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December 19, 2002

LRAP Roundup

I'm trying to pick the last one or two schools I'm going to apply to, so I'm taking a closer look at Loan Repayment Assistance Programs (LRAPs) to help me make my choices. Below is some of the information I've found, in case you're also looking at this aspect of grad school. (If you have first- or second-hand experience with any of these programs, I'd really like to hear about it. Although many of these programs sound good, I hear that most of them aren't used much, which suggests to me that there are often hidden "catches" that aren't obvious to the untrained eye. Thanks!)

UPENN: They've made some recent improvements to what I'd call a "Cadillac" program. The details are in this pdf, but here are some highlights: If you make $30k/year or less in a qualified public interest position, Penn will pick up your full loan tab. If you make $30k-$35k/year, you'll have to contribute 20% of the amount of your salary over $30k to your loan payments—Penn will pick up the rest. If you make $35k-$40k, you'll pay $1000 plus 40% of the amount of your salary above $35k. And finally, if you make more than $40k/year, you'll have to pay $3000, plus 60% of the amount of your salary over $40k. And this is all on the 10-year repayment plan. Sounds like a great deal to me.

Georgetown: GULC also has a top of the line program. It uses a formula to determine how much you pay on your loans, and how much GULC pays:

The Standard Maintenance Allowance (SMA) is the "salary cap" used in calculating LRAP awards and is adjusted regularly for inflation. Additionally, the SMA recognizes that "high cost" areas have increased basic living costs (i.e. Washington, D.C., Boston, Chicago, Los Angeles, New York City and San Francisco). For the 2003 year, the SMA is $33,150 for standard cost areas and $35,800 for high cost areas.

For both LRAP I and II, the SMA is subtracted along with any other qualified deductions (see Special Considerations) from the graduate's gross annualized salary. If the salary exceeds the SMA, then the participant is expected to contribute at least 50% of the difference towards his/her annual student loan payments. For example, if a graduate earns $34,150 in a standard cost area, the participant would have an expected contribution towards the next 12 months of loan payments of $500 ($34,150 - $33,150 SMA = $1,000 x 50% = $500 contribution).

The participant's calculated contribution is subtracted from his/her calculated annual student loan payments to determine the LRAP maximum award coverage.

Both the Penn and GULC programs help out with undergraduate or non-law-school debt, as well, under certain circumstances. GULC's program pays on a 15-year schedule for Federal Stafford loans (I think the max you can borrow via Stafford is $65k/individual), a 20-year schedule for commercial loans, and a 15-year schedule for Perkins loans.

George Washington: GW's program is based on a "target income" of $35k/year:

Generally speaking, you are financially eligible for LRAP funding if your gross annual salary minus your annual law loan repayments is equal to or less than $35,000.

Salary (Gross) MINUS Law loan debt =
$37,000/yr MINUS $8,000/yr = $29,000: You are eligible

GW's program does not cover judicial clerkships (Penn's counts time in clerkships as time in its LRAP for purposes of loan forgiveness); however, the good thing is that your LRAP loans from GW are forgiven every year. (Most of these programs help you pay your student loans by giving you new loans, then the school forgives the loans it made you. Sometimes the loans from the school are forgiven immediately, sometimes over a period of 3-5 years.)

American: The info online about American's LRAP is rather cryptic. It's got a $40k/year salary cap and you can only participate in the story for up to 10 years, but there are no more details. Doesn't sound great. Anyone have experience with this one?

Boston University: No LRAP, but they claim to provide funding to 82% of their students. Plus, I was told BU was preferable to BC? Can anyone tell me more about that?

Boston College: BC touts its Summer Public Interest Stipends to draw public interest lawyers—approximately 80 students/year get $3500 for 10-week programs working in the public interest. Sounds good. The school also has a long list of other financial aid programs. The BC LRAP has a healthy salary cap of $47,500k/year, but I don't see anything about the repayment schedule. Does it pay all your loan payments until your salary goes over the cap, or are you expected to pay something? Why don't law schools make these things super-clear on their websites!? (Maybe because they can't really afford for many people to take advantage of these programs?)

Michigan: Yet another terrific plan. The basic outline:

First, the applicant's annual available income (AAI) is calculated. A formula that includes income, assets, and various deductions such as undergraduate debt and childcare costs is used to determine the AAI. If the AAI is less than $36,000 the applicant is not expected to contribute any payments toward the loans that are covered under the program for that year. If the AAI is greater than $36,000, the applicant's expected contribution is 35% of the AAI over $36,000.

For example: if the AAI is $38,000 the applicant is expected to contribute $700 toward their loan payments for that year. ($38,000-$36,000) x .35 = $700

Posted December 19, 2002 11:44 AM | law school

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