TJAGC Student Loan Repayment Program (JA-SLRP)

1
TJAGC Student LoanRepayment Program(JA-SLRP)
Air Force JAG Corps
W i s d o m - V a l o r - J u s t i c e

• Maj Christine Lamont
• Maj Darrel Johnson
• AF/JAX
• 26 May 2010

1
2
Overview

• JA-SLRP Overview
• Who is eligible?
• What loans are eligible?
• When do you apply?
• Collateral issues
• Tax issues
• How to calculate your JA-SLRP payment
• Should I apply for JA-SLRP?

3
JA-SLRP Overview

• Governing statute 10 U.S.C. 2171
• Maximum total payments 65,000
• Payments divided over 3 years
• Payments made at end of 1st, 2nd, and 3rd years
  in TJAGC
• Maximum payment at end of 1st and 2nd year
  21,666.67
• Maximum payment at end of 3rd year 21,666.66
• Maximum because there is a cap on the amount
  that can be paid each year, IAW 10 U.S.C. 2171
• Payments made directly to the lender
• No additional active duty service commitment
  (ADSC)

4
Who Is Eligible?

• JA-SLRP starts with JASOC Class 2010-A (Oct-Dec
  09)
• Under which program did you access?
• Eligible
• Direct Appointment Program (DAP)
• ROTC Graduate
• ELP
• Intraservice transfer
• Interservice transfer
• Ineligible
• FLEP
• Interservice transfer (served as JAG prior to
  transfer)
• Previously separated/transferred from AD TJAGC

5
Who Is Eligible?

• Eligibility is determined at the end of a judge
  advocates 1st, 2nd, and 3rd completed years of
  service in TJAGC
• Additional Eligibility Criteria
• Active duty AF officer
• Qualified, designated, and serving as a judge
  advocate IAW 10 USC 801 and 8067
• Serving in your initial AF JAG Corps ADSC of at
  least 4 years
• Not eligible for JACP during the past year
• Have a qualifying loan and
• Maintained the highest levels of ethical,
  professional, personal conduct, and legal
  proficiency

6
What Loans Are Eligible?

• 10 U.S.C. 2171 only authorizes the AF to repay
  on certain types of educational loans
• Includes federal, state, and private loans
• Includes Federal Direct Loan Program, Federal
  Family Education Loan Program, Perkins Loan
  Program
• Includes those loans incurred for educational
  purposes, which were made by a lender that meets
  several requirements outlined in 10 U.S.C. 2171
  and paragraph 4.1.4 of Policy Memorandum
  implementing JA-SLRP
• Loans must be in good standing as defined by
  lender
• Only loans in existence prior to
  EAD/DAS/effective transfer
• Consolidated loans and multiple loans

7
When Do You Apply?

• Eligibility window is determined by your
  accession program
• DAPs and ROTC Graduates EAD
• ELPs DAS at first judge advocate assignment
• Intraservice/Interservice Effective transfer
  date
• Window begins day after the anniversary date
  described above and extends for 90 calendar days
• Same window for 2nd and 3rd year applications
• Must apply during eligibility window or you will
  be ineligible for that completed year and
  subsequent year payments
• Declining to apply results in permanent JA-SLRP
  ineligibility

8
Collateral Issues

• Monthly Payments and Interest
• You must continue to make monthly loan payments
  if required by your lender
• Interest on your student loan will continue to
  accumulate IAW the agreement with your lender
• Post 9/11 GI Bill
• For each completed year of service you accept a
  JA-SLRP payment that year will not apply towards
  the qualifying active duty service required for
  this program
• Ex Take all 3 JA-SLRP payments, then the first
  qualifying year for the Post 9/11 GI Bill is your
  4th year

9
Tax Issues

• Federal Tax withholdings
• SLRP payments are considered supplemental wages
  under the federal tax code
• Employers are required to withhold federal tax on
  supplemental wages
• Payments are taxable
• DFAS will withhold 28 and send you a W-2 or
  1099-MISC
• DFAS will not withhold state taxes
• Sole responsibility of judge advocate to report
  JA-SLRP payments as income and pay applicable
  taxes

10
Calculating JA-SLRP Payments

• Program Maximum
• Total Payments 65,000
• 1st and 2nd Year Maximum 21,666.67
• 3rd Year Maximum 21,666.66
• Statutory Maximum
• 33 1/3 of loans remaining unpaid principal or
  1,500, whichever is greater
• Payment cannot exceed the remaining unpaid
  principal
• Each year lender must verify the remaining unpaid
  principal
• Judge advocate will be paid the Program Maximum,
  unless it exceeds the Statutory Maximum

11
Example Year 1

• Lender verified remaining unpaid principal
  90,000.00
• Program Maximum 21,666.67
• Statutory Maximum 30,000.00

12
Example Year 1

• Lender verified remaining unpaid principal
  90,000.00
• Program Maximum 21,666.67
• Statutory Maximum 30,000.00
• Payment to Lender 15,600.00
• Federal Income Tax Withholding 6,066.67

13
Example Year 2

• Lender verified remaining unpaid principal
  74,400.00
• 90,000.00 minus Year 1 payment of 15,600.00
• Does not include Year 1 tax withholding, so need
  to subtract 6,066.67 from the Year 2 lender
  verified remaining unpaid principal before
  calculating Year 2 Statutory Maximum
• Adjusted lender verified remaining unpaid
  principal 68,333.33
• Program Maximum 21,666.67
• Statutory Maximum 22,777.77

14
Example Year 2

• Lender verified remaining unpaid principal
  74,400.00
• 90,000.00 minus Year 1 payment of 15,600.00
• Does not include Year 1 tax withholding, so need
  to subtract 6,066.67 from the Year 2 lender
  verified remaining unpaid principal before
  calculating Year 2 Statutory Maximum
• Adjusted lender verified remaining unpaid
  principal 68,333.33
• Program Maximum 21,666.67
• Statutory Maximum 22,777.77
• Payment to Lender 15,600.00
• Federal Income Tax Withholding 6,066.67

15
Example Year 3

• Lender verified remaining unpaid principal
  58,800.00
• 90,000.00 minus Year 1 2 lender payments of
  31,200.00
• Does not include Year 1 2 tax withholdings, so
  need to subtract both from the Year 3 lender
  verified remaining unpaid principal before
  calculating Year 3 Statutory Maximum
• Adjusted lender verified remaining unpaid
  principal 46,666.66
• Program Maximum 21,666.66
• Statutory Maximum 15,555.55

16
Example Year 3

• Lender verified remaining unpaid principal
  58,800.00
• 90,000.00 minus Year 1 2 lender payments of
  31,200.00
• Does not include Year 1 2 tax withholdings, so
  need to subtract both from the Year 3 lender
  verified remaining unpaid principal before
  calculating Year 3 Statutory Maximum
• Adjusted lender verified remaining unpaid
  principal 46,666.66
• Program Maximum 21,666.66
• Statutory Maximum 15,555.55
• Payment to Lender 11,200.00
• Federal Income Tax Withholding 4,355.55

17
JA-SLRP Payment Summary

• Total JA-SLRP Payments 58,888.89
• Year 1 21,666.67
• Year 2 21,666.67
• Year 3 15,555.55
• Total Received by Lender 42,400.00
• Year 1 15,600.00
• Year 2 15,600.00
• Year 3 11,200.00
• After JA-SLRP, remaining unpaid principal on
  student loan
• 47,600.00

18
Should I Apply for JA-SLRP?

• Number 1 Reason to Hesitate
• CCRAA and your Federal Direct Loans
• Public Service Loan Forgiveness Program
• Created in CCRAA and applies to Federal Direct
  Loans
• Repayment Programs Income-Based Repayment (IBR)
  Plan or Income-Contingent Repayment (ICR) Plan
• Must work in the public service sector for 120
  monthly payments
• Remaining principal and interest forgiven
• HESITATE

19
Should I Apply for JA-SLRP?

• Your goal with Public Service Loan Forgiveness
  Program
• (1) Keep monthly payments as low as possible
• (2) Maximize the amount forgiven after 120
  payments
• JA-SLRP can do the exact OPPOSITE
• (1) JA-SLRP is income, so monthly payments,
  which are based on your income, will rise
• (2) Paying off principal will minimize amount
  forgiven

20
Should I Apply for JA-SLRP?

• IBR monthly repayment calculator
  http//www.finaid.org/calculators/ibr.phtml
• ICR monthly repayment calculator
  http//www.finaid.org/calculators/icr.phtml
• Equal Justice Resource Center
  http//www.equaljusticeworks.org

21
Summary

• Closely review the implementing Policy Memorandum
• JA-SLRP System will launch on FLITE on 1 July
  2010
• When your eligibility window opens, contact JAX
  with any questions

22

• Questions?