New York University is one of the most “liberal” law schools in the country. How
ID: 2495783 • Letter: N
Question
New York University is one of the most “liberal” law schools in the country. However, in spite of the political leanings of the faculty and the students, the vast majority of its law graduates enter lucrative large firm law practices, not public interest work. To encourage students to enter public interest careers, the law school is considering two policies – a loan forgiveness program if students go into public interest careers or a scholarship program for people who say they want to go into public interest law (they would have to pay back the scholarship if they do not go in to public interest law). Suppose the two programs could be established in a way that the present value of the benefit to students going into public interest law was the same if the rate at which individuals could borrow money at was 10 percent. Do you think students would prefer one or the other option? Would all students have the same preferences? Why?
Explanation / Answer
Since the law graduates are not pursuing their carriers in public interest, a loan waving program is not likely to outperform the scholarship program since the latter seems to bring a sense of pride and reward the students. A loan waving offer may not strike some of the well-off students.
All the students might not have the same preferences. There may be some marginal students (indifferent to any course) who do not care about the type of encouragement program as long as there is a program.