Loan Repayment Programs
There are a variety of programs that provide assistance to law school graduates who have borrowed significant student loans while earning their degrees. These programs are made available by the University of Michigan Law School, the federal government, and, in some instances, employers. This section of our website brings some of these resources together to make your search easier.
The Debt Management Programs at the Law School provide graduates with maximum flexibility to choose jobs from any law-related area (excluding judicial clerkships and U-M funded fellowships), including modest-paying public interest positions, while still maintaining a reasonable lifestyle and remaining current on outstanding loan obligations. Graduates whose combination of income and debt make them eligible receive assistance in meeting their loan obligations incurred during law school. A special note for those pursuing Presidential Management Fellowship (PMF) positions: On rare occasions, the job you receive may not be law-related and, therefore, makes you ineligible for the Law School's loan repayment assistance programs (LRAPs). The Office of Career Planning will work with you as much as possible to avoid this, but if you are in doubt about it, please be in consultation with the Financial Aid Office to discuss your eligibility. For further information, select the correct program below for your entering class.
Entering classes 1984–2010 (you may elect one of the two programs below)
Entering classes 2011–Later
The College Cost Reduction and Access Act (CCRAA) of 2007 established, among other things, a new repayment plan for federal loans that will be of particular interest to graduates going into low-paying jobs. Income Based Repayment (Section 203 of the Act) allows borrowers to pay back their federal loans on the basis of their income and family size at the time of repayment. Borrowers will be eligible for loan forgiveness after 25 years of qualifying payments or 10 years for those who are working full-time in eligible public service employment (see PSLF below). The Federal Student Aid website offers further information, including a fact sheet, FAQ, and calculator for estimating IBR payments. Our CCRAA FAQ also provides more details about this program.
Pay as You Earn is a newer version of Income Based Repayment that became available for certain federal Direct loans in December of 2012. PAYE offers lower monthly payments and forgiveness after 20 years of qualifying payments instead of 25 years. Payments made under PAYE can qualify for the government's 10 year loan forgiveness program (see PSLF below). Eligibility is limited to recent federal loan borrowers who: 1) have received a disbursement of a Direct loan on or after October 1, 2011 and 2) had no outstanding balance on a Direct or FFEL loan when a new Direct or FFEL loan was received on or after October 1, 2007. The Federal Student Aid website offers details about eligibility requirements and a calculator for estimating payments.
The Public Service Loan Forgiveness Program (Section 401 of the CCRAA) will forgive most federal Direct loans after 120 qualifying payments while employed full-time in eligible public service employment. The 10 years do not need to be consecutive, but the borrower must be working in an eligible public service job at the time of forgiveness. Only certain repayment plans will qualify for PSLF, including IBR and PAYE. The following publications offer details about the requirements for forgiveness: Federal Student Aid website, fact sheet, and Q&A. There is also a form that borrowers can complete to track their progress.
The JRJ Program provides funding for federal student loan repayment for eligible public defenders and prosecuting attorneys who agree to remain employed within Michigan for at least three years. Program information and application instructions are available at www.michigan.gov/jrj.
Federal loan consolidation provides variable-rate loan holders an opportunity to lock in the current interest rate on their federal loans. Once federal loans have been consolidated, the rate cannot be adjusted again in the future. If it seems that most borrowers' loans are already set at a fixed interest rate, this is because most borrowers have already consolidated, or their loans disbursed after July 1, 2006, which is when the federal loan program changed from offering variable to fixed-rate loans. Please visit the Direct Loans website for further information.
Private loan consolidation should not be confused with federal loan consolidation. There are usually fees and, in most cases, the interest rate is variable. The rates that are offered will be based on your credit score. Further information on private loan consolidation is available at www.finaid.org/loans/privateconsolidation.phtml. If you are considering private loan consolidation, proceed with caution and feel free to contact us with any questions.
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.