January is the month where student loan applications become due. Nearly eighty percent of law students rely on student loans to finance their education. At large, the student loan debt of about 40 million Americans comes to around $30,000 per student, and we know that the debt load for law students is much, much more.
Making the decision to borrow might seem easy. All you do is ask, it’s probably going to be approved, you attend classes, and about 6 months after graduation your terms kick in and your jaw hits the ground. How did I end up owing so much? Where did all this money go? Borrowing should be far from an easy choice. Take these three steps to help you research and create the best financial aid package for you.
1. Search for as many scholarship opportunities as possible. Remember to look in unique places for scholarships. Go to your employer or the employers of friends or family who may offer scholarships or reimbursement plans. Look to community organizations, fraternal orders, or bar associations. Check with your school, financial aid office or with career counselors for additional scholarship opportunities. Organize what you find by deadlines and make a goal to apply to a certain number of scholarships each week.
2. Decrease how much you borrow. Too often students take out more loans than they actually need. Money is spent on electronics or parties rather than on education. Do you really want to pay for last night’s kegger for thirty years? Probably not. Learn to budget and live for less. Take measures to decrease your student debt prior to graduation. Make an effort to negotiate your tuition and eliminate the charges the school includes into your tuition that you aren’t using (i.e. computer lab, gym fee, athletic tickets). Take on part-time work (if it won’t cause your grades to suffer) to supplement your income.
3. Research the loan market. Private v. Federal loans? What will work best for you? As you may know, there were many changes made to the interest rates of federal student loans this past summer. What your loan terms are this time will be different than loans you may have borrowed last year or earlier. Be sure to read and understand the terms of your loan (which is well described in Chapter 5 of my book). You might be able to find a private loan that has better rates, although the government often gives better repayment options – just be sure to weigh what will be better for you long-term. Here is a helpful article when considering private loans. If you do take out private loans, make sure you have a good credit score so that you can get the best interest rate as possible.
It may be a lot of work, but it’s definitely worth the time to prevent a lifetime of financial stress and hardship in the future.