Most schools assume a flat 10year repayment schedule when calculating their LRAP assistance. This would seem to work out fine if in fact you've set up your actual loans on a 10year term. But what about a place like Yale, where they assume a 15year repayment schedule for Years 15, and a 5year schedule for Years 610  this could easily lead to a situation where their calculated assistance is GREATER than the amount you actually owe.
Example:
Say you have $100,000 in debt at 7% interest; for a 10year term, this works out to an annual payment of $13,933  this is what you actually have to send to your lender each year. Let's say in you're in Year 6, and your income is $70,000.
Now at a place like Harvard, they use a flat 10year schedule when calculating your assistance, meaning your "assumed" annual payment is also $13,933, exactly equal to your actual payment. Then using their formula at $70,000 income gives an implied student contribution of $8,400 and an implied LRAP contribution of $5,533. The two contributions exactly equal your actual annual payment of $13,933. All makes sense.
But at Yale, using a 5year schedule for Year 6 means that your "assumed" annual payment is $23,761 (=annual payment on $100,000 at 7% over 5 years). Then using their formula at $70,000 income gives an implied student contribution of $3,750 and an implied LRAP contribution of $20,011. Together the two contributions are MORE than you actually owe ($13,933). So what happens now? Seems like there are several possibilities.
1) Maybe you get to pocket the difference. Seems unlikely.
2) Maybe Yale caps their actual payment to you at the difference between what you actually owe ($13,933) and your implied student contribution ($3,750), ie., $10,183.
3) Maybe you have to pay the full $23,761 to your lender, thereby decreasing the remaining balance owed on your loan, and so you will end up paying it off in less than 10 years.
Does anyone know which of these applies? Or maybe it's something else?
Complicated LRAP question (Yale)
 Nebby
 amateur huffpo
 Posts: 29535
 Joined: Sat Feb 01, 2014 12:23 pm
Re: Complicated LRAP question (Yale)
The answer is #3.

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 Joined: Wed Mar 22, 2017 10:32 am
Re: Complicated LRAP question (Yale)
That's what I thought, thanks!
 hammy393
 Posts: 389
 Joined: Tue Nov 15, 2016 9:51 pm
Re: Complicated LRAP question (Yale)
You can calculate your payments through COAP here: http://coapcalc.law.yale.edu/
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