Student loans: they’re the financial engine that powers the graduate education, including law degrees. The sheer scale of borrowing among graduate students is both awe-inspiring and a little terrifying. Whether you’re eyeing a medical degree or, like me, a Juris Doctor, you’re likely going to need a substantial loan to make it through.
While the focus of this article—and this website—is primarily on law students, the guidance here is universally applicable to anyone bracing for the steep financial hill of graduate education.
Contemplating how to fund your law degree? You’re not alone in feeling overwhelmed. A private law school can set you back more than $40,000 in tuition each year, and if you’re attending a big city law school like George Washington University (my alma mater), that figure edges closer to $60,000. But the financial burden doesn’t stop at tuition; there are also housing, textbooks, commuting, meals, and those pesky, unpredictable additional expenses to consider. It’s no wonder that over three-quarters of law students rely on loans to foot these monumental bills.
My own journey is somewhat unique. I managed to avoid student loans for my undergraduate studies, thanks to a combination of personal savings and parental assistance. However, by the time law school enrollment came around, my financial reserves were nearly depleted, and any hope of parental aid had evaporated. For me, student loans weren’t just an option; they were a necessity. Yet, I was determined to borrow as responsibly as possible, having heard too many horror stories of students ensnared in debt traps.
In the following article, I’ll share what I’ve learned during my first year as a law student navigating the complex world of student loans, offering tips to help you sidestep the common pitfalls.
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Be 100% Positive That You Completed Your Application
As I mentioned before, Law School was the first time I had to take out student loans and the process for completing everything was somewhat unclear to me. Even if you took student loans in undergrad, the loans you take in grad school are different. Most students are taking money from the federal government, which will be grad + loans and Stafford Plus Loans. Typically, your school will make you a student loan offer based on total expenses for the year minus any scholarships you receiving. At that point you have to decide whether you want to take the full amount or take a partial amount. Once you have accepted your loans you will need to complete student loan advising on the federal government website and sign the promissory note for any loans you are receiving.
Once your sure you completed the necessary prerequisites wait a week or two and then call your law school financial aid office. They are able to confirm whether or not you completed everything.
Once you have completed the necessary information you should receive your student loans within a week or two right?
Student Loans Disperse Later Than You Would Want
Your moving for law school, maybe even to a big city where the housing is astronomical. Obviously, you going to need several thousand dollars just to pay your law school deposits, and get settled in. Good thing you have student loans coming!
Accept, your student loan money doesn’t get dispersed until the first week of class. Scratch that, its supposed to get dispersed your first week of class, never earlier, but sometimes later. If you are coming straight out of undergrad and don’t have any real savings or your like me and you weren’t able to save much money during the year you were out of school, you are probably wandering how the heck you are supposed to pay all of these expenses. The law school doesn’t care, they’ll just tell you that the loan money isn’t going to be dispersed until classes begin.
You have to either rely on savings, take out 3rd party loans or rely on family for that first month. It sucks I know, but student loans will be of no help to you. Another thing to mention is that your loans will not cover the cost of first semester books either. Law School books are expensive, even more expensive than undergrad books, and unless you want to wait until your first week you will have to pay out of pocket for them.
If you’re concerned about affordability in your first year of law school check out our guide to affording law school here.
The Fewer Student Loans You Take Out The Better
My mantra for student loans is if you can survive with less take less. Unless you hit it big during or soon after law school you will be paying back your student loans for years to come. Make it easier on future self and don’t act as a spendthrift. I had a friend in undergrad that was always asking for money from his parents come the last month or so of the semester. Why? Because, he would blow his loan refunds on tattoos, and booze. Yes you read that right, he would get expensive tattoos with some of his refund money.
Hopefully by now you already understand how blowing through student loans can be a huge detriment come the last month or two of school. If your living in a big city you have to be strict with your money. I live in a complex in d.c that has an awesome food truck right outside my door. I walk a half a block and there are four more food trucks just sitting there, waiting for me. I love food, but 90% of the time I say no and cook my pasta.
Forego Undergrad Payments?
If your like me and you’ve been out of school for more than a year you’ve already started paying back those dreaded student loans. Should you forego paying undergrad student loans? Do you even have a choice? There’s a good chance you don’t even have a choice and you have to forego them. 1L law students aren’t making any money, and it doesn’t make much since to pay down student loans with more student loans. If you do have to forego undergrad student loans, just don’t wait until a few days before your payment is due to start thinking about it.
Make Adjustments Your 2L Year
I decided to accept more student loan money than I probably should have my 1L year. The reason was I wasn’t certain how everything would pan out, and I wanted the funds to cover any unforeseen expenses. The other reason was that I rented my own apartment, which was considerably more expensive, but I didn’t want to room with anyone my first year. I recommend to any incoming law student to accept more than they think they will need, and if you have extra funds at the end of the year you can always give it back.
Your 2L year is the time to make adjustments, and hopefully you wont need as much money. I got a roommate for my second year, but I would have continued to live alone if I couldn’t find a diligent law student to live with.
Additional Tips for Navigating Law School Student Loans
Here are some additional pointers to further supplement the above insights on managing student loans.
Understand the Interest Rates and Terms
While Stafford and Grad PLUS loans are popular options for funding law school, make sure you understand the interest rates, fees, and terms associated with them. A 1-2% difference in interest rates can significantly impact the total repayment amount. Don’t just look at the immediate relief the loans provide, understand the long-term implications.
Consider Refinancing Options
Once you’re out of law school and have a stable job, Consider refinancing your student loans. Some companies offer lower interest rates, which can help you save a considerable amount over the loan’s lifespan. Keep in mind that federal student loans offer certain protections that you may lose upon refinancing, so weigh the pros and cons carefully.
Federal Loan Forgiveness Programs
If you’re considering a career in public service, you may be eligible for the Public Service Loan Forgiveness (PSLF) program. This program can forgive the remaining balance on your Direct Loans after you’ve made a certain amount of qualifying monthly payments under a repayment plan.
Budgeting and Tracking Expenses
Maintaining a budget is crucial when you have a large amount of debt. You can use budgeting apps like Mint or YNAB (You Need A Budget) to track your spending and ensure you’re sticking to your financial plan. This can help you make more informed decisions, such as knowing if you can afford to live alone or if getting a roommate is a financial necessity.
Emergency Fund
Consider keeping a small emergency fund to cover unexpected expenses like medical bills, car repairs, or last-minute flights. Being financially prepared for emergencies can prevent you from accumulating more debt.
Scholarships and Grants
Every dollar you don’t have to borrow is a dollar you won’t have to pay back with interest. Keep applying for scholarships and grants, even during your 2L and 3L years. Your school’s financial aid office is an excellent resource for this.
Seek Financial Advice
If you’re not sure how to navigate the complex world of student loans, it might be wise to seek advice from a financial advisor who specializes in educational loans. They can offer personalized advice that considers your unique financial situation.
Stay Informed
Federal and state policies on student loans can change, and staying informed about these changes can save you money or provide new options for loan forgiveness.
Conclusion
Navigating student loans during your time in law school may feel daunting, but with careful planning and smart decision-making, you can mitigate the financial burden. The aim is to minimize the amount borrowed while maximizing the value of every dollar spent. Adjustments along the way, like choosing more affordable housing or taking on a part-time job, can significantly impact your long-term financial health.
Keep in mind that you’re making an investment in your future, one that can pay off significantly if managed well. Don’t hesitate to seek advice from your school’s financial aid office and always be on the lookout for scholarships or work-study opportunities. Your financial choices today lay the groundwork for your future career, so make them wisely.
Student loans are no laughing matter for us graduate students. The goal at the end of the day is to take as few as possible, and pay them off as quickly as possible after law school. I hope these tips helped you out!