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This article examined the impact that debt perception can have on career choices. Through a lottery, they gave some NYU Law students an opportunity to have loan repayment from the school if they took a public interest job (thus requiring the student to take out an initial loan) and gave others an opportunity in which the student wasn’t required to take out a loan, but instead received free tuition in exchange for taking a public interest job (with the stipulation that they would have to pay back the school if they decided against public interest). This lottery system resulted in more student ‘winners’ of applying to NYU, and in those winners being more likely to commit to public service careers. These winners were also more likely to get clerkships, indicating high performance levels. We also see that the subsidy group ended law school with higher GPAs. Overall, they found that subsidizing education (paying for it rather than making students take out loans) saw higher rates of public interest work.
There are three major policy takeaways that can inform school and government behavior/actions. Monetary incentives influence the field (public or private) that students choose to work in. These incentives can also attract higher-quality applicants and boost overall school performance. Finally, subsidizing students may be more effective at increasing public sector work than the current loan-forgiveness plan.
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