As law school tuition continues to rise, and consequently students borrow more for legal education, it is increasingly important for public interest-minded law students to learn about financial planning and debt management in order to pursue their career goals.

The most important steps for today’s public interest advocates to take are to 1) become financially literate (understand how educational debt works) and 2) learn about resources available to make your careers more affordable.  This will not only help you to carve out a financially viable career path.  It will also allow you to educate others about the fundamental importance of the work you do and the need to better fund public interest organizations.

Debt, Salary, and LRAP Issues

Loan Repayment Assistance Programs (LRAPs)

• What is an LRAP? An LRAP is a program that provides funds to qualifying public service attorneys to help them repay educational debt. Typically, these funds come in the form of grants or forgivable loans that are directed toward the student’s debt payments.  Those who administer LRAPs structure payments this way to mitigate, or eliminate altogether, income tax consequences to the benefiting attorney.
• Who Administers LRAPs?  LRAPs are now very popular tools to aid public service attorneys.  They are administered by law schools, local/state governments, the federal government, and employers.  Interested attorneys should contact their law school alma mater to learn if the school has an LRAP, and if the Career Services Office is aware of other LRAPs from which they may benefit.
• Who Qualifies to Benefit from LRAPs?  The specific criteria to participate in an LRAP program are determined by the entity administering it.  As a general matter, the following eligibility criteria come into play:
  • The type of employment the attorney is engaged in;
  • The attorney’s income/financial resources;
  • The amount of eligible educational debt the attorney is carrying.
• Does Your Law School have an LRAP?  Many law schools have an LRAP to aid their graduates who pursue a public interest career.  Equal Justice Works provides Law Schools with LRAPs, a list of the many law schools that have LRAP programs with links to more information about each school's LRAP.

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The College Cost Reduction & Access Act of 2007 (CCRAA)

This 2007 federal legislation 1) created a new repayment option for qualifying public service lawyers – called Income Based Repayment (IBR), and 2) established a loan forgiveness program which will forgive eligible educational debt after a 120-month (10-year) period of repayment.  These programs are designed to work so that, after paying via IBR for period of time, a public service lawyer may be eligible to to have the rest of their eligible loans forgiven.  The CCRAA could have a huge impact in the public interest community – significantly lightening the load for debt-laden public interest attorneys and leading to a forgiveness of eligible debt altogether.

Income-Based Repayment - IBR is exactly what it says it is.  Through IBR, high debt/low income borrowers can significantly reduce their monthly payments if they can demonstrate a “partial financial hardship,” as defined in the CCRAA statutory and regulatory language.  (It is essentially a calculation based on the amount of your eligible debt and your income.  You do not have to be poverty-stricken to qualify for IBR; on the contrary, its provisions are generous).  Much more detail about this definition and calculators to see if you may qualify are available via the "Learn the Specifics" section and links below.

Public Service Loan Forgiveness - Borrowers working in a broadly-defined group of public service jobs may have qualified educational loans forgiven after a period of ten years (120 monthly payments) working in public service, provided that during that period they make monthly payments via the IBR Program (or through a combination of IBR and other payments).  To qualify for public service forgiveness, three primary conditions must be met:

1. The borrowed funds must be in the “Federal Direct” lending program or consolidated into it;
2. The borrower must work full-time in public service for at least 10 years; and
3. The borrower must pay a prescribed portion of their monthly income toward their debt for 10 years (120 monthly payments)

• Equal Justice Works’ Student Debt Relief Page 
• The Project on Student Debt has created a website to provide information on the CCRAA’s Income Based Repayment and Public Service Loan Forgiveness programs. 
• The National Association of Student Financial Aid Administrators maintains a CCRAA Resource Page.
• The U.S. Department of Education provides a FAQ on Income-Based Repayment (IBR) (pdf).
  

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Additional Resources

http://www.finaid.org/ – This website is geared more for prospective educational borrowers, but includes loan repayment calculators, easy-to-understand explanations of the different types of educational loans, and other useful information for those who have already borrowed.  It is a great website for borrowers who want to start with the basics and find answers to their "dumb" questions.

LRAP's at the State Level – The American Bar Association provides information about the States that have Loan Assistance Repayment Programs.  This website includes information such as each state's LRAP contact information and recent state legislation concerning LRAPs.