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LRAP: Vanderbilt University Law School

Published July 2010, last updated August 2010

Loan Repayment Assistance Program

How it Works
Vanderbilt University Law School graduates enrolled in the Loan Repayment Assistance Program (LRAP) will receive forgivable loans for between 20% and 50% of their annual debt obligation, depending on income. Every six months new LRAP loans are disbursed and previous LRAP loans are forgiven (provided the graduate has remained in eligible employment).

Graduates may participate for up to ten years, at which point all federal loans will be forgiven under [link] IBR [/link]. Enrollment in IBR is required.

Eligible Jobs
Eligible positions must:
1) be full-time;
2) require bar passage;
3) be in the public sector or with a nonprofit.

Private practice and judicial clerkships do not qualify. Salaries cannot exceed $50,000.

Eligible Debt
Only federal loans enrolled in IBR qualify for Vanderbilt’s LRAP. Only the law school portion of the debt is eligible.

Calculation of Benefits
The amount you are eligible for per year corresponds to your income in the following manner:

Every three years of program participation the graduate will be rewarded with a $5,000 increase to the income ceiling. The available documentation is unclear as to whether the entire table of benefits shifts up $5,000 or if only the ceiling moves up.

If married or in a domestic partnership, the income figure used in calculations is ½ the joint income. In figuring the joint income, $10,000 is subtracted from the spousal income as well as any spousal educational debt obligation. $5,000 may be deducted from the income figure for each dependent child.

There is no adjustment for assets except in cases where the number of applicants provides funding problems. In such a case, net worth and assets may become criteria for selection.

Given the requirement that participants enroll in IBR, is it important that you try to understand the way IBR works. Payments under IBR are capped at 15% of everything above 150% of the federal poverty line. The federal poverty line varies with family size. 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.

Hypothetical Scenarios
Let’s explore just a few hypotheticals to see how Vanderbilt’s LRAP 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 within three years of graduation.
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
LRAP Award: (50% of debt obligation ($2,063)) = $1,031
Take-home Income: ($25,919 - $1,032) = $24,887

Scenario Two
An unmarried graduate five years into the program.
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
Yearly Debt Obligation under IBR: (($45,000 – 1.5*$10,830)*.15) = $4,313
LRAP Award: (25% of debt obligation ($4,313)) = $1,079
Take-home Income: ($37,562 - $3,234) = $34,328

Scenario Three
A married graduate within three years of graduation. The graduate’s spouse is unemployed.
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 Yearly Debt Obligation under IBR: (($50,000 – 1.5*$14,570)*.15) = $4,222
Income for Calculations (1/2 joint income): $25,000
LRAP Award: (50% of debt obligation of $4,222) = $2,111
Graduate’s Take-home Income: ($41,319 - $2,111) = $39,208

Scenario Four
A married graduate within three years of graduation. 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 Yearly Debt Obligation under IBR: (($50,000 – 1.5*$14,570)*.15) = $4,222
Spouse’s Salary: $80,000
Income for Calculations ((50% of ($70,000 [spouse’s salary minus $10,000] plus $50,000)) minus $10,000 [dependent deductions]): $50,000
LRAP Award: (20% of debt obligation of $4,222) = $844
Graduate’s Take-home Income: ($41,319 - $3,378) = $37,941

Final Thoughts on the Vanderbilt University Law School Loan Repayment Assistance Program
Like all LRAPs, funding limitations may affect availability of LRAP benefits. Prospective students are advised to contact the Vanderbilt Financial Aid Office for statistics on funding, percentage of applying graduates receiving benefits, etc.

Married graduates with a nonworking spouse can stand to gain more than under some similar LRAPs, given that ½ the joint income is always used even if the individual income is higher.

i Currently:
Number in Family || Poverty Guideline
             1                        $10,830
             2                        $14,570
             3                        $18,310
             4                        $22,050
             5                        $25,790
ii For this calculation I assume that the entire table of benefits (see above section) shifts upwards $5,000, not just the ceiling.
iii Remember, every three years of participations yields a $5,000 increase to the income ceiling. I’m assuming here that the entire table shifts up. If that is not the case, this amount should be 20% of the debt obligation, not 25%.
iv The spouse’s salary here may cause IBR complications because it is fairly high. The couple may actually not be eligible for IBR.