Student loan repayment is considered to be the financial priority of LIPP participants. Participants allocate, according to the Participant Contribution formula, a limited percentage of their income toward their total annual education loan repayment. LIPP then covers any difference between the graduate’s total eligible law school debt payments due in that year and their expected contribution toward eligible loan payments with an adjustment made if a participant’s assets exceed their asset protection allowance. LIPP has no fixed salary ceiling. Each graduate’s salary “max out” point is determined by their need-based borrowing. The more eligible borrowing, the higher the salary that qualifies for LIPP. The income and asset information of a married participant’s spouse is also considered when determining benefits.
LIPP policy requires consideration of income from all sources, both taxable and non-taxable, when calculating the Participant Contribution. This includes gross income from all employment, housing allowances, living allowances, subsistence allowances, bonuses, royalties, settlements from clients, deferred compensation, alimony, child support, public assistance, rental income and gifts from family members or others. When determining the total income we prorate all LIPP eligible job income to at least 35 hours; any other income is included as additional income, for 12 months after it is earned, but is not prorated. In regards to bonuses and settlements from clients, the gross amount is added to the annual income of the participant and used to calculate the LIPP income for the six months following its disbursement.
For those participants who are paid via an hourly wage and who do not receive paid vacations, such as temporary workers, we use a 48 week year to determine an annual income. We do this to account for the two weeks of holidays businesses are generally closed and to allow for a reasonable two weeks of vacation per year.
When calculating a participant’s LIPP income, we also include several allowances. These allowances include dependent care costs and in some cases, such as self-employment, out-of-pocket health insurance expenses. We also apply a Longevity Allowance to recognize longer term participants. The Longevity Allowance begins in the fifth year of program participation, at which point participants will receive a $5,000 allowance that is deducted from their income before the LIPP benefit amount is calculated. For each additional year completed in LIPP, participants receive an additional $1,000 Longevity Allowance.
Finally, please note that the LIPP Participant Contribution formula is location neutral. The Participant Contribution is not adjusted to reflect regional differences in the cost of living.
LIPP Participant Contribution Formula *Effective July 1, 2022
|Gross Income||Participant Contribution: The portion of gross annual income graduate pays towards loans before LIPP assistance begins|
|$55,000 or less||$0|
|$55,000 – $61,000||20% of income over $55,000|
|$61,000 – $133,000||$1,200 + 40% of income over $61,000|
|$133,000 and above||$30,000 + 80% of income over $133,000|
*The monthly expected contribution cannot be applied to “non-LIPP” or LIPP-ineligible loan payments.
NB: The LIPP Participant Contribution guidelines are reviewed annually and are subject to change.