March 18 (Bloomberg) -- Harvard Law School, the longest- running law school in the U.S., will waive tuition for third- year students who agree to spend at least five years working in public service after graduation.

The plan, announced today on the school's Web site, will save participating students more than $40,000. The program is the first of its kind in the U.S. and will come in addition to a $2.5 million annual loan-repayment program for students pursuing public service, the school in Cambridge, Massachusetts, said.

The program is meant to encourage more public-service law and to counter pay disparities that lead graduates to enter private practice. About 12 percent of the law school's graduates pursue jobs in government or nonprofit organizations, and the average student debt is about $100,000.

``I want all of our students to have the ability to make public service their first choice after law school,'' said Elena Kagan, the dean of the law school, in a statement. ``We have tried in many ways to make this choice easier, particularly for students who have accumulated significant debt in college and law school.''

Participating students must earn ``eligibility credits'' by committing time to public service law programs associated with the school and related summer internships, Harvard said. Eligible students who pledge to work at least five years at a government or nonprofit organization will get a free year of tuition, worth $41,500 next year.

$3 Million Program

Starting salaries for Harvard Law School graduates vary, according to spokesman Mike Armini. Salaries go from ``the $40,000 range'' for work in a district attorney's office to the average starting pay for large firms, which is ``well in excess of $100,000,'' he said.

The third-year tuition grants will be available to students who enter the school in the second half of 2008. Students currently in their first or second year will be eligible to save $10,000 or $5,000, respectively. The grants will cost the school more than $3 million annually during the first five years, Harvard said.

The public service grants follow a December announcement that Harvard University will cut undergraduates' costs by as much as 50 percent for families that earn $120,000 to $180,000 a year. The payments decline on a sliding scale, with those making less than $60,000 attending free.

Two-thirds of undergraduate students at Harvard now receive some form of financial aid, and half receive need-based scholarship aid from Harvard, totaling more than $98 million, the school said in December. In 2008-2009, Harvard expects to spend $120 million on undergraduate grants, a rise of more than 20 percent, officials said.

Harvard's endowment, the largest of any university, was valued at $34.9 billion as of June 30. The law school's share is about $1.7 billion, Armini said.

To contact the reporter on this story: Tom Randall in New York at trandall6@bloomberg.net.

Last Updated: March 18, 2008 17:43 EDT