Financial Aid for Law School
Before Law School: Careful Planning
You will benefit greatly by planning a financial strategy before you enter law school. If possible, pay off any outstanding consumer debt and save as much money as you can to reduce the amount you will borrow. It is also important that you have a good credit history.
Because most of your financial aid will come from loans, you are likely to graduate from law school with debt to repay. Currently, the average debt for law school graduates who borrowed both federal and privately guaranteed student loans is about $90,000. For those who borrowed only federally guaranteed student loans, the average debt is just over $55,000. Keep accurate records of all loans you receive during your enrollment in law school; this will help you manage your repayments when you complete your education.
Federal loan recipients will be required to attend an entrance interview during the first few weeks of law school and an exit interview before leaving school. During these sessions, your financial aid officer will review with you the terms of your loan, sample repayment schedules, and repayment options.
While in Law School: Living on a Budget
While loans may be available to students with good credit histories, the question of how much to borrow is often asked. The maxim, "Live like a student now or you will live like a student later" is a good one to remember. You should consult an individual school's Student Expense Budget for estimates of living expenses, and budget accordingly. Consider tracking your current spending habits and comparing them to the budget at schools of your choice. Look into having a roommate; learn to cook. Food expenses are often budget-busters. Bring a lunch rather than buying one. While law school may be an excellent long-term investment, paying loans in the short term can be a real burden. Remember, not all lawyers will earn the highest salaries.
Most federal loans allow you to defer payment while you attend law school at least half-time. Interest on subsidized loans does not accrue, while unsubsidized, Grad PLUS, and private loans accrue interest while you are in law school.
The Student Expense Budget does not allow the use of federal education loan funds to pay for prior consumer debt.
Planning Ahead: Repayment of Your Loan
Your income after law school is an important factor in determining what constitutes manageable payments on your education loans. Although it may be difficult to predict what kind of job you will get (or want) after law school, or exactly what kind of salary you will receive, it is important that you make some assessment of your goals for the purpose of sound debt management. In addition to assessing expected income, you must also create a realistic picture of how much you can afford to pay back on a monthly basis while maintaining the lifestyle that you desire. You may have to adjust your thinking about how quickly you can pay your loans back, or how much money you can afford to borrow, or just how extravagantly you expect to live in the years following your graduation from law school.
Your education loan debts represent a serious financial commitment which must be repaid. A default on any loan engenders serious consequences, including possible legal action against you by the lender and/or the government.
Law school graduate debt of $90,000 amounts to almost $1,100 a month on a 10-year repayment plan. Most lenders offer graduated and income-sensitive repayment plans that lower monthly payment amounts but increase the number of years of repayment. Federal Loan Consolidation allows students to repay their Stafford and Ford Loans on an extended repayment schedule, lasting up to 30 years. Many lenders have good websites with loan repayment and budget calculators.
All figures and calculations are based on current interest rates, loan terms, and fees, and are subject to change.
