LRAP: University of Southern California Law School

Published July 2010, last updated August 2010

Loan Repayment Assistance Program

How it Works
University of Southern California Law School (USC) graduates enrolled in the Loan Repayment Assistance Program (LRAP) are awarded an LRAP loan to cover the difference between their expected contribution toward law school educational debt repayment and their actual obligation. This USC LRAP loan is eligible for full or partial forgiveness as outlined below.

Graduates must enroll in the program within five years of graduation. Graduates are also expected to enroll in [link] IBR [/link] and to seek funding from other LRAPs prior to seeking funding from USC.

Eligible Jobs
Eligible positions are full-time, paid positions as an attorney with a nonprofit organization or with local, state, or federal government.

Graduates are eligible to receive loans during a judicial clerkship, however these loans are not eligible for forgiveness and become immediately repayable once the judicial clerkship has ended. These loans must be paid within three years.

Alternative jobs may be considered on a case-by-case basis. In such cases, acceptance into the program will depend on availability of funding and consistency with the goals of LRAP.

Eligible Debt
All institutionally approved and certified educational loans (undergraduate, graduate, law school) are eligible, whether federal or private. Although federal loans need not be placed under IBR, benefits will be calculated assuming IBR.

Calculation of Graduate’s Expected Contribution
Determination of the graduate’s expected contribution (and therefore LRAP loan amount) is dependent on income. There is no income cap, but there is a point at which a graduate’s expected contribution will exceed their actual debt obligation under IBR. The graduate’s actual debt obligation must exceed the expected contribution by $1,000 or more in order for the graduate to be eligible.

You can learn more about [link] IBR here [/link], but I’ll provide a basic overview now. Payments under IBR are capped at 15% of everything above 150% of the federal poverty line. The federal poverty line varies with family size i. For example, if your income is $60,000 and you have two people in your family (yourself and a spouse), your payments under IBR would be 15% times ($60,000 – (150% of $14,570)) = $5,722.

The income used for USC LRAP calculations is the higher of the graduate’s income or ½ the joint income, if married. $5,000 may be deducted from the income figure for each dependent child.

Except in the case of significant holdings, assets will not affect LRAP loan amount or eligibility.

The graduate’s expected contribution can be found using the following table:

As mentioned before, graduates will receive an LRAP loan to cover the difference between their actual educational debt obligation (assuming IBR for federal loans) and their expected contribution (according to the above table).

In some situations under IBR, the graduate’s adjusted repayment is not high enough to cover the interest on the federal loans. In these cases, USC will set aside LRAP funds to cover this interest should the graduate not remain in IBR long enough to receive federal forgiveness.

LRAP Loan Forgiveness and Repayment
A graduate will receive LRAP loan forgiveness pursuant to the following table:

Any amount of USC LRAP loans that is not forgiven must be repaid within ten years of leaving eligible employment (except in the case judicial clerkship loans – see “Eligible Jobs” section above). There is a 7% interest rate on LRAP loans.

Hypothetical Scenarios
Let’s explore just a few hypotheticals to see how USC’s LRAP might function. In all situations below I assume the graduate receives the full amount for which he/she is eligible. It is advised that you consult with the USC Financial Aid Office to determine the likelihood of this occurrence. (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 non-law school educational debt.
Salary: $30,000
Salary less Taxes: ($30,000 - $4,081) = $25,919
Debt: $100,000 on a ten-year repayment plan at 6.8% interest
Yearly Debt Obligation (on ten-year repayment): $13,810
Yearly Debt Obligation under IBR: (($30,000 – 1.5*$10,830)*.15) = $2,063
Graduate’s Expected Contribution: $0 (below $40,000 threshold)
LRAP Award: $2,063
Take-home Income (assuming actual enrollment in IBR): $25,919

Scenario Two
An unmarried graduate with no non-law school educational 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 (on ten-year repayment): $13,810
Yearly Debt Obligation under IBR: (($45,000 – 1.5*$10,830)*.15) = $4,313
Graduate’s Expected Contribution: (33% of $15,000) = $5,000
LRAP Award: $0 (expected contribution exceeds obligation under IBR)
Take-home Income (assuming actual enrollment in IBR): ($37,562 - $4,313) = $33,249

Scenario Three
A married graduate with no non-law school educational debt. The couple has two children.
Graduate’s Salary: $50,000
Graduate’s Salary less Taxes: ($50,000 - $8,681) = $41,319
Graduate’s Debt: $100,000 on a ten-year repayment plan at 6.8% interest
Graduate’s Yearly Debt Obligation: $13,810
Graduate’s Debt Obligation under IBR: (($50,000 – 1.5*$22,050)*.15) = $2,539
Spouse’s Salary: $75,000
Income Figure used for Calculations: (1/2($50,000 + $75,000) - $10,000 (dependents)) = $52,500
Graduate’s Expected Contribution: (33% of $12,500) = $4,167
LRAP Award: $0 (expected contribution exceeds obligation under IBR)
Graduate’s Take-home Income (assuming actual enrollment in IBR): ($41,319 - $2,539) = $38,780

Final Thoughts on the University of Southern California Law School Loan Repayment Assistance Program
USC’s LRAP is unique amongst some of its competitors in that all educational loans appear to be eligible for LRAP coverage. But because USC’s LRAP is funded by the financial aid budget, the level of funding available may fluctuate. In the event that new applicants’ need exceeds the amount of financial aid available, LRAP participants may be eligible for a pro-rated portion of their benefits. Potential students should contact the financial aid office for information on the availability of LRAP funding.

i Currently:
Number in Family || Poverty Guideline
              1                       $10,830
              2                       $14,570
              3                       $18,310
              4                       $22,050
              5                       $25,790
ii Marriage complicates IBR calculations. You will need to file taxes separately to avoid having spousal income impact IBR payments.