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Northwestern Forgives Loans of Alumni Working in Public Sector

New program dovetails with federal help to forgive up to 100 percent of law loans

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January 26, 2010 | by Pat Vaughan Tremmel

CHICAGO --- Twenty-five years ago, Northwestern University School of Law was one of three of the nation's law schools to offer a loan forgiveness program to graduates who decided to forgo the big-law-firm track to begin their legal careers in the public sector.
Now 25 years later, Northwestern Law again is making a difference with a new loan forgiveness program with new twists.

The new Public Service Fellowship program dovetails with two new federal student loan repayment plans, Income Based Repayment (IBR) and the federal Public Service Loan Forgiveness (PSLF) program, to collectively address the financial hardships of those pursuing public interest careers.  

In combination with the federal government programs, the Northwestern program can result in 100 percent forgiveness of federal law school loans for alumni who work as attorneys or managers in the public sector for 10 years.  

As for the new twists, the Northwestern program also offers additional financial help during the first five years of loan assistance to make sure that those who pursue work in the private sector before they have completed 10 years in the public sector can still make headway on their loans. The program also takes into consideration education debt along with salary levels so that graduates who face the most significant financial obstacles receive the greatest benefits.  

"A primary concern was creating a program that would account for a graduate's salary and debt burden so that our largest awards would go to graduates who need them the most," said Cindy Wilson, public interest advisor in Northwestern Law's Center for Career Strategy and Advancement.  

Northwestern University School of Law's new Public Service Fellowship program is a key component in the school's broader public service strategy. "That strategy, which we adopted in 2002, emphasizes the importance for all students to serve their communities, whether through direct legal representation, pro bono activities, community service, nonprofit board membership, or philanthropy," said David Van Zandt, dean, Northwestern University School of Law. "This new program reaffirms our strong commitment to public service."

HOW THE PROGRAM WORKS

As part of the College Cost Reduction Act of 2007, IBR reduces federal loan payments to approximately 10 percent of annual income.  After 10 years of work in the public sector, the federal government will forgive 100 percent of a borrower's remaining loan balance.

The Northwestern program will cover the annual IBR payments in most cases, resulting in 100 percent forgiveness of federal law school loans for those who remain in the public sector for the entire 10 years.

But it doesn't stop there. The additional award that the Northwestern program provides during the first five years of loan assistance helps graduates reduce their overall educational debt should changing life circumstances cause them to pursue private sector employment before full forgiveness sets in.


The program recognizes that IBR participants who exit the public sector early will have loans that are greater than when they graduated, because the IBR payments often do not cover accruing interest or reduce loan principal.

"We initially considered a program that only would cover the IBR payment but ultimately decided to augment it and address the interest accrual and salary versus debt level issues and account for the possibility of unforeseen life events and the multiple career opportunities that our graduates experience." said Donald Rebstock, associate dean at Northwestern University School of Law.  

To make sure that graduates who face the most significant financial obstacles receive the greatest benefit, the program is based on a sliding scale that takes into account education debt along with salary levels. Based on that sliding scale, the new program will provide an award that covers up to 100 percent of the IBR payments plus as much as 75 percent of the annual unpaid interest.   

The Northwestern Law Public Service Fellowship program will go into effect immediately for students who graduate this spring. Graduates of the classes of 2008, 2009, and 2010 may choose between the existing and new program.

Northwestern University School of Law prepares its graduates to excel in a rapidly changing world through a rigorous intellectual environment with a collegial and supportive community. With one of the lowest student-to-faculty ratios in the country, Northwestern University School of Law students have exceptional access to full-time professors, who comprise the most highly credentialed and interdisciplinary law faculty in the nation. The law school's lakefront location in the heart of downtown Chicago provides a wealth of part-time employment options for students and proximity to courts and commerce. Public interest activities enable students to experience the practice of law as well as its theory in one of the most vibrant legal and business communities in the world.