If the most exciting part of finally graduating from law school and passing the bar is getting your bar card in the mail, the least exciting part may well be making the first payment on your student loans.
Despite the fact that law school may be a sound investment—after all, the median lawyer salary in the United States was $120,910 annually in 2018, according to the Bureau of Labor Statistics —it certainly comes with a hefty price tag.
The average young lawyer now carries over $140,000 in student debt, and figuring out how to set up a loan repayment plan can be daunting. After all, a six-figure debt is nothing to take lightly.
Finishing law school already comes with a lot of responsibility: you may find yourself moving or changing cities, starting a new job, or just adjusting to the new responsibility of dishing out legal advice for a living.
On top of that, starting to pay off your student loans can feel like a challenge. Unfortunately, student debt is not an uncommon barrier to face after graduation; in fact, it’s becoming the norm. And yet, there are reasons why being a newly minted lawyer with debt could put you in a better position than graduates in other fields.
For one, the good news is that you’ve chosen a profession where even your starting salary likely puts you well above the median American household income —which was at $61,937 annually for 2018.
Not just this, there are a ton of debt repayment options available to law school graduates, including attractive student loan repayment programs and forgiveness programs that could have you saying goodbye to your debt—if you’re in the right sector.
Ultimately, once the initial sticker shock of your student loan debt wears off, you may realize that you have numerous options at your fingertips that could help you move out of the situation you’re currently in and into one that’s much more financially comfortable.
Sure, tackling student loan debt is a challenge—for anyone. But it is a challenge you can rise to, especially with the help of other lawyers who have been in your shoes.
Whether you’re a legal services attorney or a first-year associate, a good first step on your road to career fulfillment could be creating a plan to tackle your student debt.
Ahead, we take a look at some of the options that may be available to you and uncover some tips for those attorneys who are saddled with high student loan debt—plus ways to move forward.
Taking Advantage of Your Law School’s Loan Repayment Program
New graduates with large debt loads may find themselves obsessing over the amount of debt they owe, instead of focusing on available repayment options. It’s basically the same advice that driving instructors give to new drivers: If you spot a car wreck on the side of the highway, the best way to avoid it is to keep your eyes on the road—not on the accident.
So, how can you shift your thinking and develop a more solutions-based approach when you’re facing a mountain of debt? When it comes to significant student loan debt, the answer may lie in taking the time to do your research and focusing your attention on the resources you may already have at your disposal:
One option to explore is the sort(s) of loan assistance offered by your law school. Some schools may have helpful loan repayment programs, including Loan Repayment Assistance Programs (LRAPs) , which can make it easier for law school graduates to work at public interest jobs, which typically pay less than private firms, by offering income-based repayment assistance.
That said, it’s important to pay careful attention to your student loan terms. For instance, Columbia University suggests a 10-year repayment term is the best option to take advantage of their LRAP, which would likely mean bigger monthly payments, but over a shorter period of time.
Looking Into Federal Loan Forgiveness Programs
Imagine this: You find your dream fellowship, internship, or job right after graduation, and not only does it put you on a path towards gaining valuable experience in your field, but it also comes with an unexpected added perk—debt payoff assistance.
Student loan forgiveness programs aren’t altogether uncommon for those in the legal field. In fact, there are many possible scenarios in which you could find yourself getting some help paying off your debt—or having the remainder forgiven altogether.
Typically, law school loan forgiveness is reserved for lawyers working in the public sector. Many times, public service lawyers earn lower salaries than those in the private sector, and so forgiveness programs are usually geared towards lower earners who may need more help shouldering their debt.
Public Service Loan Forgiveness (PSLF), for example, is a federal loan forgiveness program that eliminates federal student loan balances for eligible borrowers who make on-time loan payments for 10 years while they’re working for a qualifying nonprofit or in a government sector.
In addition to this, some states also offer loan forgiveness for attorneys through LRAPs. LRAPs typically require that you graduate from the academic institution that awarded you LRAP initially, work around 30+ hours per week, and start paying off your loans immediately.
These aren’t the only options available. Added bonus: Typically, loan forgiveness programs can be used as long as you qualify, so you may be able to “double-dip” if you qualify for more than one. Be sure to check the criteria for each program to confirm; there are some, such as teacher loan forgiveness programs, that do not allow “double-dipping.”
One tip: Search for and fit your repayment plan to your personal circumstances and situation. For instance, if you’re going into public interest law, there are loan forgiveness, assistance, and deferral programs. And you’ll want to ensure that your job meets the requirements for those programs.
Considering Consolidating or Refinancing Your Student Loans
If you find yourself dealing with more than one student loan, a possible option may be to consolidate or refinance your loans so that you can just worry about paying off one lump sum.
Depending on your exact circumstances, student debt consolidation may provide some peace of mind and the ability to more easily manage your repayment, given that consolidation means combining existing student loans into one.
(Note: If you refinance federal loans with a private lender, you will no longer qualify for federal loan benefits, such as PSLF, discussed above, or federal income-driven repayment plans.)
If you decided to consolidate your federal student loans into one Direct Consolidation Loan, you can always consider refinancing in the future once you are in the market for a better interest rate.
One tip: instead of treating your repayment plan as if it’s set in stone, consider ways it may need to (and could) change if your financial situation changes.
Reallocating Your Debt (If Possible)
Depending on which stage you are at in your debt repayment process, there may be options available for you to reallocate your debt. Sometimes, if you come to own property, you can use this to your advantage by borrowing or reallocating existing debt against the value of the property.
However, converting unsecured debt (like a student loan) into debt on a secured lien such as your home can come with risks. For example, if you were unable to pay your mortgage and went into loan default, you could lose your home. So, as with anything, it’s important to weigh the costs and benefits.
One tip: Take the time to research and fully understand ways to tackle law school debt. And if you have the opportunity to borrow money from, for instance, home equity, you may be able to obtain more favorable terms on your mortgage while paying off your student loan at the same time. Some mortgage lenders actually offer loans specifically tailored to pay off student loan debt.
And a Favorite Tip: Throw Some Extra Money at Your Loans When You Can
If you’re looking to find tips to conquer your student loans the old-fashioned way, you can always tighten your belt and put every available dollar towards your debt. Of course, this strategy can be used in conjunction with just about any other plan, and it’s a valuable thing to consider. After all, extra money can add up quickly. And you can always make prepayments on student loans—federal or private—you have the right to pay off your student loans as fast as you want .
Debt can be an overwhelming thing to face, but by being proactive and funneling any and all extra cash into your student loan repayments—yes, that includes that unexpected bonus or inheritance money—before you know it, you may realize that your mountain of student loan debt has, over time, become a molehill.
Here are some tips to get started:
When you’re still in school, if you have leftover loan money at the end of the semester, you can pay it back into your loans to avoid compounding interest.
If you’re doing pretty well financially for a few years out of school, you might allocate some of your high salary to pay off your loan, or pay as much extra as possible. Ditto with getting a raise: although it may be tempting to upgrade your lifestyle, sticking to the same budget and using that money to pay down your law school loan debt might be a good option—potentially saving you money and worry.
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