When I was applying to law school, I ended up having to make some difficult decisions (as we all do). Basically, my options boiled down to School A with some financial assistance, School B with more assistance, or School C with a significant amount of assistance. I distinctly remember discussing those options with a friend/recent graduate. He told me that he’d attended a school with minimal assistance and his loan payments repayments were essentially going to amount to a second mortgage for the foreseeable future. Suffice to say, loans are a significant factor driving many applicants decision to apply to law, and the practical ramifications of taking out significant loans should not be ignored.
Now, the friend I mentioned above was going into private practice, which means he likely could pay off his full loan amount on the strength of his salary over the course of a number of years. But that’s not always the case, especially for those good-hearted folks going into public service work. This is where the Public Service Loan Forgiveness program comes into play. The program pays off a student’s remaining debt after ten years of work in qualifying employment.
Unfortunately, there was news recently that the Public Service Loan Forgiveness program rejected 99% of the first eligible applications (though experts say that’s unlikely to continue as it becomes more clear to applicants what they need to do to be eligible). Today, we’re going to cover over some of the loan forgiveness options out there.
The primary mechanism for loan forgiveness is through a particular law school’s loan repayment program. The ABA provides a comprehensive list here. The terms of these programs vary substantially when it comes to the types of employment they cover and the length of time over which benefits are paid out. But the bottom line is that many schools provide some form of financial assistance to help public interest-bound students bear the financial burden that comes along with high tuition and low salaries. If you’re interested in going into this type of work, you should spend time comparing Loan Repayment Assistance Programs to ensure that you’re getting the best terms.
For more options, you can check out the list here. Just know that the Public Service Loan Forgiveness program and schools’ LRAPs are far more common mechanisms for students. Nevertheless, you should explore every option, given how expensive law school has become.
As one final note, while we’re on the subject of loans, it is worth mentioning the notion of refinancing student loans. Most of the above programs relate to federal loans, but there is another option. You can refinance your loans through a bank like First Republic to get a lower interest rate on an accelerated repayment schedule. With that said, refinancing usually isn’t an option unless you’re going into Big Law work. Although the terms vary, these loans usually lose a lot of the protections of federal loans and are much less forgiving if you lose your job or something. For those who have a job that will allow them to nuke their loans in a short time, refinancing is a great option to avoid making high interest payments.
This is an extraordinarily complicated topic, about which entire gallons of ink have been spilled. I can’t emphasize enough the importance of going through all your options and understanding the terms of the various loans and loan repayment programs involved in your law school journey. You wouldn’t take on a second mortgage (or a first one) without doing your due diligence, and you shouldn’t treat law school costs any differently.