Getting into law school is no small feat, and once you’re there, you’ll want to make sure you have all your financial ducks in a row. Millions of student around the world dream of becoming law students since this career path have a lot of advantages such as job security, respect, and a good salary.
However, as we said, studying at a reputed law school can cost you a lot and everyone can’t afford the same.
And this is where law school student loans come in to help you finance your studies. Similar to any other loans, student loans are also borrowed money that you will have to repay with interest. They can be a great way to finance your education if you don’t have the necessary funds.
In this article, we will be sharing everything you need to know about law school student loans. We will also share a few tips so you never stay behind on your repayments.
What is a law school student loan?
As we said earlier, student loans are borrowed money that you will have to repay with interest. These loans are available to both undergraduate and graduate students and can be a great way to finance your education if you don’t have the necessary funds.
Even though it’s a student loan, it is still a loan and should be treated as such. That means you will have to repay the borrowed amount plus the interest accrued on it.
The repayment period for these loans usually starts six to nine months after you graduate or leave school. However, some federal loans offer a grace period of up to three years.
Different types of law school loans
So now that we know what law school student loans are, let’s take a look at the different types of loans available.
There are two main types of law school student loans- federal loans and private loans.
1. Federal student loans
As the name suggests, a federal loan is a type of financial aid that is provided by the government. These loans are mostly need-based, which means that your financial situation will be taken into account before you are awarded the loan.
There are mainly 4 different types of federal student loans available-
Direct Subsidized Loans: These are need-based loans also known as federal student aid that are available to undergraduate and graduate students. The US Department of Education will pay the interest on these loans while you are in school, during your grace period, and during any deferment periods.
Direct Unsubsidized Loans: Unlike subsidized loans, unsubsidized loans are not need-based. That means your financial situation will not be taken into account when you apply for this loan. Both undergraduate and graduate students are eligible for this loan and the interest will accrue on these loans from the day they are disbursed.
Direct PLUS Loans: These loans are available to both graduate and professional students as well as the parents of dependent undergraduate students. The interest will accrue on these loans from the day they are disbursed.
Direct Consolidation Loans: These loans are available to all federal student loan borrowers. This loan will combine all your federal student loans into one single loan with a single monthly payment. This helps to lower your interest rate and gives you more time to repay the loan.
2. Private student loans
Private student loans are offered by private lenders such as banks, credit unions, and online lenders. These loans are not need-based and your credit score and credit history will be taken into account when you apply for the loan.
Unlike federal student loans, private law school loans don’t offer any repayment plans or deferment options. That means you will have to start repaying the loan as soon as it is disbursed.
However, some private lenders do offer forbearance options which will allow you to temporarily stop making payments on the loan.
So make sure to do your research and compare different lenders before you take out a private student loan.
How to apply for a law school loan?
So now that we know one or two things about law school loans, let’s take a look at the application process.
1. Free Application for Federal Student Aid (FAFSA)
The first step in the process is to fill out the Free Application for Federal Student Aid or FAFSA. This form will provide the government with information about your financial situation and will be used to determine your eligibility for federal student aid.
You can fill out the FAFSA online or you can download and print the form from the FAFSA website.
2. Private student loan application
If you are planning to take out a private student loan, you will need to fill out a separate application with the lender of your choice.
Most lenders have an online application process but some may require you to fill out a paper application. While choosing a lender, make sure to compare interest rates, repayment options, and borrower protections.
3. Wait for your financial aid award letter
Once you have submitted your FAFSA form, the government will process the information and send you a financial aid award letter. This letter will provide information on the types and amount of aid you are eligible for.
If you have been offered a federal student loan, you will need to accept or decline the loan before it is disbursed to your school.
And if you are applying for private student loans, you will need to complete the application process with the lender and wait for the approval.
4. Complete loan counseling
If you have been offered a federal student loan, you will need to complete loan counseling before the loan is disbursed. This counseling will provide information on your rights and responsibilities as a borrower. You can complete loan counseling online or over the phone.
And the same thing goes for private student loans. Some lenders may require you to complete loan counseling before the loan is approved.
5. Sign the promissory note
Once you have been offered a loan and completed counseling, you will need to sign a promissory note. This is a legal document in which you agree to repay the loan according to the terms and conditions.
For federal student loans, you will sign a Master Promissory Note or MPN. And for private student loans, you will sign a promissory note with the lender.
Make sure to read the documents carefully and understand the terms and conditions before you sign them.
6. Recieve the funds
Once you sign the documents, the loan will be disbursed to your school. The school will then apply the funds to your tuition and other expenses.
For federal student loans, the funds will be sent directly to your school. And for private student loans, the funds will be sent directly to you. You can then use the funds to pay for your tuition and other expenses.
Top tips for law students
Here are a few tips that will help you reduce your law school debt:
1. Apply for scholarships
One of the best ways to reduce your law school debt is to apply for scholarships. Many organizations and foundations offer scholarships for law students. And in case your scholarship money doesn’t cover your entire tuition, you can go with student loans. But your priority should be to get scholarships.
2. Get a part-time job
Another way to reduce your law school debt is to get a part-time job. You can work as a research assistant or a teaching assistant. You can also work in the library or at the front desk. Getting a part-time job will help you cover your living expenses as well as boost your credit history, which you can use to get a private student loan with a lower interest rate.
3. Work on your academics
Federal loans and some private loans consider your merit score while calculating the interest rate. So if you can maintain a high GPA, you will be able to get a lower interest rate on your loans. The higher your GPA, the lower your interest rate will be.
4. Consider public service loan forgiveness
If you are planning to work in public service after graduation, you can apply for the Public Service Loan Forgiveness program. Under this program, your federal student loans will be forgiven after you make 120 qualifying monthly payments. It can be a huge help in reducing your law school debt.
5. Refinance your student loans
One of the best ways to reduce your interest rate is to refinance your student loans. You can refinance both federal and private loans. And in case you have good credit, you can get a lower interest rate on your refinanced loan.
Refinancing means taking a new loan to pay off your existing loans. And in case you have multiple loans, you can consolidate them into one loan. This will help you save money on interest and make it easier to manage your monthly payments.
So there you have it! Law students will always have a great future ahead. However, as we mentioned earlier, the cost of law school can be a bit daunting. But with student loans, you can finance your law school education and start your career without any worries. Just make sure to choose the right loan for you and manage your debt wisely and follow these tips. You will be able to repay your student loans in no time!