Income-Based Debt Management
Program FAQ 

In order to participate in our program, our graduates must first enroll in the U.S. Department of Education's Income Based Repayment plan (IBR). The IBR plan requires a certain level of annual payment depending on income and, if you work for 10 years in a public-interest or public-sector job (or 25 years in the private sector), the federal government will forgive your outstanding loans entirely. You must then apply to our LRAP program each year to receive benefits in the following calendar year.

Our LRAP links our benefit calculations to the federal pay scale, in particular, the General Schedule GS-11 rate at which entry-level federal government attorneys are hired ($50,287 in 2011). For graduates whose incomes are at that rate or lower, we will provide an annual payment equivalent to the entire annual IBR payment. In other words, graduates at that income level will make no payment toward their loans. Graduates with higher salaries, up to 175% of the GS-11 rate, will also receive an IBR stipend from us, on a sliding scale.

In addition, for LRAP participants at income levels of GS-11 or below, if your annual IBR payment is too low to cover the annual interest accrual on your debt, the Law School will set aside an amount equivalent to your annual unpaid interest in an escrow account. For participants at higher income levels (up to 150% of the GS-11 rate), unpaid interest is escrowed on a sliding scale. In the event you stop participating in our program before your loans qualify for federal loan forgiveness, we will remit to you the funds in your escrow account. This ensures that for most participants in our program, the amount of principal you owe will not be higher if you leave the program prior to total loan forgiveness. (Because IBR payment levels are set according to income only, without regard to the borrower's total debt, it is possible for participants with particularly high debt levels and income over the GS-11 rate to accrue unpaid interest. To avoid this scenario, we encourage students to seek counseling from the Financial Aid office early in your law school career to discuss strategies for reducing your total borrowing.)

This program is for the entering class of 2011 and later. Students from the entering classes of 1984–2010 may choose to apply for this program if they wish to do so.

The numbers vary from year to year, but typically 90 to 115 people participate. We do not, however, have any ceiling on the number of graduates we will cover in a given year.

As mentioned before, our calculations are tied to the GS-11 rate, which varies annually according to changes in the cost of living. Our cap is 175% of the GS-11 rate for that year. As an example, in 2011 the GS-11 base rate is $50,287, so the cap would be $88,000.

Our program has been designed to cover the vast majority of debt for the vast majority of our students. Federal loans (Stafford subsidized, Stafford unsubsidized and GradPLUS loans) taken out during your time at Michigan Law will all be eligible for coverage under the program. Private loans will not be covered unless you were ineligible for federal loans because you were on visa status while attending law school.

You must be a full-time, salaried employee in law-related work and not be a current recipient of other funding from the Law School. Generally speaking, if a J.D. is required for the job, then your job is "law-related." (Judicial clerkships, however, are temporary positions that are not qualified employment under the program.) Special note for those pursuing Presidential Management Fellowship (PMF) positions: On rare occasions, the job you receive may not be law-related and therefore make you ineligible for the Law School's loan repayment assistance programs. 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 touch with us in the Financial Aid Office to discuss your eligibility.

No, we do not require that employment be in public interest or public service. We really want our graduates to do the legal work they want to do, whether that is for a public interest organization, the government, or a small law firm in a sparsely populated area. The breadth of our program distinguishes it from most other similar programs.

No, it does not. We have had recipients in Thailand, Lebanon, Korea, and Pakistan, just to name a few.

You apply to our LRAP program annually, and you don't need to make any long-term commitment to our program. You can move in and out of the program and do not need to be enrolled in consecutive years. It is to your benefit, however, to stay in the federal IBR program, even if you don't remain in ours. Under the IBR guidelines, if you remain in a public interest or public service job for 120 months, the remainder of your unpaid loans is forgiven. For those in the for-profit sector, forgiveness of the remainder of your loan debt comes at 25 years.

You may be enrolled in our program for a total of ten years. These years do not need to be consecutive.

Each year you are in the program you receive an interest-free loan from the Law School. If you remain in your same eligible job for that year, the loan is forgiven at the end of the calendar year. If you leave your job during that calendar year or receive a substantial raise that makes you ineligible for the program, though, you will have to pay a prorated amount back to the program. But in any event, once your participation in the LRAP ceases, you are in no way obligated to pay back the funding you received from the Law School during your participation.

No, but you must enter within five years of graduation. Graduates whose first job is a clerkship are granted an extension for the duration of the clerkship (usually one or two years).

We have a PowerPoint that provides an overview and details about our program. We also have an Audio FAQ on our website. For more information about the federal government's programs please visit CCRAA FAQ.

Applications for our program are made available each year by mid-September, and graduates must submit their forms by the November 1st deadline. You must reapply annually.