Most students cannot afford to pay all of their law school expenses out of their own pockets. According to a recent survey by the American Bar Association, over 95 percent of law students take out loans to defray these costs. This leaves many students with six-digit debt upon graduation, which may take a long time to repay. However, students who rely on loans may have opportunities to ease the financial burden that they create. Some students also may want to pursue alternative forms of funding, such as scholarships, grants, and part-time jobs.
Types of Student Loans
The federal government offers two main types of student loans for law students, which can be accessed by completing a Free Application for Federal Student Aid (FAFSA):
Direct unsubsidized loans: A law student may borrow up to $20,500 per academic year from the U.S. Department of Education. Repayment does not start until six months after the student graduates. However, a student who took out loans for their undergraduate education should be aware that they are limited to a total amount of $138,500 throughout their education.
Direct PLUS loans: A law student may apply for this loan if they have no adverse credit, or if they have an endorser (must be a U.S. citizen or green card holder) who has no adverse credit. A student may obtain an amount up to the cost of attendance, subtracting other financial aid that they are receiving. Repayment does not start until six months after the student is no longer enrolled at least half-time. However, these loans generally are more expensive than direct unsubsidized loans.
Private student loans also may be an option, especially if a student is not eligible for federal student loans. Also, a student who has strong credit might get a lower interest rate through a private loan than a federal loan. Some private lenders even offer loans for bar review after graduation. A student should carefully review the terms of a private loan and recognize that the repayment process for these loans may be less flexible. They should not borrow any more money than what they need to pay for law school.
Repaying Student Loans
A student who takes out federal loans for law school may qualify for loan forgiveness, depending on the job that they secure after graduation. A program known as Public Service Loan Forgiveness (PSLF) may be useful to students who work for the government or a non-profit organization. If they make 120 on-time monthly payments under one of the IDR plans below, the rest of the amount due on the loan may be forgiven. Before assuming that PSLF will work for you, though, you should review the nuanced rules governing the program to make sure that you would qualify.
If they do not earn a high salary, a law school graduate in any sector of the profession may qualify for an income-driven repayment (IDR) plan for a federal loan. IDR plans cap monthly payments at 10-20 percent of disposable income. If a student keeps up with their payments for 20-25 years, the rest of the amount due on the loan may be forgiven. The government currently offers four IDR plans: the Pay As You Earn Repayment Plan, the Revised Pay As You Earn Repayment Plan, the Income-Based Repayment Plan, and the Income-Contingent Repayment Plan. Each plan has different advantages and requirements.
In addition, the federal government and some states offer loan repayment assistance programs (LRAPs), which essentially consist of forgivable loans to repay student loans. A student also might apply for an LRAP offered by a state bar association, a public interest employer, or even their law school. (Not all law schools offer an LRAP, though.) The concept behind an LRAP is that a law school graduate working in the public interest sector or for the government, or in another job with a relatively low salary and a high social value, should not be forced to leave their job to repay student loans. When a law school graduate completes the service requirement of the program, the LRAP loan will be forgiven. LRAP loans may be used to repay private loans as well as federal loans.
Alternatives to Student Loans
Some students may be able to avoid taking out a loan, or limit the size of a loan, by obtaining grants or scholarships. These terms both refer to money that is given to a student without an expectation of repayment. While grants are usually based on need, and scholarships are usually based on merit, the distinction between them can be blurry. A scholarship may be contingent on maintaining a certain level of academic achievement. Application requirements vary, and competition can be fierce, so a student should explore these opportunities as soon as possible.
While most scholarships come from law schools, a student should investigate scholarships offered by other organizations as well. These may include bar associations and private law firms. A student might need to submit a brief essay with their application for the scholarship and maintain a minimum GPA, among other requirements.
Getting a part-time job also can help offset the costs of law school. The federal work-study program provides funding for students to work part-time at a location on or near campus. The program emphasizes employment in civic education and work related to a student’s course of study when possible. Not all law schools participate in the program, though, and students may find that their school prohibits or restricts participation during the first year.
Alternatively, a law student looking for ways to finance their education may simply pursue a job on their own. If they choose to work during the academic year, they should limit the time and energy devoted to the job so that their performance in law school does not suffer. A job with flexible hours and substantial control over work schedule may best fit their needs.
A veteran of the U.S. armed forces may qualify for certain educational benefits due to their service, such as those provided by the Montgomery GI Bill and the Post-9/11 GI Bill. If you served in the military, you should find out whether VA programs might help cover the costs of law school.