LRAP: University of California, Los Angeles Law School

Published October 2010, last updated November 2010

Loan Repayment Assistance Program

How It Works
The UCLA Law LRAP[i] helps graduates with significant educational debt work in the public sector, where lawyers are generally paid much less than those in the private sector. LRAP loans are issued every six months, and forgiven upon satisfactory review of an application showing that the graduate is employed in a qualifying job. Participants must apply semi-annually to continue coverage under the program.

Income Based Repayment
Beginning with the Class of 2011, those entering the program must also enroll in the federal Income Based Repayment system (see: http://www.ibrinfo.org/ or TLS’s explanation at http://www.top-law-schools.com/income-based-repayment-explanation.html). For those with high debt levels relative to income, educational loan payments are capped at 15% of discretionary income (gross income minus 150% of the federal poverty level). After 25 years of payments, all loans are forgiven—10 years if a participant works in qualifying public service. However, those who do not have their loans forgiven will likely pay more in the long run due to additional interest accrual.

UCLA’s LRAP dovetails with IBR, paying for some or all of these reduced monthly payments while graduates pursue qualifying employment. This splits the costs of supporting public interest graduates between the university and the federal government, which may help to protect the program from economic uncertainty, but will reduce overall LRAP benefits for some. For example, those who leave LRAP after a few years for higher-paying jobs may have made little to no progress on paying off their principal.

Eligible Jobs
To enroll in LRAP, a graduate must work full-time for a nonprofit organization or government agency. Additionally, the job must be law-related, necessitating bar passage or at least significant use of skills taught in law school. Private sector jobs and short-term clerkships are not covered; non-tenure track clinical instruction and work for foreign governments may qualify on a case-by-case basis. Graduates must enter LRAP within three years of their repayment start date.

Eligible Debt
Any federal or private loans taken out for law school (including bar study loans) are covered, with a few caveats: educational loans taken out in excess of UCLA’s computed student budget are not eligible, and private loans are capped at $40,000. This program represents an improvement for committed public interest graduates with especially high debt loads, as the previous non-IBR program capped eligible debt at $105,000 (a relatively low threshold, given that current non-resident tuition tops $50,000 a year).

Calculation of Expected Participant Contribution
The income floor for requiring a participant contribution is generous, at $55,000. Graduates are expected to contribute 35% of income above this amount, up to the IBR-adjusted monthly payment obligation. After two years, the $55,000 threshold increases by $1,000 each year. Graduates are no longer eligible when their adjusted gross incomes exceed $80,000.

Participants with children deduct $6,000 from their gross incomes for a first child and $4,000 for each subsequent child. The program takes spousal income into consideration only if that spouse has a higher income, in which case half of joint income becomes the new base figure. Not including retirement accounts and home equity, single participants can accumulate $10,000 of assets a year with no effect on LRAP loans; married graduates, $20,000.

Hypothetical Scenarios
*All scenarios assume California taxes and may underestimate interest payments for some.[ii]

Scenario One
An unmarried graduate.
Salary: $55,000
Salary less Taxes: $39,286
Debt: $100,000 on a ten-year repayment plan at 6.8% interest
Actual Yearly Debt Obligation: $13,800
Yearly Debt Obligation under IBR[iii]: $5,760
Graduate’s Expected Contribution: $0
LRAP Award: $5,760
Take-home Income: $39,286

Scenario Two
An unmarried graduate in his or her fourth year of eligibility.
Salary: $70,000
Salary less Taxes: $47,632
Debt: 100,000 on a ten-year repayment plan at 6.8% interest
Actual Yearly Debt Obligation: $13,800
Yearly Debt Obligation under IBR: $8,040
Graduate’s Expected Contribution: $4,550
LRAP Award: $3,490
Take-home Income: $44,142

Scenario Three
A married graduate with two children in his or her sixth year of eligibility; spouse makes $50,000/year. Combined assets (excluding retirement funds and house equity) of $60,000.
Salary: $65,000
Spousal Income: $50,000
Salary less Taxes (joint): $82,888
Debt: $100,000 on a ten-year repayment plan at 6.8% interest
Actual Yearly Debt Obligation: $13,800
Yearly Debt Obligation under IBR: $12,240
Graduate’s Expected Contribution: $0
LRAP Award: $12,240
Take-home Income (joint): $82,888

Scenario Four
A graduate married for two years, with no children, in his or her sixth year of eligibility; spouse has no income. Combined assets (excluding retirement funds and house equity) of $100,000.
Salary: $65,000
Spousal Income: $0
Salary less Taxes (joint): $51,558
Debt: $100,000 on a ten-year repayment plan at 6.8% interest
Unprotected Assets: $20,000 [$100,000 – (4 x $10,000 + 2 x $20,000)]
Actual Yearly Debt Obligation: $13,800
Yearly Debt Obligation under IBR: $6,480
LRAP Award: $0 (Income plus unprotected assets exceed $80,000 cap)
Take-home Income: $45,078 ($37,758 without IBR)

Final Notes on the UCLA Law Loan Repayment Assistance Program
The UCLA LRAP allows graduates to pursue low-paying public interest work. Students comparing the program to other LRAP’s should keep in mind the difference between programs that require IBR participation and those that do not, since IBR participants will pay off principal amounts much more slowly. UCLA’s program provides a great deal of aid to graduates committed to public service, but may not be as helpful for students who move between the public and private sectors.

[i] http://www.law.ucla.edu/home/index.asp?page=1277
[ii] Tax calculations use www.paycheckcity.com
[iii] http://www.ibrinfo.org/calculator.php