LRAP: Columbia Law School

Published May 2010

Loan Repayment Assistance Program

How it Works
Columbia Law School graduates in eligible employment may apply for Loan Repayment Assistance Program (LRAP) funding. The Law School will cover the difference between the expected student contribution and the actual debt obligation. This award is in the form of a loan which is fully forgiven after five years of participation in the Program. Graduates must enter within seven years of graduation and may participate for up to the tenth year after graduation. While graduates are free to come in and out of the Program, earnings while outside of the Program affect future funding.

Eligible Jobs
In order to qualify for LRAP, the graduate must:
(1) be employed in a position that makes use of his/her legal education
(2) be employed in public interest 1, public service 2, or legal services for the poor 3
(3) be employed full-time

See below for how judicial clerkships are handled under LRAP.

The Law School determines whether a job qualifies.

Eligible Debt
Any loans that were institutionally approved and certified by Columbia Law School (generally those taken out up to the standard Cost of Attendance 4) are covered. Personal loans, consumer debt, bar exam loans, loans in your parents’ name, loans for tuition from a joint-degree program 5, or loans taken out for other graduate education are not covered. Undergraduate debt is not covered, but undergraduate debt payments are subtracted from the participant’s adjusted gross income before calculation of benefits.

Calculation of Income
The income used to calculate LRAP benefits is the addition of adjusted gross income 6, untaxed income, and voluntary retirement contributions, minus undergraduate debt payments. If the participant is married, either the participant’s income or one-half the joint income will be used for calculations (whichever is higher).7 Up to $10,000 per year may be subtracted from the spouse’s income based on educational debt obligation. See Hypothetical Scenario Three below for an example of joint income being used for calculations.

Calculation of LRAP Loan Amounts
If a participant’s income (as calculated above) is under $50,000 for the year, he/she is not expected to contribute anything towards eligible loan repayments (i.e., an LRAP loan will cover the full payments). The participant is expected to contribute 34.5% of any elibigle income above $50,000 to loan repayments (the rest, if any, is covered by an LRAP loan). There is no income cap. LRAP loans do not accrue interest until the participant leaves qualifying employment.

Loan Forgiveness
If you participate in the program for less than three years, you are expected to pay back your LRAP loan in full 8. If you participate for between three and four years, Columbia will forgive one-third of your LRAP loan. If you participate for between four and five years, Columbia will forgive two-thirds of your LRAP loan. If you participate in LRAP for five or more years, the full amount of your LRAP loan will be forgiven by Columbia 9.

Judicial Clerkships
Since clerkships often precede entry into lucrative private sector jobs which may be accompanied by a significant clerkship bonus, LRAPs often treat these jobs as special cases, exempting them from LRAP consideration despite the generally lower salary. Columbia graduates engaged in a judicial clerkship are eligible for similar benefits, however, but the LRAP loan accrues interest at 5% during the clerkship period. If you enter non-qualifying employment, the LRAP loan and interest must be repaid. However, if you enter qualifying employment after the clerkship, the clerkship period counts toward your years of LRAP participation (for loan forgiveness purposes) and the interest accrued during the clerkship period is reversed.

Duration of LRAP Benefits
Graduates are only eligible for LRAP benefits for the first ten years following graduation, except in the case of deferment 10. Because of this, graduates should put their educational debt on a ten-year repayment schedule. Further, graduates must enter the Program within seven years of graduation. Graduates may enter or leave the Program, but earnings during periods while not participating in the Program will affect future benefits. 34.5% of any amount made in excess of $50,000 is expected to be used to pay off debt. The difference between what was expected to be paid off during such periods and the actual amount paid off is subtracted from your future LRAP benefit potential. See Hypothetical Scenario Four below for an example.

Hypothetical Scenarios
Let’s explore a few hypothetical scenarios to see how Columbia Law School’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 with no undergraduate debt.
Salary: $45,000
Salary less Taxes: ($45,000 - $7,438) = $37,562
Debt: $120,000 on a ten-year repayment plan at 6.8% interest
Yearly Debt Obligation: $16,572
Graduate’s Expected Contribution: $0 (income is below $50,000 threshold)
LRAP Loan: $16,572
Take-home Income: ($37,562 - $0) = $37,562

Scenario Two
An unmarried graduate with no undergraduate debt.
Salary: $55,000
Salary less Taxes: ($55,000 - $9,938) = $45,062
Debt: $120,000 on a ten-year repayment plan at 6.8% interest
Yearly Debt Obligation: $16,572
Graduate’s Expected Contribution: (34.5% of $5,000) = $1,725
LRAP Loan: ($16,572 - $1,725) = $14,847
Take-home Income: ($45,062 - $1,725) = $43,337

Scenario Three
A married graduate with no undergraduate debt. Graduate’s spouse has over $10,000 in educational debt obligation per year.
Graduate’s Salary: $65,000
Graduate’s Salary less Taxes: ($65,000 - $12,438) = $52,562
Spousal Income: ($85,000 - $10,000 educational debt obligation) = $75,000
One-Half of Joint Income: ($75,000 + $65,000) / 2 = $70,000
[$70,000 is used for benefits calculation as this is larger than graduate’s salary of $65,000.]
Debt: $120,000 on a ten-year repayment plan at 6.8% interest
Yearly Debt Obligation: $16,572
Graduate’s Expected Contribution: (34.5% of $20,000) = $6,900
LRAP Loan: ($16,572 - $6,900) = $9,672
Graduate’s Take-home Income: ($52,562 - $6,900) = $45,662

Scenario Four
An unmarried graduate works in the private sector for two years making a salary of $120,000 each year. He/she then enters LRAP-qualifying employment.
For two years, the expected contribution to educational debt would be 34.5% of $70,000, or $24,150 each year. Instead, the graduate had just met the minimum payments of $16,572. After two years, the difference between the expected and actual contributions totaled $15,156. This is deducted from future LRAP benefits.
Qualifying-Employment Salary: $45,000
Salary less Taxes: ($45,000 - $7,438) = $37,562
Debt: $120,000 on a ten-year repayment plan at 6.8% interest
Yearly Debt Obligation: $16,572
Graduate’s Expected Contribution: $0 (income is below $50,000 threshold) + $15,156
LRAP Loan: ($16,572 - $15,156) = $1,416
Take-home Income: ($37,562 - $15,156) = $22,406

Scenario Five
An unmarried graduate with no undergraduate debt.
Salary: $85,000
Salary less Taxes: ($85,000 - $17,520) = $67,480
Debt: $120,000 on a ten-year repayment plan at 6.8% interest
Yearly Debt Obligation: $16,572
Graduate’s Expected Contribution: (34.5% of $35,000) = $12,075
LRAP Loan: ($16,572 - $12,075) = $4,497
Take-home Income: ($67,480 - $12,075) = $55,405

Scenario Six
An unmarried graduate with $6,000 per year in undergraduate debt payments.
Adjusted Gross Income: ($75,000 salary - $6,000 undergraduate debt payments) = $69,000
Salary less Taxes less Undergraduate Debt Payments: ($75,000 - $14,938 - $6,00) = $54,062
Debt: $120,000 on a ten-year repayment plan at 6.8% interest
Yearly Law School Educational Debt Obligation: $16,572
Expected Contribution: (34.5% of $19,000) = $6,555
LRAP Loan: ($16,572 - $6,555) = $10,017
Take-home Income (after taxes and all educational debt payments): ($54,062 - $6,555) = $47,507

Final Notes on the Columbia Law School Loan Repayment Assistance Program
The total amount awarded to an LRAP participant may be quite substantial. It is theoretically possible that a Columbia Law School graduate could meet their entire law school educational debt obligation with LRAP loans that are eventually forgiven. In this case, the amount awarded could easily exceed $100,000. Of course, all LRAP applications are subject to approval by the Law School. The availability of future funding undoubtedly affects all school’s LRAPs.

It is worth noting that significant assets may affect your eligibility for LRAP benefits, although the documentation does not note how.

As always, read the original documentation before contacting the Columbia Law School Financial Aid Office.

Additional Financial Support for Public Interest
In addition to LRAP, Columbia Law School provides guaranteed summer funding to all 1L and 2L students in eligible public interest summer internships. There are several fellowships and internships that are also fully funded. For more details, see http://www.law.columbia.edu/center_program/public_interest/summerprograms.

i “Public interest work means work for an entity whose proclaimed purpose is the advancement of a vision of the public good that is broader than the interest of particular clients; such entities will normally be 501(c)(3) non-profit organizations, but also can be international non-governmental organizations (NGO’s).”
ii “Public service means employment by a government agency.”
iii Usually work for a 501(c)(3) “but may include private practice where the practice is limited to clients comparable to those served by government-supported and non-profit legal services organizations.”
iv $71,000 for single students for the 2009-2010 academic year.
v That is, the non-law-school tuition loans are not covered.
vi From your Federal tax form.
vii If two Columbia LRAP participants are married, they can apply for LRAP benefits independently.
viii Interest, currently at 5%, begins to accrue on the day you leave qualifying employment. The maximum repayment term is ten years.
ix Re: forgiven loans as taxable income: “For participants working in government or a 501(c)(3) organization, LRAP loan amounts forgiven may not be considered taxable income. For participants working LRAP-eligible positions in the private sector or outside the US, LRAP loan forgiveness is reported to the IRS and a Form 1099-MISC is issued. Please consult with a tax advisor regarding reporting requirements.”
x Deferments may be granted for up to two years. While ineligible for LRAP benefits during this period, LRAP loans will not accrue interest. LRAP loans not yet forgiven must be repaid if the participant does not return to qualifying employment after deferment period.