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Paying for Law School with Student Loans

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You’ve taken the LSAT and been accepted into law school — congratulations! You’re joining an elite group of students. In 2019, the American Bar Association reported that just 38,283 students enrolled as first-year law students. 

However, now you have to think about how to pay for law school, as your education can be quite expensive. For example, the total cost of attendance for a single year at Yale Law School is $92,000 as of the 2020-2021 school year. In addition, you may need even more money after school to study for and take the bar exam. 

If you need helping pay for law school, here’s what you need to know about your financial aid options. 

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Apply for Scholarships, Grants, and Work-Study Programs

When it comes to paying for your education, it’s always a good idea to start with financial aid that you don’t have to repay. To ensure you get the maximum amount of support you’re entitled to, complete the Free Application for Federal Student Aid every year that you’re in school. It’s what the government and schools use to decide whether or not you’re eligible for grants, scholarships, and federal loans. 

There are three types of aid that don’t need to be paid back. 

Scholarships

Scholarships can be awarded by the school, private companies, or non-profit organizations. They are usually based on your academic merit. 

As a law school student, there are several scholarships you may be eligible for, including: 

  • Legal Opportunity Scholarship Fund: Offered by the American Bar Association, the Legal Opportunity Scholarship Fund is awarded to racial and ethnic minority students. Recipients can receive $15,000 of financial aid over their three years of law school. 
  • Federal Circuit Bar Association’s Scholarship: The Federal Circuit Bar Association awards this scholarship to law school students with a financial need who have an interest in the jurisdiction of the United States Court of Appeals for the Federal Circuit. Recipients of the scholarships will receive up to $10,000 for their education. 

Visit the American Bar Association website for a listing of scholarships available to law school students. 

Grants

While federal grants like Pell Grants are typically reserved for undergraduate students, you may qualify for institutional grants based on your financial need. 

For example, Harvard Law School has a robust grant program for need-based applicants. According to the school, most recipients of grants come from families with household incomes under $180,000. 

Work-study programs

If you complete the FAFSA, a work-study program may be part of your financial aid package when you’re accepted into law school. With a work-study program, you take on a part-time job related to your field and use the earnings to offset your education costs. 

Federal Student Loans

As a law school student, you have two student loan options: Direct Unsubsidized Loans and Direct PLUS Loans. Unfortunately, these loan types have higher interest rates than other types of federal loans. 

1. Direct Unsubsidized Loans

Law school students (and other graduate students) can take out up to $20,500 in Direct Unsubsidized Loans per year regardless of their financial need. 

However, there is an aggregate limit on how much you can borrow. You can only borrow up to $138,500 in Direct Subsidized and Unsubsidized Loans, and that amount includes loans you took out for undergraduate study. If you need more money to pay for law school, you’ll have to use another form of financing. 

Direct Unsubsidized Loans disbursed after July 1, 2019, and before July 1, 2020, have a fixed interest rate of 6.08%

2. Direct PLUS Loans

Direct PLUS Loans can be used by graduate or professional students and parents of undergraduate students to pay for education expenses not covered by other financial aid. With a Grad PLUS Loan, you can borrow up to the total cost of attendance. 

However, PLUS Loans do require a credit check. If you have an adverse credit history, you may need an endorser — someone with good credit and stable income — to apply for the loan with you to qualify for a loan. 

Loans disbursed after July 1, 2019, and before July 1, 2020, have an interest rate of 7.08%, the highest of all federal student loans. 

Private Student Loans 

Some federal loans have limits on how much you can borrow for your education. If you need more funding to pay for law school, private loans can be a useful supplement. International students might also turn to private loans to fund their education; and, private lenders typically allow you to borrow a loan amount up to the total cost of attendance. 

With private law school student loans, you apply for a loan directly from the lender. You can often get a rate quote without undergoing a credit check, so you can find out what interest rate to expect without damaging your credit. Having a good credit score could mean a lower interest rate once approved.

If you don’t have an established credit history, it can be a good idea to apply for a private student loan with a cosigner. A cosigner is someone — usually a friend or relative — with good credit who signs the loan application with you and agrees to make the payments on the loan if you fall behind. Adding a cosigner to the loan increases your odds of qualifying for a loan and securing a lower interest rate. 

Private loans also offer both fixed and variable rates, while federal loans are only fixed rate. Selecting a variable rate can mean an interest rate reduction upon signing, but the rate is subject to change over the life of the loan. With a fixed rate you can more easily budget for loan payments upfront.

Loan Repayment Options for Lawyers 

Once you graduate from law school and start working as a lawyer, there are several different student loan repayment options available to you. 

1. Department of Justice Attorney Student Loan Repayment Program

Attorneys working for the Department of Justice can apply for this program and receive up to $6,000 per year in student loan repayment assistance, up to a maximum of $60,000 in aid. In exchange, they must make a three-year service commitment to the department. 

2. State loan repayment assistance programs

Depending on where you live, you may be eligible for repayment assistance from your state. 

For example, Maryland operates the Janet L. Hoffman Loan Assistance Repayment Program for lawyers in public service careers. Eligible recipients can receive up to $30,000 in student loan repayment assistance in return for three years of qualifying employment. 

In New Mexico, attorneys that provide legal services to low income or underserved residents and who earn $75,000 or less per year can qualify for the Public Service Loan Repayment Program. Under this program, attorneys must make a three-year commitment to work in public service. In exchange, they can receive up to $7,200 per year of service. 

To find out if your state has a similar program, visit the American Bar Association website for an updated listing of existing state loan repayment programs. 

3. Income-driven repayment plans

If you have federal student loans and can’t afford your current monthly payments, you can apply for an income-driven repayment (IDR) plan. Under an IDR plan, the loan servicer extends your repayment term and limits your monthly payment to a percentage of your discretionary income. Some people can qualify for a payment as low as $0

You can apply for an IDR plan online

4. Public Service Loan Forgiveness

If you have federal loans and work for a government agency or non-profit organization — for example, if you work for the county as a public defender — you could qualify for Public Service Loan Forgiveness (PSLF). Under this program, your loan balance can be forgiven if you work for an eligible employer for ten years while making 120 qualifying payments. Payments made under an IDR plan count toward the required 120 payments. 

5. Student loan refinancing

Not everyone will qualify for repayment assistance programs, IDR plans, or PSLF. If you aren’t eligible, or if you have private law school loans, another option for tackling your debt is student loan refinancing. 

When you refinance your law school debt, you can qualify for a lower interest rate. Getting the lowest rate and minimizing your interest payments can help you save a significant amount of money and pay off your student debt earlier. 

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Paying for law school

While law school can be expensive, it can be a worthwhile investment in your future and pave your way to a rewarding career. By exploring your financing options and taking advantage of grants, scholarships, work-study programs, and law school loans, you can pay for your education and minimize your debt.

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Disclaimer: This blog post provides personal finance educational information, and it is not intended to provide legal, financial, or tax advice.