Being in public service as a member of the Air Force Judge Advocate General Corps is a good thing. I get to practice law, serve my country, and look pretty cool while doing it (thanks tiger-stripe ABUs!). But one of the less attractive aspects of this job is the debt-to-income ratio, due in large part to student loans used to pay for law school. The average new JAG has somewhere between 70-100 thousand dollars in student loans. I won’t get in to how much debt I am carrying, or how much money I make as an 0-3 captain in the Air Force; but I will say that many of my fellow JAGs are financially unable to continue serving in the Air Force (or public service) because of the difficulty they have in paying their student loans out of their military income. This has meant that, in recent years, nearly 50% of the JAG Corps leaves after only four years of service.
Sad, right? Well here’s some good news: it looks like these pesky law school loans will qualify for repayment under Section 2171 of Title 10, United States Code (10 U.S.C. §2171). The implementation and other guidance for this program is still being ironed out, but here’s some general information sent out by The Judge Advocate General for the Air Force.
TJAGC Student Loan Repayment Program (JA-SLRP)
Reference: 10 U.S.C. §2171
How much money could I receive?
Each eligible active duty judge advocate can apply for a maximum of $65,000, which will be divided into three equal annual payments. The three annual payments are capped by 10 U.S.C. §2171 at 33 1/3 percent of the loan’s remaining unpaid principal or $1,500, which is greater, for each year of active duty service. Interest, even interest recapitalized into the principal, will not be repaid. The payments are taxable income, so each JA-SLRP recipient will be responsible for paying applicable state and federal taxes.
What loans are eligible for JA-SLRP?
Federal, state, and private loans are eligible for JA-SLRP, provided the loans meet the criteria in 10 U.S.C. §2171.
In accordance with 10 U.S.C. §2171, the Air Force is authorized to repay the following educational loans, which must be in good standing, as defined by the judge advocate’s lender:
1. Any loan made, insured, or guaranteed under Part B of title IV of the Higher Education Act of 1965 (20 U.S.C. §1071, et seq.);
2. Any loan made under part D of such title (the William D. Ford Federal Direct Loan Program, 20 U.S.C. §1087a, et seq.);
3. Any loan made under part E of such title (20 U.S.C. §1087aa, et seq.); or
4. Any loan incurred for educational purposes made by a lender that is –
a. An agency or instrumentality of a State;
b. A financial or credit institution (including an insurance company) that is subject to examination and supervision by an agency of the United States or any State;
c. A pension fund approved by the Under Secretary of Defense for Personnel and Readiness for the purposes of this program; or
d. A non-profit private entity designated by a State regulated by such State, and approved by the Under Secretary of Defense for Personnel and Readiness for the purposes of this program.
Is there an additional Active Duty Service Commitment (ADSC)?
No, JA-SLRP payments will be made on the basis of each complete year of active duty service performed by the eligible judge advocate.
What impact will JA-SLRP have on my eligibility for College Cost Reduction and Access Act (CCRAA) programs?
There are two CCRAA programs you will need to consider in light of your personal financial situations before applying for JA-SLRP. First, if you are repaying your loan under the Income Based Repayment (IBR) or Income Contingent Repayment (ICR) program, your monthly payments will likely rise in the tax year following each JA-SLRP payment. Those repayment programs calculate your monthly payments based on your income, not the amount of your student loan debt. In addition, this rise in your income may make you ineligible for the IBR or ICR.
Second, if you have a Federal Direct or Federal Consolidated Direct Loan and are pursuing the CCRAA’s Public Service Loan Forgiveness Program (PSLFP), you must closely examine whether JA-SLRP payments should be applied to those federal loans. To take full advantage of the PSLFP, you will want to keep your monthly payments as low as possible thereby maximizing the remaining principal and interest the federal government forgives. By applying JA-SLRP payments to these federal loans, you will actually be accomplishing the opposite: your monthly payments will rise and you will be reducing the amount the federal government forgives.
As I said, the specifics of this program are still up in the air (final details are expected sometime during spring of 2010), but it is good news for JAGs with law school loans. I’m excited!
UPDATE (13 October 2010): I found the slides from the AF JAG webcast on the SLRP. View them here: JA SLRP slides (26 May 2010 webcast). Or, if you have access to the secure-login AF JAG website (Web Flite), you can see the original webcast here: https://aflsa.jag.af.mil/apps/jade/collaborate/course/view.php?id=930.