The University of Texas at Austin   School of Law

William Wayne Justice Center for Public Interest Law

“That they may truly and impartially administer justice”

UT Law Loan Repayment Assistance Program
Program Guidelines - 2012

Last revision: June 27, 2012

Introduction

The UT Law Loan Repayment Assistance Program provides financial assistance to graduating students with educational debt who enter qualifying public service, beginning with the Class of 2008. UT Law places a high value on working for the good of society, and the LRAP is designed to make it affordable for our graduates to choose to accept public service employment.

These Program Guidelines - 2010 went into effect on December 10, 2009.

The University of Texas School of Law reserves the right to change the terms of the LRAP as described herein at any time.

Overview

LRAP provides assistance to graduates of our J.D. program who earn a salary of $50,000 or less for full-time, law-related, work with qualified public service employers. The program provides a series of semi-annual forgivable loans over a period not to extend ten years, to help cover law school-related loan payments made during the six-month period following each LRAP loan. The amount of each participant's LRAP loan is based on his or her income.

Participants must use all of the LRAP loan program funds for each six month loan period to make payments toward their outstanding law school educational loans during the specified loan period. LRAP loans are forgiven (canceled) at the end of the first two years of qualifying employment and thereafter at the end of each six month period if all program requirements are met. Participants apply every six months for a new LRAP loan and/or forgiveness of a prior LRAP loan.

Qualifying Employment

"Qualifying employment" is full-time, law-related employment, at a salary at least equivalent to the federal minimum wage, with a 501(c)(3) organization, a government agency, a public defender, the U.S. military, or an organization located outside the U.S. that is equivalent to a 501(c)(3) organization. "Qualifying employment" is employment that is expected to continue for at least six months subsequent to the date of the LRAP loan application. "Law-related employment" is work that makes substantial use of legal skills by requiring passage of the bar or otherwise drawing heavily on law school training. "Full-time" is working at least 35 hours per week.

Eligibility for benefits ends permanently once a participant leaves qualifying employment. [1]

Eligible Loans[2]

The program covers federal and private educational loans for law school study up to the amount of the student budget for each year (as determined by the Financial Aid Office), reduced by the amount of financial aid received during each year of law school. The program covers only the law school portion of any consolidated loans combining undergraduate loans with law school loans. It also covers bar examination loans up to $5,000. Otherwise eligible loans are not covered if a graduate elects an interest-only repayment option

The administrator of the LRAP program will obtain a statement of the financial aid each applicant received from the Financial Aid Office.

Resident Budgets 2010-2011 2011-2012 2012-2013
Fall/Spring $45,170 (1L)
$43,222 (2L, 3L)
$47,712 (1L)
$45,632 (2L)
$44,492 (3L)
$49,574 (1L)
$48,002 (2L)
$47,420 (3L)
Summer $8,148 $8,830 (2L)
$8,532 (3L)
$9,137 (2L)
$9,062 (3L)
Non-Resident Budgets 2010-2011 2011-2012 2012-2013
Fall/Spring $61,250 (1L)
$59,080 (2L, 3L)
$63,234 (1L)
$60,978 (2L, 3L)
$65,656 (1L)
$63,318 (2L, 3L)
Summer $10,045 $9,904 $11,084

Available Benefits

Participants will receive forgivable loans up to the amount of their payments due on eligible loans for the subsequent six month period, up to one half of the maximum benefit per year. There are no adjustments for spousal income or dependents.

Gross Salary[3] Maximum Annual Benefit
$35,000 and below $8,000
$35,001 - $37,500 $7,000
$37,501 - $40,000 $6,000
$40,001 - $42,500 $5,000
$42,501 - $45,000 $4,000
$45,001 - $47,500 $3,000
$47,501 - $50,000 $2,000

Interest accrues on the LRAP loans at an annual rate of five percent (5%), beginning on the date the loan is issued.

Eligibility Period

Graduates who have not accepted a judicial clerkship or a public interest fellowship must apply for admission into the program within two years of graduation. Graduates who accept a judicial clerkship or fellowship must apply within three years of graduation.

The maximum length of LRAP participation is ten years, and benefits will not be paid beyond eleven years after graduation. This provides participants with financial support through the standard ten-year loan repayment period.

Asset Limitation

A program participant's net assets, excluding his or her house and retirement accounts, may not exceed $25,000. A married participant is presumed to own one half of his or her spouse's assets (excluding retirement accounts) accumulated after the marriage. Participants must sign an asset certification statement to receive or forgive a LRAP loan.

Forgiveness Terms for LRAP Loans

LRAP loans and the accrued interest on them will be forgiven for participants who remain in qualifying employment and meet the other requirements of the program for an initial period of two years; subsequent LRAP loans and the accrued interest on them will be forgiven on a semi-annual basis.

A participant who remains in qualifying employment but whose salary increases during the six-month loan period to a different level on the Available Benefits chart above, or to more than $50,000, will not be expected to repay a portion of that LRAP loan or the accrued interest.

Participants who leave the program before two years or otherwise become ineligible during their first two years must repay their LRAP loans and the accrued interest on them in full. A participant who remains in the program after satisfying the initial two-year period, but then leaves qualifying employment before the end of any subsequent six-month period, will be required to repay a pro-rated portion of the six-month loan with interest.

All LRAP loan repayments will be under terms set forth in the LRAP Promissory Note, which must be signed by the applicant before any LRAP loan funds are disbursed.

Applying to Receive and Forgive LRAP Loans

Graduates are eligible to receive their first LRAP loan approximately seven months after graduation - meaning in January for May graduates, in March for August graduates, and in July for December graduates. Each LRAP loan will cover a six-month period.[4]

An application for a LRAP loan will be accepted at any time, and the loan will be disbursed based on the timing of the individual application.[5]

An application for forgiveness of a LRAP loan is due before the last day of the period covered by the loan, which is 182 days from the date of the promissory note.

An applicant must sign an Agreement and Promissory Note before receiving each LRAP disbursement. Please see the LRAP Application Instructions for detailed information about applying to receive and/or forgive LRAP loans.

Tax considerations

Each program participant must determine the taxability of the forgiveness of the LRAP loans. Section 108(f) of the Internal Revenue Code 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.

Death or Disability

If a program participant dies or becomes totally and permanently disabled, the entire amount of the LRAP loan and any accrued interest on the loan, along with any related charges and fees, will be cancelled. To request cancellation of the loan due to the death of the borrower, a certified copy of the death certificate should be provided to the LRAP Administrator; to request cancellation of the loan due to the permanent disability of the borrower, a Total Permanent Disability Request form should be submitted to the LRAP Administrator.

 

Program Administration

The LRAP program is administered by:

William Wayne Justice Center for Public Interest Law
University of Texas School of Law
727 East Dean Keeton St.
Austin, TX 78705
(512) 232-6277
lrap@law.utexas.edu

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[1] Exceptions may be granted by the LRAP administrator due to unusual circumstances, including a layoff. [return]

[2] The program does not cover consumer credit or loans from a private individual. [return]

[3] All compensation received from an employer that is deemed taxable by the IRS is considered part of an individual's salary for this program. [return]

[4] For example, a student graduating in May 2012 and beginning qualifying employment several months later will typically apply in December or early January for a loan to cover the period from January through June of 2013. [return]

[5] For example, a student graduating in May 2012 who obtains qualifying employment in March 2013 can apply at that time and receive a loan to cover the six-month period from March through August of 2013. [return]