You worked hard to get to law school - Don't fail out because you lost control of your finances! Law students stray from financial security, but Dean Aguilar is going to share how to keep your "money on your mind ..."

"I think the way students most commonly stray from the path of financial security during law school is by not considering or acknowledging the full financial implications of committing to law school until very late in the admissions process." - Dean Reyes Aguilar.


Now having said this, there are a few specific things Dean Aguilar has seen law students commonly do in regard to their finances that should be addressed.


Finally, students can't keep track of how much they are borrowing and from what programs unless they keep records.


Special Note: Don't be caught unaware of the financial commitment you are making. A legal education is an all encompassing endeavor. You will be challenged intellectually, emotionally, and financially. Do your research now and you will trim your stress as a 1-L!

Financial resources are available for law school. These resources include: scholarships, work-study, VA Benefits, wages, employment benefits, and loans. There are virtues and drawbacks to all the resources I listed. I will address the most common type of financial aid for law students: the loan programs. -- Dean Aguilar.

There are private educational loan programs and loan programs guaranteed by the federal government. The virtue of these loan programs is that they make funding available to assist students in paying for their educations. The drawback is this borrowed money must be repaid with interest.



What distinguishes these programs are the details of interest rates, what happens to accruing interest while the students are enrolled, what are the repayment options, and if loan cancellation or forgiveness apply to the individual programs.

Private education loans, also known as alternative education loans are offered by private lenders-most often banks.



A virtue - due to the low primary credit rate set by the Federal Reserve Board, the private student loan programs have relatively low interests rates. However, if we enter an inflationary period the current interest rate will climb.

A drawback - borrowers are unable to take advantage of income based repayment options, loan forgiveness opportunities, and loan cancellation due to death or disability offered through the federally guaranteed loan programs. Also, borrower may defer payment on the loans while enrolled, but interest does accrue during that time period meaning they owe a larger amount on the loan than what was originally borrowed.


Federal student loans are essentially made under three programs: the Federal Family Education Loan Program or FFEL Program; the William D. Ford Federal Direct Loan Program; and the Perkins Loan Program. The loans under these programs are Stafford, Graduate PLUS, and Perkins Loans. All of these loans have fixed interest rates which will not change.



A virtue - A portion of the Stafford Loans (up to $8,500 annually) and all of Perkins Loans are subsidized.

A drawback - The Graduate PLUS and the remainder of what a student borrows from the Stafford Loan program is unsubsidized. However, a student borrower can make quarterly payments on that interest significantly reducing the cost of the loan over a ten year repayment period. Of course, these payments should not be made with loan money.

A virtue - The Stafford and Perkins Loans are very easy to qualify for. A student borrower simply cannot be in default on another federally guaranteed student loan. Other than that, students' credit will not affect their eligibility for the Stafford or Perkins Loans.

A drawback (potentially) - The Graduate PLUS Loan program is a credit-based loan. The credit check is not as strict as the private loan programs and if a person has a negative credit record it is easier to rehabilitate in order to qualify for the Graduate PLUS loan program as compared to the private loan programs.

Finally, virtues of the federally guaranteed loan programs include the repayment options and loan cancellation or forgiveness that are available to borrowers.



Stafford and Graduate PLUS Loans have multiple repayment options. The standard ten year repayment option means you will have the same monthly payment for the ten years it will take to pay-off your debt.



Next week Dean Aguilar discusses: How law students get in financial trouble and how to avoid it!


Edited: 01/20/2010 at 04:04 PM by matthewniziol

Hello,
Happy New year!

Has anyone applied to Rutger's Newark, NJ adn heard anything? I just sent my application in this weekend.

You can dream about law school all day, but writing that first tuition check can be a nightmare. CLEO asked Dean Reyes Aguilar University of Utah, SJ Quinney College of Law to "Talk Numbers" and help you face the facts about financing law school.

This is a four part series in which Dean Aguilar explores What You Need To Know about paying for law school. Let's start with the basics:

Question: What steps can an undergraduate student take to prepare for financing law school?
Answer: Dean Aguilar advises ...

The first thing I want to address is stating the obvious, but warrants mention. From the perspective of financing law school, one of the best things one can do is perform well in courses and develop strong academic skills.



The second action students can take is to address debt. Be wary of debt. While it may be necessary to take on some debt to support an undergraduate education, acquire that debt in a prudent manner and at a reasonable level.



The third action is to know and understand the types of loans to which you are obligating yourself. Know if you are taking out private or federally guaranteed loans.



Also, know if your loans are accruing interest while you are in school. Educational loans that are accruing interest while you are a student are called "unsubsidized" loans.


As undergraduate students approach graduation and prepare to apply to law school they should begin setting a sound knowledge base for financing their legal education. Have a budget and plan to address the application process.

Law student debt is wide ranging and varies from school to school. This also holds true for salaries of recent law school graduates. Salaries, in addition to being wide ranging, can vary dramatically from geographic region to geographic region and practice sector to practice sector.

In short, as it relates to financing your legal education, do the cost/benefit analysis. Know what you are getting into financially before committing to attend law school.


Edited: 01/12/2010 at 02:52 PM by matthewniziol