The Legal Services Corporation (LSC) is known for its charitable role in providing essential legal services to some of the most economically vulnerable in society. The LSC accomplishes this by providing funding to legal organizations who specialize in essential legal services. These organizations are known for training a lot of new attorneys. What many people may not know is that the LSC has a loan repayment program, known as the Herbert S. Garten Loan Repayment Assistance Program (LRAP). Given the financial struggles with repaying loans that countless new attorneys in public service face, this program can help these attorneys pay back their loans. This article provides an explanation of what this program is and how to take advantage of it.
Background of the program
The Herbert S. Garten Loan Repayment Assistance Program has existed since 2006. The aim of the program is to help the LSC gain top-notch attorneys as part of their network by making it easier for these attorneys to pay back their loans. Participants will receive up to three years of assistance in making their loan payments.
Every year, eligible attorneys can apply for an LSC loan. A lottery selects the program participants. If someone receives a loan, they are required to use it to pay back law school loans and any associated interest. If these attorneys remain working at the LSC grantee for the following 12 months, then LSC forgives the loan that they distributed to the participant. If a participant quits working at the LSC affiliated organization in the middle of the 12 month period, they have to pay back the whole loan.
After having the opportunity to participate in the first year, the applicant can apply for a second and third year. When applying for the second and third year, the attorney needs to show their salary and that they have continued to work for the LSC affiliated organization. Someone who gets to participate one year is not guaranteed to have the opportunity to participate the next year.
In order to be eligible to participate in the program, you need to have full-time employment as a lawyer at an organization that is receiving funding from the LSC. Additionally, you must have a general expectation that you will be employed at the organization for three years. If you are participating in a fellowship that is less than three years, you can still apply, provided that you have an expectation to be employed with an LSC affiliate for three years. Interestingly, you cannot have been employed by the LSC organization for more than five years at the time you apply. You can be disqualified if you have already received LRAP loans for 36 months or more. You will also be disqualified if you have defaulted on any LRAP loans and if you discharged an LRAP loan in a bankruptcy filing.
The annual income requirements are as follows:
- 48 States, D.C., territories, and other service areas: $62,500
- Alaska: $78,125
- Hawaii: $71,875
The net worth requirement is $35,000.
You do not need to apply to or participate in any other loan repayment programs. Conversely, if you are participating in another loan assistance program, it will not impact your eligibility for LRAP. However, the LSC still wants you to submit any information on loan forgiveness programs that you are participating in. The LSC wants to review this information on how to improve LRAP.
In terms of overall debt eligibility, you must have at least $75,000 in overall law school loans. If your law school debt has been consolidated with other loans, you will need to calculate how much of the total is law school debt.
How to apply
It is important to check LRAP’s “How to Apply” page to see the requirements for the year that you are interested in applying. You will need to submit a statement from the lender that shows what you owe. You will also need to register an account in their internal system known as GrantEase. It can take up to five days to register in GrantEase, so be sure to allow yourself that amount of time. If you are a returning applicant, you will receive an email from GrantEase, likely in the Spring, with information about how to apply for the next year.
In 2019, 170 people applied for LRAP, and 125 received assistance. While the program is run through a lottery, there is a good chance of receiving assistance for the time being.
Money from LRAP
LRAP gives participants a relatively free hand in terms of using the money to pay back loans. You can use the money to pay off basically any loan used to pay for law school or bar preparation. You just need to have a lending institution verify that it is a loan associated with law school. The main restrictions on LRAP loans are that they cannot be used for any non-law school education loans, such as for a master’s or undergraduate degree, the money cannot go towards non-education loans, they cannot be used for credit card debt, and they cannot pay back loans from friends or family or loans taken out in conjunction with friends or family. You can receive up to $5,600 per year. The money is disbursed in six-month installments. The money can be used to make monthly payments or as a lump sum payment to outstanding law debt.
The interest on the LRAP loan accrues at six percent per year. The loan and interest are forgiven so long as the lawyer abides by the requirements of the program. If you violate the terms of the program, such as by quitting working for the organization, then you are considered in default of the loan and you have to return the whole amount of the loan. Reasons for being in default include: quitting your job, going from full-time to part-time, being fired, finishing a fellowship and not continuing to work with the LSC affiliated organization and using the LRAP money for something that it is not supposed to be used for.
Sometimes the LSC will forgive a loan default if there are extenuating circumstances. In these situations, you need to petition the LSC for forgiveness within 30 days of being in default. They can decide to completely forgive the loan or only part of it. You will hear about the decision within 30 business days of when the LSC receives your petition.
Some potential reasons of why you can have your loan forgiven are:
- A disability or serious illness that forces you to quit or reduce the hours that you work
- The disability or illness of an immediate family member that changes your employment status
- Having to quit because your spouse is involuntarily forced to transfer out of state
- Being laid off because the LSC grantee loses funding.
Circumstances that do not qualify for forgiveness are when someone is fired, someone resigns to take another job, quitting to relocate to be close to someone else, leaving to take care of your children (unless they receive a serious illness or disability), or voluntarily reducing your hours.
Ultimately the amount of money that LRAP provides is dependent on the number of participants and the amount LSC has for the program. While LRAP will provide up to $5,600, not every participant gets the full amount. The budget for LRAP was last set at $1.5 million, but LSC has been requesting $2 million from the federal government over the last three years.
How does LRAP factor into the Public Service Loan Forgiveness program?
As noted above, LRAP does not forbid you from participating in the Public Service Loan Forgiveness (PSLF) program, nor will it impact the amount of money you receive. As a result, in theory, you can use the money you receive from LRAP to make your required 120 loan repayments
That being said, LRAP participation could potentially impact PSLF eligibility for a few reasons. To start, it is unclear if the money from LRAP would be considered income. While income levels do not disqualify you from PSLF, income levels can impact how much you need to pay for each month. A bigger issue can be whether your employer qualifies as an eligible employer under PSLF. While it might seem like an open and shut case that an LSC grantee would qualify for PSLF, all employers still need to be approved and many people have been surprised to find out an employer that they thought qualified, did not. So if you thought your employer qualified and then you find out they do not, if you try to switch jobs to a PSLF eligible employer, who is not associated with LSC, that could cause you to default on a LRAP loan.
As far as PSLF goes, it appears that LRAP can help alleviate some of the money that you are required to pay towards your law school debt as part of the program. How much of your payments that it will account for, is dependent on your specific finances and loan repayment program. Using a loan calculator can help you make this determination. However, under certain repayment programs, the amount you need to pay could be as low as $4,000 in a year. If this is the case, then you could receive enough money for all three years to cover your payments. Under this scenario, you would just need to make payments for seven years out of your own pocket. But issues over whether your employer even qualifies, how much money you are making and the actual amount of money you receive from LRAP, could derail this scenario.
LRAP appears to be a helpful program that has not received enough attention. While it will not clear all of your loans, and there are no certainties in terms of whether you qualify and how much money you receive, it still has a lot of upside. When you are paying back loans, especially when you have a public interest job, any loan repayment assistance you can receive is welcome. This is particularly true as PSLF continues to have so many issues. When developing a strategy to repay law school loans, it is always a good idea to consider all of your options. If you work for an LSC grantee, LRAP is a potential option.
Todd Carney is a graduate of Harvard Law School. He holds a Bachelor’s degree in Political Science and Public Communications. He has also worked in digital media in New York City and Washington D.C. The views in his pieces are his alone and do not reflect the views of his employer.