Saturday, December 23, 2006

Evaluating Loan Repayment Assistance Programs

Since I am interested in working in public interest law, one of my criteria for choosing among schools will be their loan repayment assistance programs (LRAP). Loan Repayment Assistance Programs, as their name implies, help you pay off the loans you incur while in law school. With a good LRAP your loans may be entirely paid off without you having to pay a single cent. However, not all LRAPs are created equal. Here are some of the factors that you need to look at in LRAPs:

Amount of Benefit: Most schools I have looked at will give you up to the amount of your loan payments on a 10-year repayment plan, so it is typically to your benefit to put your loan a 10-year repayment schedule to get the maximum benefit. However, some schools have a cap on the amount of benefit you can receive, so be sure to check before you make any changes.

Length of Benefit: How long after you graduate you can receive the benefit, and/or for how many years you can receive the benefit. Ten is the most I have seen, since most programs assume a ten-year repayment schedule. Some programs allow you to take a deferment or leave of absence without affecting your eligibility.

Eligible Employment: Typically, to be eligible for a LRAP you must be working in a law-related job in public service. However, definitions of public service vary, so make sure you know what kinds of jobs qualify, and, when you are looking for a job, you may want to double-check with your school to make sure they will accept a job you are considering before you accept the offer. Clerking typically does not count as eligible employment, but most programs will cover you for a one-year clerkship as long as you go into an eligible job right after.

Income: Most LRAPs have a base income, under which you receive the full benefit, and an income cap, above which you will not receive any benefit. Some schools adjust the base and cap based on the actual salaries of their graduates in each graduating class, while others have a single income cap that applies to all graduates. In some cases the income base can be unrealistically low (like $25,000), limiting the usefulness of the benefit. Significant assets may also limit your benefit or disqualify you from receiving any benefit.

Loan Forgiveness: Typically the money you receive from a LRAP is in the form of a loan which can be forgiven if you continue to work in public service. You may need to work as long as five or seven years in public service before your loans will be forgiven, so, if you work in public service and receive loan repayment assistance for three years and then take a job outside of public service, you may need to repay the money you received.

In addition to school LRAPs, some states also offer LRAPs. For more information on LRAPs see the ABA LRAP page.

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