The Futurue of LRAP?

Dean Edl*y sent out this email earlier today:

Dear Friends,

I recently received a petition signed by several Boalt students concerning the state of Boalt’s Loan Repayment Assistance Program (or LRAP). Realizing how important LRAP is to the School and to many of you, I write to share some of my current thinking about LRAP in the context of the University’s budget turmoil.

First, let me offer some background. Approximately fifteen years ago, Boalt established LRAP to enable our graduates to pursue careers in public service by assisting them with loan repayment. As Boalt tuition increased with state budget cuts, funding for LRAP similarly increased, most notably in 2006 (my second year here) when it was substantially reformed. Under the original guidelines, only a relative handful of students participated in the program because the parameters were so conservative. This reflected the lower tuition, and the consequently modest typical debt loads of students but also the far smaller Boalt budget, of which tuition revenue is by far the largest component. Under this revised LRAP, graduates became eligible for up to 100% repayment assistance on as much as $100,000 of law school debt. For students working in qualifying public sector employment, the result could be a $0 out-of-pocket debt repayment for LRAP participants as Boalt absorbed the tab on the amortizing loans.

Although this revised program was one of the most generous in the country, two developments prompted a further modification of LRAP in 2009. The first was rising tuition rates across the country at both colleges and professional schools, including here at Boalt. With 1Ls arriving with already significant undergraduate debt-burdens and 3Ls leaving with even larger ones, it quickly became clear that even our commitment to repay $100,000 of law school debt may not be enough to assist Boalt graduates interested in pursuing public interest careers.

At the same time, however, the College Cost Reduction and Access Act of 2007 (CCRAA) created both the Income Based Repayment (IBR) program and the Public Service Loan Forgiveness (PSLF) program that provided a way to address this challenge in a fiscally sound fashion. Under these two programs, any graduate who enrolls in IBR for their federal loans will make minimum monthly payments based on their income. And for those who consolidate or have all of their federal loans with the Direct Loan Program and make 120 scheduled monthly payments while working for qualified public interest employers, their remaining loan balance will be forgiven by the federal government. Based in large part on Boalt student input in 2008, we revised LRAP to take advantage of these benefits: Graduates pursuing a career in public sector work could consolidate law school as well as college loans and elect IBR. Berkeley would then provide assistance with making all or a prorated amount of IBR payments for ten years, at which time the remaining debt balance would be forgiven.

In my judgment, the move to IBR seems undeniably a win-win for both Boalt and our students.[1] Graduates can now pursue a career in public interest work regardless of the size of their law school and college debt burdens. Meanwhile, Boalt benefits by making the most efficient use of scarce financial aid resources, freeing up more money for other important grants and fellowships. That so many of our competitors have since emulated the manner in which we have integrated LRAP and IBR/PSLF seems to confirm the wisdom of this strategy.

Notwithstanding these benefits, however, the student petition as well as research by the Financial Aid Committee this year have highlighted two areas in which this strategy merits further review to ensure that LRAP is the best that it can be. One relates to the cost students could incur if they leave public sector work prior to making their 120 payments under IBR; the other focuses on the chance, which in my political judgment is remote, of adverse changes to CCRAA by Congress.

For this reason, I wanted to let you know that we will be inviting BHSA to work with the Financial Aid Committee next year to undertake a substantive review of these issues and to investigate the different approaches Boalt might take to address them in a reasonable fashion. BHSA’s involvement is especially important because almost all LRAP resources necessarily come from tuition revenue, making the program one in which students cross-subsidize each other over time and across careers. At this point I have no strong view about what alternative approaches might look like. We don’t even know how much further our state funds will be cut in the next six months, much less beyond that.

But for those of you graduating and who worry about the issues raised in the petition, I assure you that absolutely nothing is more important to me, or the faculty as a whole, than the robustness of our Financial Aid programs. They shape the character of the student body, and express a core component of Berkeley Law’s mission. Therefore, the Financial Aid Committee and BHSA will have my focused attention on this matter as they analyze these issues next year. I can also assure you that if we adopt positive changes to LRAP, I will make sure they are retroactive for the class of 2011—the “Hardhats”.

Sincerely,

Christoph[*]r Edl[*]y, Jr.
The Honorable William H. Orrick, Jr. Distinguished Chair and Dean

[1] I can’t resist adding that in 1987, presidential candidate Michael Dukakis proposed a very similar program, designed by Gene Sperling and me. I was national issues director for the campaign, and Sperling was my junior staffer on economic policy. He’s now director of the White House National Economic Council. I’m a fundraiser. But I’m not bitter.

It seems like he provides some good context for why he is transitioning the program to be based on IBR. Admittedly I do not have the most complete knowledge of this issue, however. For example, I do not know what exactly the petition in question contained.

At any rate, I am sure opinions will be diverse on this issue! I look forward to seeing them in the comments.