Wednesday, July 31, 2013

The Senate Student Loan Bill Passes: Part III on H.R. 1911

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The pressure to fix the student loan interest rate that doubled on July 1st is increasing as Congress sets to recess in a few days until after Labor Day weekend.  Fortunately, it appears they might actually have legislation ready for the President to sign into law as early as today!

H.R. 1911 is moving forward.  In case you are unfamiliar with the legislative process, a bill keeps its number and the house abbreviation from which the bill originated – in this case, the House of Representatives.  On July 24th, the Senate passed this bill with amendments (changes).  The bill has to go back to the House (since they agreed to pass a different version) and re-pass the bill with its new changes.  If the House doesn’t agree with the changes and votes it down, then the two houses can conference to reconcile the bill or the bill is killed and the doubled July 1st student loan interest rates will remain.  However, it doesn’t appear that the new bill will fail in the House.  The likely outcome is that the House will pass the new version of H.R. 1911, which means it will then be delivered to the President to sign (which he has already stated he would do) in order to be enacted (become law).  Once the bill is enacted, the student loan interest rates will change.

The Changes to H.R. 1911:

  • Direct subsidized and Direct unsubsidized Federal Stafford Loans will match the rate of a high-yield ten-year Treasury note plus 2.05% and the rate would be capped at 8.25%. The rate estimate for this upcoming fall is 3.9%.  
  •  PLUS loans have been divided:

o   Graduate Student PLUS loans will match the rate of a high-yield ten-year Treasury note plus 3.6% and capped at 9.5%.  The rate estimate for this upcoming fall is 5.4%.
o   Parents and some Graduate Student PLUS loans will match the rate of a high-yield ten-year Treasury note plus 4.6% and capped at 10.5%. The rate estimate for this upcoming fall is 6.4%.

  • Compare the new and old versions of H.R. 1911 here.

What this Means for You:

  • New Pros:  The very high rates set on July 1st (6.8%) will go away.  These rates are also lower than what was originally proposed (for the most part).  Variable interest rates may allow you to pay less over the life of the loan if the rates stay low. 
  •  New Cons:  The PLUS loan rates for some graduate students and parents are higher than what was originally proposed.  There is a disincentive for parents to help their children lessen student debt obligations – expect more students to be applying for loans in their own name.  Variable interest rates may require that you pay more over the life of the loan if the rates increase as the market improves.

Debt is never fun.  The fewer loans you take out the better it is for you long-term.  As the interest rates are presently low, it’s even more important that you make an effort to pay any interest owed during school, so that if the rates do rise when it comes time for repayment, you’re not facing a high interest rate against a balance that has grown from compound interest.

Wednesday, July 24, 2013

4 Bar Exam Bargains While You Are Still in Law School

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Last week’s post suggested four purchases for new graduates as they prepare to take the bar exam this coming week, but rising 3Ls should also be preparing for the exam…in a different way.  The process for applying and taking the exam can cost thousands of dollars, and not all students are aware of these costs.  The earlier you begin the bar planning process, the more you can save.  Here are a few tips.

1.    Lock in a bar exam prep course.  Prep courses are a good investment.  These courses give you the best study regiment, materials, practice, and skills for passing the exam.  Most courses give deals to students (especially 1Ls) who put a deposit on the course early.  Many times you can get a discount, lock in the current price, and receive bonus study materials for core classes and the MPRE.  If you take a representative position with a prep course, not only do you receive income for working, but you might get better discounts or even a free course.

2.    Review your state bar exam requirements.  Find out the deadlines to avoid late fees.  Also, if you keep track of the costs for each part of the application in advance, it won’t come as such a big surprise to you or your wallet when the time to pay arrives.

3.    Miscellaneous costs.  There are additional expenses besides the costs to apply for the exam and the prep course.  You have to decide whether you will be working or not during bar preparation and possibly until you receive exam results.  If you do not work, you have to account for living expenses during the time you do not have income.  Also, sometimes the bar exam is not given in a location near you.  Therefore, you will also need to consider travel, hotel, and food costs during the exam.  You can save money by booking hotel and transportation early.

4.    Budget.  Create a budget now for these upcoming costs.  You can adjust your current earnings and spending during the school year so you can make these payments without financial worry.  If you plan ahead, you can avoid taking on additional loans.  Most bar exam specific loans are through private lenders, have high interest rates, have demanding repayment schedules, and may not be tax write-offs once you begin to make payments.

Save.  Study.  Succeed.

Wednesday, July 17, 2013

4 Purchases That Got Me through the Bar

In just two weeks (yikes!), new graduates across the nation will be taking the bar exam.  One of the major purchases for the bar should’ve been a bar prep course.  Although pricey, it is well worth the investment (*Barrister on a Budget Bonus! Put a deposit on a course during 1L or 2L and you’ll get discounts or lock in that year’s price, and you usually receive complimentary study aides for your core classes and the MPRE!), as the course will increase your chances of passing the exam on the first try.  Other than this major purchase, here are four other bargain purchases that will help you when it’s time to take the exam.

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1. Digital Watch:  Most bar examiners will prohibit phones (which is what the majority of us use to tell time these days) during the exam.  If you’re like me, squinting your eyes to pick out the little tick on a watch is annoying and a burden when taking a timed exam.  A digital watch gives you something to quickly look at to keep your pace during each section of the exam.  Make sure that all alarms/beeps/etc. are turned off, so the examiners won’t confiscate it.  Do not go into the exam without practicing with your timing device.  Your practice exams should simulate the real thing as much as possible to decrease stress and eliminate distractions that are in your control.  You can usually find a good one for $15-$20.

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2. Earplugs:  If noises like an ambulance blaring it’s siren as it passes your test center or even the faint sound of other test-takers hyperventilating bothers you, then earplugs are a lifesaver! Just pop these in after the instructions are given, and blissfully take your exam in silence.  You can get a lifetime supply of these things for about $2.  However, be smart about the health of your ears and use earplugs safely (click the credit below the photo for the hidden dangers of earplugs).

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 3. Hand Grip Exercise Thingy:  Okay, laugh if you will, but this thing came in really handy (pun intended).  I didn’t trust to use my computer for the exam because it was severely worn out from law school and was unlikely to upload the answers in the allotted time.  I decided it was better to take the exam by hand, but I wanted to prevent a major hand cramp from messing up my timing and writing legibility.  As you would train your legs for running a marathon, I trained my hands for the essay marathon.  I would use this thing while I reviewed answers, read, or watched lectures.  Three days of writing and filling in circles, and I didn’t get a hand cramp once!  I found my hand grip thing for free, and if you don’t want to spend money for this fine piece of exercise equipment, I’m sure a stress ball will also do the trick.

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4. Dress Like an Onion:  Maybe not literally.  Dress in layers so you are prepared for whatever temperature the exam center is that day.  Feeling uncomfortable from an extreme temperature can mess with your body and mind and will take away your focus from the exam.  If you arrive in layers, you can take away or add what you need to feel comfortable.  Remember, the point is to eliminate distractions that are in your control.

Hang in there, and good luck!

Wednesday, July 10, 2013

A Midsummer Associate's Dream

‘Tis the season for mid-summer reviews, which means you’re half way there!  For some of you, you’re on the verge of getting the full-time job offer (fingers crossed) upon graduation, and for others, maybe an invitation back to the firm next summer is on the horizon.  As summer associate programs shrink and job guarantees are few and far between, clenching that offer is the summer associate’s dream.  But, how can you make that dream a reality?

1.      Decorum.  From the moment you begin your program, consider yourself on a permanent interview for the rest of the summer because you are being judged, questioned, and compared at every moment.  Be professional.  Your work, no matter the size of the task, should be of the highest quality, on-time (if not early), proofed, and well-researched.  Outside of the office is also part of this marathon of an interview.  Attend as many of the firm’s social outings as possible, but remember that this isn’t a frat party, it is business.  Co-workers are not friends, lovers or gossip pals.
2.      Be Flexible.  If you are interested in a particular practice area within the firm, then attempt to work in that area as much as possible.  The more the staff in that field gets to know you and your work ethic, the better your chances.  However, you must be open to other practice areas.  Be enthusiastic about all of your projects.  If you show that you can be flexible and a team player, you can greatly improve your odds of an invitation to stay. 
3.      Inquire About Positions Available During the School Year:  If you are doing well in your studies and are able to take on more work, it may be worthwhile to ask about a job continuing into the school year – even if it’s only for an hour or two a week.  If there isn’t anything available, it is still worth the effort.  You showed interest and dedication to the firm and potential plans to commit.  If you can get a position, you will be able to maintain your professional relationships and stay in the minds (and faces) of recruiters.  Not to mention, you will improve your practical skills and earn an income!  If the position is unpaid, don’t reject it automatically. Weigh the offer against your ability to time manage and retain a high rank.  
4.      Take Critiques Professionally.  A mid-summer review is just that – a review of what you have done so far.  You will be critiqued because – let’s face it – you only learn theory in law school.  You’re unlikely to be a natural at the practical stuff and mistakes will happen.  Plus, you’re human.  Even if it doesn’t feel like it, these critiques are to help you become the attorney of the firm’s dreams.  They are investing their time and money in you and want the investment to pay off.  Take the criticisms, implement them, improve, and do it all with a smile.

Bonus!  Barrister on a Budget Tip:  Aside from looking for that permanent job, you should be managing your summer associate income wisely.  Try to save as much as you can in order to borrow fewer loans in the upcoming year and to make interest payments which will help you avoid paying more over the life of the loan.

As this is not an all-inclusive list, I’ve provided a few articles of interest below. 
·  Making the Most of Your Summer Associate Program.
·         NYU:  How to Succeed as a Summer Associate (I particularly enjoyed the section on real world examples of career limiting behavior).

Wednesday, July 3, 2013

Double Trouble: Update on the Student Loan Bill Debacle

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July 1st has come and gone, and the much discussed deadline has passed.  Congress is in recess.  This Fourth of July weekend, members of Congress will look to the sky to watch the fireworks explode and will celebrate their independence and freedom, while students across the nation look to the sky in hope only to see their financial futures exploding, further dependence on government aid, and the shackles of debt obligations growing heavier.

Although the House was able to come to an agreement on the student loan crisis, the Senate was unable to rise to the challenge.  Instead, the Senate broke for recess, leaving the issue at a stalemate.  Consequently, without a bill passage, the student loan rates for Direct Federal Loans will now double from 3.4% to 6.8%; a hefty and unwelcome change to students hoping to brighten their futures with an undergraduate or graduate education.

Unless Congress acts after the break, these rates are locked in.  A few reconciliatory attempts have been made, but seemingly lack luster.  For instance, Senate Democrats are leaning toward a one-year extension, maintaining the pre-July 1st rates, while Congress takes the year to finally figure this thing out.  Déjà vu?  Yes.  Lately, the hurry up-and-wait method has been quite popular on The Hill.  Remember the deficit crisis and the “fiscal cliff?”  How many times are we to play chicken before we get smacked down by a truck?

To truly celebrate this holiday weekend, remember those who fought for our freedom and use it as inspiration to fight for your fiscal freedom.  You may not be armed with bayonets and cannons, but you do have your words.  Like “they” always say, “The pen is mightier than the sword.”  In terms of today, I assume a key stroke is just as mighty – write emails to your congressmen, blog or even reach out with social media blasts.   Check back every Wednesday for more on this issue and other student-related topics.
Happy Fourth of July!