The Interest Freedom Plan: New Initiative to Reduce Student Debt

April 28, 2015

Northwestern University School of Law has established the Interest Freedom Plan (IFP) to assist recent graduates who will earn less than $85,000 per year with their student loan interest payments. The program is designed to help those who pursue positions in the private sector who do not otherwise qualify for the Law School’s Loan Repayment Assistance Program (LRAP), as well as graduates who are unemployed as a result of extended job searches.

Open to Juris Doctor graduates beginning with the class of 2015, the program will pay student loan interest for up to one year. Graduates who initially pursue less traditional and less lucrative positions in the private sector will not accrue interest on their loans and, therefore, will not see an increase in the loan amount during their first year in repayment.

“The majority of Northwestern Law graduates will continue to accept offers of employment from prominent law firms throughout the country,” said Daniel B. Rodriguez, Dean and Harold Washington Professor, Northwestern University School of Law. “This has been a common path for our graduates and the employment outlook for our students in this sector remains strong—indeed, near the top among the nation’s leading law schools.”

“But the employment picture is changing,” he continued. “More of our graduates are pursuing careers in business, in the tech sector, and in startups, reflecting the changes in the marketplace and, in particular, the growing strengths of our innovative programs at the intersection of law, business, and technology. Moreover, some of our students are pursuing less traditional, less immediately lucrative positions, and some, albeit a small number, undertake job searches that extend into the period during which they would begin repaying their student loans. Our goal is to assist these students as they embark upon highly successful and satisfying lifelong careers.”

To illustrate how the program will work, consider a hypothetical recent graduate with a $100,000 loan on a 10-year repayment plan at 7% interest: the IFP program would pay an annual benefit of $6,773.

To participate, students must provide proof of employment and repayment status in the form of documents such as an offer letter, tax returns, or proof of loan repayment status. Graduates who have yet to secure their first jobs will be eligible to participate provided they fulfill certain requirements, such as a minimum number of ongoing meetings with their career advisor and demonstration of an active job search. The program does not apply to students employed in judicial clerkships.

“The $85,000 salary cap is just slightly over half the median starting salary for Northwestern Law graduates who enter the private sector,” Rodriguez explained. “While certainly a living wage, the salary cap should be considered within the context of overall debt burden, which can be substantial after many years of higher education.”

IFP is the latest in a series of Northwestern Law initiatives designed to address the structural shifts that have occurred and are occurring in the delivery of legal services. It represents a significant departure from traditional LRAPs, which are designed to provide relief to graduates pursuing careers in the public sector. IFP will work in concert with Northwestern Law’s long-established LRAP, and will complement the Law School’s significant augmentation of merit- and need-based financial aid and tempered tuition increases over the past five years.

These initiatives are being made possible because of the record-breaking external support from Northwestern Law’s alumni and friends through the Motion to Lead campaign.

“Northwestern Law is committed to educating students regardless of their financial circumstance,” Rodriguez said. “We are dedicated to ameliorating the difficulties posed by student debt with tangible and constructive efforts, and we will continue to invest substantially in our students through financial aid and creatively in our graduates through programs like IFP.”