Harvard LIPP program Forum

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curious109

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Harvard LIPP program

Post by curious109 » Mon Mar 27, 2017 4:11 pm

I've been reading up a lot about Harvard's LRAP. A couple of big advantages that nobody seems to have touched on:

1) Starting in Year 5, you are given a $5000 credit when calculating your eligible income level. This credit increases by $1000 for each succeeding year. So for example, in Year 5, if your income was $80,000, it would only count as $75,000 for purposes of computing Harvard's LIPP contribution. This makes a significant difference given that Harvard expects you to pay 40% of your marginal income (above $52,000) toward your loans. The credit is in effect saving you $2,000 a year in Year 5, and it goes up by $400 each succeeding year.

2) If you're not working in government or for a 501(c)(3) organization, you're still eligible for LIPP as long as your job is "law-related". While Yale and Stanford have similar eligibility (Yale's is even better), one thing to remember in these situations is that LRAP contributions will be considered taxable income. At a 25-28% marginal rate, that tax liability can be significant (several thousand $). One great advantage of Harvard's program is that they will up their LRAP contribution by 25% to cover this! That's a huge benefit.

Hope this helps some of you...

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big_willy_style_333

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Re: Harvard LIPP program

Post by big_willy_style_333 » Mon Mar 27, 2017 4:33 pm

curious109 wrote:I've been reading up a lot about Harvard's LRAP. A couple of big advantages that nobody seems to have touched on:

1) Starting in Year 5, you are given a $5000 credit when calculating your eligible income level. This credit increases by $1000 for each succeeding year. So for example, in Year 5, if your income was $80,000, it would only count as $75,000 for purposes of computing Harvard's LIPP contribution. This makes a significant difference given that Harvard expects you to pay 40% of your marginal income (above $52,000) toward your loans. The credit is in effect saving you $2,000 a year in Year 5, and it goes up by $400 each succeeding year.

2) If you're not working in government or for a 501(c)(3) organization, you're still eligible for LIPP as long as your job is "law-related". While Yale and Stanford have similar eligibility (Yale's is even better), one thing to remember in these situations is that LRAP contributions will be considered taxable income. At a 25-28% marginal rate, that tax liability can be significant (several thousand $). One great advantage of Harvard's program is that they will up their LRAP contribution by 25% to cover this! That's a huge benefit.

Hope this helps some of you...
just FYI, I believe Stanford's LRAP does 1) starting in your second year.

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