PSA: HYS LRAPs are definitely not "amazing." Forum

[twenty]

1. It reduces payments by 25%

You're possibly misunderstanding how LRAPs work. Lowering your immediate debt on the front end of your student loan (i.e, paying for part of school out of pocket) when you know that a big chunk of your loan is going to have to be forgiven on the back end, whether by HYS or by DoED, is the same thing as flushing your money down the toilet.

2. You were using PAYE I thought for CLS.

On the ten year plan (i.e, the only plan you get access to their LRAP through), your loans are forgiven by PSLF, which does not include the tax bomb on forgiven debt.

[Nelson]

The entire advantage of Harvard's LIPP is flexibility. Hence it's likely to make your loans manageable no matter what you do. Focusing on the amount you pay in is sort of beside the point because PAYE and especially PSLF aren't nearly as flexible.

I just don't understand what the point of this post is. If your point is that people should take full rides instead of HYS, those people don't turn down full rides because of HYS's superior LRAP (this is the strawman). They do so because they think they're special snowflakes who are going to be S. Ct. clerks.

[twenty]

So the federal government may have eliminated the need for school funded loan payment assistance, but why does that make Harvard a bad choice? It just levels the playing field. No debt is obviously better but with the federal government programs it's even easier to repay your loans.

Because people are actively advocating Harvard/Yale/Stanford as more financially viable because of their killer LRAPs, which causes me to believe that no one knows what the frack they're talking about.

I've openly advocated Yale over UChicago for free recently when OP said they forsure wanted a federal clerkship/prestigious PI, so I'm certainly not saying Harvard is a bad choice.

You used to lose IBR eligibility ( I think permanently) once you were above a certain salary. Harvard's program was better than that, if I recall correctly.

Not true. Furthermore, $1,200 + .4*(income-cap) is ALWAYS going to be more than the PAYE payment (or even the IBR, for that matter). The only thing you have to do is demonstrate partial financial hardship, and if you can't do that with law school debt, then you have no business using any of LRAP/PAYE/PSLF -- just pay it off in a year, because obviously you're making 200k+ a year.

The thing is with PAYE and PSLF, the public is funding your massive debt. Some people would prefer to.require the schools pay more.

I agree, and I think it's terrible. PAYE provides an incentive for irresponsible spending and irresponsible tuition hikes. It's bad.

[twenty]

I just don't understand what the point of this post is. If your point is that people should take full rides instead of HYS, those people don't turn down full rides because of HYS's superior LRAP (this is the strawman). They do so because they think they're special snowflakes who are going to be S. Ct. clerks.

Let me make this abundantly clear for you, then.

There are people on TLS that advocate that 0Ls should pick HYS over whatever else for whatever price (doesn't really matter) because of how wonderful HYS LRAPs are, making any debt a non-factor in the decision.

My position is that you are free to choose HYS, you are free to choose a T14 for free, but making your choice contingent on bad information is not okay.

[Nelson]

I just don't understand what the point of this post is. If your point is that people should take full rides instead of HYS, those people don't turn down full rides because of HYS's superior LRAP (this is the strawman). They do so because they think they're special snowflakes who are going to be S. Ct. clerks.

Let me make this abundantly clear for you, then.

There are people on TLS that advocate that 0Ls should pick HYS over whatever else for whatever price (doesn't really matter) because of how wonderful HYS LRAPs are, making any debt a non-factor in the decision.

My position is that you are free to choose HYS, you are free to choose a T14 for free, but making your choice contingent on bad information is not okay.

For a point of reference, go back and read ph's post where he shows you the people who willingly advocate for HYS > T14 because of how great the LRAP is.

His post doesn't have any posts that actually advocate that position. It's just people mentioning LRAP while advocating for HYS. None of them are saying "take HYS over T14 full ride for public service because HYS's LRAP is better." There's no bad information. Your original post that purports to clear up the "bad information" is based on an arbitrary selection of outcomes that suit your point.

Second edit: I'm not even arguing with your (I think) underlying premise that people overrate LRAP. But I don't think your original post actually helps much other than to show that there are some people who are better off taking a full ride. Sure, but those people are only better off assuming outcomes are equally likely. And they aren't. The argument for HYS in most cases is that the placement outcomes are better and that their LRAPs help mitigate the increased debt to some extent. If you start from the assumption that placement is equal (as you do in your OP by setting out three equal scenarios), then obviously the free option makes better financial sense.

[twenty]

I ninja edited you because you're partially right, but:

The ONLY consideration should be Yale vs the Ruby at Chicago - purely b/c Yale's incredible LRAP program means debt is pretty much irrelevant.

Cross-reference typical federal PI salary with Yale's LRAP. If you spend the first handful of years making under 80k, you're going to be subsidized pretty heavily at Yale, greatly lessening the cost disparity.

are exactly the kind of people I hope to influence with OP.

[Nelson]

I ninja edited you because you're partially right, but:

The ONLY consideration should be Yale vs the Ruby at Chicago - purely b/c Yale's incredible LRAP program means debt is pretty much irrelevant.

Cross-reference typical federal PI salary with Yale's LRAP. If you spend the first handful of years making under 80k, you're going to be subsidized pretty heavily at Yale, greatly lessening the cost disparity.

are exactly the kind of people I hope to influence with OP.

Yale's LRAP is objectively the best out there because it covers you for non-legal work. You can go be a freaking auto mechanic and you're covered.

[NYstate]

Harvard doesn't require you to practice law to be covered. Harvard includes firms outside the typical PSLF route.

Harvard allows part time work to be included if you have a small child.

It seems to me that these decisions are individually determined.

[ph14]

I just don't understand what the point of this post is. If your point is that people should take full rides instead of HYS, those people don't turn down full rides because of HYS's superior LRAP (this is the strawman). They do so because they think they're special snowflakes who are going to be S. Ct. clerks.

Let me make this abundantly clear for you, then.

There are people on TLS that advocate that 0Ls should pick HYS over whatever else for whatever price (doesn't really matter) because of how wonderful HYS LRAPs are, making any debt a non-factor in the decision.

My position is that you are free to choose HYS, you are free to choose a T14 for free, but making your choice contingent on bad information is not okay.

For a point of reference, go back and read ph's post where he shows you the people who willingly advocate for HYS > T14 because of how great the LRAP is.

His post doesn't have any posts that actually advocate that position. It's just people mentioning LRAP while advocating for HYS. None of them are saying "take HYS over T14 full ride for public service because HYS's LRAP is better." There's no bad information. Your original post that purports to clear up the "bad information" is based on an arbitrary selection of outcomes that suit your point.

I spent all of 5 minutes looking for posts. There are plenty more out there.

[NYstate]

I ninja edited you because you're partially right, but:

The ONLY consideration should be Yale vs the Ruby at Chicago - purely b/c Yale's incredible LRAP program means debt is pretty much irrelevant.

Cross-reference typical federal PI salary with Yale's LRAP. If you spend the first handful of years making under 80k, you're going to be subsidized pretty heavily at Yale, greatly lessening the cost disparity.

are exactly the kind of people I hope to influence with OP.

Yale's LRAP is objectively the best out there because it covers you for non-legal work. You can go be a freaking auto mechanic and you're covered.

Yes, I recall that Yale is based solely on income. It also includes undergrad debt and part time work.

[twenty]

There's no bad information. Your original post that purports to clear up the "bad information" is based on an arbitrary selection of outcomes that suit your point.

...

Okay, so find a more likely scenario that I didn't explicitly preempt and disclose.

It has occurred to me that I really have no idea what you're trying to show here.

You can go be a freaking auto mechanic and you're covered.

Oh come on now. You and I both know that has zero relevance to any discussions pertaining to "should I chose NYU with a full ride, or Stanford?"

[Nelson]

I spent all of 5 minutes

This seems to be your typical approach.

[Nelson]

Oh come on now. You and I both know that has zero relevance to any discussions pertaining to "should I chose NYU with a full ride, or Stanford?"

I agree with you. I think I expressed myself better in my second edit above.

[NYstate]

Oh come on now. You and I both know that has zero relevance to any discussions pertaining to "should I chose NYU with a full ride, or Stanford?"

I agree with you. I think I expressed myself better in my second edit above.

Well you should clarify the OP. Don't throw Yale in the mix you are trying to say are no longer awesome.

[ph14]

I spent all of 5 minutes

This seems to be your typical approach.

Stop derailing an on-topic thread. To remain on-topic: I think we should read OP's point more generally as 0Ls should be careful about how they consider LRAP in making their law school decisions.

[NYstate]

Why are you assuming the Michigan grad has zero debt but won't have the same savings at other schools? Most full ride people still owe debt for COL.

[cron1834]

Why are you assuming the Michigan grad has zero debt but won't have the same savings at other schools? Most full ride people still owe debt for COL.

TBF, he addressed this earlier. If you're assuming that LRAP/PSLF tag-team is going to bail you out, and you have $75k just sitting in the bank (wut), you'd be smart just to leave the $75k and take out more loans, since HLS is going to cover the bulk of your payments anyway.

This raises a factual question on my part - do LRAP iterations or IBR/PSLF take personal savings into account? I've never heard that, so my guess is no, but it clearly impacts your ability to pay.

[twenty]

But I don't think your original post actually helps much other than to show that there are some people who are better off taking a full ride. Sure, but those people are only better off assuming outcomes are equally likely. And they aren't. The argument for HYS in most cases is that the placement outcomes are better and that their LRAPs help mitigate the increased debt to some extent. If you start from the assumption that placement is equal (as you do in your OP by setting out three equal scenarios), then obviously the free option makes better financial sense.

This is definitely a better explanation of what you're trying to say. As I've said before (as early as my second post), HYS is a terrific option for those interested in prestigious PI, which, while still a bit unicornish, are certainly far more obtainable from Yale than from, say, Berkeley. Placement is clearly not equal, and I did try to account for that fact in OP; though that was definitely not the point I was trying to make.

The problem I have, and I think you'll agree with me, is where an OP starts a thread that says, "I have a full ride at Penn and I was accepted with no financial aid at Harvard, I want to be an AUSA, what should I do?" And at that point, someone will undoubtedly come to Harvard's defense with "You don't have to worry about debt, because exceptional LRAP!" I don't contend that Harvard may in fact be the better choice based on hypothetical-though-frequently-not-OP's goals, but I think it's only fair to properly represent the situation in question, especially when there are so many posters actively misrepresenting the school's LRAP program.

Why are you assuming the Michigan grad has zero debt but won't have the same savings at other schools? Most full ride people still owe debt for COL.

I did address this earlier -- if it makes you feel better, you can give the HYS person the same 40k-ish in COL savings. Now instead of being 250k in debt, you're only 200k or so. Since you're obviously not going to pay even 200k off in ten years on a PI salary, the question still remains -- do you use HYS LRAP and have the debt forgiven by the school, or do you use PAYE/PSLF and have the debt forgiven by the feds? One thing is for sure, you wasted 40k of your savings because there is literally no difference in outcome between 250k in forgiveness than 200k in forgiveness.

On the other hand, it makes sense for the Michigan grad to pay off all his loans ASAP because he almost certainly would be paying off the entirety of his loans with a standard repayment plan. So why borrow money you already have at 8% when you have it sitting in your bank?

This raises a factual question on my part - do LRAP iterations or IBR/PSLF take personal savings into account? I've never heard that, so my guess is no, but it clearly impacts your ability to pay.

Harvard does for sure, as I pointed out in OP (obviously not tied to PSLF), I wouldn't be surprised at all to find out Yale and Stanford did as well. Some PSLF-tied LRAPs, notably NYU, won't let you participate in their LRAP if you have in assets more than the amount your loan. So if you have 300k in the bank, and 280k in student loans, they'll tell you to pay your damn loan.

According to the FSA glossary, (found here: http://studentaid.ed.gov/glossary ), partial financial hardship does not seem to take into account preexisting assets.

[twenty]

Incidentally, Cornell's LRAP program isn't friends with PSLF either. Their school-funded program is substantially worse than HYS, capping out at 44k for 100% contribution, though probably not particularly relevant to most people reading this thread.

[ColbyBryant]

One thing to point out regarding flexibility.

Harvard's LIPP actually pays your loans each year that you are in the program. If you have $150,000 of loans, it is approximately $215,000 over 10 years with interest. For every year that you are enrolled in the LIPP, 1/10th of that total amount is payed off. Completely gone, and never coming back. So, if you manage to find low income work for 5 years (which, again, is 8 years from now for current applicants), you are left with 1/2 of your total loan, or about $108,000 total remaining. At this point, your work in the public interest may have exposed you to a particular field of law that you find fascinating, but is either high paying or not PSLF eligible. No big deal, you move on to that new job and either enroll in PAYE with 108,000 of debt, or you are earning enough money that you plan to pay off your relatively smaller loan over the next 5-10 years.

THIS is the flexibility that people talk about when referring to YH vs other LRAPs. It is not a reason to take HYS over a FULL RIDE to T14, but it may be a reason to consider HYS over a substantial scholarship to other schools if you are not certain of your career goals. And really, none of us should be CERTAIN of our career goals before taking a law class.

It is impossible to plan your life 13 years ahead of time as an applicant. Maybe especially for us women who plan to have kids sometime in the next 13 years, it is hard to imagine staying in a PSLF eligible job for 120 on-time payments.

I may not fully understand the PAYE/PSLF option, so I have a question for you (twenty and others): You mention that you can flow in and out of PSLF. If, for example, I work for 4 years in a PSLF eligible job, and then move to a non-PSLF eligible job for 3 years staying on PAYE....if I go back to a PSLF eligible job for ... 6 years? is it all forgiven without tax bomb? How flexible is it really? Is it just 10 total years in a PSLF eligible job, with gaps allowed? Seems unlikely to me, and I have not heard of such flexibility.

Also, the whole IBR/PSLF loan forgiveness started in 2007. To put that in perspective for applicants... to date Zero people have actually had their loans forgiven by this program, because it is not yet 2017. By the time current applicants apply, we are relying on a program to be the same in the year 2027. Yes yes yes, I have read all the great articles saying that PSLF is not going anywhere, and that if it did people would be grandfathered in. But what about 2 years ago when they got rid of subsidized Stafford loans? People who were partway through school, and may have entered school KNOWING that they would have subsidized loans to rely on, were not grandfathered in. IT was a small difference (accruing interest on $8500-17000 of loans for 1-2 years before graduation), but still people were scared that rules changed during school.

[twenty]

One thing to point out regarding flexibility.

Harvard's LIPP actually pays your loans each year that you are in the program. If you have $150,000 of loans, it is approximately $215,000 over 10 years with interest. For every year that you are enrolled in the LIPP, 1/10th of that total amount is payed off. Completely gone, and never coming back. So, if you manage to find low income work for 5 years (which, again, is 8 years from now for current applicants), you are left with 1/2 of your total loan, or about $108,000 total remaining. At this point, your work in the public interest may have exposed you to a particular field of law that you find fascinating, but is either high paying or not PSLF eligible. No big deal, you move on to that new job and either enroll in PAYE with 108,000 of debt, or you are earning enough money that you plan to pay off your relatively smaller loan over the next 5-10 years.

THIS is the flexibility that people talk about when referring to YH vs other LRAPs. It is not a reason to take HYS over a FULL RIDE to T14, but it may be a reason to consider HYS over a substantial scholarship to other schools if you are not certain of your career goals. And really, none of us should be CERTAIN of our career goals before taking a law class.

I did point this out in the OP, but I don't think this is actually as much of an advantage as it might seem. First, you're paying a substantial premium from the getgo to be able to change from public service to non-public service in the future. If you feel like you might want to bail on public service/be in a spot where you're making 200k+/etc. after a few years of practice, you have no business counting on any LRAPs, even HYS'. At that point, you should probably take the significant scholarship anyway.

Though I get what you're saying, and I'm sure there are (albeit few) people who go to Yale, realize they have zero interest in practicing law for the next ten years, and now have the option to go open up an internet company. But that's more of a "thank God you went to Yale so you're not totally effed" thing rather than a "you should pick Yale for this reason" thing.

It is impossible to plan your life 13 years ahead of time as an applicant. Maybe especially for us women who plan to have kids sometime in the next 13 years, it is hard to imagine staying in a PSLF eligible job for 120 on-time payments.

[...]

Also, the whole IBR/PSLF loan forgiveness started in 2007. To put that in perspective for applicants... to date Zero people have actually had their loans forgiven by this program, because it is not yet 2017. By the time current applicants apply, we are relying on a program to be the same in the year 2027. Yes yes yes, I have read all the great articles saying that PSLF is not going anywhere, and that if it did people would be grandfathered in. But what about 2 years ago when they got rid of subsidized Stafford loans? People who were partway through school, and may have entered school KNOWING that they would have subsidized loans to rely on, were not grandfathered in. IT was a small difference (accruing interest on $8500-17000 of loans for 1-2 years before graduation), but still people were scared that rules changed during school.

I agree, but I think it's important to point out that the likelihood of PSLF going away is still very low, as you pointed out. Furthermore, it may seem like I'm shifting my argument a bit, but any debt you have from HYS' LRAP (which, granted, will be less than if you'd done PAYE) is still very likely going to be on the table regardless of which LRAP you chose. This is an excellent reason to pick a full ride over HYS, though.

I may not fully understand the PAYE/PSLF option, so I have a question for you (twenty and others): You mention that you can flow in and out of PSLF. If, for example, I work for 4 years in a PSLF eligible job, and then move to a non-PSLF eligible job for 3 years staying on PAYE....if I go back to a PSLF eligible job for ... 6 years? is it all forgiven without tax bomb? How flexible is it really? Is it just 10 total years in a PSLF eligible job, with gaps allowed? Seems unlikely to me, and I have not heard of such flexibility.

To answer your question, yes. All PSLF requires is that you have worked a total of 120 months in public interest employment. You could spread those out as far as you want. There should even be an FAQ on DoED's website where they confirm this.

[ColbyBryant]

(.....)
To answer your question, yes. All PSLF requires is that you have worked a total of 120 months in public interest employment. You could spread those out as far as you want. There should even be an FAQ on DoED's website where they confirm this.

Thanks for your response. I do agree that for MOST purposes any reasonable person should pick a truly full ride from a T14 over HYS. I just wanted to point out that for many people who are not certain of their future goals and do not have the opportunity of a TRULY full tuition scholarship from a T10, the flexibility of an LRAP is an important component of a consideration.

I mean really, if one actually ends up spending 10 full years in a low income PSLF eligible job, the PAYE/PSLF on its own is so darn good that you'll be fine whether your program has an LRAP or not. I consider the HYS LRAPs to be true low income protection - no strings attached-, while the other LRAPs kinda trick you into thinking that they are the ones paying off your loans for ya.

I should mention that your initial point is true, I just wanted to emphasize the reasons that LIPP is good under certain circumstances, for the purposes of future TLS lurkers reading these posts. I am facing a situation of HLS vs. Michigan with 90k, which I believe you have been contributing to.



EDIT: To expand on the above...If you have 275k in loans (ie full CoA from the T14 in big cities, with interest accruing during law school) and do PAYE, even if you are married and filing singly, on a $50,000 salary your payment will be about $250 per month. If you are in a PSLF eligible job for 10 years, you will pay about $30,000 total of your loan over 10 years an the rest will be forgiven.

Presuming an average interest rate of 7.5% (note- it will probably be higher ITE), the loan would have come out to about $400,000 over 10 years. All in all, without any help from any school, if you are truly in a PSLF eligible job you are paying less than one tenth of your total loan back. In this case - $30,000 out of $400,000. True, if you make more, it gets worse. But most PI jobs pay dirt. Yes, U Chicago will cover that $30,000 for you no matter how much money your spouse is making.

If you want true low income Flexibility, no LRAP outside of YH(S) will actually give it to you IMO. Just make sure your spouse isn't making tons of money. Again, not the point of your post, but worth discussing for people who are looking at this thread.

[worldtraveler]

One thing to point out regarding flexibility.

Harvard's LIPP actually pays your loans each year that you are in the program. If you have $150,000 of loans, it is approximately $215,000 over 10 years with interest. For every year that you are enrolled in the LIPP, 1/10th of that total amount is payed off. Completely gone, and never coming back. So, if you manage to find low income work for 5 years (which, again, is 8 years from now for current applicants), you are left with 1/2 of your total loan, or about $108,000 total remaining. At this point, your work in the public interest may have exposed you to a particular field of law that you find fascinating, but is either high paying or not PSLF eligible. No big deal, you move on to that new job and either enroll in PAYE with 108,000 of debt, or you are earning enough money that you plan to pay off your relatively smaller loan over the next 5-10 years.

THIS is the flexibility that people talk about when referring to YH vs other LRAPs. It is not a reason to take HYS over a FULL RIDE to T14, but it may be a reason to consider HYS over a substantial scholarship to other schools if you are not certain of your career goals. And really, none of us should be CERTAIN of our career goals before taking a law class.

It is impossible to plan your life 13 years ahead of time as an applicant. Maybe especially for us women who plan to have kids sometime in the next 13 years, it is hard to imagine staying in a PSLF eligible job for 120 on-time payments.

I may not fully understand the PAYE/PSLF option, so I have a question for you (twenty and others): You mention that you can flow in and out of PSLF. If, for example, I work for 4 years in a PSLF eligible job, and then move to a non-PSLF eligible job for 3 years staying on PAYE....if I go back to a PSLF eligible job for ... 6 years? is it all forgiven without tax bomb? How flexible is it really? Is it just 10 total years in a PSLF eligible job, with gaps allowed? Seems unlikely to me, and I have not heard of such flexibility.

Also, the whole IBR/PSLF loan forgiveness started in 2007. To put that in perspective for applicants... to date Zero people have actually had their loans forgiven by this program, because it is not yet 2017. By the time current applicants apply, we are relying on a program to be the same in the year 2027. Yes yes yes, I have read all the great articles saying that PSLF is not going anywhere, and that if it did people would be grandfathered in. But what about 2 years ago when they got rid of subsidized Stafford loans? People who were partway through school, and may have entered school KNOWING that they would have subsidized loans to rely on, were not grandfathered in. IT was a small difference (accruing interest on $8500-17000 of loans for 1-2 years before graduation), but still people were scared that rules changed during school.

It is all forgiven. Just as long as you make 120 qualifying payments in your lifetime.

[sasquatchsam]

Although a good LRAP can be the deciding factor when selecting a school to attend, it should not be the primary factor. There really seems to be a sliding scale between financial risk and employment risk. HYS provide for the greatest certainty of finding a job regardless of grades. However, a full tuition scholarship from a t-14 creates the possibility of making $$$ immediately after graduation and on average is the better decision financially.

I think LIPP is really designed to help people who fall into the unfortunate category of unemployment or underemployment rather than to forgive debt for those in public service. As someone who is very risk averse, I find that Harvard's LIPP is of more value to me than Michigan's LRAP simply because it protects me under any circumstance. I have a very specific employment goal upon graduation and I know Harvard will help me achieve it more easily than Michigan. I am more concerned about finding that right job (firm job in a very small market) than I am about having lots of $$$. However, I also want to protect my family from crushing debt...LIPP allows me to take the risk of attending Harvard so I can have the job I want. I am happy to hear from people who disagree with me though. It is a tough decision and I want to be as informed as possible.

Basically, I think analyzing LRAPs only based on which one will allow you to net the most money in a public service job is somewhat a flawed approach. However, it does demonstrate that LIPP is not a better option for those going into PI.

[ColbyBryant]

Hey again. Twenty -- given your presence on all of the PI threads, I am just curious if you can touch on your current status in the legal field? Ie, how old are you, what year are you in law school/graduated, what work are you doing in the field, etc. I cannot tell if your profile is real.. it says reapplying for 2013-2014 but it is the 2014-2015 year, and given the consistency with which you give advice and make threads about the PI field, I had assumed that you were a graduate. Just curious, because people take advice on these threads very seriously sometimes. Thanks!

Anyways, I also wanted to add something here about the PAYE/LRAP combo. Come 2017-2018, the federal government is going to start forgiving an incredible amount of loans through PSLF. Even more in 2019-2020 once more graduates had caught on and started their 120 payments. As the law currently reads, medical students are eligible for PSLF. Hospitals are non-profit organizations (Point being that if a neurosurgeon spends 9 years in residency and then 1 year as an attending, their loan is forgiven). The law will eventually have to change to get around this, because this individual is pointedly pursuing a career that earns >700k per year. Parts of the law will inevitably change, and we have no idea how this will effect us. Just something to think about. I am a 0L, probably the oldest applicant around, and have seen many friends go through higher education. These are my credentials!

I am still figuring out TLS so I wasn't sure where to post this...just went to the thread I had most recently visited. Hope that is ok!