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Loan Repayment Assistance Program
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Loan Repayment Assistance Program
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LRAP Application Deadlines November 1st and May 1stATTENTION ALL CURRENT AND POTENTIAL PUBLIC SERVICE EMPLOYEES How will this affect Georgetown Law Center's Loan Repayment Assistance Program (LRAP)?
More information on the Loan Repayment Assistance Program
What is LRAP?Georgetown Law began the Loan Repayment Assistance Program (LRAP) in 1986 to assist JD graduates in pursuing careers in the field of public interest law within the U.S. as well as international opportunities. Graduates who qualify for LRAP benefits receive assistance with monthly student loan payments in the form of interest-free loans from Georgetown Law. In 1996 the program expanded to include government employees. Since that expansion, the program was divided into two segments: LRAP I, which was open to public interest employees, and LRAP II, which was open to anyone who qualifies for LRAP I and also to government employees. We have exciting developments to report. The Law Center faculty voted to approve changes that will greatly enhance the program as well as simplify things for prospective LRAP applicants. Effective in May 2007, LRAP I and II were combined into one program that has the best features of each.
The Merger of LRAP I and IIRather than continue to maintain both LRAP I and LRAP II, the two segments were merged and there is now one LRAP for all participants, regardless of employment in either public interest or the government. Funding for all participants will be 100% of need, whereas previously only participants in LRAP I would receive 100% funding. Formerly only federal loans (Subsidized and Unsubsidized Stafford, SLS and Perkins) and Law Center Loans were guaranteed coverage. This policy has changed and commercial student loans such as Law Access, T.H.E., LawLoans, Citiassist, Excel and Bar Exam will also be guaranteed coverage, as long as they were certified by the Financial Aid Office . Until now commercial loans have typically been funded in practice, on an as funds permit basis. The most notable change for participants formerly in LRAP I is that there is no longer be a five year commitment to LRAP in order to earn forgiveness. Awards will be administered like those previously made to LRAP II participants and will be loans that are forgiven after six months. Thus as long as a participant in LRAP remains in his/her eligible employment during the six month term, and qualified for funding, he/she would receive forgiveness for that loan at the end of the six months. The chart below simplifies the distinctions between the former LRAP I and LRAP II and the current LRAP as a result of the merger:
Who may apply for LRAP?Consideration is granted to JD graduates who apply within two years of graduation. Applications submitted more than two years after graduation must be accompanied by a letter of appeal explaining why the graduate is applying outside the two-year window. Such applications will be sent to the LRAP committee and if approved will be awarded as funds permit after all on-time applications have been evaluated. A graduate participating in a judicial clerkship, which prevents the submission of an application within two years of graduation, may be granted a one-time extension until the next application deadline. Applications for LRAP are available in September of each year, with a deadline to apply by November 1st annually. Mid-year applications are available in March of each year, with a deadline to apply by May 1st. If the 1st falls on a Saturday, Sunday, or holiday, all materials will be considered timely if they are received by the next business day.
General Eligibility Criteria for LRAPJD Graduates owing outstanding balances on their Georgetown University student account are not eligible to apply for LRAP funds until the balance owed is paid in full. Graduates in arrears on student loan payments are not eligible to participate in LRAP until all accounts are brought to a "current" status. LRAP funds cannot be used to bring a participant's account status current. Loan coverage will be provided, only for loans borrowed to pay for credits earned within a students' degree requirements and must be loans certified by the Financial Aid Office. Loan Repayment Schedule used for LRAP Calculation:
If a graduate chooses to pay his or her federal loans on an accelerated timeline, LRAP eligibility will still be calculated based on the repayment schedules above.
Types of Eligible EmploymentLRAP provides assistance to JD graduates who are employed or self-employed, on a full-time, paid basis, in a law-related capacity by a non-profit entity which has as one of its primary purposes the rendering of legal services to or on behalf of persons or organizations which could not otherwise obtain like services, and for JD graduates who are employed on a full-time, paid basis, in a law-related capacity by a government agency which has as one of its primary purposes the rendering of legal services on behalf of the public. Some examples of eligible employment include: Asylum Aid , UN Committee on Human Rights , ADALAH - The Legal Center for Arab Minority Rights in Israel, Legal Aid, Public Defender Offices, Washington Legal Foundation, Rocky Mountain Legal Defense Fund, ACLU, District Attorney, County Prosecutor, Other public service employment at the local, state or federal level Judicial clerkships are NOT considered to be eligible employment for LRAP. However, a graduate participating in a judicial clerkship which prevents the submission of an application within the two-year window may be granted a one-time extension until the next application deadline.
LRAP AwardsEligible participants receive LRAP benefits in the form of six month loans. At the completion of each six month loan, the award is granted 100% forgiveness. The amount awarded is 100% of a participant’s need, based on the LRAP calculation. Since each award is provided as a loan, with a legally binding promissory note, and LRAP participants are employed by a non-profit or government agency, when the loan is forgiven it is not considered a taxable event by the IRS.
Standard Maintenance Allowance (SMA) To recognize that income must first go towards basic living expenses, a “Standard Maintenance Allowance” (SMA) was developed. The SMA is the "salary base" used in calculating LRAP awards and is adjusted regularly for inflation. To reflect current cost of living conditions nationwide, a three-tier SMA structure was created using the government locality pay tables. In November 2007, SMAs have been updated as follows:
*The Tier III SMA will be applied to all overseas locations unless otherwise determined by the LRAP Coordinator.The SMA is subtracted along with any other qualified deductions (see Factors that Adjust Income) 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 $42,700 in a Tier II cost area, the participant would have an expected contribution toward the next 12 months of loan payments of $100 ($42,700 - $42,500 SMA = $200 x 50% = $100 contribution). The participant's calculated contribution is subtracted from his/her calculated annual student loan payments to determine the LRAP maximum award coverage. Most participants become ineligible for a monetary award from the program when their yearly income is equal to two times their yearly loan payments plus the SMA for the area in which they live. For example, if a graduate pays $8,000 annually for law school loans and lives in the Washington D.C. area, the applicant would be ineligible for LRAP benefits if his/her salary, less qualified deductions exceeds $58,500 ($8,000 x 2 = $16,000; $16,000 + $42,500 = $58,500).
Disbursement of FundsLRAP funds are disbursed twice a year. They are disbursed directly to the participant every six months and in advance of loan payments being due. For example, funds released in mid-December go towards loan payments for January through June. Funds released at mid-year, go towards loan payments for July through December. To receive the December disbursement, a complete and on-time online application, and required documentation materials (available to participants in September with a November 1st deadline) must be submitted for evaluation. Any application received without all documentation will be considered incomplete and will not be reviewed until all of the necessary documentation has been submitted.
Factors that Adjust IncomeSalary Increases and “Other” Income: Salary increases as well as income earned from supplemental employment, produced from investments, interest from checking or savings accounts, generated from business ventures, and any bonuses or untaxed benefits (not retirement plans) provided by an employer will be added to the total household income.
Prior Educational Debt: Prior educational debt will be recognized in calculating LRAP eligibility. An applicant's non-Georgetown Law annual student loan debt payments, capped at $4,000, will be deducted from the gross salary when determining LRAP benefits. For example, if a graduate owes $6,000 in non-Georgetown Law loan payments per year and earns $40,000, the salary used to determine LRAP eligibility will be $36,000 (maximum deduction of $4,000; $40,000 - $4,000 = $36,000). If applicable, applicants' spouses' loan debt payments, capped at $4,000, will be deducted from his or her gross salary as well.
Married Graduates (new applicants and current participants who become married as of May 2007 only): Graduates who are married will be evaluated on the basis of either (1) their own income* (if the spouse is not working or earns below the dependent care allowance) or (2) an average of the joint incomes (if the participant has a working spouse in the household). Any annual education loan payments for the working spouse will be subtracted from the spouse’s income before the joint income is averaged. *If the spouse is not working then the participant will receive a dependent care allowance for the non-working spouse.
Dependent Care Allowance: Participants with children are allowed a deduction for each child (or the amount of child support paid) from the household income. This allowance is reviewed regularly for cost of living increases and inflation. The child care deduction for 2008 is $6,400.
Assets (new applicants as of November 2004 only): An asset equation will be included in your evaluation and may affect your eligibility for LRAP funds.
Salary Bonuses: If a bonus is received before December 1, a recalculation of the July through December term will be done. If a bonus is received on or after December 1, this amount will be added to the subsequent January through June term.
Housing/Food/Non-Cash Benefits: Any benefits received from an employer in addition to annual salary are included in a participant’s income during the LRAP calculation. If an employer cannot provide a monetary amount for a benefit such as housing or a food allowance, then an amount will be determined by the LRAP staff, who will consider the cost of living for the area where the participant resides to determine an appropriate amount.
Once the household income has been determined, the appropriate SMA is applied and the difference, if any, is considered to be the graduate’s annual total disposable income. LRAP expects one-half of this figure, the “participant’s contribution”, to be applied towards Georgetown Law loan payments.
Special ConsiderationsLeave of Absence: Participants may take a leave of absence from the program for up to a maximum of two years. Participants are responsible for their student loan payments during the deferment period. If you place your loans into forbearance during the leave period, any interest that accrues will not be covered by LRAP. The time spent on a leave of absence will not be counted towards LRAP forgiveness if it’s requested within a six month term. You may owe money back to the program for the term you were awarded. LRAP Appeals: In certain instances, an applicant may have an employment opportunity or other scenario which does not fall within published LRAP guidelines. In such cases, graduates should submit an appeal of special circumstances to the LRAP Committee for review. All Committee submissions are anonymous and Committee members who are able to identify the appellant are asked to excuse themselves from the voting process. Submissions should be sent well in advance of the first of the months listed below and should be accompanied by supporting documentation. Committee meetings are held as follows:
LRAP Asset Calculation (for all new applicants as of Nov. 2004)The Law Center 's Loan Repayment Assistance Program (LRAP) was created to assist graduates who want to accept jobs with public interest organizations and/or government agencies with their student loan repayment. By assisting Georgetown Law graduates with their loan repayment, the program allows graduates to work for organizations which are unable to pay the higher salaries necessary for many graduates to fulfill their monthly loan repayment obligations. However, if a graduate has significant financial assets which would otherwise allow him or her to meet monthly student loan repayment obligations, there is little reason for the Law Center to subsidize the graduate's salary. The Law Center's resources would be better allocated to graduates or students who need the assistance to make loan payments or attend school. Beginning with new applications as of 2004, an applicant's assets will be considered when deciding awards. This policy is a fair accommodation between the goals of allowing program participants to accumulate reasonable savings and diverting the Law Center's scarce financial resources from those graduates who do not need assistance. When reviewing an LRAP applicant's assets, IRA/Keogh and other designated retirement accounts will be completely excluded from the calculation of assets. Graduates are encouraged to contribute to such accounts and will not be penalized for doing so. The two areas in particular that will be examined are "cash/savings/checking/other investment accounts" and "home equity":
Cash/Savings/Checking and other Investment Accounts All assets in this category, in excess of one half of the Standard Maintenance Allowance (SMA), will be considered in the LRAP calculation. Excluding assets below one half of the SMA will allow graduates to create a financial "cushion". This policy is congruent with the Financial Aid Office's advice to students and graduates to save six months of salary to prepare for unexpected gaps in employment and other unforeseen circumstances. The SMA for various geographic locations are as follows:
*The Tier III SMA will be applied to all overseas locations unless otherwise determined by the LRAP Coordinator.
Home Equity In order to preserve its scarce resources, the Law Center must avoid subsidizing those graduates who have substantial assets in home equity, acquired either through a gift or a dramatic rise in home value. Therefore, all home equity that is less than an LRAP participant's age multiplied by $2,000 will be excluded from the calculation. This policy is congruent with the Financial Aid Office's advice to students and graduates to purchase a home rather than pay rent, if possible.
Calculation Once an applicant's assets to be considered for LRAP purposes have been calculated, they will be applied to the "Contribution from Available Income (AI)" table, as published annually by the Department of Education.
The result of the AI adjustment will be added to the applicant's annual income figure when determining the total household income. If the applicant is married, this additional amount will be averaged with the spouses' salary, resulting in only 50% of the calculated asset being applied to the calculation.
Calculation of Eligibility: An ExampleA 28 year old, single graduate with no children in the household earns $46,700 per year employed at a public interest organization in New York and owes $68,000 in loans for law school. He has $5,000 in assets and $60,000 of home equity. If monthly loan payments are $575 (or $6,900 per year), then the applicant would be expected to contribute 50% of their salary over the SMA towards yearly loan payments, or $600 ($46,700 - $45,500 = $1,200 x 50% = $600) plus an asset calculation of $880 ($5000-$22,750 (1/2 SMA for Tier 1) + (60,000 - 56,000) * 22%) = 880. Maximum eligibility in the LRAP program would be $5,420 ($6,900-$600-$880) = the total yearly loan obligation less the recipient's expected contribution.
Estimate LRAP Eligibility
Applying for LRAPLRAP applications are available annually in September and are due NO LATER THAN November 1st. The mid-year application is available late March with a deadline date of May 1st. If the 1st falls on a Saturday, Sunday, or holiday, all materials will be considered timely if they are received by the next business day. All sections of the online application must be complete as well as mailing or faxing required documentation. The applicant is responsible for submitting a complete application by the established deadline. Late or incomplete applications will be considered for the program on an "as funds permit" basis. If qualifying employment was not secured until after the deadline date, the LRAP committee will make every attempt to review applicant eligibility based on the availability of funds. However, applicants should submit all other relevant paperwork by the published deadlines.
RENEWAL PARTICIPANTS
Initial LRAP applications are considered complete with the submission of the online application, as well as submitting the Employer Certification form, a position description and description of the organization for which the applicant will be working, the loan repayment documents from the lenders, an applicant certification and a copy of your most recently filed tax return. Required Documents for complete applications should be faxed or submitted to: Fax (Toll Free): (866) 316-2950
LRAP PublicationsNews You Can Use: The newsletter for graduates that covers newsworthy changes to the LRAP program, reminders, upcoming events, or other important loan information.
LRAP Participant Profiles
Revised Mar. 26, 2007 |
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