Educational Debt Burden and Career Choice:

Abstract: This paper examines the influence of psychological responses to educational debt on the career choices of law school admits, including the decision to attend law school and the decision to work in public interest law after graduating. I analyze experimental data from NYU Law School’s Innovative Financial Aid Study in which two income-contingent financial aid instruments – loan repayment assistance and tuition subsidies – were assigned by lottery to a set of applicants. The packages had equivalent monetary value, but the loan repayment assistance required the student to take on a loan that would be paid for by NYU if the student took a public interest law job after graduation, while the tuition subsidy program covered part of the students ’ tuition fee, to be reimbursed by the student if he failed to take a public interest law job at the end of law school. This difference in framing had a large effect on both enrollment and career choices: In two cohorts for whom the lottery results were announced before enrollment, recipients of the tuition assistance package were twice as likely to enroll at NYU if they received the tuition assistance package. In all cohorts (including an unselected sample, where the results were announced after selection), recipients of the tuition assistance package have a 36-45 % higher rate of placement in public interest law