Here are some answers to frequently asked questions.
A. APPLICATION & ELIGIBILITY BASICS
C. DEBT & BENEFIT DETERMINATION
D. BENEFIT DISBURSEMENT & LOAN FORGIVENESS
E. JUDICIAL CLERKSHIPS
F. PARTICIPANT RESPONSIBILITIES
G. INCOME BASED REPAYMENT LRAP
A. APPLICATION & ELIGIBILITY BASICS
1. What is the Eligibility Period?
Participants must be NYU School of Law JD graduates to be eligible for LRAP benefits. Provided that all other Program conditions are met, participants may receive LRAP benefits for up to ten years following graduation.
2. When can I Submit my First LRAP Application?
Graduates entering LRAP for the first time will submit their initial application in September/October following graduation. Applicants must request access to the LRAP application by emailing the Office of Student Financial Services at email@example.com. Note: January graduates should contact the Student Financial Services office directly regarding when to submit their LRAP application.
3. Does the Program Offer Extensions to the Eligibility Period?
Participants may request Qualified Program Deferrals up to a maximum of 24 months (subject to the approval of the Program Administrator). The Program will consider deferral requests for the following reasons: continuing education, economic hardship, involuntary unemployment, temporary disability, and parental leave. Participants are ineligible to receive LRAP benefits during a Qualified Program Deferral period. Approval of a Qualified Program Deferral is at the discretion of the Program Administrator. The participant must submit a written request as well as any additional documentation that may be requested.
4. When is the Annual Application Period?
Participants must apply annually to LRAP. The annual application period is generally from September 1 - October 15 of the calendar year prior to the year for which an applicant is requesting benefits. LRAP applications are available at a secure online site.
5. What happens if I have an outstanding balance on my NYU bursar account? Will I be eligible to apply for LRAP?
Graduates with an outstanding balance due to NYU are ineligible to receive LRAP benefits. All outstanding amounts due to NYU must be paid in full before a graduate is eligible to receive LRAP benefits. Additionally, LRAP benefits will not be calculated retroactively.
1. What are the Criteria for Qualifying Employment?
The following criteria are utilized to determine the eligibility of an applicant’s employment. ALL of the following criteria must be met for a graduate to be considered eligible to receive benefits from the Program:
- Participants must be full-time, paid employees (those who work 35 hours or more each week) in eligible positions, as defined below. Graduates in unpaid positions, such as internships or volunteer positions, are not eligible to receive benefits under the Program.
- Eligible positions include those in federal, state, and local governmental units (“governmental unit”) or domestic section 501(c)(3) and other not-for-profit organizations and international non-governmental organizations under the direction of a governmental unit or a section 501 (c)(3) organization.
- Eligible positions must “involve law,” as determined by NYU School of Law. Such positions typically require the employee to use his or her legal training to a significant degree, are positions that are often held by members of the legal profession (such as a policy position in government), or have a minimal educational requirement of a JD degree.
2. What if I Work for a Private or For-Profit Organization?
Applicants working at for-profit organizations may be eligible to participate in the Program but require special review and approval by the Program Administrator in order to determine whether the position is intended to further the practice of law in the public interest. It is expected that at least fifty-one percent of the work being done by the organization and graduate will further the practice of law in the public interest.
3. Does LRAP Cover Self-Employment?
Applicants who are self-employed require special review and approval by the Program Administrator. Please refer to the self-employment guidelines and supplemental self-employment application for additional information. Applicants should bear in mind that each self-employment situation is unique and requires individual assessment by the Program Administrator.
4. Does LRAP Cover Parental Leave or Have Provisions for Graduates with Children?
Participants graduating in 2005 and beyond who are the primary caregiver for their dependent child(ren) up to the age of six and who are working less than full-time may continue to receive LRAP benefits from the Program subject to the following conditions:
- Such participants working at least half-time in eligible positions will receive benefits based upon Qualifying Income calculated at the full-time equivalent rate for the position, and subject to all other conditions of the Program. Such periods will be included in the calculation of eligible time in the Program for purposes of Loan Forgiveness and Repayment.
- Such participants on approved parental leaves under the Family and Medical Leave Act of 1993 may continue to receive benefits for up to six months based upon Qualifying Income calculated at the participant’s full-time salary immediately preceding such leave, and subject to all other conditions of the Program. Such periods will be included in the calculation of eligible time in the Program for purposes of Loan Forgiveness and Repayment.
C. DEBT & BENEFIT DETERMINATION
1. How Does NYU Determine What Loans are Covered by LRAP?
LRAP recognizes debt service only on law school student loans approved and certified by NYU. Law school student loans include formal educational debt disbursed within certified student loan programs and used to fund educational expenses in pursuit of the JD degree. LRAP does not recognize other debt including parental loans, personal loans (from financial institutions or individuals), consumer debt (including credit card and home equity loans). Loans to cover bar-related expenses up to $10,000 may be covered if all other criteria are met for determining qualifying debt.
The amount of debt qualifying for consideration by the Program (“Qualifying Debt”) is the lesser of:
- The original principal of the participant’s actual law school loans (“Actual Debt”), as defined above, or
- An amount equal to three years (six semesters) of the standard student expense budget less aid received and less the student contribution calculated according to NYU’s institutional formula (“Maximum LRAP-Eligible Debt”)
- Summer earnings in excess of $15,000 per summer which were received during the period in which the participant was in school or in the summer immediately following graduation are deemed to be an addition to the student contribution.
2. Does LRAP Cover Bar Loans?
Bar study loans up to $10,000, less any other aid or reimbursement you received for bar expenses, may be considered eligible for LRAP.
3. How does the School of Law Calculate My Student Contribution for LRAP Purposes?
The School of Law expects all students to contribute a significant portion of their personal assets toward paying for law school educational expenses. Individual student contributions are computed in accordance with federal and institutional guidelines and, therefore, will vary from one student to the next based on an individual’s assets and earnings. The amount of your student contribution will be based on the information that you provided on the School of Law financial aid application. If you did not complete the School of Law financial aid application, your assumed annual student contribution will be the cost of tuition. We do not recalculate or adjust a student contribution after the initial calculation, with the exception of summer earnings.
As far as a student's assets, 100% of qualified requirement assets and home equity on a primary residence up to $100,000 is protected in the Student Contribution calculation. All other assets are valued at 100%.
The amount of your Student Contribution is listed on the second page of your Financial Aid Award Letter (accessible on-line in our financial aid application processing system).
4. How Will My Summer Employment in the Private Sector Affect My LRAP Eligibility?
As noted above, when determining my LRAP “Qualifying Debt”, earnings in excess of $15,000 in either summer following your 1L or 2L years, as well as the summer following graduation, will be added to your student contribution. For example, if you received a PILC grant your 1L summer and your 2L summer earnings totaled $24,000 then $9,000 would be added to your student contribution for LRAP purposes ($24,000 minus $15,000 = $9,000).
5. What if My LRAP-Eligible Debt is Less Than My Actual Debt?
Should it be necessary to exclude some of an applicant’s law school debt by virtue of the maximum debt cap (i.e., in cases where the participant’s actual original principal exceeds the calculated maximum), private loans will be excluded first, followed by Graduate PLUS loans, then Unsubsidized Direct loans, as necessary.
6. Once My Qualifying Debt is Determined, What Loan Payments are LRAP-Eligible?
To be eligible for coverage by LRAP, repayment on loans must be current; payments on delinquent loans and loans in deferment or forbearance status are ineligible for consideration as qualifying debt service.
7. How Will A Consolidation Loan Affect My LRAP Benefits?
Participants may decide to consolidate their loans under the Federal Consolidation Loan Program, or may otherwise extend private loan repayment periods. However, LRAP will only make disbursements to participants for actual payments made or monthly payments that would be required on a 10-year schedule, whichever is less. Additionally, participants are not eligible for LRAP benefits for periods in which their loans are in deferment or forbearance.
8. What is My Qualifying Debt Service?
Once a participant’s qualifying debt is determined, qualifying monthly debt service, upon which LRAP benefits are calculated, is determined to be the lesser of:
- Monthly debt service payments on qualifying debt required on a ten-year level repayment schedule or,
- Monthly payments on qualifying debt based upon the participant’s actual loan repayment schedule(s).
9. What is the “Participant Contribution” under Alternative vs. IBR LRAP?
For classes graduating 2005-2008, participants are eligible for LRAP benefits for 100% of qualifying debt service if their qualifying incomes are less than or equal to the base qualifying income for their class. Participants with qualifying incomes that exceed the base but less than $30,000 in excess of the base qualifying income amount (the “Qualifying Income Cap”) are expected to contribute on an annual basis to the repayment of their qualified debt (the “participant contribution”) as follows:
- LRAP benefits will be reduced by a participant contribution of 40% of qualifying income between the base qualifying income and $20,000 in excess of the base qualifying income.
- LRAP benefits will be further reduced by an additional participant contribution of 50% of qualifying income between the base qualifying income plus $20,000 and the base qualifying income plus $30,000.
Note: Participants with qualifying incomes exceeding the base plus $30,000 are ineligible to receive LRAP benefits (but may be eligible for LRAP loan forgiveness).
Under IBR LRAP, benefits will also be reduced by a participant contribution equal to 40% of the difference between the base qualifying income and the participant’s qualifying income. However, under IBR LRAP, the base qualifying income is $80,000. If you are eligible for 2005-2008 LRAP, then we will use the base income as set forth in the qualifying base incomes scales developed annually by the Office of Student Financial Services for the 2005-2008 LRAP program.
10. Is There Any Allowance for Non-Law School Debt Service?
The participant contribution, as calculated above, will be reduced for debt service paid by the participant on undergraduate and graduate/professional school educational loans at an amount not to exceed $5,000 annually. Participants with debt service that exceeds this limit may qualify for additional contribution offsets subject to a needs analysis to be completed by the School of Law.
11. What is My Qualifying Income?
A participant’s Qualifying Income is defined as the participant’s annualized gross income from employment, subject to the provisions for married participants outlined below. Gross income from employment includes, but is not limited to, wages, fees, bonuses, housing allowances, and income from self-employment, as may be applicable.
12. How can I Determine if I Might Be Eligible for LRAP Assistance?
Qualifying income scales for each graduating class, upon which LRAP calculations are based, will be determined annually by NYU, using a formula based upon public service salaries used by the federal government. The Base Qualifying Income (“Base”) figure for each year will be published in approximately October of the preceding year. Applicants to LRAP must also meet all other program requirements.
13. How Does LRAP Treat Participants Who Are Married or in Domestic Partnerships?
Participants who are married or in domestic partnerships will have their Qualifying Income calculated subject to one of three scenarios:
- If the spouse’s/domestic partner’s annualized gross income from employment (as defined by the Program), less the spouse’s/domestic partner’s undergraduate student loan debt service of up to $5000 annually, is less than the participant’s gross income from employment, the participant’s gross income from employment will be used as Qualifying Income; or
- If the spouse’s/domestic partner’s gross income from employment, as defined above and less the spouse’s/domestic partner’s undergraduate student loan debt service of up to $5000 annually, is more than the participant’s gross income from employment, the spouse’s/domestic partner’s gross income from employment less the spouse’s/domestic partner’s undergraduate student loan debt service of up to $5000 annually will be added to the participant’s gross income from employment and the sum divided by two to determine Qualifying Income; or
- If two LRAP participants are married or are in a domestic partnership, each will be treated as single for purposes of calculating Qualifying Income.
14. How is My Net Worth Calculated?
Participants must have total net worth (assets minus liabilities) of less than $20,000. In the case of participants who are married or in domestic partnerships, 50% of the combined net worth of the participant and his/her spouse/domestic partner will be considered to be the net worth of the participant. All applicants must submit disclosure statements of net worth annually as part of the application process (with their first application for participation in any given year), and as part of the information submitted for a change in marital status. Qualified Retirement Assets, such as 403(b), 401(k), or IRAs will be excluded from the net worth calculation for purposes of net asset qualification.
15. How Are My LRAP Benefits Calculated?
LRAP benefits are calculated on the basis of qualifying debt service, qualifying income, and the participant contribution. The monthly LRAP benefit will be monthly qualifying debt service less the monthly participant contribution. Please note that it is possible that applicants with qualifying income of less than the qualifying income cap will not receive a current monthly LRAP benefit if their expected participant contribution exceeds their qualifying debt service. In such cases, participants may remain eligible for LRAP loan forgiveness.
D. BENEFIT DISBURSEMENT & LOAN FORGIVENESS
1. Once My Application is Approved and My Benefits are Calculated, How are Benefits Disbursed?
LRAP benefits are disbursed to participants two times annually either by check or direct deposit. Participants are strongly encouraged to sign up for direct deposit.
Participants are required to use the benefits during the time they are issued and only for the loans and payment months for which they are intended. Benefits that are disbursed by check are subject to a stale date of 180 days from the date of issuance. Participants failing to deposit LRAP benefit checks within the stale date period may request a check be reissued. However, it is within the sole discretion of the Program Administrator to approve such a request. Participants making such a request must provide in writing a basis for the request to reissue that is acceptable to the Program Administrator. The request must be specific regarding the reason the participant failed (a) to deposit the check within the stale date period and (b) use the funds during the time for which the benefits were issued.
2. When Are My LRAP Loans Forgiven?
LRAP loans are forgiven once participants accrue 36 months of eligibility in the Program. At the end of the year during which a participant reaches 36 months of eligibility, all outstanding LRAP loans made by the Program will be forgiven. Loans made in subsequent years will be forgiven annually.
Note: For purposes of determining eligibility for forgiveness, graduates will accrue service for each month for which they receive benefit distributions, as well as for each month during which they are no longer receiving current benefits but during which they have remained continuously in qualifying employment, as defined by the School of Law.
3. What if My Income Causes Me to “CAP OUT” of the Program Before My 36 Months of Eligibility?
Participants whose income precludes them from receiving current benefits but who remain in qualifying employment must complete an annual LRAP application in order to continue to accrue months of eligibility toward forgiveness.
4. What if I Exit the Program Voluntarily?
Participants who leave the LRAP Program prior to the forgiveness of their LRAP Loans must repay those loans to NYU School of Law. Loans which become repayable to the Program will be amortized on a monthly basis over a period not to exceed 12 months at an amount equal to the rate used for Graduate PLUS loans by the U.S. Department of Education.
5. How is Interest Accrual Applied?
Interest begins accruing on the outstanding principal balance on the date the participant no longer qualifies for Program participation. Repayment is expected to begin 90 days following departure from the Program.
E. JUDICIAL CLERKSHIPS
1. Does LRAP Cover Judicial Clerkships?
NYU’s LRAP is not intended to provide benefits to graduates who choose to take judicial clerkships. However, the Program does make exceptions for graduates who intend to proceed directly to LRAP-eligible employment within 30 days following the end of their clerkships. Such graduates may apply to the Program for LRAP benefits, and such benefits may be paid to them for up to two consecutive years (24 months) of clerkship employment.
2. To Qualify for LRAP, Must My Clerkship Occur Immediately Following Graduation?
No. Please consult with the LRAP Administrator to discuss how a later clerkship may impact your eligibility for LRAP.
3. How do Clerkship Loans Differ from LRAP Loans?
LRAP benefits paid during clerkships are subject to all Program terms, as well as to the following additional conditions:
- Interest will accrue at an amount equal to the interest rate on the Graduate PLUS loan as set by the U.S. Department of Education.
- Accrued interest on Clerkship Loans will be forgiven by the Program for participants who, following an eligible clerkship, proceed immediately to LRAP-eligible employment and otherwise participate in the LRAP Program, and who remain in such a position for at least twelve consecutive months. In addition, at such time as the accrued interest is forgiven, the period of time in which the student participated in the clerkship will be included in the calculation of eligible time in the Program for purposes of Loan Forgiveness and Repayment.
- Clerkship Loans (plus accrued interest thereon) made to participants who do not enter LRAP-eligible employment within 30 days following their clerkships, or who do not remain in LRAP-eligible employment for twelve consecutive months, become immediately repayable to the Program.
F. PARTICIPANT RESPONSIBILITIES
All participants are expected to abide by the rules and requirements of the Program. Failure to accurately and timely disclose material information, as well as failure to use program distributions to repay law school loans, may result in suspension from the Program and ineligibility to receive benefits. Please note that graduates should not rely on support from the Program prior to completing an application and receiving approval from the Program Administrator.
1. What are My Responsibilities?
When completing an annual LRAP application, applicants must submit all required documentation along with the application. Applicants who do not submit required documetation within 60 days of completing an LRAP application will be ineligible to receive LRAP benefits. Participants must notify the Office of Student Financial Services within 30 days of the effective date of a change in eligibility or within 30 days of the date upon which they became aware of such a change. Changes that must be reported include (but are not limited to) changes in salary, marital status, employment, and loan repayment status or amount. Participants will be required to submit supporting documentation to substantiate change(s).
2. How do I Submit Changes in Status?
Changes are to be submitted to NYU via email, mail or the online application system. Failure to notify the Office of Student Financial Services within 30 days of a change will result in the loss of benefits or imposition of penalties.
3. How do Changes to My Status Affect My LRAP Benefits and/or Eligibility?
LRAP benefits and the LRAP Loan amount are calculated prospectively, based upon the information provided by the participant at the time the application is completed, and on that basis may be modified from time to time. LRAP benefits will be recalculated as of the effective date of a reported change, and the impact of the change will be reflected beginning with the next disbursement.
Participants who receive overpayments as a result of changes in eligibility will be required to return the amount of the overpayment to the Program. The overpayment may be applied to a future disbursement or may become immediately repayable to the Program, depending on eligibility status.
Participants who are eligible for an increased monthly benefit amount will receive any retroactive adjustment as part of the next LRAP disbursement.
4. What if My Interest Rate Changes During the Year?
Changes to loan payments based solely on interest rate adjustments should not be reported (except on the annual application) and benefits will not be adjusted on that basis.
5. What if I Work at a Firm Before Entering LRAP?
For graduates entering LRAP following ineligible employment, the School of Law will make an adjustment which recognizes earnings during such period(s) of ineligible employment and anticipates accelerated repayment of law school debt on that basis. This adjustment deducts from qualifying debt as otherwise calculated, an amount equal to 40% of the amount by which the participant’s gross income exceeded the qualifying base income amount(s) applicable during such periods of ineligible employment. Qualifying debt will be adjusted by this amount regardless of whether the participant actually made such payments. NOTE: The base qualifying income in this calculation is not $80,000. For this calculation, the Program uses the LRAP income scales that are published annually by the Office of Student Financial Services.
G. INCOME BASED REPAYMENT LRAP
1. Why has NYU integrated LRAP with the federal Public Service Loan Forgiveness Program (PSLFP) and Income Based Repayment (IBR)?
The integration of NYU’s LRAP with PSLFP and IBR will allow NYU to cover a much broader income range while significantly lowering the out-of-pocket costs for the majority of our participants. For example, assume a participant’s annual income from employment for 2012 is $78,000. Under Alternative LRAP (the 2005-2008 Program), this would result in over $800 per month in an out-of-pocket cost for the participant contribution (this assumes an income base of approximately $52,000 in 2012 for the participant’s graduating class).
However, in IBR LRAP, we have a fixed income base of $80,000. Given that the participant’s $78,000 qualifying income is below the $80,000 base, the participant will no longer have a participant contribution.
2. I am a current participant in LRAP and my loans are already in repayment. If I’ve already been in LRAP for a year and my LRAP eligibility ends 10 years after graduation, under IBR LRAP won’t my repayment be extended beyond 10 years leaving me without LRAP support for a period of time?
Participants already in repayment who are required to switch to IBR LRAP will have their time extended in LRAP so that it coincides with the 120-month requirement for forgiveness under PSLFP. This extension of time is separate from LRAP’s available deferment time for participants of up to 24 months for involuntary unemployment, family or educational leave.
3. Should I consolidate my undergraduate loans into the Direct Loans program as well or only my law school loans?
Under IBR LRAP, you are only required to consolidate your law school loans and enroll them in IBR. It is your choice whether to consolidate your non-law school loans. If you are not sure whether consolidation of these loans is in your best interest, we are happy to schedule an appointment to discuss the pros and cons.
4. I intend to stay in LRAP eligible employment but I might not stay in employment that is eligible for forgiveness under PSLFP. If that happens, won’t I end up owing a lot more than if I had just kept paying my loans on a 10-year repayment plan instead of IBR?
LRAP has taken into consideration that some participants may begin in an LRAP and PSLFP eligible position but transition to a position that is not eligible for both programs at a later time. Depending on the timing of this transition, you will be presented with different LRAP continuation options and be able to decide the best course of action at that time depending on your specific situation.
5. If I understand correctly, I will be ineligible for LRAP if I marry someone whose salary, when combined with mine, would average more than the top limits of LRAP. My understanding of IBR, however, is that if a married couple files taxes separately, only the tax return for the person receiving the benefits will be considered in determining IBR payments. What does this mean to me under IBR LRAP?
Under the previous LRAP, there is a cap on qualifying income. However, IBR LRAP does not have a stated cap. Depending on the debt load, the participant will cap out when the participant contribution (the amount LRAP expects you to pay based on your income) exceeds the eligible required monthly loan payment. IBR LRAP has a fixed qualifying base income of $80,000. Thus, those participants with a qualifying income of less than $80,000 will not have a participant contribution. Those participants with a qualifying income greater than $80,000 will be expected to contribute 40% of the difference between their income and the $80,000 base (roughly $34 per month for every $1,000 that your income exceeds the $80,000 base). For participants who marry and file separately, we will only look at the participant’s income when determining qualifying income for LRAP (same as under IBR).
6. At the end of 3 years in LRAP, all LRAP loans that the Law School has disbursed to a participant up to that point are forgiven. However, under IBR LRAP, the balance is not forgiven until the end of the full ten years. What happens if I leave IBR LRAP?
After 36 months of LRAP eligible employment, NYU will forgive the LRAP loan (benefits) provided to date. The participant will still have an outstanding debt with their lender. We do not forgive the loans you hold with your lender. The idea is that your loans will be reduced by the payments made while enrolled in LRAP. Under Alternative LRAP, this meant that if you left after 36 months in LRAP, you would have made 3 years of payments toward your law school debt and would have no further obligation to LRAP as we would have forgiven the loan we provided to you to pay your lenders. At the end of 10 years in Alternative LRAP, the idea is that you would have paid your loans off.
The same idea applies to IBR LRAP. After 36 months you can leave LRAP with no obligation to continue. However, you will still have to continue paying your lenders. We encourage you to review the Program Description, specifically the areas concerning negative amortization and PSLFP.