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NewsvineAbout 10 percent of Stanford’s graduating law students go into public sector jobs each year. To help those graduates, Stanford Law School announced this weekend that it is expanding the Loan Repayment Assistance Program (LRAP), which enables participants to take low-paying jobs in the public sector by paying part of their educational debt.
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While first-year associates at major law firms can earn up to $160,000 in an entry level position, graduates taking jobs as public defenders, attorneys for nonprofits or other public-interest jobs often earn less than $50,000 per year. Since Stanford law students graduate with an average loan debt of $100,000, expected salaries can have a significant impact on their career paths.
Stanford law graduates in public-interest employment who make less than $100,000 per year qualify for LRAP, and the program contributes to their loan payments based on a sliding scale.
LRAP currently covers one hundred percent of loan payments for graduates with incomes of $46,500 or less; eighty-five percent for graduates with incomes between $46,500 and $60,000; and thirty percent for graduates with incomes between $60,000 and $100,000.
Under LRAP’s expansion, the program will likely contribute a greater amount to law school graduates with incomes in the middle-upper qualifying range ($60,000 - $75,000), though the exact details have yet to be specified. Contributions from participants in other income ranges will remain the same.
In order to remain tax-exempt, the money that LRAP provides to meet monthly debt payments is technically a loan. Previously, after participants spent three years in employment that qualified them for LRAP, twenty-five percent of these loans would be forgiven; after four years, fifty percent; and after five years, one hundred percent. Under the new expansion, LRAP will now forgive loans on an annual basis. Even if participants spend only one year in LRAP, they will not have to pay back the money provided to them.
“We speak with participants and reevaluate LRAP every year,” said Law School Dean Larry Kramer. “But due to the recent press about Harvard’s new Public Service Initiative, we thought it was important to make a bigger announcement to reaffirm that Stanford has the most generous loan forgiveness program in the country.”
Harvard Law School announced in March that it will provide a tuition grant for the third year of law school — worth approximately $40,000 — to students willing to commit to spending five years in the public sector.
Kramer emphasized that the term “grant” is a little misleading.
“Essentially, Harvard becomes one of your creditors,” Kramer said. “They loan you the tuition money and then promise to forgive it if you stay in public service for five years. But if you leave the program, you pay back the entire amount, plus a ten percent penalty and an above-market interest rate.”
To prove that Stanford’s program is still the “most generous,” Frank Brucato, Chief Financial Officer of the Law School, presented a chart to newly admitted students on Sunday morning. The chart showed, for each year of public interest employment, the amount an average student would have already contributed to his loan payments and the amount of debt that would remain — essentially a measure of how much debt the graduate would be responsible for were he to leave LRAP at that time. After each year in the program, with the exception of one — year five — Stanford’s amount was lowest, making LRAP the most generous.
“So if you plan to leave after exactly five years,” Brucato joked, “Harvard is a better deal.”
Kramer also discounted the idea that Harvard’s tuition grant would be a powerful psychological lure regardless of the fine details.
“Law students aren’t stupid,” Kramer said. “They’ll be able to crunch the numbers and know which program is better.”
Andrew Prout, a newly admitted student who attended Sunday’s presentation, was impressed.
“The expansion is great,” Prout said. “I was also impressed by the smaller components such as the allowances for assets and children.”
Still, Prout did not think that comparing loan forgiveness programs would be a major factor in his decision about which school to attend.
“I’m not deciding based on that,” Prout said. “But once I’m in law school, a program like LRAP would definitely help me feel comfortable entering public service.”