Prospective LIPP participants are advised to consider that there are regional differences in the cost of living, state and local tax rates, and other personal expenditures. While regions with a lower cost of living may offer a relatively higher standard of living at a given income, there may be also regions where, for example, a higher cost of living is offset to some extent by the availability of infrastructure (such as public transportation) and other desirable public services and amenities. It is also possible that some areas of the U.S. may offer more career advancement, networking, and job opportunities in a given employment sector than others.
LIPP is intended to be location neutral and does not make an allowance for regional cost of living differences. Instead, LIPP is designed to provide a consistent level of predictability regarding loan repayment based on gross income and (when applicable) assets. It is up to each LIPP participant, when making employment choices, to evaluate the full value proposition of living and working in a specific region in light of her or his own needs and preferences, and to recognize that there may be benefits and trade-offs to any situation.
In areas where there is a significant local differentiation in income tax, an adjustment to income may be made by the LIPP staff to account for differential tax rates. For example, while many LIPP participants live and work in the New York or Washington DC greater metropolitan areas, only New York or DC residents pay a separate city income tax. The LIPP staff generally gives an allowance for city taxes that represent a significant residency-based difference between otherwise similarly situated participants living in the same local geographic region. However, LIPP benefits are not adjusted for tax differences between different states or metropolitan regions.
By remaining location neutral LIPP seeks neither to increase nor diminish the incentives to choose employment in one geographic region over another. Decisions regarding where to live and work rest entirely with individual LIPP participants.