Debt Management/Loan Forgiveness Program

ATTENTION: The Debt Management Program deadline has been moved to November 1, 2008! The application materials will be available online by mid-September 2008.

Michigan's Debt Management/Loan Forgiveness Program provides an opportunity for University of Michigan Law School graduates to accept a lower paying job without feeling overwhelmed by the debt accumulated while earning their degree. The program will actually contribute to loan payments, making a modest paying job more realistic. Applicants working full-time in a law related occupation and graduating from the University of Michigan Law School in 1986 or later can be considered for the program. (Judicial Clerks are not eligible during their year(s) of clerkship. Fellowships funded by the U of M are also excluded.) The applications are processed and funds are disbursed annually. There are three basic steps used to determine how much assistance an applicant receives from the Debt Management Program.

Step One: Calculating Applicant's Expected Contribution toward eligible loan payments.
First, the applicant's annual available income (AAI) is calculated. A formula that includes income, assets, and various deductions such as undergraduate debt and childcare costs is used to determine the AAI. If the AAI is less than $36,000 the applicant is not expected to contribute any payments toward the loans that are covered under the program for that year. If the AAI is greater than $36,000, the applicant's expected contribution is 35% of the AAI over $36,000.

For example: if the AAI is $38,000 the applicant is expected to contribute $700 toward their loan payments for that year. ($38,000-$36,000) x .35 = $700

Step Two: Determining Annual Loan Payment Amounts.
Only certain loans awarded while enrolled at the University of Michigan Law School are considered. Eligible loans include Stafford subsidized and unsubsidized loans, GradPLUS loans, loans from the Law School or from an external lender minus your student contribution (available from the financial aid office), loans for the purchase of a computer, and bar study loans (up to $8,000 for bar study loans). Monthly payments are calculated using the lender's standard repayment plan. For example:

Step Three: Calculating the Debt Management Program's contribution.
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: $11,848.56 (annual loan payment amount) - $700 (participant's expected contribution) = $11,148.56 (Debt Management Program's contribution).

The online application and information can be found at: www.law.umich.edu/currentstudents/financialaid/debtmgmt/Pages/Application.aspx.

Note: Many states, legal services programs and public defender offices have Loan Repayment Assistance Programs (LRAPs). The ABA maintains a list of state and employer LRAPs at www.abanet.org/legalservices/sclaid/lrap/home.html. You should check with your employer to see if there is an LRAP available to you.