Loan repayment assistance programs (LRAP) have been around for awhile. SLS created one of the first programs of its kind – if not the first – back in 1987. Recently, there’s been a bit of a buzz around this topic as Chicago announced a revamped program. If you’ve got the time, check out the numerous articles written about it. Hats off to them for enhancing their program from what they offered previously. As I read more, what really concerned me was how applicants and admitted students could sift through the sound bites and get the information they need not just about this program, but about all LRAP programs offered at schools of interest.
Certainly when one sees the word “free” linked with the word “education”, all kind of bells and whistles go off and it’s difficult to turn your eyes away from the candy. Resist the urge to sign on the dotted line for a bit. I urge you instead to do a thoughtful examination of these programs as you do your research on law schools. As an applicant or an admitted student, you should create a list of questions to ask of each school you are seriously considering. Consider it your responsibility to do this. Ask questions pertaining to academics. Ask questions pertaining to faculty accessibility. Ask questions pertaining to the quality of student life. Ask questions about financial aid. Ask questions about employment statistics. Ask questions about things that matter to YOU. A question that you must include on this list concerns LRAP. Don’t simply ask if the school has a loan forgiveness or loan repayment program. A lot of schools have these programs so you’re going to get a lot of affirmative answers and you won’t be any better off than you were before you asked the question. So, don’t check that question off your list quite yet. Educate yourself by digging into the details. Be forewarned, though, as the details should not be left for bedtime reading. Be forewarned, also, that you can easily fall into the trap of comparing apples to oranges. Be patient and work through the details and discover the principles that drive each school’s program. Here are some things you should be looking at:
1. What employment qualifies for coverage? If there is a requirement that the work must be in the public sector and that is where you believe your commitment lies, then please make sure that the school you are considering has a robust public interest curriculum. A generous loan repayment or forgiveness program should go hand-in-hand with a very rigorous public interest curriculum.
2. What are the income eligibility caps? Or, better yet, is there a cap on salary?
3. How are payments calculated – on a school-based formula or the government’s IBR rate or some other method? Will the school pay you funds based on a 10-year plan or based on 25-year plan? Remember, interest is accruing if you’re spreading your payments out over a longer period of time.
4. What happens if you miss a loan payment or make a late payment? Are you kicked out of the program?
5. What loans will be covered under the school’s program? Will undergraduate loans be covered? How about bar study loans? How about private loans (as opposed to federal loans)? And what about loans you may have for prior degrees or for a joint degree?
6. How does a school treat part-time employment?
7. How is spousal income used in calculating available income? What about your spouse’s debt – will that be taken into consideration when looking at income?
8. Does the program include a seniority allowance which provides an annual reduction in salary based on the number of years you’ve been participating in the program?
9. How generous are the leave policies – family leave, periods of unemployment, etc?
10. What assets are viewed as resources? What assets are excluded? Is there a cap on resources that will be taken into consideration?
11. What is the actual forgiveness policy on the loans that are given to you? Forgiven after 10 years? After 5 years? After 1 year?
12. How flexible is the program? This one is really important. We can all come up with policies and procedures, but I guarantee you that there will be cases where a graduate doesn’t quite fit neatly into a box. Will the school be able to bend to make the program work for someone like this?
You’ll discover that some programs are very simple and uncomplicated. That’s the beauty of Chicago’s program to me. A program with a single cap and an IBR schedule is probably an LRAP administrator’s dream come true. Imagine no complicated spousal formulas which might or might not take into account the financial health of the married couple as opposed to the earnings of one partner, no seniority allowances, no messy non-federal or non-law school loans to consider for coverage. Simple is easy and clean, but does simple mean better? I imagine Chicago created this program with their graduate employment profile in mind just as we are mindful of our graduates’ needs as we annually review our policies. So we did a little exercise here and looked at our pool and tried to apply Chicago’s new program to our graduates. Interestingly, but not surprisingly, of our total LRAP population over time, only about 10% of our graduates remained in the program for 10 years AND made 80K or below (and we were helping with undergraduate loan debt and bar loan debt, by the way). Yes, just 10%. This range is the requirement to benefit from Chicago’s offer of a free education. So for those who fit in to that narrow band, it’s a great deal. Since most of LRAP participants don’t fit in to that band, at least here at SLS, you can see why we’re convinced our program is so strong. And, hopefully, you can see why you need to do some homework. Now, go back to the list of questions and really start digging deeper. Read through the LRAP brochures and scan the program terms. Ignore the hype. Do your comparisons. Run the numbers. Read the fine print and let the strength of the program shine through on its own merits and as it works for your unique situation.