Financial Aid Programs

There are a variety of programs that provide assistance to law school graduates who have borrowed student loans while earning their degrees. These programs are made available by the University of Michigan Law School, the federal government, and, in some instances, employers. This section of our website brings some of these resources together to make your search easier.

  • Michigan Law’s Loan Repayment Assistance Programs (LRAPs) 

    The Debt Management Programs at the Law School provide graduates with maximum flexibility to choose jobs from any law-related area (excluding judicial clerkships and U-M funded fellowships), including modest-paying public interest positions, while still maintaining a reasonable lifestyle and remaining current on outstanding loan obligations.

    Graduates whose combination of income and debt make them eligible receive assistance in meeting their loan obligations incurred during law school. A special note for those pursuing Presidential Management Fellowship (PMF) positions: On rare occasions, the job you receive may not be law-related and, therefore, makes you ineligible for the Law School's Debt Management 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 consult the Financial Aid Office to discuss your eligibility. For further information, select the correct program below for your entering class.

    Entering Classes 2011–Later

    Income-based Debt Management Program

    Income-based Debt Management FAQ       

    Income-based Debt Management Information and Instructions (pdf)

    Apply for the Income-based Debt Management Program  

     

    Entering Classes 1984–2010 

    You may choose between the income-based option above or traditional option below.

    Traditional Debt Management Program

    Traditional Debt Management Information and Instructions (pdf)

    Apply for the Traditional Debt Management Program

  • Income-based Repayment (IBR)

    The College Cost Reduction and Access Act (CCRAA) of 2007 established, among other things, a new repayment plan for federal loans that will be of particular interest to graduates going into low-paying jobs. Income Based Repayment (Section 203 of the Act) allows borrowers to pay back their federal loans on the basis of their income and family size at the time of repayment.

    Borrowers will be eligible for loan forgiveness after 25 years of qualifying payments or 10 years for those who are working full-time in eligible public service employment (see PSLF below).

    The Federal Student Aid website offers further information, including a FAQ, and calculator for estimating IBR payments. Our CCRAA FAQ also provides more details about this program.

    Federal Student Aid

    Income-driven Repayment Plans

    Loan Simulator

    CCRAA FAQs 

  • Pay As You Earn (PAYE) 

    Pay as You Earn is a newer version of Income Based Repayment that became available for certain federal Direct loans in December of 2012. PAYE offers lower monthly payments and forgiveness after 20 years of qualifying payments instead of 25 years.

    Payments made under PAYE can qualify for the government's 10 year public service loan forgiveness program (see PSLF below). Eligibility is limited to recent federal loan borrowers who: 1) have received a disbursement of a Direct loan on or after October 1, 2011 and 2) had no outstanding balance on a Direct or FFEL loan when a new Direct or FFEL loan was received on or after October 1, 2007.

    The Federal Student Aid website offers details about eligibility requirements and a calculator for estimating payments.

    Federal Student Aid

    Loan Simulator

  • Revised Pay As You Earn (REPAYE) 

    Revised Pay as You Earn is the newest version of Income Based Repayment that became available in 2015 for all federal Direct loans. REPAYE offers lower monthly payments and forgiveness after 20 years of qualifying payments for borrowers repaying only undergraduate loans and 25 years for those repaying loans borrowed for graduate or professional education.

    Payments made under REPAYE can qualify for the government's 10 year public service loan forgiveness program (see PSLF below). All Direct loan borrowers are eligible regardless of the time their loans were borrowed.

    The Federal Student Aid website offers details about eligibility requirements, a comparison of income-driven plans, and a calculator for estimating payments.

    Federal Student Aid  

    Eligibility Requirements  

    Loan Simulator  

  • The Public Service Loan Forgiveness Program (PSLF)

    The Public Service Loan Forgiveness Program (Section 401 of the CCRAA) will forgive most federal Direct loans after 120 qualifying payments while employed full-time in eligible public service employment.

    The 10 years do not need to be consecutive, but the borrower must be working in an eligible public service job at the time of forgiveness. Only certain repayment plans qualify for PSLF, including IBR and PAYE.

    The following publications offer details about the requirements for forgiveness: Federal Student Aid website, help tool, and Q&A. There is also a form that borrowers can complete to track their progress. 

    About the Public Service Loan Forgiveness Program  

    Federal Student Aid Help Tool 

    Public Service Loan Forgiveness FAQs 

    Track Progress  

  • John R. Justice Student Loan Repayment Program

    The JRJ Program provides funding for federal student loan repayment for eligible public defenders and prosecuting attorneys who agree to remain employed within Michigan for at least three years.

    Learn About the JRJ Program  

  • Federal Loan Consolidation 

    Federal loan consolidation provides variable-rate loan holders an opportunity to lock in the current interest rate on their federal loans. Once federal loans have been consolidated, the rate cannot be adjusted again in the future.

    If it seems that most borrowers' loans are already set at a fixed interest rate, this is because most borrowers have already consolidated, or their loans disbursed after July 1, 2006, which is when the federal loan program changed from offering variable to fixed-rate loans. 

    Learn About Federal Loan Consolidation 

  • Private Loan Consolidation 

    Private loan consolidation should not be confused with federal loan consolidation. Fees may apply and, in some cases, the interest rate is variable. The rates that are offered will be based on your credit score or require a cosigner.

    If you are considering private loan consolidation, proceed with caution and feel free to contact us with any questions.

    Note: Many states, legal services programs, and public defender offices have Loan Repayment Assistance Programs (LRAPs). The ABA maintains a list of state and employer LRAPs. You should check with your employer to see if there is an LRAP available to you.

    Learn About Private Loan Consolidation 

    State and Employer LRAPs 

Comparing Loan Repayment Assistance Programs

This document will assist prospective law students in analyzing the LRAPs of the law schools they may be considering, as loan repayment looms large in the decision to attend law school and the selection of one. The table below offers a manageable rubric to learn about LRAPs generally and Michigan Law’s in particular. This should not be taken as a substitute for reading our FAQ when the time comes, the application guidelines (password restricted). 

There are many factors that comprise an LRAP; however, the type of jobs that are eligible, conditions on entry and re-entry, and the accounting for negative amortization are especially important for evaluating whether a program provides comprehensive, long-term, and flexible support to a law school graduate.

Application Guide

LRAP FACTORS

CONSIDER …

MICHIGAN LAW INCOME-BASED DEBT MANAGEMENT PROGRAM

 

ELIGIBILITY

 

Who

  • Which class years are eligible?
  • Program is open to all Michigan Law JD entering classes ≥ 1984.

IBR-Required?

  • Is enrollment in the US Department of Education's Income-Based Repayment (IBR) program required?
  • If it is not an IBR-based program, how is the outstanding debt in its entirety retired or forgiven (and by whom)?
  • Yes, enrollment in federal IBR, PAYE, or REPAYE is required for all eligible debt (except for non-citizens).
  • Graduate must be eligible for federal IBR, PAYE, or REPAYE using only loans received to attend Michigan Law.
  • Government grants forgiveness for entire IBR loan, if all terms met, after 10 years for public interest and 20 (PAYE) or 25 years (IBR/REPAYE) for private employment.

Federal Income-Driven Repayment Plans

Loan Forgiveness

Latest Entry into Program

  • What is the entry deadline (as flexibility will generally work to your advantage)?
  • Are extensions available?
  • Graduate may enroll any time within 5 years of graduation, subject to meeting application deadlines.
  • Extension for a judicial clerkship (usually 1 or 2 years) is automatic.

Maximum Number of Years Participation

  • What is the maximum number of years you can participate in the program?
  • What happens when you wish to return to the program but had to exit it because you changed job, started a family, or experienced some other major life event?
  • Is there a set end date for eligibility, i.e., 10 years after graduation?
  • Is there a requirement for consecutive years of participation? 
  • Alum may participate in the program for 10 years, but they need not be consecutive.
  • Alum must enroll within 5 years of graduation.
  • The combined effect of the latest entry date (≤ 5 years graduation) and non-consecutive 10 years of participation work in tandem to create the scenario that our support could be available to an alum over the 25 year course of some payment plans.

Eligible Jobs

  • What legal job sectors and jobs are eligible? 
  • Is a public interest job required?  If so, how is "public interest" defined? 
  • Is private/for-profit employment eligible?
  • What is the specific language for eligibility:  "JD required," "JD preferred," or some other phrase?  How is it defined?
  • What jobs are likely to need case-by-case review for eligibility?
  • Is there a difference between the IBR and LRAP's definitions of "public interest"?  Is it possible your job is eligible for one but not the other?
  • Are other kinds of employment eligible – part-time, self-employment, or volunteer?
  • All sectors (not-for-profit and profit) of the legal profession are included – academic, business, government, private practice, public interest.
  • JD is required. Exceptions are granted through appeal.
  • The job must be full-time and paid.
  • Career (i.e., permanent) clerkships are eligible.

Excluded Sectors/Jobs

  • Is there a risk that a future job relevant to your interests is excluded?
  • No JD-required, full-time, permanent job is excluded.

Judicial Clerkships

  • Are clerkships excluded or included?
  • Do clerkships trigger an extension of years of eligibility or entry date?
  • Are there special circumstances for a clerkship to be considered an eligible job, e.g., a restriction on the kind of post-clerkship job?
  • Career (i.e., permanent) clerkships are eligible.
  • Term clerkships (generally temporary) are excluded but still eligible for IBR.
  • Entry into the program is extended for clerkships (usually 1 to 2 years).

Part-time, Self-, and Other Employment

  • Are part-time employment and self-employment eligible jobs?  If so, are there any conditions that apply?
  • Self-employment is eligible (consistent with other program requirements).
  • Part-time and temporary jobs are excluded.

Full Coverage

  • At what salary will you have virtually no out-of-pocket costs?
  • A salary at or below federal GS-11 base rate (the General Schedule pay rate for entry-level federal attorneys), currently about $55,000, will result in virtually no out-of-pocket costs for the graduate.

Cap

  • What is the maximum salary still eligible for participation?  The higher the cap, the longer you'll be able to participate in the LRAP.
  • How does the LRAP provide support over the upper ranges of income – continued full coverage, a sliding scale, a limited range of salary covered?
  • The salary cap is 175% of federal GS-11 base rate (~$96,600).
  • Coverage is provided on an income-based sliding scale up to ~$96,600. See details in "Factors Considered" within the Benefits & Coverage section.

Eligible Loans

  • Is there a highly restrictive list of eligible law school education loans? If so, it may be difficult to receive a useful benefit.
  • Are other loans eligible, e.g., educational (private, joint degree programs, undergraduate), private (bar-related, computer, others)?
  • Are international students eligible?
  • Direct (subsidized & unsubsidized) & Grad Plus taken for Michigan Law education (the loans most of our students obtain) are eligible. See also the lists of eligible and ineligible loans for each federal loan repayment plan.
  • Bar-related loans ≤ $8K are eligible.
  • Private educational loans are eligible if taken due to visa status.

Loan Repayment FAQ

Eligible Loans for Each Federal Repayment Plan

 

ENTRY, EXIT, & RE-ENTRY

 

How Often

  • How are entry and re-entry into the program handled?  Is re-entry prohibited or conditions placed on it?
  • Are there penalties for exiting the program that require repayment of money loaned prior to the current year?  What is the interest rate?
  • Participant may enter and exit the program as needs change, subject to deadline dates.
  • No long term commitment to remain in LRAP. No penalties.
  • However, the graduate benefits from remaining in IBR because of debt forgiveness by the government.

Negative Amortization (or What Was Happening to All That Unpaid Interest?)

  • How does the plan address negative amortization (i.e., when the required federal IBR payments for the loan do not cover the accruing interest)?  Negative amortization is most relevant on exit and re-entry to IBR and LRAP programs.
  • On a sliding scale based on income, Michigan Law places funds annually into a reserve to account for the unpaid interest.
  • Alum can request a one-time disbursement from the reserve account up to five years after leaving the program (and prior to loan forgiveness).
  • Disbursement funds are sent directly to the alum's federal loan servicer.

 Income-Based Debt Management 

Deadlines During the Year

  • What are the application deadlines?  Programs may have limited flexibility in accepting late applications due to their own need for financial planning and budgeting.
  • May graduates apply by November 1.
  • December graduates receive a one-time opportunity to apply (by May 1) to receive interim coverage until the November 1 application cycle.

 

BENEFITS & COVERAGE

 

Factors Considered in Determining the Amount of the Benefit

  • Whether and how the LRAP accounts for
    • your spouse's income
    • your spouse's educational loan payments
    • assets (yours and/or your spouse's)
    • dependent care and costs
    • other debts
    • past activities
  • Tier 1: Graduate pays $0 at federal GS-11 pay rate (~≤ $55K).
  • Tier 2: Graduate pays increasing share of principal & no interest from ~ $55K to ~$82K).
  • Tier 3:  Graduate pays all but a little of the IBR payment on a sliding scale from ~ $82K to ~$96K.
  • Reserve account is created to account for unpaid interest.
  • Only the participant's income is used to calculate the IBR payment level that determines program coverage.
  • Even if the participant files a joint tax return and, thus, has a higher federal IBR payment than that derived from a single income, program coverage extends only to that derived solely from the participant's income.
  • Program requires notification of changes during the year (e.g., employment, income, loan payments).

Learn more

Negative Amortization

  • Is there a program benefit designed to address this issue? 
  • Is it one amount for all participants or individually calculated based on your accruing unpaid interest?
  • How long does it take to vest? 
  • Does the benefit expire at some point?  If so, when?  
  • We place funds (on an income-based sliding scale) into an escrow account to offset participant's unpaid interest.
  • The account vests after two consecutive years.
  • Participants can request a one-time payout within five years after exiting the program.

Annual Forgiveness and Federal Tax Issues

  • Is annual funding from LRAP given as a loan or a grant?
  • Note that a loan may be non-taxable, but a grant or scholarship in this kind of program is taxable. Programs generally encourage consultation with a tax advisor to confirm whether forgiveness is taxable or non-taxable.
  • The benefit is an annual interest-free loan from Michigan Law that is forgiven at the end of that calendar year, provided all terms are met.
  • The program includes a recommendation to consult a tax advisor.

Family Care Leave

  • What events may provide for a family care benefit?
  • Is the benefit tied to employment?  In general, LRAP coverage is dependent on the participant's employment (requiring near full-time, paid leave to continue receiving the benefit).
  • If deferral is available, does the program likewise extend your years of eligibility for coverage (or does the deferral "use up" some years of eligibility)?
  • Alum must be on leave at full salary with the employer to remain eligible for LRAP.
  • Alum is eligible to resume participation in the LRAP whenever the unpaid leave from employment is over.
  • The ten year clock of eligibility is paused during times of unpaid leave.
  • Note: If participant's employer requires long-term unpaid leave, participant may still seek a possible reduction in federal IBR payment with their federal loan servicer.

Who?

Consider:
  • Which class years are eligible?
Michigan Law Income-Based Debt Management Program:
  • Program is open to all Michigan Law JD entering classes ≥ 1984.

 

IBR-Required?

Consider:
  • Is enrollment in the US Department of Education's Income-Based Repayment (IBR) program required?
  • If it is not an IBR-based program, how is the outstanding debt in its entirety retired or forgiven (and by whom)?
Michigan Law Income-Based Debt Management Program:
  • Yes, enrollment in federal IBR, PAYE, or REPAYE is required for all eligible debt (except for non-citizens).
  • Graduate must be eligible for federal IBR, PAYE, or REPAYE using only loans received to attend Michigan Law.
  • Government grants forgiveness for entire IBR loan, if all terms met, after 10 years for public interest and 20 (PAYE) or 25 years (IBR/REPAYE) for private employment.

Federal Income-Driven Repayment Plans    Loan Forgiveness

 

Latest Entry into Program

Consider:
  • What is the entry deadline (as flexibility will generally work to your advantage)?

  • Are extensions available?
Michigan Law Income-Based Debt Management Program:
  • Graduate may enroll any time within 5 years of graduation, subject to meeting application deadlines.
  • Extension for a judicial clerkship (usually 1 or 2 years) is automatic.

How Often

Consider:
  • How are entry and re-entry into the program handled?  Is re-entry prohibited or conditions placed on it?

  • Are there penalties for exiting the program that require repayment of money loaned prior to the current year?  What is the interest rate?
Michigan Law Income-Based Debt Management Program:
  • Participant may enter and exit the program as needs change, subject to deadline dates.

  • No long term commitment to remain in LRAP. No penalties.

  • However, the graduate benefits from remaining in IBR because of debt forgiveness by the government.

Factors Considered in Determining the Amount of the Benefit

Consider:

Whether and how the LRAP accounts for

  • your spouse's income
  • your spouse's educational loan payments
  • assets (yours and/or your spouse's)
  • dependent care and costs
  • other debts
  • past activities
Michigan Law Income-Based Debt Management Program:
  • Tier 1: Graduate pays $0 at federal GS-11 pay rate (~≤ $55K).
  • Tier 2: Graduate pays increasing share of principal & no interest from ~ $55K to ~$82K).
  • Tier 3:  Graduate pays all but a little of the IBR payment on a sliding scale from ~ $82K to ~$96K.
  • Reserve account is created to account for unpaid interest.
  • Only the participant's income is used to calculate the IBR payment level that determines program coverage.
  • Even if the participant files a joint tax return and, thus, has a higher federal IBR payment than that derived from a single income, program coverage extends only to that derived solely from the participant's income.
  • Program requires notification of changes during the year (e.g., employment, income, loan payments).

Learn more

 

Comparing Loan Repayment

This document will assist prospective law students in analyzing the LRAPs of the law schools they may be considering, as loan repayment looms large in the decision to attend law school and the selection of one. The table below offers a manageable rubric to learn about LRAPs generally and Michigan Law’s in particular. This should not be taken as a substitute for reading our FAQ when the time comes, the application guidelines (password restricted). 

There are many factors that comprise an LRAP; however, the type of jobs that are eligible, conditions on entry and re-entry, and the accounting for negative amortization are especially important for evaluating whether a program provides comprehensive, long-term, and flexible support to a law school graduate.

Application Guide

Eligibility

  • Who?

    Program is open to all Michigan Law JD entering classes ≥ 1984.

    What to consider when comparing to other schools
    • Which class years are eligible?

Entry, Exit and Re-entry