You asked for information about law schools and states that provide loan repayment assistance for students who enter public interest law after graduation.

Loan repayment assistance programs (LRAPs) help law school graduates repay part of their educational debt. As of December 2004, 81 U. S. law schools, 16 of which are public, administered LRAPs, according to Equal Justice Works, a public interest law organization. LRAPs are also available to graduates of law schools in 10 states where statewide programs are administered by bar associations, nonprofit organizations, or a state agency.

Most LRAPs target law school graduates who take jobs in nonprofit public interest law or government agencies, but some are available to any graduate. Most set income eligibility limits and require recipients to stay in a qualifying job for a specified period or repay their LRAP loans if they leave. Due to recent federal tax law changes, most LRAPs now take the form of forgivable loans that recipients use to repay their law school loans.

Many law schools fund their LRAP programs through their operating budgets, student fees, or endowment income. Some supplement this funding through individual donor and foundation contributions and conduct fundraising campaigns for this purpose. Most state LRAPs are funded through IOLTA (interest on lawyers’ trust accounts) funds and bar foundations; Maryland, Minnesota, and North Carolina fully or partially fund their LRAPs with state appropriations.

LRAPs are growing in number and funding. The 81 current law school LRAPs represent a 50% increase over 2000, and 30% more LRAP funds were disbursed in 2004 ($ 10. 6 million) than 2000, Equal Justice Works reports. At least 22 law schools and seven states are in the process of exploring or establishing an LRAP.

LRAPs vary considerably in their effect. A 2004 Equal Justice Works survey found that most law school LRAPs provided limited assistance to just a few graduates. Only 18 schools (14 private, four public) assisted 20 or more students a year. The average award to a private law school graduate was $ 5,416 (no average was reported for public schools).

LRAPs are intended to help overcome one financial barrier –debt burden- that makes new attorneys reluctant to pursue public interest or government law jobs. Most law school students, regardless of their career objectives, borrow heavily to finance their education—over $ 45,700 for public law school graduates, nearly $ 73,000 for those in private schools. They receive significantly lower salaries in public interest law and government agencies than beginning lawyers in private firms. The median starting salary for 2003 law school graduates was $ 37,500 (for public interest lawyers) and $ 43,000 (for government attorneys), compared to $ 80,000 in private practice.

Nearly two-thirds of law students surveyed in 2002 said their debt burden prevented them from considering a career in public interest or government law. A similar percentage of public interest and government employers reported trouble recruiting and retaining attorneys, principally because of low wages and high debt (Equal Justice Works, Financing the Future, 2004).

At most law schools with LRAPs, a committee of faculty members, financial aid and career services staff, students, and alumni set policies.

These include the type of employment that qualifies for an LRAP, whether the LRAP will be distributed as a grant or a forgivable loan, the loan forgiveness period, and qualifying income levels. Schools’ financial aid offices typically administer the programs.

Nearly all schools offer LRAPS to graduates who work for a nonprofit or legal services agency, according to an Equal Justice Works survey. And most give them to graduates who become public defenders, prosecutors, and government and military attorneys. Over 30% of schools responding to the survey offer LRAPs to students entering for-profit private or solo practice. And 20% offer them for judicial clerkships and academic positions.

Because of 1997 federal tax law changes, most LRAPs are now awarded as forgivable loans rather than grants. Before the change, all LRAP payments were taxable as income. Now, a forgivable loan from a qualifying lender to a qualifying recipient is not taxed (grants continue to be taxable). A qualifying recipient must be employed by a government or nonprofit organization. The loan must come from the law school or a nonprofit organization (other than the recipient’s employer). The LRAP recipient uses the loan to make payments on his student loan. After a recipient works for a specified time working in a qualified job, the school forgives its loan; most forgive loans in three or fewer years.

Many law schools fund their LRAP programs through their operating budgets. Some supplement this funding through individual donor and foundation contributions and undertake targeted fundraising campaigns for this purpose. A handful of schools, according to the American Bar Association, have created endowments to support an LRAP. Schools also support their LRAPs through student fees, student fundraising, and class gifts.

The goal of the University of Michigan’s Debt Management Program is to assure that graduates can consider all available employment options in deciding where to work. It provides forgivable loans to any graduate regardless of where he practices. Any University of Michigan Law School graduate working at least half-time in a position that requires a J. D. degree (except during a judicial clerkship) can apply annually for a one-year, interest-free loan.

Financial aid office staff use three basic steps to determine an applicant’s assistance. First, they calculate his annual available income (AAI) using a formula that includes income, assets, and various deductions such as undergraduate debt and childcare costs. A spouse’s income and assets are included in this calculation. If the AAI is under $ 36,000, the applicant is not expected to contribute anything toward repaying his eligible loans that year. If it is above $ 36,000, he is expected to contribute 35% of his AAI over $ 36,000. For example, if the AAI is $ 38,000 the applicant is expected to contribute $ 700 toward his loan payments for that year (($ 38,000-$ 36,000) x . 35 = $ 700).

Second, the total amount due for the year on the student’s eligible loans is calculated. Eligible loans are limited to those the student obtained while enrolled at the law school. They include subsidized and unsubsidized federal Stafford loans, loans from the law school or an external lender, and loans to purchase a computer or study for the bar. Monthly payments are calculated using the lender’s standard repayment plan.

Lastly, the applicant's expected contribution is subtracted from the annual loan payment amount. Any remainder is the amount the Debt Management Program will contribute toward the applicant’s loan payments. For example, $ 11,542 (annual loan payment amount) - $ 700 (participant’s expected contribution) = $ 10,842 (the Debt Management Program’s contribution). A recipient who leaves a job or receives a raise that places him over the qualifying income must repay that year’s loan.

A law school dean started the program in 1986 by segregating some of the school’s financial aid money for loan repayment. These funds were later supplemented by a large anonymous donation. The program now disburses approximately $ 400,000 a year. In 2003-04, it gave 87 loans ranging from $ 1,200 to $ 12,000. Loans went to 2004 graduates as well as those back to the class of 1989.

Rutgers-Newark’s LRAP is intended to support and increase the number of its graduates serving the public sector and people and causes traditionally underserved by the bar. It provides forgivable loans for up

to five years to graduates who work in a law-related position in a government agency or nonprofit organization. Loans are forgiven only after a recipient works for five years in a qualifying position.

Initial LRAP applicants can have incomes up to $ 48,000 for single filers, $ 75,000 for joint filers. This income cap increases by $ 2,000 for each subsequent year of public service employment. Award amounts are reduced proportionately if available funds are insufficient to support fully all qualifying graduates. An applicant’s AAI and assistance amount is determined in the same way as the University of Michigan. And like Michigan, a recipient can use the loan to repay only the debt he assumed for law school (it does not cover bar study loans); repayment of other debt works to lower the individual’s AAI.

An LRAP recipient can take a leave of absence for up to two years for pregnancy, family care, relocation, or illness but is not eligible for an LRAP if he leaves. A recipient whose receives a salary increase that puts him over the income limit cannot receive further funds but can continue to earn credit toward the five-year public service commitment if he stays in the qualifying job.

Students initiated Rutgers-Newark’s LRAP through a student fee assessment. Student fees still partially fund the program, but it has been boosted by an anonymous $ 1 million dollar gift. This gift enabled the school to increase its disbursements by nearly 90% between 2000 and 2003. The program has awarded 84 loans worth over $ 353,000 since its inception in 1999. In 2003-04, 30 recipients shared over $ 130,000 in loans, an average of over $ 4,300 per loan.

This is a new LRAP, begun in 2003. Forgivable loans are available to anyone who graduated in 1997 and thereafter. People can apply in their third year of school and the two years following graduation. Applicants must have a full-time, law-related job (or an offer of one) in a public interest organization. This can be a nonprofit charity, social welfare, or labor or agricultural organization.

A seven-member committee (two faculty, two students, two alumni, and one financial aid office staff) sets program policies, annually determines financial eligibility criteria, reviews applications, and determines whether applicants’ jobs qualify for aid. The school’s financial aid office is responsible for day-to-day administration, including verifying applicants’ information, distributing funds, and determining repayment obligations.

The committee annually sets the income limit. It is $ 45,000 this year, which, the school says, is below the average for its graduates in larger private sector firms and within the range of those in small firms. In addition to income, the committee looks at the cost of living where the applicant works, any benefits his or his spouse’s employer provides, the applicant’s debt and financial need, and his commitment to a public interest law career. Applicants must verify their eligibility biannually.

LRAP loans are completely forgiven after a recipient works in a qualifying job for five years, even if his salary in such a job increases beyond the income limit. A recipient who leaves a qualifying job in less than five years must repay a portion of the loan, plus interest the committee sets, according to a sliding schedule. The repayment term is typically 10 years.

An endowment, capitalized principally by funds the law school received when it merged with Penn State and supplemented by class gifts and donations, is the source of LRAP funds. Five people currently receive help that averages $ 4,000.

The Boston College Law School LRAP’s goal is to encourage graduates to pursue public interest careers. Initial candidates must have graduated within the past five years and have salaries under $ 50,000. Loan recipients remain eligible until their salary exceeds $ 58,000. The actual amount of their award is based on their financial need as determined by the family’s adjusted income. Loans are for one year and are forgiven if the recipient remains in the qualifying job for that period.

A candidate must be employed full-time in a law-related position in a public interest organization. The committee that selects recipients uses the following employment priorities in determining awards:

1. organizations, such as legal services corporations and public defenders, that provide direct legal services to indigent clients or members of traditionally underserved groups;

2. private, nonprofit employers; and

3. government agencies.

Graduates in judicial clerkships and academic positions are ineligible.

The program strongly encourages recipients to consolidate their eligible loans (it covers only law school-related loans) for the maximum allowable period. Awards may be reduced if a recipient fails to do this.

The LRAP is financed by income from the Boston College Publication Trust and donations. Its goal is to fund 60% of a candidate’s annual consolidated law school debt. Currently, 49 graduates are receiving annual loans ranging between $ 500 and $ 6,000.

Statewide LRAPs are currently offered in 10 states. They operate much like law school LRAPs in terms of qualifying candidates and disbursing loans, but they are open to graduates of any law school in the state or, in some, to any attorney who meets the eligibility criteria. Qualifying employment and income limits are similar to law school LRAPs, with exception of Maryland whose LRAP is also open to teachers and certain healthcare professionals.

These LRAPs differ principally from their law school counterparts in terms of governance and funding sources. State bar foundations administer the programs in Arizona, Florida, Maine, New Hampshire, New York, and Washington. An independent nonprofit agency runs Minnesota’s and North Carolina’s programs. The Texas Supreme Court created that state’s LRAP, which is administered by an independent entity. Maryland created its LRAP in statute; it is administered by the Maryland Higher Education Commission. California and Georgia also created LRAPs in statute, but neither is operating because the legislature has not funded them. (After the Texas Supreme Court started its LRAP, the legislature authorized a program but has not funded it. )

In contrast to law school LRAPs, which depend mainly on school operating budgets and private gifts, the statewide programs are supported wholly or partially by IOLTA funds (six states), bar association and bar foundation grants (four), and state appropriations (three). Some also receive funds from private gifts and law schools.

Because it is the only statutorily created LRAP in operation, we described Maryland’s program in more detail.

The Janet L. Hoffman LRAP is available to Maryland residents who work full-time in state or local government or nonprofit agencies serving low-income or underserved people. Lawyers, teachers with specific certification or who work in specific schools, social workers, and certain health care professionals can receive assistance. They can use it to repay any educational debt.

The salary limit for lawyers is $ 60,000 for an individual and $ 130,000 for a couple. If funds are inadequate to help all eligible applicants, priority is given (1) to people who graduated within the past three years and then (2) to those with the highest annual loan debt-to-income ratio. Awards are made until funds are depleted; remaining eligible candidates are placed on a waiting list. Recipients who apply to renew an award are given priority for one more year; they can reapply after the second year but no longer receive priority (Maryland Code 18: 1501-1505).

For the past two fiscal years, the legislature has appropriated just under $ 2 million for its LRAP; $ 1 million is earmarked for teachers and nurses. In FY 05, the commission made 32 LRAP awards to attorneys totaling $ 119,000 (51 people applied). The awards averaged $ 3,731. Most of the recipients (24) worked for state or local governments; eight worked for nonprofit organizations.

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