The Bar Blues

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The Public Service Loan Forgiveness Effect

In 2007, the Public Service Loan Forgiveness program began. For a refresher, here’s how the program works. If you commit to going into a public service career, you can gain tax free forgiveness for your qualified federal school loans after making 120 qualifying monthly payments (10 years of payments). The qualifying jobs for the loan forgiveness are jobs in local, state, national, or tribal government, a 501(c)(3) certified nonprofit, a full-time AmeriCorps or Peace Corps position, or work with a “private public service” organization.
Many critics claimed (and continue to claim) that colleges and universities would take advantage of the program and good nature of college students to increase tuition amounts. At laws schools, this has not been the case. There has been a decrease in average tuition increases at law schools since the program’s inception. In 2007, the average law school tuition increase was 6%. The percentage decreased from 2008 to 2009 to 4%, rose a little in 2010 and 2011 to 5% and has been in free fall since and now stands at 3%.
Before we all start praising of law schools for not taking advantage of this generous program, note that the decrease of tuition increases have come when there is a decreased interest in the law profession. The demand for schooling has decreased as well. In fact, the actual demand for law school applicants (and their application rates) might be the best predictor of tuition percentages increasing or decreasing.
Since 2010, applications have actually decreased by 38%. As noted above, the average tuition increase has also dropped significantly. Interestingly, the loan forgiveness program has not led to more law students seeking careers in the public service sector. Since 2011, the amount of lawyers going into public service and government positions has remained flat.
The pertinent question is if and (potentially) when law school applicants do increase, will the percentage of tuition increases go up with the applications or remain low?
Source: Huffington Post
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