Michigan's LRAP

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WhatOurBodiesAreFor
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Michigan's LRAP

Postby WhatOurBodiesAreFor » Sat Mar 16, 2013 10:19 am

As a 0L and someone unfamiliar with all things student loans, this program seems to be very good. With this program, you could even do biglaw for 2 or 3 (or 5) years before entering the program. It also covers virtually any type of legal work.

My question to TLS and financial aid gurus is: is there a catch?

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Tiago Splitter
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Re: Michigan's LRAP

Postby Tiago Splitter » Sat Mar 16, 2013 4:24 pm

They only make your IBR payment plus any remaining accrued interest for ten years. For someone taking on a lot of debt and going into low-paying but not PSLF-eligible work, this makes life a little easier for those ten years but then you still have all of your original principal still remaining ten years out. Nice that they don't just cover Government/PI jobs but it's not a panacea.

Example:

200K debt at graduation
40K job
Mich makes IBR payments plus all accrued interest for ten years
At the end of ten years you have 200K in debt.

fdo15
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Joined: Wed Jul 11, 2012 11:16 am

Re: Michigan's LRAP

Postby fdo15 » Sun Mar 17, 2013 1:57 pm

So among Michigan and their peer schools who would you guys say has the best LRAP? I've looked at most of them, and it seems like there are some pros and cons to each.

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02889
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Re: Michigan's LRAP

Postby 02889 » Mon Mar 18, 2013 3:40 pm

Tiago Splitter wrote:They only make your IBR payment plus any remaining accrued interest for ten years. For someone taking on a lot of debt and going into low-paying but not PSLF-eligible work, this makes life a little easier for those ten years but then you still have all of your original principal still remaining ten years out. Nice that they don't just cover Government/PI jobs but it's not a panacea.

Example:

200K debt at graduation
40K job
Mich makes IBR payments plus all accrued interest for ten years
At the end of ten years you have 200K in debt.

Isn't the loan forgiveness element on the government end, not the school itself? I thought PSLF was a government repayment plan, through which your loans are forgiven after ten years. The law school itself just makes the loan payments for you when you're on IBR/PSLF, no?

If all LRAP amounted to was a 10 year deferment, I don't know why Michigan would even bother to offer it or why any student would use it.

04102014
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Re: Michigan's LRAP

Postby 04102014 » Mon Mar 18, 2013 3:53 pm

02889 wrote:
Tiago Splitter wrote:They only make your IBR payment plus any remaining accrued interest for ten years. For someone taking on a lot of debt and going into low-paying but not PSLF-eligible work, this makes life a little easier for those ten years but then you still have all of your original principal still remaining ten years out. Nice that they don't just cover Government/PI jobs but it's not a panacea.

Example:

200K debt at graduation
40K job
Mich makes IBR payments plus all accrued interest for ten years
At the end of ten years you have 200K in debt.

Isn't the loan forgiveness element on the government end, not the school itself? I thought PSLF was a government repayment plan, through which your loans are forgiven after ten years. The law school itself just makes the loan payments for you when you're on IBR/PSLF, no?

If all LRAP amounted to was a 10 year deferment, I don't know why Michigan would even bother to offer it or why any student would use it.


Tiago's hypothetical was for non-PLSF-eligible work.

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Tiago Splitter
Posts: 15461
Joined: Tue Jun 28, 2011 1:20 am

Re: Michigan's LRAP

Postby Tiago Splitter » Mon Mar 18, 2013 3:53 pm

02889 wrote:
Tiago Splitter wrote:They only make your IBR payment plus any remaining accrued interest for ten years. For someone taking on a lot of debt and going into low-paying but not PSLF-eligible work, this makes life a little easier for those ten years but then you still have all of your original principal still remaining ten years out. Nice that they don't just cover Government/PI jobs but it's not a panacea.

Example:

200K debt at graduation
40K job
Mich makes IBR payments plus all accrued interest for ten years
At the end of ten years you have 200K in debt.

Isn't the loan forgiveness element on the government end, not the school itself? I thought PSLF was a government repayment plan, through which your loans are forgiven after ten years. The law school itself just makes the loan payments for you when you're on IBR/PSLF, no?

If all LRAP amounted to was a 10 year deferment, I don't know why Michigan would even bother to offer it or why any student would use it.

PSLF is a government program, but it only forgives the loans of people who work in public interest. Many schools only make loan payments for these people. Michigan also makes loan payments for people who are in legal work which does not qualify for Public Service Loan Forgiveness, but they only let you stay in the program for ten years. The Feds will forgive your loans under IBR after 25 years but that forgiven amount is generally taxable, unlike amounts forgiven under PSLF. So from what I can tell it does appear that for some people Michigan's LRAP will essentially be a ten year deferment on loans and if you don't start making big money or switch to a PSLF-eligible job you'll be in the same situation down the line. Not bad to get a ten year window to try out different things, but not a panacea either.

One thing I might not have made clear is that Michigan makes your IBR payments and for some people under certain income thresholds pays all or part of your additional accrued interest. IBR payments have nothing to do with the size of your loan, and for many people on IBR the loan balance increases even while they make their payments. Someone with 200K debt but a 40K job might have an IBR payment of like 3K, while the interest is 15K. Michigan will essentially just cover your interest (the whole 15K) for those ten years but then after that they shut it down and you're on your own.

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02889
Posts: 479
Joined: Wed Dec 28, 2011 12:21 pm

Re: Michigan's LRAP

Postby 02889 » Mon Mar 18, 2013 4:09 pm

Tiago Splitter wrote:
02889 wrote:
Tiago Splitter wrote:They only make your IBR payment plus any remaining accrued interest for ten years. For someone taking on a lot of debt and going into low-paying but not PSLF-eligible work, this makes life a little easier for those ten years but then you still have all of your original principal still remaining ten years out. Nice that they don't just cover Government/PI jobs but it's not a panacea.

Example:

200K debt at graduation
40K job
Mich makes IBR payments plus all accrued interest for ten years
At the end of ten years you have 200K in debt.

Isn't the loan forgiveness element on the government end, not the school itself? I thought PSLF was a government repayment plan, through which your loans are forgiven after ten years. The law school itself just makes the loan payments for you when you're on IBR/PSLF, no?

If all LRAP amounted to was a 10 year deferment, I don't know why Michigan would even bother to offer it or why any student would use it.

PSLF is a government program, but it only forgives the loans of people who work in public interest. Many schools only make loan payments for these people. Michigan also makes loan payments for people who are in legal work which does not qualify for Public Service Loan Forgiveness, but they only let you stay in the program for ten years. The Feds will forgive your loans under IBR after 25 years but that forgiven amount is generally taxable, unlike amounts forgiven under PSLF. So from what I can tell it does appear that for some people Michigan's LRAP will essentially be a ten year deferment on loans and if you don't start making big money or switch to a PSLF-eligible job you'll be in the same situation down the line. Not bad to get a ten year window to try out different things, but not a panacea either.

One thing I might not have made clear is that Michigan makes your IBR payments and for some people under certain income thresholds pays all or part of your additional accrued interest. IBR payments have nothing to do with the size of your loan, and for many people on IBR the loan balance increases even while they make their payments. Someone with 200K debt but a 40K job might have an IBR payment of like 3K, while the interest is 15K. Michigan will essentially just cover your interest (the whole 15K) for those ten years but then after that they shut it down and you're on your own.

Ah, sorry, I missed that you were speaking about non-PSLF eligible employment. I didn't mean to have you type all that out, but I appreciate the clarification.

For the people who would use Michigan's non-PI payment program, then, I guess it'd be a great opportunity to have them make payments, and to make payments yourself, so you can actually make progress on the loans if you're able. Just allowing Michigan to make your payments does seem like a horrible idea.




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