LIPP undergoes $250K benefits upgrade

BY MIKE WISER

In late April, just as the members of class of 2001 were preparing to head off to their new jobs and wondering whether they would ever be debt free, Dean Robert Clark ’72 announced that the school’s Low Income Protection Plan (LIPP) would undergo major changes. The school would redefine which jobs were covered by the plan, eliminate the different treatment of need-based and imputed parental-contribution loans, replace the old salary cap with a salary-debt ratio and increase the LIPP contributions.

The changes were designed to address a range of criticisms aimed at a program that many students and faculty saw as inferior to similar programs at NYU and Yale law schools. The changes, which took effect on July 1, will affect the 200 or so alumni in low-income jobs who use contributions from LIPP to help pay off law school loans. Dean Clark and Lisa Dealy, the Director of LIPP, both said that the changes will put HLS in the same league as the best loan-forgiveness programs in the country.

Under the new program, LIPP will treat all financial aid loans the same. When students receive loans, the school calculates how much a student needs and how much that student’s parents are expected to contribute. Under the old system loans that were part of this imputed parental contribution were treated differently by LIPP than the need-based loans. Dealy said that the program was confusing and she had many “philosophical conversations” with students about why they would be responsible for the imputed-parental contribution five years after they had graduated. While the change would not have a huge effect on the cost of the program or the amount alumni receive, she said that the change would affect 80 percent of participants.

The definition of which alumni can receive LIPP funding has also changed. Under the old system only students in private or public sector “law related” jobs were covered. Now any alumni working in a government, non-profit or academic job will be included in the program. Dealy said that under the old system jobs were evaluated on a case-by-case basis and students were put into a Catch-22 situation of having to accept a job before they knew whether they would receive funding. As under the old system, private-sector jobs are still covered only if the job is law related.

The new program will also replace the old salary caps with a flexible debt-to-salary ratio that will remain constant. The salary cap was used to determine at what salary level a student becomes ineligible for the program. The problem before was that the cap had to be raised in an ad hoc fashion and, Dealy explained, “LIPP got out of sync with reality.” This new system will allow the contribution and cap to be more individually tailored to students who bear vastly differing levels of debt.

Last, the program increased the school’s overall contribution for every salary level is covered by the program (see sidebar). Dealy estimated that that the increased funding will cost the school $225,000 to $250,000 a year.

While Dealy argues that HLS has one of the best loan-forgiveness programs in the country, she admits that the process these programs are so complicated that they are difficult to compare. A student in one situation may be better off at one school, but the opposite may be true for another student.

Although she is happy with the changes, Dealy said, “In my mind there are still things we could tweak to make it better.” The school and her office, she says, needs to market the program to students and applicants so that they know what it does. A number of participants have also complained that there should be a cost of living adjustment for graduates who work in more expensive cities such as Washington, D.C., and New York City. She also said that in the long term the school should look at how undergraduate loans are handled and how the school calculates the expected contribution for students in jobs with stagnant incomes but growing expenses over time.

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