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LRAP Questions

Posted: Thu Jan 18, 2018 11:29 pm
by ChutzpahSaxa15
1) What is negative amortization risk / protection - as outlined on the spreadsheet?

2) So if programs are 10 years, does that mean that all your debt should be paid off at the end or that you're left to pay whatever else is there in full?

3) Does LRAP kind of function as a back-end scholarship? So if a school has a great LRAP and I'm committed to PI, should I not mind taking on a lot of debt?

4) If a clerkship does not qualify for an LRAP, are we supposed to pay our loans in full during that year or two?

Re: LRAP Questions

Posted: Fri Jan 19, 2018 6:47 am
by cavalier1138
1. Negative amortization is the mystical process by which your loan balance continues to increase as you make payments (i.e. your payments are less than the accruing interest). A few T13 LRAPs protect against this in the instance that you switch from PSLF-eligible employment to non-eligible employment and have to adjust your payment schedule.

2. It hopefully means the former, but if a school's LRAP is 100% dependent on PSLF, then switching out of a PSLF-eligible job would leave you on the hook for the remaining balance of the loan at a school that doesn't provide protection for things like negative amortization.

3. Yes, but if you have even a sliver of doubt--if you have even once entertained the idea of working at a firm, even as a stepping stone to something else--you should be very wary of taking on this much debt.

4. No. Clerkships (I believe) are still PSLF-eligible, so you would just be responsible for your IBR/PAYE payments for that time period.

Re: LRAP Questions

Posted: Fri Jan 19, 2018 2:37 pm
by ChutzpahSaxa15