Could the answer be “actually lowering tuition” since the university sits on a $28.9 billion endowment? Go back to Russia, you commie!
No, Stanford Law is still going to boast a non-discounted $383,937 price tag. But the school is trying out a program transforming the whole approach to law school financing.
Yesterday, the school announced a new program funded by the Flywheel Fund for Career Choice where students can sign up to get $170K upfront for school in exchange for committing to repay 10 percent of their post-graduation income for 12 years. Those proceeds would then be used to fund more students.
Theoretically, the fund would break even with a Biglaw attorney making it through their sixth year — but the deal also includes an income cap and payments cannot exceed $1,875/month so the fund will need around 7-and-a-half years out of the associate before it starts generating a gain on the deal.
But where this really seems primed to help is in that middle-tier of the legal world. Public interest lawyers have loan repayment plans already and Biglaw lawyers are definitely struggling with debt but will be all right. It’s the increasingly important middle — for the clients who don’t qualify for charitable help but also can’t pay $1,500/hour — where lawyers will need help. Those are the firms paying way under the Biglaw scale where debt gets stifling.
Which is the other advantage of this idea: flexibility. One of the most common career paths from a T14 school is to collect massive checks and bonuses for three to six years and then bail on Biglaw for an in-house job or a firm below the Biglaw scale or the government. The market is riddled with attorneys not flowing to their optimal position because they’re handcuffed by debt. Income-based repayment programs empower that associate to take the income hit to go where they’re best suited.
Stanford is also kicking in some to grease the wheels for folks off the Biglaw track. From Reuters:
Stanford Law will fully cover repayment for Flywheel pilot participants earning less than $100,000 and subsidize payments for those earning between $100,000 and $115,000, at a projected annual cost to the school of $200,000 to $300,000, [Stanford Law CFO Frank] Brucato said.
Look, I’m still going to advocate on behalf of schools slashing tuition and making up the costs by reinvesting in faculty and away from admin and unnecessary capital projects. But if there’s an opportunity to use the graduates poised to make the most to help fund those who find themselves — either out of the gate or 4 or 5 years down the road — making less than top dollar, it’s worth trying out.
Stanford Law to offer ‘income share’ financing as law school costs soar [Reuters]
Joe Patrice is a senior editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter if you’re interested in law, politics, and a healthy dose of college sports news. Joe also serves as a Managing Director at RPN Executive Search.
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