force students to search for an accessible path that will also pay the costs of relocating and then living in those cities. There are also simple (and often perverse) economic incentives, career-building considerations, and personal preference factors to consider. But the simple truth is that the number of actual public interest lawyers is so much lower than the number of hypothetical public interest lawyers because - pay attention now - people have no idea what they want to do when they are applying for law school! In fact, it is safe to say that the "actual" number for any subset of the legal profession is substantially lower than the suggested numbers generated by surveys of law school applicants.

It is human nature to change one's mind, especially after being exposed to hundreds of hours of logical reasoning and critical analysis.

So this takes us back to our initial question, framed in a new way: if students think they might want to do public interest law, but know they probably won’t, should they put much (or any) stock in each school's loan forgiveness program?

My answer to this - perhaps surprisingly - is yes. But it comes with a caveat. Students who see themselves doing public interest work after law school should still take that aspect of a program into account, but must do so with an understanding of human nature and the likely evolution that will take place in law school. This approach will help applicants identify those programs that offer a more realistic possibility of providing a future benefit.

Take, for instance, the different loan forgiveness programs at both Harvard Law School and the University of Chicago Law School. Both have interesting and competitive loan forgiveness programs that work in very different ways. Harvard has introduced a new program that subsidizes a public interest student's education by picking up the tab on the entire third year of law school ($45,000). This will, no doubt, catch the eye of more than a few applicants. However, it comes with more strings than John Cusak's puppet show in Being John Malkovich, as students who receive this subsidy are then required to work at least five years in a qualified public interest position. Five years! If students do not meet their end of the bargain, Harvard has to come and ask for that money back.

Chicago's program, on the other hand, is more modest in scope but less fraught with peril. Students who do post-graduate work in the public interest sector are eligible to receive up to $10,000 for each year that they do so, for as many as seven years. This might not be as enticing to an applicant as the promise of a free third year of tuition, but it comes at no risk and is still a very nice way of rewarding people for using their legal educations to make the world a better place (presumably).

Law school applicants everywhere, consider loan forgiveness programs if you see fit, but be sure to analyze them with the proper lens of perspective and rational expectation. And just know that whatever school you are analyzing and whatever program they are offering, the whole thing is primarily a marketing concept brilliantly designed to play on your own idealized view of your eventual career.

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