10 Tips on How to Minimize Law School Debt
Graduating from law school opens up so many doors, but getting there can be stressful for so many people. Even though the salaries lawyers make could pay off student loans, it’s always smarter to try and stay out of debt while you are in law school.
Loans are one of the only ways that people can afford to attend. Don’t feel angry or frustrated when you have to take out a loan, just do your best to take out as little as possible.
These 10 tips on how to minimize law school debt will give you some actionable steps that help you pay for law school without taking out too many loans.
How to Minimize Law School Debt
Even though loans are one of the easiest ways to pay for law school, they can also be a huge burden to pay off when you graduate. Learn how to minimize law school debt and ease that stress afterward.
1. Apply for Law School Grants
Always apply for as many grants as you can and accept them first. Grants are a type of financial aid that does not need to be repaid. Talk to your school’s financial aid office; some law schools offer grants based on financial need.
Unfortunately, federal Pell Grants are only for undergraduate schools, so they aren’t available in law school. You’ll have to look for privately-funded grants or grants through the school itself.
2. Work During College
Law school is emotionally and mentally exhausting, but if you are able to work during college, you will be able to afford to take out fewer loans.
Look for jobs that allow you to study while working or maybe get a part-time job. You could even look at side hustles like driving for rideshare companies.
Some law students set up side hustles - like freelance writing or social media jobs - that pay a little extra.
3. Get Scholarships
It’s actually easier to find scholarships for law school than it is to find grants, so spend a weekend applying to as many scholarships as you can.
The best place to find law school scholarships is through your school’s financial aid office. There might be privately-funded scholarships set up based on minority status, financial need, or even the specialty you are going to study.
Applying for scholarships is time-consuming, but it will pay off. Apply for as many as you qualify for and use that money instead of student loans.
4. Go to a Low-Cost School
Ivy League schools look impressive on a resume, but they also come with a hefty price tag. You can save thousands of dollars just by choosing a different school.
For example, Columbia University has a tuition of $60,514 for the 2021-2022 school year. Compare that to $27,720 a year for Brigham Young University Law School.
There are benefits to attending Ivy League schools - namely, the networking and possibility of future employment. Those same opportunities are available at other schools, too, and you’ll save so much money that it will definitely be worth it.
5. Take Out Federal Direct Loans First
Not all student loans are bad - and you might have to take some out to pay for school. If you do, take out Federal direct loans first. They will have lower interest rates and are eligible for government assistance later on.
There are two types of federal direct loans - a direct unsubsidized loan and direct PLUS loans.
Unsubsidized loans have a maximum borrow amount of $20,500 per year. There is also a cap for how much you can borrow over your entire time in law school, which is $138,500. These are some of the best loans to get because they have the lowest cost and a fixed rate.PLUS loans are available to students and the parents of the students. Parents can take out a PLUS loan and give the money to them. Then, it is the parent’s responsibility to pay it back.
6. Only Borrow As Much as You Need
Even though you qualify for a certain amount of financial aid that does not mean you should take out the maximum amount. Do whatever you can to only take out loans for the bare minimum you need to pay for school.
Lots of students fall into the trap of taking out extra loans, thinking of it as “free money” that they will be able to pay back as soon as they get the perfect job. Plan for the possibility that you will begin to owe student loan payments before you land a lucrative career.
7. Plan Ahead for Your Debt Payment Strategies
Another way to minimize law school debt is to speak with a financial aid officer about how much the student loan payments will be and make a plan for how you are going to afford it.
Often, the simple act of knowing you will owe $500 a month (for example) is enough to encourage you to take out less in your loans and get creative with other ways to pay for school.
8. Search for Law School Loan Forgiveness Programs
There are also student loan forgiveness programs out there for graduates that qualify.
If you want to work for the government, you might be eligible for a Public Service Loan Forgiveness. Through this program, the federal government will pay off your student loans after you make 120 monthly payments on time and work for the US government. This program is very difficult to achieve, so talk to someone at your school about whether it is a good option for you.
There are also income-driven repayment plans or employers that offer to help you pay off loans. Some income-driven repayment plans are through the federal loans program and if you make on-time payments for 20 or 25 years, they may forgive your outstanding balance.
9. Only Accept Paid Internships or Summer Associate Programs
Internships are a fantastic way to network and possibly earn a coveted job at a big law firm. If you are trying to keep your student loans low, then use those summer months to only accept paid summer associate programs.
There are paid internships out there and even law firms that offer programs for law students - all with income potential.
10. Create and Stick to a Budget
Finally, make a budget before you decide how much to borrow. Then, stick to this budget. It might feel like you are pinching pennies and don’t have financial freedom, but the investment is worth it. This one act could save you tens of thousands of dollars after graduation.
Talk to a Financial Planner
If attending law school is in your future, speak to someone that knows about financial planning for lawyers. At Power Forward Group, we will look at your budget and lifestyle and help you create a financial plan to minimize law school debt and maximize your wealth after you get your first associate job.