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LRAP: University of Illinois College of Law

Published October 2010, last updated November 2010

Loan Repayment Assistance Program

How It Works
Illinois’ Loan Repayment Assistance Program helps graduates in the public sector pay educational debts that might otherwise become unmanageable. On an annual basis, the College of Law provides an LRAP loan to cover a portion of each participant’s law school debt. After several years of qualifying employment, these loans are forgiven on the following schedule:
       25% (3 years)
       50% (4 years)
       75% (5 years)
       100% (6 years)

To stay in the program, participants’ adjusted gross incomes may not rise above $55,000 (although the program’s literature states that this amount may grow to $65,000). Spousal income only counts if a graduate’s spouse makes more money, in which case one-half of the couple’s joint income becomes the figure of interest.

In the event that available funds are insufficient to cover all eligible participants, each qualifying graduate will receive an equal percentage of their calculated award.

Eligible Jobs
LRAP participants must work full-time in a law-related capacity at a non-profit organization or government agency. Academia is not covered, and clerkships will be covered only if applicants take qualifying employment after their clerkship year(s).

Eligible Debt
Law school loans approved by the University of Illinois qualify for LRAP benefits. LRAP does not cover other educational or personal loans, although non-qualifying educational debt can be deducted from participants’ adjusted gross incomes.

Calculation of Expected Participant Contribution
After subtracting any federal dependent deductions and non-qualifying educational loan payments from a graduate’s gross income, the College of Law deducts an additional “Standard Maintenance Allowance”: the NALP median entry level public sector salary plus a cost-of-living adjustment. The LRAP award is the difference between qualifying loan payments and half of this resulting figure.

Hypothetical Scenarios
The complex nature of Illinois’ LRAP program—which depends on NALP survey data and U.S. Office of Personnel Management guidelines—makes accurate predictions difficult. The scenarios below should be taken as rough estimates; the College of Law’s program description lists two scenarios here.

Scenario One
An unmarried graduate living in Chicago
Graduate’s Salary: $45,000
Graduate’s Salary less Taxes: $34,660[i]
Debt: $80,000 on a ten-year repayment plan at 6.8% interest
Yearly Debt Obligation: $10,440[ii]
Graduate’s Expected Contribution: $1,800 ( 1/2[$45,000 – ($36,000 + $5,400*)]
       *$5,400 = $36,000 x 15% cost-of-living adjustment for Chicago[iii]
LRAP Award: $8,640
Take-home Income: $32,840

Scenario Two
A married graduate living in New York City. The couple has two children.
Graduate’s Salary: $50,000
Spouse’s Salary: $45,000
Joint Salary Less Taxes: $68,270
Debt: $80,000 on a ten-year repayment plan at 6.8% interest
Yearly Debt Obligation: $10,440
Graduate’s Expected Contribution: $3,250 (1/2[$50,000 – ($36,000 + $5,400* + $1900˚)]
        *$5,400 = $36,000 x 15% cost-of-living adjustment for New York
        ˚$1,900 = 2 x $950 dependent deduction
LRAP Award: $7,190
Joint Take-home Income: $65,020

Scenario Three
A single graduate living in Peoria, Illinois.
Graduate’s Salary: $44,000
Salary Less Taxes: $34,000
Law School Debt: $80,000 on a ten-year repayment plan at 6.8% interest Yearly Debt Obligation: $10,440
Graduate’s Expected Contribution: $4,000 (1/2[$44,000 - $36,000])
LRAP Award: $6,440
Take-home income: $30,000

Scenario Four
A married graduate living in St. Louis, Missouri. The couple has one child.
Graduate’s Salary: $56,000
Salary less Taxes: $45,200
Debt: $80,000 on a ten-year repayment plan at 6.8% interest Yearly Debt Obligation: $10,440
Graduate’s Expected Contribution: $10,440 ($56,000 - $950 child deduction is above the $55,000 income cap)
LRAP Award: $0 Take-home Income: $34,760

Final Notes on the University of Illinois College of Law LRAP
The University of Illinois LRAP provides limited help to graduates who want to work low-paying jobs in the public sector. Participants must stay in the program for several years to have their aid forgiven, and those with large debt loads will likely need additional assistance (perhaps from the federal Income Based Repayment plan) to meet their debt obligations. Still, even with a $55,000 upper income cap, LRAP can be huge for graduates committed to public service.

[i] www.paycheckcity.com
[ii] http://www.finaid.org/calculators/loanpayments.phtml
[iii] http://www.payscale.com/cost-of-living-calculator