Financial Aid Repayment
Before Law School: Careful PlanningScheduling a financial strategy before you enter law school, you will profit greatly. If possible, pay off any excellent 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 your financial aid will come from loans, you are likely to graduate from law school with debt to refund. At the moment, the average debt for law school graduates who borrowed both federal and privately guaranteed student loans is about $90,000. The average debt is just over $55,000, for those who borrowed only federally guaranteed student loans. Keep exact records of all loans you obtain through your enrollment in law school; this will help you administer your repayments when you complete your education.
Federal loan receivers will be needed to attend an access interview through the first few weeks of law school and an exit interview before departure school. Through these sessions, your financial aid officer will evaluation with you the conditions of your loan, sample repayment schedules, and repayment options.
While in Law School: Living on a BudgetThe interrogation of how much to borrow is often asked. The maxim, "Live like a student now or you will live like a student later" is an excellent one to consider. You should consult an individual school's Student Expense Budget for approximates of living expenses, and budget accordingly. Consider tracking your current spending routines and comparing them to the financial plan at schools of your selection. While law school may be an exceptional long-term investment, paying loans in the short period can be a real burden. Remember, not all lawyers will earn the highest salaries.
Some federal loans permit you to postpone payment while you focus law school at least half-time. Interest on subsidized loans does not accumulate, while unsubsidized, Grad PLUS, and private loans accrue importance while you are in law school.
Planning Ahead: Repayment of Your LoanYour income after law school is a significant aspect in determining what constitutes convenient payments on your education loans. Though it may be complicated to predict what kind of job you will get (or want) after law school, or precisely what kind of remuneration you will obtain, it is important that you make some evaluation of your goals for the reason of sound debt organization. In addition to evaluating expected income, you must also create a reasonable picture of how much you can afford to pay back on a monthly basis while preserving the lifestyle that you want.
Your education loan debts symbolize a serious financial obligation which must be repaid. A default on any loan produces serious consequences, the lender and/or the government can take legal action against you.
Law school graduate debt of $90,000 amounts to almost $1,100 a month on a 10-year repayment plan. Some lenders offer graduated and income-sensitive repayment plans that lower monthly payment amounts but increase the number of years of repayment. Federal Loan Consolidation permits students to repay their Stafford and Ford Loans on an extended repayment program, lasting up to 30 years. Many lenders have good websites with information about loan repayment and budget calculators.
All information and calculations are based on current interest rates, loan conditions, and fees, and are subject to change.
Strategies for Graduates Seeking Public Interest CareersStudents who seek to work in public service or the public interest sector of the profession face special challenges in financing their legal educations because remunerations for such jobs are low. Students graduating from law school with the average amount of debt may find that the average entry-level public service or public interest salary will not offer the resources required to repay their law school loans and cover their basic living expenses.
Students can utilize a number of strategies to make it easier or possible to follow a career in government or public interest law. First, students can borrow less through law school. Students may also take benefit of programs developed at some law schools to mitigate the debt burden for those interested in public interest careers, including fellowships, scholarships, and Loan Repayment Assistance Programs (“LRAPs”). LRAPs offer financial support to law school graduates working in the public interest sector, government, or other lower-paying legal fields. In most cases, this help is given to graduates in the form of a justifiable loan to help them repay their annual educational debt. Upon conclusion of the required service obligation, schools will forgive or cancel these loans for program participants.
LRAPs sponsor a limited number of law schools: as of December 2006, approximately 106 law schools sponsored programs. The support for these programs is limited, so most schools are incapable to offer support to all applicants.
The state bar foundations also manage LRAPs, public interest legal employers, and federal and state governments to assist law graduates in following and remaining in public interest jobs. The federal government offers some options to assist graduates seeking legal careers in public service, including the income-contingent repayment option (“ICR”) of the William D. Ford Federal Direct Loan Program. The income-contingent repayment option is available to all borrowers with federal direct loans and borrowers who consolidate their federally guaranteed loans into federal consolidation loans. Congress created ICR to facilitate graduates, who have high educational debt, to take lower-paying community service or public service jobs. The ICR limits annual loan repayment obligations to a logical proportion of a borrower’s income. Any remaining debt is forgiven after 25 years of payments under the ICR plan.