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LRAP: Cornell Law School

Published June 2010

Public Interest Low Income Protection Plan

How it Works
Cornell Law School graduates enrolled in the Public Interest Low Income Protection Plan (PILIPP) are each year given a loan to cover the difference between their expected contribution toward law school loan repayment and the actual amount. This loan is forgiven at the end of the year.

Eligible Jobs
Eligible positions are in government or with a nonprofit agency. The position must require the use of a J.D. Half-time employment may be eligible on a pro-rata basis.

Judicial clerkships are not eligible but you may enter PILIPP after completion.

Eligible Debt
All loans taken to fund your law school education up to the amount of the student budget are eligible, whether private or federal. In addition, loans taken for bar study and up to $2,500 to fund the public interest job search during 2L and 3L years are eligible.

While other educational debt is not eligible, it is taken into account in the calculation of expected contribution.

Calculation of Expected Participant Contribution
As mentioned above, Cornell will provide a forgivable loan to cover the difference between the actual loan payments and the expected participant contribution. The participant is expected to contribute 50% of “net income” to loan repayment. Net income is determined by subtracting the cost of living and any dependent child deductions from the participant’s gross annual income.

Gross annual income is the higher of (1) the participant’s income minus annual non-law educational debt or (2) ½ the joint income (if married) minus the joint annual educational debt obligation (not including participant’s law school debt obligation).

There is a base amount of $35,000 allotted for cost of living. This amount is adjusted based on where the participant resides. For example, the amount is increased by 27.96% for those living in New York and 18.55% for those living in Atlanta. The complete list of adjustments can be found on Cornell Law’s website.

A $5,000 allowance is given for each dependent child.

So, for example, a single, childless participant living in New York with a salary of $55,000 would have a net income of $10,214 ($55,000 minus ($35,000 + 27.96% of $35,000). Half of this ($5,107) would be the expected contribution towards law school loan repayment. Cornell would cover the remaining amount, if any.

There is no salary cap. Assets may be included in the calculation of net income.

Hypothetical Scenarios
Given the number of variables, there are many more possibilities than I could hope to capture in this article. Let’s explore just a few hypotheticals to see how PILIPP might function. (On the table of contents page you will find links to websites I used to calculate federal tax burden and yearly student debt obligations. Using these, you can input your own variables. Keep in mind that the take-home income amount does not reflect state or local taxes. Treat all hypothetical scenarios and amounts as approximations.)

Scenario One
An unmarried graduate with no undergraduate debt living in Pittsburgh.
Salary: $45,000
Salary less Taxes: ($45,000 - $7,438) = $37,562
Net Income: ($45,000 – ($35,000 + 15.86% of $35,000)) = $4,449
Debt: $100,000 on a ten-year repayment plan at 6.8% interest
Yearly Debt Obligation: $13,810
Graduate’s Expected Contribution: $2,225 (50% of $4,449)
PILIPP Award: ($13,810 - $2,225) = $11,585
Take-home Income: ($37,562 - $2,225) = $35,427

Scenario Two
An unmarried graduate with $5,000 per year in undergraduate debt obligation living in New York City.
Salary: $85,000
Salary less Taxes: ($85,000 - $17,520) = $67,480
Net Income: ($85,000 - $5,000 – ($35,000 + 27.96% of $35,000)) = $35,214
Debt: $100,000 on a ten-year repayment plan at 6.8% interest
Yearly Debt Obligation: $13,810
Graduate’s Expected Contribution: (50% of $35,214) = $17,607
PILIPP Award: $0 (expected contribution exceeds actual debt obligation)
Take-home Income: ($67,480 - $13,810) = $53,670

Scenario Three
A married graduate with no undergraduate debt. The graduate’s spouse has $12,000 in educational debt obligation per year. The couple has two children and lives in San Francisco.
Graduate’s Salary: $70,000
Graduate’s Salary less Taxes: ($70,000 - $13,688) = $56,312
Spouse’s Salary: $85,000
Gross Annual Income: $71,500 (half joint income after subtracting spouse’s educational debt obligation)
Net Income: ($71,500 - $10,000 for dependent children – ($35,000 + 34.35% of $35,000)) = $14,478
Graduate’s Debt: $100,000 on a ten-year repayment plan at 6.8% interest
Graduate’s Yearly Debt Obligation: $13,810
Graduate’s Expected Contribution: (50% of $14,478) = $7,239
PILIPP Award: ($13,810 - $7,239) = $6,571
Graduate’s Take-home Income: ($56,312 - $7,239) = $49,073

Final Thoughts on the Cornell Law School Public Interest Low Income Protection Plan
Unlike most of its peer schools, Cornell has an LRAP which does not require the participant to enroll in the federal government’s IBR plan. Whether or not this will remain the case for future classes remains to be seen. Also unique to PILIPP is the cost of living adjustment, benefiting those who live in high cost areas like New York City and San Francisco.