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If your life goal is to become an attorney, then law school is already in your future plans. What you may not be aware of is the cost, so you should become familiar with the expenses associated with earning a law degree, as well as your options for paying those costs.
The average cost of tuition and other fees at private schools is just over $49,000 per year, and in-state public schools cost over $21,000 less. Since law school takes three years, the overall cost will be roughly between $85,000 and $150,000 added expense after you earn your four-year degree.
While that may seem like a staggering total, you most likely won't have that amount of debt upon law school graduation if you plan carefully and understand all your options. Scholarships, grants, and loans can cover much, if not all, of your tuition if you understand your options.
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What Are Law School Loans?
Law school loans are available for those who hold a bachelor’s degree, have taken the LSAT exam, and enroll in a law school program. This type of loan is offered both privately and federally and is designed to offset the costs of law school after the student has exhausted grant, scholarship, and other financial aid sources to pay for their tuition. The terms for law school loans differ depending on the source, so some may require minimum family incomes or other specific criteria to qualify for monies.
Each law school determines the type of financial aid they accept, so you should work closely with your prospective school to make sure you apply for the correct type of loans to pay for your tuition and other school expenses. That way you won’t apply for financing that is not accepted at your school of choice.
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Types of Law School Loans Available
There are two basic types of loans for law school: federal and private. While private loans may look better initially, you should exhaust your federal loan options first because they offer some advantages that are more beneficial in the long run.
Here’s a look at the types of law school loans available:
- Federal Grad PLUS Loan:
PLUS Loans are credit based and typically have a higher interest rate than Direct loans.
- Federal Direct Loan:
Formerly titled Stafford Loans, Federal Direct Loans are unsubsidized.
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You should complete the Free Application for Federal Student Aid (FAFSA) by the October before you plan to enroll in law school; this will tell you what federal programs you qualify for. State aid may also be available, so you should check with the Bar Association in the state where you live.
Private law school loans such as the Sallie Mae Law School Loan are available through credit unions and banks and are based on your credit score. The terms of the loan will depend on the institution, and the interest rate will depend on your credit score; interest rates may be fixed or variable.
Federal Direct Unsubsidized Loans have a borrowing limit of $20,500 per school year. Other loans may have limits based on your income and credit score. Although private loans don’t typically have a cap, you should strive to keep the amount minimal as it may take several years to complete payment on your loans.
What to Think About When Looking for a Loan
Forbearance and deferment are offered under special circumstances and allow you to temporarily stop paying or partially pay your loan payments in order to avoid defaulting on the loan. The main difference between the two terms is that, with a deferment you will not be required to pay the interest during the time you aren’t making your loan payments. There are specific criteria you must meet for these options; major illness, extended unemployment, and military service are examples that may qualify you for loan deferment or forbearance.
- Interest Rates:
Law school loans often have higher interest rates than other types of loans so be sure you know what you’re paying for. A fixed rate loan will have the same interest rate throughout the terms of the loan; a variable rate loan may change depending on the current index rate. While a variable rate loan may look more promising, if the rate goes up, your monthly payment will do the same so you should look at a worst-case scenario and be sure you can make a higher payment if you choose this type of loan. Variable rate loans may also be called adjustable rate loans or a similar title that infers a possible future change in rate.
- Loan Fees (Origination or Other):
Some loans have fees, and you should clarify in advance what costs are attached to your loan. Whether it is called an originator fee, processing fee, or other name it can raise the cost of your loan and you should be aware of these fees and how you are required to pay them. For example, a $20,000 loan may have a $1,000 origination fee; the institution may subtract their fee up front and you will receive $19,000 for tuition instead of the full $20,000. Make sure there are no hidden fees in the loan you are applying for.
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- Eligibility Requirements:
Each loan will have its own requirements. To qualify for federal loans, you must complete the FAFSA. Other types of federal and private loans may have requirements such as income, credit score, and proof of citizenship. Most law school loans require completion of the LSAT and school acceptance; check with your school of choice to see what types of loans are available and what the requirements are for your individual circumstances.
- Repayment Options:
Before you sign for a law school loan you should clearly understand the repayment terms. While federal loans have a grace period so that you won’t have to begin making payments until after graduation, private loans require at least some form of payment as soon as the funds are disbursed, so you’ll have to be able to make payments while attending law school.
You may also choose to check into loan forgiveness programs. These are typically state or federal programs such as the Public Service Loan Forgiveness Program which will forgive your loans in return for a specific number of employment years in a high-need position. Some federal loans offer a lowered payment program if you’re underemployed after graduation; if you are hired into a more lucrative position you might consider refinancing your student debt to obtain a more advantageous payment program.
Sallie Mae Law School Loans
- Why Sallie Mae for Law School Loans:
Sallie Mae is one of the largest student loan companies in the private sector and because they specialize in student loans. a Sallie Mae Law School Loan may be your best choice if you have exhausted all your federal loan options.
- Repayment Options:
Sallie Mae loans have a maximum 15-year term, so you’ll know in advance how long you’ll be making payments. They also offer a $25 payment program while you’re in school, so you won’t face a major monthly bill while studying for your law degree. Sallie Mae also has options for both forbearance and deferment, so if you have a major life change, you can forgo paying your loan until you’re back on your feet.
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- Features and Benefits:
Because law students often need a co-signer for loans, Sallie Mae has a good faith program that allows you to drop your co-signer after one year of on-time payments. They also offer a loan specifically for those studying for the Bar, so you won’t have to worry about the gap between earning your degree and becoming a full-fledged attorney.
Sallie Mae doesn’t have a borrowing limit, so you can borrow the full amount needed to cover your tuition. They also offer a full discharge in case of full disability or death, so your family won’t be crushed by law school loans if something happens to you before the loan is paid in full.
There are other advantages to Sallie Mae, as they are one of the few lenders who grant loans to students attending less than half time. They also offer credit score monitoring, free study tools, and tutoring as part of the law school loan package.
Give yourself plenty of time to explore and understand your options before you apply for law school. You should begin applying for scholarships and grants during your senior year of undergraduate school, check out loan forgiveness programs, and consider working several years in the public sector after graduating law school in order to cover the costs of attending. A high score on the LSAT can bring offers from schools and employers, so make sure you spend extra time studying for the exam. Check out a wide range of schools and learn the cost options before you apply for admission to your school of choice in order to get the best value for your money.