Texas Law Loan Repayment Assistance Program Guidelines

Last revision: March 2018

Introduction

The Texas Law Loan Repayment Assistance Program (LRAP) provides financial assistance to graduating students with educational debt who enter qualifying public service, beginning with the Class of 2008. Texas Law places a high value on working for the good of society, and the LRAP is designed to make it affordable for our graduates to choose to accept public service employment.

These Program Guidelines went into effect on December 10, 2009, and were updated most recently on March 1, 2018.

The University of Texas School of Law reserves the right to change the terms of the LRAP as described herein at any time.

Overview

Texas Law LRAP provides assistance to graduates of our J.D. program who earn a salary of $55,000 or less for full-time, law-related, work with qualified public service employers. The program provides a series of semi-annual forgivable loans over a period not to exceed ten years, to help cover law school-related loan payments made during the six-month period following each LRAP loan. The amount of each participant’s LRAP loan is based on his or her income.

Participants must use all of the LRAP loan program funds for each six month loan period to make payments toward their outstanding law school educational loans during the specified loan period. LRAP loans are forgiven (canceled) at the end of each six month period if all program requirements are met. Participants apply every six months for a new LRAP loan and/or forgiveness of a prior LRAP loan. For participants who are new to the program as of March 1, 2018, applications are due on the first Monday of June for the July-December loan period and on the third Monday of November for the January-June loan period. Students who entered the LRAP program before March 1, 2018, may remain on their original application schedule.

Qualifying Employment

“Qualifying employment” is full-time, law-related employment, at a salary at least equivalent to the federal minimum wage, with a 501(c)(3) organization, a government agency, a public defender, the U.S. military, or an organization located outside the U.S. that is equivalent to a 501(c)(3) organization. “Qualifying employment” is expected to continue for at least six months subsequent to the date of the LRAP loan application. “Law-related employment” is work that makes substantial use of legal skills by requiring passage of the bar or otherwise drawing heavily on law school training. “Full-time” is working at least 35 hours per week.

Eligible Loans[1]

The program is designed to help qualified students repay federal and private educational loans for law school study. The program covers only the law school portion of any consolidated loans combining undergraduate loans with law school loans. It also covers bar examination loans up to $5,000. Otherwise eligible loans are not covered if a graduate elects an interest-only repayment option.

Available Benefits

Participants will receive forgivable loans up to the amount of their total law school educational debt for the subsequent six month period, up to one half of the maximum benefit per year. The amount of an eligible participant’s maximum annual benefit is based on the participant’s gross annual salary.  There are no adjustments for spousal income or dependents.

Gross Salary[2] Maximum Annual Benefit
$35,000 and below $8,000
$35,001 – $40,000 $7,000
$40,001 – $43,000 $6,000
$43,001 – $46,000 $5,000
$46,001 – $49,000 $4,000
$49,001 – $52,000 $3,000
$52,001 – $55,000 $2,000

Interest accrues on the LRAP loans at an annual rate of five percent (5% APR), beginning on the date the loan is issued.

Eligibility Period

Graduates who have not accepted a judicial clerkship or a public interest fellowship must apply for admission into the program within two years of graduation. Graduates who accept a judicial clerkship or fellowship must apply within three years of graduation.

The maximum length of LRAP participation is ten years, and benefits will not be paid beyond eleven years after graduation. This provides participants with financial support through the standard ten-year loan repayment period.

Asset Limitation

A program participant’s net assets, excluding his or her house and retirement accounts, may not exceed $25,000. A married participant is presumed to own one half of his or her spouse’s assets (excluding retirement accounts) accumulated after the marriage. Participants must sign an asset certification statement to receive or forgive a LRAP loan.

Forgiveness Terms for LRAP Loans

LRAP loans and the accrued interest on them will be forgiven for participants who remain in qualifying employment and meet the other requirements of the program for the six-month period covered by the loan.  Subsequent LRAP loans and the accrued interest on them will be forgiven on a semi-annual basis.

A participant who remains in qualifying employment but whose gross salary increases during the six-month loan period to a different level on the Available Benefits chart above, or to more than $55,000, will not be expected to repay a portion of that LRAP loan or the accrued interest.

Participants who leave qualifying employment before the end of the six-month period covered by their LRAP loan become ineligible for LRAP assistance, and must notify the UT School of Law, Office of Financial Aid, within 30 days of the change in employment.  Ineligible participants may be required to repay a pro-rated portion of the six-month loan with interest.[3]

For any other circumstances resulting in a participant leaving qualified employment, LRAP status will be determined by the UT School of Law, Office of Financial Aid.

All LRAP loan repayments will be under terms set forth in the LRAP Promissory Note, which must be signed by the applicant before any LRAP loan funds are disbursed.

Applying to Receive and Forgive LRAP Loans

Graduates are eligible to receive their first LRAP loan when they enter into loan repayment with their lender.  Each LRAP loan will cover a six-month period.  Students must remain in good standing with their lender to maintain eligibility.

For participants who are new to the program after March 1, 2018, LRAP loan funds will be distributed semi-annually over two six-month periods: January-June and July-December. An applicant must submit their application by the third Monday in November for the January-June loan period, and by the first Monday in June for the July-December loan period.  Participants who entered the program prior to January 1, 2018, may remain on their already-established application schedule.

To receive LRAP loan forgiveness, applications for forgiveness must be made by the end of the six-month period covered by the loan.

An applicant must sign an Agreement and Promissory Note before receiving each LRAP disbursement. Please see the LRAP Application Instructions for detailed information about applying to receive and/or forgive LRAP loans.

Tax considerations

Each program participant must determine the taxability of the forgiveness of the LRAP loans. Section 108(f) of the Internal Revenue Code details the requirements for tax-free forgiveness. Please feel free to refer to IRS Publication 970 for an overview of the treatment of LRAP loan forgiveness, as well as the deductibility of student loan interest payments.

Death or Disability

If a program participant dies or becomes totally and permanently disabled, the entire amount of the LRAP loan and any accrued interest on the loan, along with any related charges and fees, will be cancelled. To request cancellation of the loan due to the death of the borrower, a certified copy of the death certificate should be provided to the LRAP Administrator. In the event of a disability affecting your employment, contact the LRAP Administrator.

Program Administration

The LRAP program is administered by:

University of Texas School of Law
Office of Financial Aid – LRAP
727 East Dean Keeton St.
Austin, TX 78705
(512) 232-1203
lrap@law.utexas.edu

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[1] The program does not cover consumer credit or loans from a private individual.

[2] All compensation received from an employer that is deemed taxable by the IRS is considered part of an individual’s salary for this program.

[3] Exceptions may be granted by the LRAP administrator due to unusual circumstances, including a layoff.