TJAGC Student Loan Repayment Program (JA-SLRP)

1. TJAGC Student LoanRepayment Program(JA-SLRP) Maj Christine Lamont Maj Darrel Johnson AF/JAX 26 May 2010 Air Force JAG Corps W i s d o m - V a l o r - J u s t i c e 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 advocate’s 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?