LRAP: Stanford Law School

Published May 2010

Miles and Nancy Rubin Loan Repayment Assistance Program

How it Works
Those Stanford Law School (SLS) graduates enrolled in the Loan Repayment Assistance Program (LRAP) receive an interest-free loan used to pay off educational debt. The award amount is primarily based on their income and law school educational debt. LRAP awards are intended to bridge the gap between actual law school educational loan payments and expected participant contribution towards those loans. Awards will be disbursed in the form of a one year loan forgiven annually. Graduates must first enroll in the program within ten years of graduation and are only eligible to receive assistance for the first ten years post graduation. Graduates are free to come in and out of the LRAP depending on their employment circumstances. It does not appear that earnings during periods of ineligible employment affect future award amounts.

Eligible Jobs
In order to qualify for LRAP, the graduate’s employment must be:
(1) in a law-related position
(2) in a tax exempt organization such as a 501(c)(3), government unit, or self-employed or in the private sector if at least 50% of time is spent providing legal services for free or at a reduced rate to a clientele that would otherwise not be able to afford such legal services
(3) salaried (i.e. not volunteer and presumably not paid at an hourly rate)

Clerkships are generally not covered unless the graduate intends to take qualifying employment at the completion of the clerkship. In this case, the graduate is provided with loans which accrue interest upon disbursement (currently 6.8%). The clerkship loan is forgiven at the end of the first year of LRAP participation (along with the first year LRAP loan), and the clerkship year(s) will count towards the seniority adjustment (see below). However, if the graduate does not pursue qualifying employment after the clerkship, the loan and any interest accrued becomes immediately repayable.

While full-time teaching positions are not covered under LRAP, post-graduate academic fellowships are treated the same as clerkships.

Eligible Debt
Any loans taken to meet eligible in-school expenses are covered. This includes undergraduate debt and other graduate school debt. Any loans taken out not considered need-based are not covered (generally amounts above the total cost of attendance). Up to $8,500 taken out for bar expenses is also eligible.

Calculation of Expected Participant Contribution
LRAP loans will cover the difference between the student’s expected contribution and the actual amount of qualifying educational debt.1 If the graduate’s adjusted income is below $50,000, the graduate is not expected to contribute any amount towards eligible loans. As a graduate’s salary climbs, the expected contribution formula shifts. See the Hypothetical Scenarios below for examples.

Calculation of Participant Income
Participants estimate their adjusted gross income (from their federal tax return) for the upcoming year.2 There are several factors that can further influence the figure used for LRAP calculations.

If the participant is married, the amount used for calculations is their individual income or half of the joint income, whichever is higher. When calculating the spousal income, the yearly educational loan obligation is subtracted from the total. If both spouses are participants in the Program, each uses half of the joint income for LRAP calculations.

An $8,000 allowance is subtracted from the participant’s income for each dependent child. This amount is split evenly if two LRAP participants are married.

Starting in the second year, participants are given a seniority allowance to be subtracted from the income figure used for calculations. The amount is $1,000 times the number of years of LRAP participation completed (i.e., not including the current year).3

If the participant is employed full-time, an imputed full-time salary is used for calculations.

Assets in excess of $130,000 are included in the income figure.

Hypothetical Scenarios
Let’s explore a few hypothetical scenarios to see how the SLS LRAP might work. There is an LRAP Calculator on the SLS website as well:

Stanford Law School: 2010 LRAP Calculator

I would suggest going through hypothetical scenarios on your own, as this helps one gain a better understanding of the LRAP. (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.

Salary: $45,000
Salary less Taxes: ($45,000 - $7,438) = $37,562
Debt: $100,000 on a ten-year repayment plan at 6.8% interest
Yearly Debt Obligation: $13,810
Graduate’s Expected Contribution: $0 (below $50,000 floor)
LRAP Award: $13,810
Take-home Income: $37,562

Scenario Two
An unmarried graduate with no undergraduate debt.

Salary: $55,000
Salary less Taxes: ($55,000 - $9,938) = $45,062
Debt: $100,000 on a ten-year repayment plan at 6.8% interest
Yearly Debt Obligation: $13,810
Graduate’s Expected Contribution: (15% of $5,000) = $750
LRAP Award: ($13,810 - $750) = $13,060
Take-home Income: ($45,062 - $750) = $44,312

Scenario Three
A married graduate with no undergraduate debt. Graduate’s spouse has $13,000 in educational debt obligation per year. The couple has one child.

Graduate’s Salary: $65,000
Graduate’s Salary less Taxes: ($65,000 - $12,438) = $52,562
Spousal Income: ($85,000 - $13,000 educational debt obligation) = $72,000
One-Half of Joint Income: ($65,000 + $72,000) / 2 = $68,500
[The joint income figure is used for LRAP calculations as it is larger than the graduate’s salary alone. There is also an $8,000 dependent care allowance for the child. The final income figure used for LIPP is $60,500.]
Debt: $100,000 on a ten-year repayment plan at 6.8% interest
Yearly Debt Obligation: $13,810
Graduate’s Expected Contribution: (15% of $10,500) = $1,575
LRAP Award: ($13,810 - $1,575) = $12,235
Graduate’s Take-home Income: ($52,562 - $1,575) = $50,987

Scenario Four
An unmarried graduate with $25,000 total undergraduate debt. The graduate is starting the sixth year of LRAP participation.

Salary: $90,000
Salary less Taxes: ($90,000 - $18,920) = $71,080
Debt: $100,000 law school debt and $25,000 undergraduate debt, both on a ten-year repayment plan at 6.8% interest
Yearly Debt Obligation: $17,262
Income used for Calculation: ($90,000 - $5,000 seniority allowance) = $85,000
Graduate’s Expected Contribution: (15% of $15,000 + 50% of $15,000 + 70% of $5,000) = $13,250
LRAP Award: ($17,262 - $13,250) = $4,012
Take-home income: ($71,080 - $13,250) = $57,830

Final Notes on the Stanford Law School Miles and Nancy Rubin Loan Repayment Assistance Program
The SLS LRAP is a very generous program, especially for salaries up to $65,000. Unique to the SLS LRAP is the inclusion of any – not just law school – educational debt without concern given to the amount. The other top two law schools (Harvard and Yale) include undergraduate debt but only up to $30,000, and are less generous with respect to graduate school debt. Further, a Stanford graduate could presumably make a large amount of money immediately after graduation, pay off a substantial amount of educational debt, and still enter LRAP within five years of graduation. The amount made in those first few years would not reduce LRAP awards. Although this may go against the spirit of the Program, there doesn’t appear to be anything in the documentation designed to prevent this.

Additional Financial Support for Public Interest
For the summer of 2010, Stanford Law students engaging in at least ten weeks of public interest work are eligible for summer funding. 1Ls are guaranteed $5,000 and 2Ls are guaranteed $7,500. Applicants for funding must be eligible for $8,500 in need-based loans for the following school year.

i The Program’s calculations will be based on your actual repayment schedule, so long as that schedule is not under ten years. Since you are only eligible for benefits for ten years after graduation, it is probably best for most graduates enrolled in the Program to enroll in a ten year repayment schedule.
ii Awards are adjusted if the estimate is too high or too low.
iii So, someone beginning their seventh year of participation has six years of previous LRAP participation and is given a $6,000 allowance for that upcoming year.