Study Debt for Law Students

Study Debt for Law Students

22-01-2020

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Study Debt for Law Students

Many histories, political science or liberal arts majors have intentions of pursuing law studies. Many believe, at least as in seeing the movies and on television that meaning a lawyer means wearing nice suits and having a high paying job.

Others also believe that earning a Juris Doctor degree and eventually becoming a lawyer is a ticket to a lucrative career and financial success. Few lawyers though believe that this is the case.

Over the last couple of years, the employment market has been flooded by many law graduates, resulting in stiff competition and lower starting wages. This has left many law graduates with the burden of not having enough income to pay off their student debt.

The Costs of a Law Degree

It takes seven years to earn a Juris Doctor degree- four years of undergraduate studies and three years in law school. That is of course if you are a full-time student. The American Bar Association says a full-time law student would shell out $18,104 per semester (2018) or $108,624 for 6 semesters (3 years). This does not take into consideration changes in tuition fees in three years. That is for the tuition fees alone.

Add in the cost of a four-year undergraduate which is about $86, 332 and your total cost to earn a law degree would sum up to about $200,000. This amount still does not include your cost of living while in law school.

If you wonder if the study fees are worth it, read https://theattorneyguide.io/legal_blogs/27-The-Richest-Lawyers-in-the-World

Study Debt for Law Students

The high tuition fees have led close to 70% of law school graduates availing of a study debt or student loan to finance their law studies. Law students either avail of federal loans or private student loans to finance their law studies. Since law students are not qualified for subsidized federal loans, the total loan amount increases when interest is computed at the time of repayment.

Many law students also incur study debt through private student loans. These lenders offer fewer repayment plans and forgiveness options. Private student loans are riskier than federal loans thus more law students have to deal with being highly indebted just to become lawyers.

Even more law graduates get further indebted when they avail of a bar exam loan or an additional student loan for a Masters in Law degree.

Study Debt Repayment

That heavy study debt burden may be easily washed out if you get a high paying job. Many lawyers availed of a study debt for law school, got employed with the private sector and have a high salary-to-debt ratio.

Both law and medical schools are expensive. Lawyers, however, have to deal with a weak job market resulting in lowered salaries. These push them to seek employment with the public sector or take on jobs from different fields. Even if the graduate does not land a high-paying job, he still has to repay his study debt.

How to Repay Law School Study Debts

If you intend to avail yourself a study loan, you will need to carefully plot your career path. You will only be able to repay your debt if your salary can afford it. If you work as a lawyer in the public sector, you will be earning less than if you work in the private sector.

• Working in the Public Sector or Non-Profit Organization

• You will be able to avail of the Public Service Loan Forgiveness or other loan forgiveness programs for lawyers. If you qualify for any study debt forgiveness program, make sure to keep your payments updated. It is thus important that you choose the repayment plan you are comfortable with.

• You can benefit from an income-driven repayment with a lower federal student loan. This allows you to have affordable repayments while waiting for the approval of your loan forgiveness.

• Avail of Repayment Assistance Programs offered by your state (if available). 23 states in the US have this program.

• Working in the Private Sector

• If you intend to work with big law firms (private sector), you will be earning big money. It is then advisable to immediately pay your student debt to bring down interest rates. This means you will have to stick with the standard repayment plan or even refinancing law student loans with lower interest rates.

• The key here is to find a job that will allow you to afford to repay your student debt. You may not like to be a practicing lawyer but if the job allows you to repay your student loan, you will have to stick it out with that job. You can shift careers when you are debt-free.

How to Reduce Law School Study Debt

Law school is expensive. If you have no choice but to avail of a study debt to finish law school, there are ways to limit the amount you need to borrow:

• Choose a public or in-state law school instead of private or out-of-state law schools.

• Compare interest rates of private law school study debt options. Choose the option with the most favorable repayment plan and lowest interest rate.

• Try to avail first of federal student loans. They have lower interest rates, borrower protections, forgiveness programs, and repayment assistance.

• Search for law school grants, financial aid, and scholarships you may be qualified so you can complete law school debt-free.

• Get a part-time job while still in college to save some money and therefore lower the amount of student loans or financial aid you need.

• Live on a budget.

• Make use of free resources. Do not enroll in a gym when you can use the campus gym for free.

Getting a private loan to finance your law studies should be your last option. Private loans offer high-interest rates and do not offer flexible payment terms. They also do not have an income-driven repayment program, no forbearance, and forgiveness.

However, if you have no choice but to avail of a private student loan, choose one with a fixed interest rate. When you graduate, find a good job and immediately pay off the debt to avoid high-interest rates.

Your best option to finance your law studies though is to pay money and not avail of any loans. Many law students seek employment first before enrolling in law school so they can save money to finance even just their cost of living.

Is Law School Worth the Debt?

The reason many want to be lawyers is because of the high possibility of having a lucrative and high-paying job. The National Association of Law Placement said that in 2019, many lawyers in the private sector earned as much as $155,000.

On the other hand, a lawyer working in the public sector earned between $48,000 and $56,200. While much lower than salaries in the private sector, student loan forgiveness and repayment assistance available for this sector can to a large extent ease the burden of being in debt.

The average law school debt is about $145,500. This means repayment is about $1,674 per month for 10 years. This translates to about 13% of the potential average salary of lawyers’ employees employed in the private sector.

Is availing of a study for law school worth the risk? Enter law school with a clear mind. Law school is not all about studying and earning your Juris Doctor or Masters in Law. It is also important that you plan your law school finances well. Being always cash strapped can affect your focus.

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