What Does Your LRAP Look Like? Important Questions to Ask About Any LRAP
What does your loan repayment assistance program look like? Not all LRAPs are created equally. Programs have different requirements, restrictions and benefits.
Some things to consider are varying payment amounts and duration of eligibility, whether you'll be able to benefit from more than one LRAP at the same time and whether your LRAP money is taxable.
Equal Justice Works has compiled some important questions to ask about any LRAP to help you get started.
How much assistance does the program provide?
You'll want to know how much the program's payment amounts are and whether these are disbursed on a monthly or annual basis. Is there a cap on total assistance?
How are other LRAP benefits considered?
You'll want to know whether your eligibility will end once you've received a certain amount in payments. Will you be able to take advantage of other available LRAPs? For example, from the government, your employer or your school. If so, will the amount you receive affect your ability to qualify for assistance from this program? Will it affect the amount you receive through this program?
How is the LRAP funded?
Is there a sole funder? Do funds come from the institution's general fund? Are you able to rely on availability of funds in the future?
Is the LRAP structured as a forgivable loan or as a grant?
The answer to this may determine whether your LRAP is taxable. Grants may be taxable, while forgivable loans may be structured so they are not taxable income. Read the Official Revenue Ruling stating most law school-based loan forgiveness programs meet the requirement of 108(f) and will not be taxed.
Which student loans are eligible?
Does the LRAP cover loans from undergraduate and graduate or professional studies? Does it cover graduate studies outside the degree received from that school? Will you be able to use the LRAP to pay down private as well as government loans?
What service obligation do I have and for how long?
Is there an employment requirement and must you work for a certain number of years to qualify?
Is there a limit on how long I can participate?
There are two components to this query: First, are you only eligible for a certain number of years after graduation? Second, will you no longer be eligible after you've participated and received assistance for a certain number of years?
What employment qualifies?
For example, must you be working in the public interest? Does the program define "public interest"?
Must I have a specialized license?
Does the program require you to have passed an exam or receive specific certification? For example, for law school LRAPs, must you have passed the bar exam and do you need to be in employment that requires a law license or degree?
Must I be practicing in a certain profession?
Does the program require you to be employed in a certain type of position? For example, must you be practicing law?
Is there an income cap and what is it?
Will you no longer be eligible if your salary increases?
How is "income" calculated?
For example, will the program count your spouse's income? Will it count any inheritance or assets against your income?