Paying for Law School: An Outline for Success

 

Obtaining a law degree is a major investment in your life. It is also a significant financial investment. The good news is that funding options are available, including scholarships, grants, and education loans to help you pay for it. You can receive financial aid up to an amount equal to what the law school calculates as your “Cost of Attendance” for the academic year. Cost of Attendance includes the cost of tuition and fees, as well as allowances for your books and supplies, and living expenses for the months of the year when you are enrolled in classes.

Although scholarship and grant funding help reduce what you may have to borrow, it is important to understand that many students increasingly must rely on loans to fund at least a portion of this investment. In essence, you will end up with an “education mortgage.” This “mortgage” represents the financing you will need to make this investment in yourself. It will be repaid with your future income after you have graduated. But repaying this “mortgage” can be affordable if you use federal student loans when loan funding is needed to finance your legal education. Federal student loans provide flexible repayment options including the Income-Driven Repayment (IDR) plans where your monthly payment can be equal to less than 10% of your household’s monthly Adjusted Gross Income (AGI) rather than on the amount of your total student loan debt.

To make the most of your investment, you should make every effort to borrow only what you need to attend the law school you choose and achieve your goal to become an attorney. Doing so requires that you fully understand the options available to fund your education and how to take advantage of those options. Since debt financing is likely to be at least a portion of that funding, it is also important that you take care in deciding how much to borrow as you prepare financially for the time you will be in school.

The amount of aid available and the form it takes is largely determined by the law schools. You should, therefore, rely on the law schools as the primary source of information about financial aid. There are many resources to help you understand the process and responsibilities of acquiring financial aid to finance a legal education.

We encourage you to attend the financial aid workshops at the LSAC Law School Forums and to visit LSAC.org to review the section on Paying for Law School. Additionally, please refer to Paying for Law School: A Preliminary Guide (PDF), published by LSAC.

As you speak with representatives from the law schools, here are some of the questions you should ask as a prospective law student:

  • Are there forms in addition to the “Free Application for Federal Student Aid” (FAFSA) that I must complete for your school to apply for financial aid?
  • Does your school have a priority filing deadline for the FAFSA and any other required financial aid application materials?
  • How is eligibility for financial aid determined at your school?
  • Does your school consider parental income information when awarding institutional scholarships and grants?
  • What expenses/costs are included in the Cost of Attendance for the law school and what costs are not included?
  • What kinds of scholarships are available and how do I apply for them? (Specifically, ask about merit- and need-based scholarships.)
  • What is the average loan debt of students who have graduated recently from your school?
  • Will I be able to work during law school? Are there any on-campus jobs or work-study positions available?
  • What is the job placement rate at your law school, and what is the salary range for your graduates?

You also need to understand the following information if you are to be successful in funding your legal education, managing your finances while in law school, and navigating repayment of the loans you borrow once you graduate.

Options for Paying for Law School

The purpose of financial aid is to provide financing options to you so that you can pursue your educational goals. The first step in this process is to assess what resources you can provide before seeking assistance from the available financial aid options. Financial aid then can help cover the costs you cannot pay yourself.

Your financial resources:

  • Savings
  • Financial support from family and friends
  • Earnings from part-time employment in the second and third law school years

Financial aid options:

  • Scholarships and grants
  • Federal financial assistance programs:
    • Federal Loans
      • Federal Direct Unsubsidized Loan
      • Federal Direct Graduate PLUS Loan
    • Federal Work Study (subject to program participation and funding availability at your law school)
  • Private/alternative loan funding (typically used by students who are not eligible for the federal loan programs)
  • Institutional loans (funded from endowments and other institutional resources)
  • Personal loans from family and friends

Preparing Financially for Law School

Assess your available financial resources:

  • Savings
  • In-school earnings
  • Funds from family and friends
  • Spouse/partner contribution

Save as much as possible for law school.

Pay off consumer debt (particularly credit card debt).

Check your credit history; repair any problems:

  • You can obtain a free copy of your credit report once every 12 months from each of the three national consumer reporting agencies — Equifax, Experian, and TransUnion — due to the Fair and Accurate Credit Transactions (FACT) Act of 2003. For more information, go to www.annualcreditreport.com.

Organize your financial records.

Apply for financial aid, if needed.

Applying for Financial Aid

Understand the application process required by each of the law schools to which you have applied for admission.

Complete all required application materials, including the Free Application for Federal Student Aid (FAFSA) at FAFSA.gov.

Adhere to all deadlines established by each law school.

Apply for scholarships/grants funded by private organizations.

Review the financial aid award notice you receive from each law school to which you apply and follow the directions they provide to complete the process.

Apply for loan funding at the school you plan to attend according to the instructions they provide.

Deciding How Much to Borrow

Calculate your in-school budget:

  • Estimate your available resources (e.g., savings, financial support from family and friends, earnings, scholarship/grant funding).
  • Estimate your expenses:
    • Tuition and fees
    • Books and supplies
    • Housing
    • Food
    • Transportation
    • Clothing
    • Entertainment/recreation
    • Miscellaneous personal expenses

Determine if your estimated budget while in school will have a surplus (unlikely) or a deficit (likely). Do so by subtracting your estimated expenses from your available resources.

Consider borrowing federal student loans to cover any estimated deficit if no other option seems reasonable (hopefully this amount is LESS than the amount you are eligible to borrow based on the information you receive from the financial aid office serving the law school). But, remember, you also will need funds to cover your living expenses during the summers between each year of law school and as you prepare for and take the bar exam after you graduate. You cannot receive “extra” financial aid to cover these expenses, so make certain you account for them as you decide how much to borrow each academic year. You may need to use your savings or earnings from employment for these summertime and postgraduate expenses. Also note that current federal regulations do not allow schools to include the cost of repaying your prior consumer debt, such as credit card debt, in Cost of Attendance. So it is important to pay off any existing consumer debt before you start law school, if possible. However, repayment of your prior education loans should be eligible to be deferred while you are in school.

Evaluate if you can afford to repay the amount you plan to borrow by estimating your future out-of-school budget.

Reduce your planned borrowing to the extent possible if you are concerned about how much you’ll have to repay.

Strategies for Reducing How Much You Have to Borrow While in School

Reevaluate your in-school budget:

  • Reduce your planned expenses by identifying ways to live more inexpensively.
    • Live with roommates.
    • Bring your lunch/beverages from home each day rather than buying them at school.
    • Shop with a list and use coupons when possible.
    • Take advantage of student discounts; have “free” fun.
  • Increase your available resources:
    • Can your family provide additional assistance so that you can reduce the amount you have to borrow?
    • Apply for additional scholarship/grant funding from private organizations.
    • Increase in-school earnings during your second and third years of law school, but do not exceed limits imposed by the law school or the American Bar Association (ABA) on the maximum number of hours you are allowed to work per week (the ABA recommends a maximum of 20 hours per week if attending law school on a full-time basis) or jeopardize your academic performance by working too many hours.

Consider attending the law school you’ve chosen on a part-time rather than full-time basis if necessary, and if feasible. Note: It is very important that you discuss this option with staff in the admission and/or financial aid office and consider the pros and cons of attending on less than a full-time basis before you decide to pursue this option.

Managing Your Finances While in Law School

  • Be as thrifty as possible.
  • Track your spending and monitor your in-school budget; make adjustments as needed.
  • Keep good financial records.
  • Open and read all correspondence from the financial aid office serving the law school and your loan servicer(s).
  • Pay all your bills by the due dates.
  • Seek assistance from the financial aid staff if you experience any financial problems or issues.

Remember, funding is available to help you pay for law school. The flexibility of the federal student loan programs (including the option to repay your federal student loans using one of the income-driven repayment plans) should make it possible for you to be able to afford repayment of any federal loans you borrow regardless of the career path you choose. However, since you are spending your future income when you borrow money, it is very important that you borrow only what you need to attend the law school you choose and to achieve your goal of becoming a lawyer. Planning how you will fund law school and meeting all application deadlines are important steps you need to take to be successful in making the most of your investment in law school. Good luck.

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