Loan Repayment Assistance Available for Civil Legal Assistance Attorneys: APPLY NOW
A new loan repayment assistance program for civil legal aid attorneys is now available. The Civil Legal Assistance Attorney Student Loan Repayment Program (CLAARP) will repay a portion of eligible federal student loan debt for civil legal assistance attorneys who are employed full-time. The attorneys will need to remain employed for three years or pay the assistance back. An attorney may be awarded up to $6,000 in repayment assistance in 2010 (actually received in 2011), and may be prioritized to receive assistance in future years if Congress continues to fund the program. An attorney may receive a lifetime maximum of $40,000 in assistance.
Five million dollars is available for distribution to qualified civil legal assistance attorneys for fiscal year 2010. The Department of Education will commit these funds to eligible civil legal assistance attorneys on a first-come, first-served basis. Applications must be submitted by August 16, 2010, but eligible attorneys should complete the application as soon as possible because funds are unlikely to cover all applicants.
Attorneys must be licensed to practice law and employed full-time as a civil legal assistance attorney at the time of application. 2010 law graduates are unlikely to be licensed and employed in time for this application cycle.
Eligible attorneys are full-time employees of “a nonprofit organization that provides legal assistance with respect to civil matters to low-income individuals without a fee,” or full-time employees of a “protection and advocacy system or client assistance program” receiving federal funding under specific sections of the U.S. Code.
The full-time requirement may be fulfilled by part-time employment that total at least an annual average of 30 hours per week with two or more eligible employers
Federal student loans are eligible for assistance. These loans include: Federal Perkins Loans, Federal Stafford Loans (both subsidized and unsubsidized), Federal PLUS Loans, Federal Consolidation Loans, and Federal Supplemental Loans for Students. Eligible loans may be either FFEL or Federal Direct Loans.
Loans in default, Parent PLUS loans, and private, commercial, or alternative student loans are not eligible.
Three-Year Service Commitment Required
To apply, attorneys must complete an Application to Participate and Service Agreement that binds the attorney to complete the required three-year service commitment.
Although funding has not yet been secured for future fiscal years, Congress is authorized to appropriate up to $10,000,000 per year through fiscal year 2013. Attorneys who do not complete all three years of service will have to repay the 2010 award, even if the attorney does not receive funds for all three years of the service period.
How to Apply
Complete and submit an Application to Participate and Service Agreement. Remember that funds will be committed to eligible civil legal assistance attorneys on a first-come, first-served basis so apply now!
Repayment Assistance Process
Attorneys that receive assistance will need to submit an Annual Certification of Employment, a draft of which is pending approval, within 90 days of the completion of a year of qualifying employment. The Department of Education will pay the amount of the award (up to $6,000) to the holder of the loan.
Caution: Ineligibility for Double-Benefits Clause
Section 431(g) of the statute that created the CLAARP program, states:
Ineligibility for Double Benefits - No borrower may, for the same service, receive a reduction of loan obligations under both this section and [Loan Forgiveness for Service in Areas of National Need] or [Public Service Loan Forgiveness under the CCRAA].
The application contains similar language.
Although it is not entirely clear how this provision will be interpreted, it is likely that attorneys who receive assistance under CLAARP cannot count the payments they make during the years they receive a CLAARP award toward the 120 payments required to earn federal loan forgiveness from the Public Service Loan Forgiveness (PSLF) under the College Cost Reduction and Access Act. Consider the following:
- Attorneys planning careers as civil legal assistance attorneys and expecting substantial loan forgiveness from PSLF should carefully consider the effect of CLAARP’s Ineligibility for Double Benefits clause on the timing and amount of PSLF. Attorneys with high debt to income ratios, including typical recent law graduates, should take care in analyzing their options.
- Attorneys who do not expect much benefit from PSLF, including experienced attorneys burdened with private student loans and those with moderate federal student loan debt to income ratios, are especially encouraged to consider CLAARP. Although CLAARP does not repay private loans, it can provide federal student debt relief that is not based on income. The Ineligibility for Double-Benefits clause cannot harm PSLF loan forgiveness for those who do not stand to benefit from PSLF.
Example of Effect of Ineligibility for Double Benefits Restriction on Recent Law Graduate
If an attorney accepts three years of assistance from CLAARP, the Ineligibility for Double Benefits provision causes the typical recent law graduate who becomes a career legal services attorney to extend her time in repayment under PSLF from 10 to 13 years, paying $18,000 more out of pocket than she would have otherwise.
Assume today’s typical starting legal services attorney receives three years of benefits under CLAARP:
- The attorney starts with $120,000 in federal educational debt at composite interest rate of 7.65% (half Stafford and half GRAD plus), starting salary of $40,000, with annual increases at 4%.
- CLAARP gives her $6,000 per year for her first three years ($18,000 in total benefits). This assistance is attributed first to accrued interest as required, then to principal, resulting in a total reduction of her principal balance of only $6,000 after year 3.
- The Ineligibility for Double Benefits delays her from qualification for Public Service Loan Forgiveness (PSLF) under the CCRAA after year 10 of repayment. She must instead make payments for an additional three years, in years 11 through 13 of repayment.
- The required payments in years 11 through 13 total $18,004.
- She repays a total of $63,215 out of her own pocket over the course of the 13 years.
- In the absence of the Ineligibility for Double Benefits provision, or if she had refused benefits under CLAARP, she would have repaid $45,211 over the course of 10 years.
- This recent graduate career legal services attorney ends up paying $18,004 more out of her pocket ($63,215 vs. $45,211), for having accepted benefits under CLAARP.
Mark Kantrowitz of finaid.org has posted a calculator for assessing the impact of the Ineligibility for Double Benefits provision here: www.finaid.org/calculators/ibr_policy.phtml. Check out your individual situation.
- Now: Applications are available for submission
- September 30, 2010: Deadline for the Department of Education to commit funds to attorneys for fiscal year 2010.
- Within 90 days after the conclusion of each year of service: Submit Annual Certification of Employment Form.