Home Future payments Stanford Law to offer ‘revenue-sharing’ funding as law school costs soar

Stanford Law to offer ‘revenue-sharing’ funding as law school costs soar

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The Stanford University campus is seen from the top of Hoover Tower in Stanford, California May 9, 2014. REUTERS/Beck Diefenbach

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  • Law students will pay 10% of future earnings in exchange for $170.00 upfront for tuition
  • Pilot program could usher in new era for law school funding, say proponents

(Reuters) – Stanford Law School has partnered with a new nonprofit to offer so-called “revenue-sharing agreements” to law students, a move officials say will reduce the cost of a JD to many and will make it easier for law graduates to take on lower paying public interest positions.

Under a pilot program announced Thursday, participating first- and second-year Stanford law students will receive up to $170,000 in advance to pay for their degrees through the Flywheel Fund for Career Choice, which has received over $2.5 million in donations. Upon graduation, participants will donate 10% of their earnings for 12 years to Flywheel.

The school said Flywheel will use these funds to offer new revenue-sharing agreements to prospective law students. The program is open to graduates pursuing any career path, which distinguishes it from existing law school loan repayment programs that are only available to graduates working in public service jobs.

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The plan was designed to ensure participants don’t end up paying more than if they had taken out federal graduate loans to pay for their law school education, said David Kafafian, chief operating officer of Stride Funding, which manages the program for Flywheel. But they will not be eligible to participate in the federal government’s civil service loan forgiveness, which forgives debt for borrowers who remain in civil service positions for 10 years.

Stanford Law Chief Financial Officer Frank Brucato called the pilot program a “game changer,” predicting it could establish a new national law school funding model.

The school has opted for $170,000 as the median amount that current and future students should borrow, Brucato said. Annual tuition for Stanford Law’s three-year JD program is now $66,924

Rising law student debt is a growing concern in the legal profession. Nearly 71% of law students leave campus with student loans, according to the US Department of Education, and their average debt hovers around $138,500, more than any other field outside of medicine.

A 2021 survey by the American Bar Association of law graduates in their first decade of practice found that 80% said their debt influenced their choice of job or career, while 67% said said he felt “high or overwhelming stress on finances in general.”

Stanford Law will fully cover reimbursement for Flywheel Pilot participants earning less than $100,000 and subsidize payments for those earning between $100,000 and $115,000, at an expected annual cost to the school of $2.5-3 million. dollars, Brucato said.

The program, which will initially be limited to 20 students, also includes an income cap of $225,000, which means monthly payments cannot exceed $1,875, even for the highest-paid graduates.

Setting simple terms in advance will give law students clear information about their finances after graduation and ease the transition from public interest jobs to private practice jobs, as their loan status will not is unrelated to their type of job, said Flywheel President Elliot Schrage.

That could be a relief for many students and graduates who might otherwise have six-figure debt in traditional law school, said Stanford law professor Ralph Richard Banks.

“It could ultimately extend far beyond Stanford,” Banks said. “There is great potential here.”

Read more:

Ashamed. Stress. Desperate. How debt weighs on young lawyers

‘Debt changed my life’: Lawyers weigh in on student loan reprieve

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