Loan-ly, I am so loan-ly

I was lucky enough to have my parents fund my undergraduate degree. But pretty much since the time I could hold a pencil, they let me know that for any education after that, I would be on my own. So how is a lowly B.S. holder with a year of entry-level work under her belt supposed to fund three years of advanced education? For me (and most) the answer is loans. And with loan application season rapidly approaching, this post will break down some of the options, both federal and private.

Let’s start with the feds. Step 1. Fill out the FAFSA. Step 2. See what you get offered. There are four types of loans the government can offer you for graduate study.

Federal Perkins Loans

If you get offered one of these – take it! These loans are few and far between and are offered only to students with low incomes. Qualified students can receive up to $8,000 a year at a fixed interest rate of only 5%. And the best part is, these loans DO NOT start accruing interest while you’re still in school.

Subsidized Stafford Loans

These loans have a fixed interest rate of 6% and a fee of 1%, which has real interest rate hovering around 7%. The feds award this loan to students who “need help paying tuition” (but hello, doesn’t everyone?) based on the information filled out in the FAFSA. These loans are considered subsidized because like Perkins loans, the interest does not begin to accrue until you graduate.

Unsubsidized Stafford Loans

This is the one that basically every grad student gets. If you’re a legal US citizen and haven’t defaulted on other loans, the feds will offer you this one. Your income and credit score don’t matter, and you can get the full amount you qualify for. Like the subsidized Stafford loans, the APR is about 7%, but the reason it is “unsubsidized” is because the interest starts to accrue while you are still in school. The good news is, you still don’t have to start paying off your loans while you are enrolled at least half time.

Grad PLUS Loans

So aside from tuition expenses, just living in general also costs money. That’s what Grad PLUS loans are for. Basically, they cover living expenses like room, board, and transportation costs included in the schools estimated “cost of attendance.” The student can get all the money they qualify for, but there are a few caveats. 1) The interest rates and fees on these loans are higher, bringing the APR to about 8.8%. 2) These loans require a separate application and also a credit check, so students with adverse credit or who have defaulted on other student loans may not qualify for Grad PLUS.

Private Loans

So, the four types of federal loans aren’t that complicated. Here’s where it gets hairy, because there are literally thousands of different terms for private loans from many different borrowers. Here are a few tips:

  1. Generally, you shouldn’t consider a private loan until you’ve exhausted your options with the feds. The federal loans with the highest APR, Grad PLUS loans, generally still have better repayment options than private loans. The best private loans will be on par with Grad PLUS loans, but they will pretty much always only be available to students with the best credit and often with a credit-worthy co-signer as well.
  2. Don’t be fooled by seemingly low interest rates. Private lenders can sneak in high fees that make the loan end up costing more. According to FinAid, about 4% in fees equals around 1% increase in interest rate.
  3. Don’t be fooled by fees! Similar to the above tip, lenders who charge no fees often just roll them into a higher interest rate.
  4. Beware repayment terms. Longer repayment terms with a lower interest rate may seem attractive, but the longer term of repayment can actually increase the amount paid in interest.
  5. Compare carefully and watch out for credit checks! Often times, private lenders will advertise their cheapest rates which may only apply to the most credit-worthy of their borrowers. Students with bad credit may actually receive loan offers of 6% higher interest rates, and lenders usually won’t give you this information up front. You find out after you apply. Comparison sites like Credible let you compare your personalized offers WITHOUT affecting your credit score. I highly suggest using tools like these before applying to every loan under the sun – because each credit check takes a small but temporary hit to your score, which can make qualifying for private loans even harder.

Private loans can be sneaky, but they’re not all bad. For law students specifically, private loans can help you finance the cost of post-graduation expenses, such as bar preparation classes. The feds won’t. The takeaway is, when it comes to any loan type – do your research! Try your best to calculate how much you will actually need so you aren’t overborrowing and racking up interest on money you won’t use. Come up with a budget and figure out what repayment plan might work best for you. Max out on your federal loans first, and then if you are still planning on taking out private loans, see if you can find a willing cosigner (parent, grandparent, etc) with good credit to help you get more competitive rates.

After you’ve been approved, don’t stress too much. I’m not saying don’t be cost conscious, but focus more on doing well in school so you can get a banging job after graduation and pay off those loans quick. Happy borrowing!

 

For more information on federal and private loan comparisons, check out these sites: https://www.usnews.com/education/articles/2010/04/15/the-4-best-grad-student-loans and http://www.finaid.org/loans/privatestudentloans.phtml.

 

Choosing a law school

When it came time for me to choose a school, it felt like basically the most momentous, weighty decision I faced in my life thus far. Sure, I had to choose a university before, but this was a law school, this commitment could essentially define my career. Believe me, I put off the decision as long as I could, but you know, those deposits sure do add up …

There are so many factors to this choice, and the variables apply differently to each person. Before you start making endless pro/con lists that eventually devolve into “has Chipotle .25 miles closer to campus” (been there done that), here are a few of the game-changers to consider:

  1. Cost of attendance

It’s no surprise that law school is expensive. Now, the starting salary of the legal field is significantly high, but most people don’t want to spend most of their salary on paying off student loans. Scholarships can be a big help in defraying costs, so don’t take them for granted! Most of the time, these scholarships just cover tuition – the other thing to consider is living expenses. As much as you will feel like you’re selling your soul to law school, you will still have to eat, have a place to sleep, and pay for gas/transportation costs for the commute. Rent and living expenses vary a lot from city to city. So, if you got a huge scholarship to a school in Manhattan, just keep in mind you will probably make up for it in rent payments for your shoebox apartment. If you didn’t get as big of a scholarship to a certain school but you’re living at home, you’ll be saving a lot in the cost of living department. A little math can go a long way.

2. Region of practice

I have it on good authority (aka pretty much every lawyer that I talked to) that going to law school in the state you would like to practice in is often more important than the ranking of your school. This was SO helpful for me in narrowing down my law school choices. Unless you’re going to a top 10 law school, it’s probably more beneficial for you to go to school in the state you want to be a lawyer in rather than going to a higher ranked school outside of that state. The professional network you develop while in law school will open many doors for you. Going to school out of state is by no means professional suicide, it will just require more effort on your part when it comes to preparing for the bar, cultivating a network, and seeking out internships and jobs.

3. Ranking

You can’t avoid it. Law school rankings are a pretty good way to suss out a law school’s reputation from a non-biased party. The US News and World Report, for example, weighs things like bar passage rates, retention and graduation rates, faculty to student ratios, and employment statistics to assign each school a ranking.  Now, I wouldn’t live and die by these rankings, because some of the factors are somewhat qualitative, as evidenced by the varying rankings across different rating organizations. The other thing about rankings – they’re subject to change, and they often do year to year. Slipping a few spots in a year isn’t anything to lose sleep about, but a continuous slide or a large dip should be a red flag. Conversely, law school with a steady hold on rankings or a school with consistent upward mobility demonstrates the school is doing something right.

4. Gut feeling

Some would argue that this one probably shouldn’t be on the list. But I think there are some intangible factors that should definitely be part of a major life decision, and gut feeling would be one of them. Personally, my gut has pretty consistently lead me in the right direction, which is why I trusted it when it came time to make my final law school decision. I was pretty much set on one school in my home state that was higher ranked, but I decided to take a quick trip to visit another school on my list anyway. As soon as I set foot in the door, an overwhelming feeling hit me that this was the place I was meant to go to school. My pride still dogged me over rankings for a few days, but I could not ignore my gut. Then it occurred to me, effective legal arguments are crafted with ethos (credibility), logos (logic) and pathos (emotion). Why shouldn’t this apply to choosing a school too? Trusting your gut is part of the process.

Bottom line: Do your research. Know what schools have better programs for what you want to do. Consider the area (both legal and geographical) that you would like to practice in. Factor in your scholarships and the cost of living in the city you may attend law school in. Once you have it narrowed down, go on school visits. Fitting in may sound cliche, but you’ll be making lifelong friendships and professional relationships in the next three years. If a certain school screams yes, don’t ignore it.

A [Brief] Introduction

Hey there! I’m Jenna, and this blog will serve to document my postgraduate journey to legal lawyer-hood. I’m going to law school! Obviously I’m learning as I go, but my hope is that this blog can help answer questions and give some helpful tips to navigate law school.

It’s gonna be a wild ride, let’s do this.