Law School Discussion

Loan Forgiveness

Loan Forgiveness
« on: September 29, 2008, 09:58:19 AM »
Is anyone familiar with loan forgiveness programs for public sector employees?  I'm considering a job as an ADA after graduation, but am concerned about my ability to pay my loans, etc.  I know that -- to some extent -- public sector employees such as ADAs may be eligible for loan forgiveness.  I've heard the amount you pay is equal to a portion of you disposable income, and that the remaining amount of your loans is forgiven if you make 120 consecutive payments (i.e. you remain a public sector employee for 10 years).  Is this true?  Does it only apply to federal loans?  Do any private loan companies offer similar loan forgiveness?  Only respond if you have an actual understanding of these programs -- speculation isn't much help.  Thanks!


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Re: Loan Forgiveness
« Reply #1 on: September 29, 2008, 10:36:10 AM »


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Re: Loan Forgiveness
« Reply #2 on: September 29, 2008, 11:07:36 AM »
Your school may have its own loan repayment program.  The school-specific programs vary greatly from school to school, but many barely make a dent for most people.  For instance, I think my school only gave $5000 a year for loan payments, and if you are married, it's much harder to qualify.  You should go to your school's financial aid department or find out who does exit interviews for loan before graduation. They will have the most info on if your school has a LRAP program, and the details.

There will be a federal program available in the next year or so for public interest employees.  It wasn't available right after graduation this year, but it may be in effect next year; I can't remember for sure.  I *think* the terms require 10 years of public service, but I don't think it has to be consecutive (could be wrong about that).  You must make loan payments during the time you're working, but after you reach the 10 years of service, the remaining balance of your *federal* loans are forgiven.  Working as an ADA would qualify under this program as public service.  Again, your financial advisor or someone at your school will know more, and I'm sure you can find more info on the web.

As for private loans, I don't know of any loan forgiveness programs, but it may vary by lenders. I'd speak with your lender for what options they might have available.

As for repayment plans, federal loans have different repayment options. IIRC, you can either pay a fixed rate every month (standard), or graduated (pay very little now, and payments increase as time goes on), and income based (calculated by some formula).  Private lenders usually have similar options.

Bottom line, check with your lender(s) to assess your options, and speak with someone at your school about any available school programs.


Re: Loan Forgiveness
« Reply #3 on: September 29, 2008, 11:12:01 AM »
This is the one that is of specific interest for those going into prosecution/indigent defense:

And this is the more general one, the College Cost Reduction Act:

I only learned a little bit about them last year at an info session my school did for public interest students. They're still quite new, but I know these two are only applicable for federal loans (which includes Grad Plus).

Re: Loan Forgiveness
« Reply #4 on: October 09, 2008, 05:39:22 PM »
I think your talking about the college cost reduction act.  You basically have it right, your loan payments are based on your income rather than the amount of your loans.  In July 2009 the income based portion of the act will go into effect meaning that your loan payment will be 15% of what they call your disposable income. 

Your disposable income is your income minus 150% of the poverty line. If this doesnt make sense the power point link and law review article below explain it. 

Also, the program does not include private loans.  BUT it does include graduate plus loans which is what most law school students have in addition to our federal loans.

This has the basics you should know.. its a powerpoint.

This is a Law review article explaining everything in detail.  This is actually a really easy read with great examples.