Class of 2029 LRAP Policies

NYU Law’s LRAP 2029 provides coverage for law school educational debt, up to $10,000 in loans for bar-related expenses, and up to $30,000 in original principal of qualifying non-law school educational debt.

LRAP 2029 will consider coverage for federal educational loans borrowed for law school that are approved and certified by NYU Law. Private educational loans will only be considered for coverage once a borrower has utilized all available federal loan funds. If an applicant is not eligible for federal loans, their private loans can be eligible for coverage under Classic LRAP if the applicant can demonstrate to the satisfaction of the program administrator that the applicant was ineligible to borrow federal student loans at the time the applicant was enrolled. Qualifying law school debt must be used to fund education-related expenses in pursuit of the JD degree and incurred or disbursed during the academic year for which the loans are intended.

Except for an approved budget increase for a one-time computer expense (during a period of full-time JD enrollment), all other approved increases to the standard student expense budget are excluded from benefit calculations for purposes of determining coverage under the program. (Please note that the student expense budget changes each year.)

The amount of law school educational debt qualifying for consideration by the program is the lesser of:

• The original principal of the participant’s actual law school loans OR
• An amount equal to six semesters of the standard student expense budget (includes only the Fall and Spring semesters during the regular academic year)
  • Minus any scholarship or other grant aid;
  • Minus the participant contribution; and
  • Minus summer earnings in excess of $25,000 gross income per summer

Any loans borrowed to cover the participant contribution are ineligible for any coverage under LRAP. 

In addition to qualifying law school educational loans, LRAP 2029 will cover up to $10,000 of a bar study loan. Eligibility for bar study loan coverage is conditional upon an applicant meeting all other LRAP eligibility criteria for loans taken while completing a JD.

LRAP 2029 may also provide coverage for up to $30,000 (in combined original principal) for non-law debt including undergraduate, graduate, and NYU joint degree programs with another NYU graduate school.

With respect to eligible private educational loans, some participants may decide to extend repayment periods. In such cases, LRAP will make disbursements to participants for monthly payments on a 10-year schedule. The 10-year schedule will be based on the loan balance(s) at the time the participant first enters repayment.

It is the responsibility of each participant to verify the repayment terms of their loans and make their required monthly payments on time. If participants find their loans are being repaid over a period of time greater than 10 years, LRAP 2029 will cover expedited payments so long as the expedited plan is not shorter than 10 years and results in a total of 120 payments by the participant.

For graduates entering LRAP 2029 following non-LRAP-eligible employment, NYU will make an adjustment that recognizes earnings during such period(s) of ineligible employment and assumes accelerated repayment of law school debt on that basis. This adjustment is calculated by deducting from qualifying debt (as described above) an amount equal to 40 percent of the amount by which the participant’s gross income exceeded the base qualifying income amount(s) applicable during such periods of ineligible employment. Qualifying debt will be adjusted by the difference between (a) what the graduate should have paid under the ineligible employment adjustment calculation and (b) what the graduate actually paid during the period of ineligible employment. For participants entering LRAP 2029, the program will not use the $110,000 threshold when calculating the ineligible employment adjustment. A qualifying income scale will be calculated for future graduating classes consistent with prior LRAP guidelines, and that scale will be used when calculating the ineligible employment adjustment.

LRAP assistance is not available for loans from family and friends, personal loans from banks or other sources, or for other graduate school debt, except as specified above. Non-law debt in excess of $30,000 in original principal is not eligible for LRAP coverage. There is no retroactive LRAP assistance and no LRAP assistance available for periods of loan forbearance or deferment or during grace periods.

A three-fold set of criteria is 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 at (a) federal, state, and local governmental units (“governmental unit”), or (b) domestic section 501(c)(3) and other not-for-profit organizations, or (c) international non-governmental organizations under the direction of a governmental unit or a section 501 (c)(3).
• Eligible positions must “involve law,” as determined by the program administrator. Such positions generally require the employee to use their legal training to a significant degree, are often held by members of the legal profession, and/or generally have a minimal educational requirement of a JD degree.

Applicants working in for-profit organizations may be eligible to participate in the program, but they require special review and approval by the program administrator to ascertain whether the position is intended to further the practice of law in the public interest. It is expected that at least 51 percent of the work being done by the organization and graduate will serve underrepresented populations.

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.

Under certain financial circumstances, LRAP 2029 participants may be expected to make a contribution toward the repayment of their NYU Law loans. This is referred to as the participant contribution.

The two repayment plans available in LRAP 2029 each require a participant contribution based on qualifying income. Under each plan, a percentage of a participant’s income may be required to be paid toward the participant’s NYU Law loans. LRAP 2029 then covers any difference between the participant’s eligible debt payments and the expected participant contribution.

Participants who are married or in domestic partnerships are also required to report their partner's income. If the participant has a lower income than their partner, their qualifying income will be equal to the average of both incomes. If the participant has a higher income than their partner, their qualifying income will equal their individual income alone.
 

PSLF-Driven LRAP Participant Contribution

Participants with Only Federal Loans:

Qualifying income $110,000 or less.

• Participant contribution: Zero

Qualifying income $110,001 or greater.

• Participant contribution: 40 percent of the amount over $110,000

Participants with Both Federal and Private Loans

Qualifying income $75,000 or less.

• Participant contribution: Zero

Qualifying income $75,001 up to $110,000.

• Participant contribution: 40 percent of the amount over $75,000 towards their private loan payments
• Participant contribution: Zero towards their federal loan payments

Qualifying income $110,001 or greater.

• Participant contribution: 40 percent of the amount over $75,000 towards their private loan payments
• Participant contribution: 40 percent of the amount over $110,000 towards their federal loan payments
   

Classic LRAP Participant Contribution

Qualifying income $65,000 or less.

• Participant contribution: Zero

Qualifying income $65,001 up to $126,000.

• Participant contribution: $1,200 plus 40 percent of the amount between $65,000 and $126,000

Qualifying income $126,001 or more.

• Participant contribution: $30,000 plus 80 percent of the amount above $126,000

Participants who are on parental leave under the Family and Medical Leave Act (FMLA) are eligible for continued coverage in LRAP, and their LRAP benefits will continue to be calculated using the qualifying income for the position held. In the event a participant opts to take additional, unpaid parental leave, LRAP deferment time of up to 24 months is available which will allow for an extension of two years of continued LRAP coverage.

Part-Time Work

Participants in Original Standard, Plus Traditional, and Classic LRAP may work part-time and continue to receive LRAP coverage while caring for dependent children. LRAP benefits will be based on the full-time equivalent rate of payment for the qualifying position and not the amount being paid during part-time status.

Because of the full-time employment requirement for Public Service Loan Forgiveness (PSLF), participants in Original Integrated, Plus Income-Driven, and PSLF-Driven LRAP must work full-time in order for payments to count. Deferment Time is available to these participants should they choose to work part-time.

In determining qualifying income for LRAP, an exemption of $10,000 for each dependent will be subtracted for each participant. There is no limit on the amount of dependents allowed per participant. However, in the case of two married participants in LRAP with dependents, the total number will be divided between the participants; each cannot claim the total in their respective calculations.

Participants may request qualified program deferrals up to a maximum of 24 months subject to the approval of the program administrator. Qualified program deferral periods will extend a participant’s eligibility period as otherwise defined herein. The program will consider requests for such deferrals for the following reasons: continuing education, economic hardship, involuntary unemployment, temporary disability, and parental leave. Participants are not eligible to receive program benefits during a qualified program deferral period.

Approval of a qualified program deferral is at the discretion of the program administrator, and the participant will be required to submit the request in writing and to submit such other documentation as may be requested.

Participants must be JD graduates of NYU Law to be eligible for LRAP 2029 benefits. Provided that all other program conditions are met, participants may receive LRAP benefits for up to 10 years. The majority of applicants begin their LRAP participation period in January of the year following a May graduation. For those graduates who graduate at times other than in May, the beginning of the LRAP eligibility period will be determined by the program administrator as appropriate, considering the applicable loan grace periods.

Eligible graduates may apply to LRAP 2029 for up to five years following graduation as long as they meet all LRAP requirements, including but not limited to job, debt, and income qualifications. While graduates eligible for LRAP 2029 may first apply to the program any time during the five-year eligibility window, under no circumstances will the amount eligible for coverage under LRAP 2029 ever exceed the amount outstanding at the end of the applicable loan grace periods.

Additionally, while LRAP provides up to 24 months of deferment time under certain circumstances, no retroactive deferments are allowed. A person must be an active participant in LRAP in order to be able to use deferment time.

Participants must have total net worth (assets minus liabilities) of less than $100,000. In the case of married participants or those in domestic partnerships, 50 percent of the combined net worth of the participant and their spouse/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 a given year), and as part of the information submitted for a change in marital status. Qualified retirement assets—such as 403(b)s, 401(k)s, or IRAs—will be excluded from the net worth calculation for purposes of net asset qualification.

Participants eligible for LRAP 2029 who opt into the PSLF-Driven Plan may, under certain circumstances, qualify for additional assistance to help cover negative amortization that can occur while enrolled in an income-driven repayment plan. Negative amortization occurs when the payments made by a borrower are less than the interest due on the borrower’s outstanding debt. The amount of the one-time payment is designed to cover an eligible participant’s accrued unpaid interest as of the time they have left PSLF-eligible employment.

In order to help address the issue of negative amortization, LRAP 2029 participants who opted into the PSLF-Driven Plan and who have completed 36 months in eligible employment may receive a one-time payment to assist with the negative amortization on their LRAP-eligible federal law school loans. For example, a participant who leaves LRAP 2029’s PSLF-Driven Plan (because they have left PSLF-qualifying employment) but otherwise remains in LRAP-eligible employment will receive this one-time payment once the participant has left PSLF-qualifying employment. The one-time payment is calculated as of the time of the switch to PSLF-ineligible employment.

Note: Interest accrued due to forbearance, deferment (except while enrolled at NYU), or other periods of non-payment, and penalties for late payment or default on eligible law school loans do not qualify for one-time payment coverage. Additionally, one-time payment coverage will cover the negative amortization (interest only) on qualifying law school debt minus any participant contribution. Any ambiguity or conflict within or question regarding the interpretation or application of these LRAP guidelines as they relate to the one-time payment or otherwise will be made by the program administrator at the administrator’s sole discretion.

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.

Changes to loan payments based solely on quarterly interest rate adjustments should not be reported except on the annual application, and benefits will not be adjusted on that basis. Participants will be required to submit supporting documentation to substantiate the change(s).

Changes are to be submitted to NYU via the LRAP application within 30 days of the change. Failure to report application changes may result in a delay or cancellation of continued LRAP benefits. Any recalculation of benefits using the effective date of a reported change and any subsequent adjustment to the benefit resulting from the change will be reflected beginning with the next disbursement. Documentation of changes may be attached to an active LRAP application or by sending them to nyulaw@mylrap.org.

Participants who are eligible for an increased monthly benefit amount will receive any retroactive adjustment as part of the next disbursement.

The forgiveness of LRAP loans is, in most cases, not subject to federal income tax pursuant to Section 108(f) of the Internal Revenue Code (IRC). Participants who are working for or under the direction of a governmental unit or an organization described in 501(c)(3) of the IRC generally will not have this forgiveness added to their gross income. Section 108(f) of the IRC details the requirements for tax-free forgiveness.

Please feel free to refer to IRS Publication 970 for an overview of the treatment of LRAP loan forgiveness, as well as the deductibility of student loan interest payments. By providing you with this information NYU is not rendering, or purporting to render, legal, accounting, or tax guidance. NYU strongly urges participants to consult with their tax advisors regarding the taxability of the forgiveness of their loans.

Note: While NYU is strongly committed to LRAP, it is important to note that neither the existence of the program nor the formula used by the program to calculate benefits is guaranteed. The formula and other terms of the program will be determined at the discretion of the program administrator and may be adjusted as program resources, participation rates, and indebtedness of participants change. Participants may receive more or less funding in succeeding years.