New York University (NYU) School of Law encourages its graduates to pursue a variety of career options. The Loan Repayment Assistance Program (LRAP or Program) is one program designed to assist JD graduates who choose careers in the public service or other fields of law in the public interest.
NYU School of Law encourages its graduates to pursue careers in public service, and recognizes the difficulty that law school debt burdens present to those interested in such careers. LRAP provides our graduates with greater flexibility in career choice by easing the burden of debt repayment obligations. Graduates who choose careers in public service or with not-for-profit organizations following graduation may have their debt burden funded in full or in part by NYU, if their qualifying income is below the level provided in the published qualifying income scale and that they meet all other requirements for participation as outlined below.
NYU introduced LRAP in 1984. Our commitment to assisting our graduates in pursuing public interest employment has increased significantly since then.
The following section provides an overview of how LRAP works. Specific terms and conditions are defined in the sections that follow. Please note that graduates should not rely on support from the Program prior to completing an application and receiving approval from the Program Administrator. Loans are made annually by the Program (“LRAP Loans”) to participants to assist them with repayment of their law school loans. The initial amount of the annual loan is determined on the basis of the participant’s Qualifying Income, Qualifying Debt Service on Qualifying Debt, as hereinafter defined, and other information as reported on the annual application. Participants are eligible to receive LRAP distributions for ten years following graduation, provided that all Program conditions are met. Program eligibility may be extended by up to 24 months for Qualified Program Deferral periods.
On an annual basis, all participants must apply to the Program and sign a promissory note. Additionally, participants must notify the Program of changes in status within 30 days of the effective date of the change. Should a change result in an amended monthly benefit amount, the modified benefit amount, plus any retroactive impact for benefits previously distributed, will be reflected beginning with the next quarterly distribution.
LRAP Loans may be 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, and LRAP Loans made in subsequent years to such participants will be forgiven annually. Participants who leave the LRAP Program prior to the forgiveness of their LRAP Loans must repay those loans to NYU School of Law. Such loans become repayable over ten years at an interest rate of 5% per year. Interest begins accruing on the outstanding loans on the date the participant leaves the Program.
1. 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. The eligibility period begins upon the earlier of: 1) the date the participant begins to repay his or her law school loans or 2) January of the year following a May graduation. The eligibility period for the majority of graduates begins in January; however, graduates may begin their eligibility and participation in the Program as early as the October following a May graduation if they have already begun loan repayment and provided that they meet all additional Program requirements. For those graduates who graduate at times other than in May, the beginning of the LRAP eligibility period will be determined as appropriate considering the applicable loan grace periods but in no event later than six months following graduation.
Participants may request Qualified Program Deferrals, 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 above. 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.
2. Qualifying Employment
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.
- Participants 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:
- Participants working at least half-time in eligible positions will receive benefits based upon Qualifying Income (see section C.5.) calculated ratably at the fulltime 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 as set forth further in section E. below.
- 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 as set forth further in section E. below.
- Participants who are the primary caregiver for their dependent child(ren) up to the age of
- Eligible positions include those in the federal, state, and local governmental units (“governmental unit”) or domestic section 501(c)(3) and other not-for-profit organizations and international nongovernmental organizations under the direction of a governmental unit or a section 501 (c) (3).
- Eligible positions must “involve law,” as determined by NYU School of Law. Such positions generally 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, 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 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 fifty-one 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.
3. Net Asset Qualification
Participants must have total net worth (assets minus liabilities) of less than $20,000. In the case of married participants or those in domestic partnerships, 50% of the combined net worth of the participant and his/her 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), 401(k), or IRAs will be excluded from the net worth calculation for purposes of net asset qualification.
4. Qualifying Debt and Debt Service
LRAP recognizes debt service only on law school student loans approved and recognized by NYU. Law school student loans only include formal educational debt from certified student loan programs. The loans must be used to fund educational related expenses in pursuit of the JD degree and incurred or disbursed during the academic year for which the loans are intended. LRAP does not recognize other debt including parental loans, personal loans (from financial institutions or individuals), and 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.
- For purposes of determining Qualifying Debt, the standard student expense budget may be increased by up to $10,000 to cover bar study loans for students with demonstrated need as determined by NYU. Such determination of need must be made prior to receipt of a bar study loan.
Participants may decide to consolidate their loans under the Federal Consolidation Loan Program or may otherwise extend private loan repayment periods. However, LRAP will make disbursements to participants only 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, but may be eligible for a Qualified Program Deferral, as previously described in section C.1.
For graduates entering the Program following non-LRAP-eligible employment, NYU will make an adjustment which 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 otherwise calculated as described above, an amount equal to 40% of the amount by which the participant’s gross income exceeded the Base Qualifying Income amount(s) (as described in section C.5.) applicable during such periods of ineligible employment. Qualifying Debt will be adjusted by this amount regardless of whether the participant actually made such payments.
If it is necessary to exclude from the calculation of Qualifying Debt some of an applicant’s Actual Debt because it exceeds the Maximum LRAP-Eligible Debt, private loans and Grad PLUS loans will first be excluded, followed by unsubsidized Stafford loans, as necessary.
Once a participant’s Qualifying Debt is determined, Qualifying Debt Service, upon which LRAP benefits will be calculated, is determined to be the lesser of: a.) monthly debt service payments on Qualifying Debt required on a ten-year level repayment schedule or, b.) monthly payments on Qualifying Debt based upon the participant’s actual loan repayment schedule(s). To be eligible for inclusion as Qualified Debt Service, repayment on loans must be current. Payments on delinquent loans and debt service on loans in deferment or forbearance status are not eligible for consideration in calculating Qualifying Debt Service.
5. Qualifying Income
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 utilized by the federal government. The Base Qualifying Income (“Base”) figure for each year will be published in October of the preceding year. Copies of the Qualifying Income Scales will be posted on our website or will be provided upon request.
A participant’s Qualifying Income is defined as the participant’s annualized gross income from employment, subject to the provisions for married participants or participants in domestic partnerships as 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.
Program participants who are married or are 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 above and 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 Program participants are married or are in domestic partnerships, each will be treated as unmarried when calculating Qualifying Income
6. Participant Contribution
Participants are eligible for LRAP benefits for 100% of Qualifying Debt Service (see section C.4. above) if their Qualifying Incomes are less than or equal to the Base Qualifying Income for their class. Participants with Qualifying Incomes exceeding the Qualifying Income Cap, which is the applicable Base Qualifying Income plus $30,000, will not be eligible to receive benefits, but may be eligible for LRAP Loan forgiveness, as described in section E. below.
Participants with Qualifying Incomes that exceed the Base but that are less than the Qualifying Income Cap are expected to contribute on an annual basis to the repayment of their Qualifying Debt (the “Participant Contribution”) as follows:
- LRAP benefits will be reduced by a Participant Contribution equal to 40% of the participant’s
Qualifying Income between the Base and $30,000 in excess of the Base.
The Participant Contribution, as calculated above, will be reduced for debt service paid by the participant on undergraduate and graduate/professional school educational loans in 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 NYU School of Law.
7. LRAP Benefit Calculation
LRAP benefits are calculated on the basis of Qualifying Debt Service as described in section C.4., Qualifying Income as described in section C.5., and the Participant Contribution as described in section C.6. The monthly LRAP benefit will be equal to the monthly Qualifying Debt Service less the monthly Participant Contribution. Please note that it is possible that applicants whose Qualifying Incomes are less than the Qualifying Income Cap will not receive a current monthly LRAP benefit if their expected Participant Contributions exceed their Qualifying Debt Service. In such cases, participants may remain eligible for LRAP Loan forgiveness, according to the terms outlined in section E.
Other LRAP Benefits
Participants receiving benefits under similar loan repayment assistance programs may have their NYU benefits reduced. As the guidelines for these programs may vary, the Program Administrator will work with the participant and other LRAP provider to determine the impact on benefits.
8. LRAP Loan Disbursement
LRAP benefits are distributed to participants as loans, which are forgiven by or repayable to the Program as outlined in section E. below. On the basis of the initial monthly LRAP benefit calculation for each year, a prospective annual LRAP benefit calculation will be completed, and will serve as the initial amount of the LRAP Loan to the participant for that year. The amount of the loan for participants entering at the beginning of a year will typically be 12 times the amount of the monthly LRAP benefit amount (if adjustments for over- or under-awards from prior periods are being applied, this will effect the amount of the loan). The loan amount for participants entering during other quarters will be based upon the number of months of anticipated participation for the year. For example, a participant who enters the Program mid-year and who is eligible for benefits effective on July 1 would have an initial loan amount of six times the calculated monthly benefit.
At the beginning of each year of participation, participants will be required to sign a promissory note in the amount of the initial LRAP Loan. It is expected that the distributions will be utilized by participants to assist in the repayment of their loans for the coming calendar quarter (e.g., the January disbursement would be utilized in the payment of the January, February, and March payments). Interest does not accrue on LRAP Loan distributions unless and until the Participant no longer qualifies for Program participation, according to the terms outlined in Section E. below.
As noted, projected 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. Participants are required to submit changes in status, including changes in salary, marital status, employment, and loan repayment status or amounts, within 30 days of the effective date of the change (see Section F.2., below). If such a change results in an amended monthly benefit amount, the amended benefit amount, plus any retroactive adjustments for benefits previously disbursed, will be reflected in the next quarterly disbursement.
Loans will be repayable to the Program subject to the terms of the promissory note, and the terms outlined in Section E. below.
The following is a summary of the steps used in determining applicants’ eligibility for Program participation and the level of benefits to be received. The information presented here is for illustration only; please bear in mind that individual circumstances vary widely. Please refer to the website for information pertaining to Qualifying Income Scales for your class.
- 1. Qualifying Employment Determination
Applicants provide details about their employment and employer, as outlined in section C.2. Applicants employed by governmental units and agencies, as well as charitable organizations (typically organizations with 501(c)(3) tax status) are typically eligible to participate in the Program, provided that their work with the organization involves law. Other positions and self-employment require the approval of the Program Administrator.
- 2. Net Asset Qualification
Applicants complete a disclosure of assets and debts to calculate their net assets, as outlined in section C.3. Applicants with net assets (assets less debts) exceeding $20,000 are not eligible for participation in the Program.
- 3. Qualifying Income Determination
Applicants provide details on their gross income and that of their spouse if they are married or of their domestic partner. Gross income includes earnings from employment as defined in section C.5. The rules for married participants or those in domestic partnerships, as previously explained, are applied in the determination as appropriate. If Qualifying Income is greater than the Qualifying Income Cap, the applicant is not eligible to receive LRAP benefits, but may remain eligible for LRAP Loan forgiveness subject to the terms outlined in section E.
- 4. Qualifying Debt Service Calculation
Applicants provide details regarding their law school loan obligations. The amount of a participant’s Actual Debt is compared to the calculated Maximum LRAP-Eligible Debt, as outlined in section C.4. The lesser of the Actual Debt of the applicant or the Maximum LRAP-Eligible Debt is used in calculating the applicant’s Qualifying Debt Service, which is then used to calculate the LRAP benefit.
LRAP Loans are repayable to the Program unless the obligation to repay the loan has been forgiven by the Program.
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, and loans made in subsequent years to such participants will be forgiven annually. For purposes of determining eligibility for forgiveness, graduates will accrue one month 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 above and determined by NYU. Participants whose income precludes them from receiving current benefits but who remain in qualifying employment must complete an annual application to the Program.
Participants who leave the LRAP Program prior to the forgiveness of their LRAP Loans must repay those loans to NYU School of Law. Participants who are in periods of Qualified Program Deferral (see section C.1.) will not be required to repay the loans, and the loans will not accrue interest, during the Deferral Period if they express, in writing, their intent to return to the Program immediately following such Deferral. In addition, participants who remain in qualified employment but who are no longer receiving benefits and who have not yet accrued 36 months of eligibility will not be required to repay the loans as long as they meet the requirements noted above.
Loans which become repayable to the Program will be amortized on a monthly basis over ten years at an interest rate of 5% per year. To the extent that the monthly payment amount created by the ten year amortization is less than $50, the loan will be amortized over a shorter term, such that the monthly payment will be $50. 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.
If a participant returns to qualifying employment, in accordance with section C.1., after beginning to repay his or her LRAP Loans, the obligation to make current payments on the then-outstanding principal amount of the loans will cease at such time. Such a participant will accrue additional months of eligibility towards forgiveness as otherwise provided herein. In such cases, the outstanding principal amount of the loan at the time of re-entry will be added to the principal amount of loans subsequently disbursed by the Program to the participant, and this amount will be eligible for forgiveness or become repayable subject to the terms outlined above.
All participants are expected to abide by the rules and requirements of the Program. Failure to accurately disclose material information in a timely manner, as well as failure to utilize Program distributions to repay law school loans, may result in suspension from the Program and ineligibility to receive future benefits.
1. Annual Application
Participants must apply annually to the LRAP Program. Applications for the LRAP Program are available at a secure online site. Please contact the NYU School of Law Office of Student Financial Services email@example.com for the application form link and instructions. The application period is from September 1 - October 15 of the calendar year prior to that for which benefits are being requested. Applicants who have just graduated, or who initially become eligible (or become re-eligible) at other times during the year (due to changes in status such as employment and loan repayment), may apply up to one month prior to the next quarterly disbursement date. Please consult the website for the application enrollment periods and deadlines. In addition, applicants are required to inform NYU within 30 days of changes regarding their employment, marital status, and loan repayment status that may impact eligibility for LRAP benefits, as outlined further in section F.2. below.
A complete application must be submitted by the above deadline to ensure timely benefit disbursements. Applications received after the deadlines may result in ineligibility for the next scheduled disbursement. Along with the completed application form, a complete application for benefits includes copies of all required supporting documentation, including, but not limited to:
- a. Employment and Income Documentation
- A copy of the applicant’s and spouse’s/domestic partner’s, if applicable, most recent federal income tax return, including all schedules and w-2s.
Copies of the applicant’s and spouse’s/domestic partner’s forms 1099, if applicable.A recently dated letter from the employer(s) stating position, current salary and effective date; OR a completed Employer Verification Form.Copies of the applicant’s and spouse’s/domestic partner’s most recent pay stub(s).Self-employed individuals will be required to submit a supplemental Self-employment Application, and provide additional information regarding business revenues and expenses, as outlined in the application. The Program Administrator will work with the participant to determine the documentation requirements for such circumstances.
- b. Loan Principal and Debt Service Documentation
- Completed Loan Verification Form; OR Copies of bills (disclosure statements or coupons) for all loans listed on the application.
- If loans have been consolidated, a copy of the consolidation disclosure statements that includes pay-off amounts for all non-law school loans included in the consolidation.
- Loans must be in repayment status and current.
Proof of payment status for all loans for all periods of participation
- Copies of website printouts or cancelled checks are acceptable
2. Notification of Changes
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 changes in salary, marital status, employment, and loan repayment status or amount. 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. Participants will be required to submit supporting documentation to substantiate the change(s), in the form(s) noted in section F.1. above.
Changes are to be submitted to NYU via the online application system. Failure to notify the Office of Student Financial Services via the online system (or otherwise in writing, should the system not be available) within 30 days of a change will result in the loss of benefits or imposition of penalties. LRAP benefits will be recalculated as of the effective date of a reported change, and any adjustment to the loan amount resulting from the change will be reflected beginning with the next quarterly disbursement. Participants who receive award overpayments as a result of changes in eligibility will be required to return the amount of the overpayment to the Program, as outlined in section F.3. below. Participants who are eligible for an increased monthly benefit amount will receive any retroactive adjustment as part of the next quarterly disbursement.
3. Repayment of Award Overpayments
LRAP benefits are disbursed prospectively based upon annual salary and debt service amounts at the time of last application or notification of change. If a participant experiences a material change in status that results in a reduction of monthly benefits which have previously been disbursed, subsequent disbursements will be reduced accordingly to recover the overpayment. If a participant who received an overpayment of benefits no longer qualifies for current benefits, the amount of the overpayment is due and payable to the Program within 60 days of the last day of participation. Payment plans and further collections information will be referred to the New York University Office of the Bursar.
The NYU Loan Repayment Assistance Program is administered by the NYU School of Law Office of Student Financial Services. For further information please contact us as follows: NYU School of Law, Office of Student Financial Services, 245 Sullivan Street, Suite #474, New York, NY 10012, (212) 998-6050 email us firstname.lastname@example.org or visit us at http://www.law.nyu.edu/financialaid/lrap.
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.
NOTE REGARDING TAXABILITY OF LRAP LOAN FORGIVENESS: 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. 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 Internal Revenue Code (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 or accounting advice. NYU strongly urges participants to consult with their tax advisers regarding the taxability of the forgiveness of their loans.