A career as a professional attorney can be difficult, but also mentally stimulating and rewarding. According to the BLS, the job outlook for lawyers between 2014 and 2024 will increase by approximately 6%; this figure is consistent across most fields of employment in the U.S. When it comes time to apply for law school, many students also find themselves applying for a series of law school loans, grants, and scholarships. Law school student loans are offered both federally and privately to students who have completed an undergraduate degree, taken the LSAT exam, and are enrolled in a law school graduate program. That said, before applying for any loans, students may want to to exhaust all grant and scholarship options available to them, as law schools can be quite costly. Whatever isn’t covered by scholarships, grants, and financial aid can then be supplemented by law school loans. See the information below to further ensure you choose the correct type of loan to assist you in covering the cost of your law school tuition.
Each loan program will have a set of requirements laid out for applicants; however, there are a few general criteria students should expect to fulfill. For Federal Direct Loans, students are required to fill out the Free Application for Federal Student Aid (FAFSA) to determine their eligibility for loan assistance. Considering the cost of tuition, board, and other fees, law schools ultimately determine how much assistance a student will need through federal and/or private loans. There are approximately two-hundred accredited law schools in the United States; many schools differ in their loan/scholarship expectations. Some loan options will take your household’s income into account in determining your loan’s interest rates; be sure to look at interest and repayment expectations before signing onto any loans. Also, before signing onto a loan be sure you are familiar with the process of how to apply for law school loans and grants, as many schools have different policies and each loan option may differ in specific requirements.
Repaying a Law School Student Loan
Law school graduates are required to begin paying back their law school loans after a certain grace period. Although this grace period differs with each loan program, a one-year grace period is the typical amount of time a student has before they must begin paying back their loans. With Direct Unsubsidized Federal Loans, students are allowed a six-month grace period, after which students are responsible for paying the interest for the time they were both enrolled in a law school program as well as using their grace period. If a student should find themselves struggling or unable to pay back their law student loans, they are urged to contact a loan provider immediately to decide how best to handle the matter. In these circumstances, a common option students seek is loan deferment (or forbearance).
Types of Law School Student Loans
- Federal Direct Stafford Loan
With this Direct Unsubsidized Federal Loan, students are able to borrow up to $20,500. The Direct Stafford Loan has an interest rate of 6.8% with a 1% loan fee that begins accruing as soon as the loan is distributed. A six-month grace period is what students are granted before they must begin paying back their loan; however, there are forbearance and deferment options available, should a student absolutely need them.
- PLUS Loans
These U.S. Department of Education loans are given to graduate students who need to supplement education expenses that aren’t covered by scholarships or other financial aid. Students who receive these 7.9% interest rate loans must have a good credit history and be enrolled at least half-time at an eligible law school. For this loan, students are allowed to borrow up to the total cost of the attendance, which is ultimately determined by the law school they’re attending.
- Discover Law Loans
This private loan for law school is available at a fixed interest rate of 6.79% to 7.89% APR to graduate students who are enrolled at least half-time. Students are not required to pay back their loan while in school and can receive a lower interest rate if they qualify for the Auto Debit Reward program. Students must pass a credit check and, if they aren’t in good credit standing, provide a cosigner to receive the loan.
- Wells Fargo Student Loans
Wells Fargo offers students a private law school loan option with competitive interest rates. Students are not expected to repay any portion of this loan while still enrolled in school and are given a six-month grace period before owing any money. This loan is awarded not only for tuition, but also for any expenses related to a college education, like: housing, textbooks, electronics, lab fees, and more. Interest rate discounts are awarded to eligible students. If possible, a cosigner may be added to the loan to improve chances of approval.
- Income-Driven Repayment (IDR) Plans
Post-graduation, these student loans for law school can offer you a monthly payment option that totals less than 10% of your family’s monthly income (as opposed to many loans that base repayment off of the amount your owe in total student debt). IDR plans give you more opportunities for payment relief than private/institutional sources of student-assistance loans. The amount of money you are able to borrow will be determined by staff in the financial aid department of the school you attend. The size of the loan you receive will be dependent upon the cost of attendance at your school, federal regulations in your state, and policies at your individual institution.
- Federal Perkins Loan
These loans for law school are available to students at many, but not all law schools. The amount each student is awarded is decided by your school based on your financial information (as collected by FAFSA surveys). Each year, the maximum amount of money awarded per student is $8,000. These loans can potentially be included in the Federal Public Service Loan Forgiveness program.
- Federal Work Study Programs
These programs are available at most, but not all, undergraduate and graduate institutions. FWS is a program that gives funding to students that attend class full-time during part of the year and part-time during the rest of the year; during these part-time (and full-time if possible) segments, students can work on campus/off campus in non-profit agencies in exchange for loans. Standards set forth by the ABA limit paid employment for students to no more than twenty hours per week. While many schools do take part in work-study programs, not all of them offer this option.
- Federal Direct - Unsubsidized Loans
Each year, law students can borrow up to $20,500 from the U.S. Department of Education. Since these loans for law school are not subsidized, interest on the borrowed money begins to accrue as soon as the loan is awarded to you. As of the 2016/2017 school year, interest rates on these loans were set to be fixed at 5.31%, though this percentage may have gone up or down since the loan rates were set. Post-graduation, you are given a six-month grace period to find a job before you are required to begin repaying your loans.
- Private Loans
This option is most relevant to students who do not qualify for federal loans. A private loan may also be attractive to you if you are seeking more competitive interest rates or if you need loans post-graduation while you are still in search of full-time employment. Terms of private loans will likely vary widely as they are awarded by private vendors. Before choosing a private loan, be sure to look over repayment grace periods and repayment terms.