Maximizing Scholarships & Loan Forgiveness for Law School

Earning a law degree is a useful step to a legal career, but it comes at a hefty price. You may receive less financial backing from family members than you did for your undergrad education, yet a law-school education still requires money for tuition, housing, books and other expenses, such as groceries, phone bills and transportation. Even if you work after college and save up for law school, it could still be a stretch to pay law school tuition yourself. The average single-year private law school tuition in 2018-2019 was over $48,000, so a three-year program could run you nearly $150,000. You'll probably need aid. Most law students — 90% or so — take out loans to finance their legal educations.

Financial aid for law school is different from undergraduate financial aid. Sure, the Free Application for Federal Student Aid (FAFSA) is the starting point for both. But the law school financial aid process involves two aspects not often found in that of undergraduate aid: negotiation of aid amounts and post-graduation loan forgiveness or repayment-assistance programs.

As with financing your undergrad education, the FAFSA is the launching point to financial aid for law school. Filling out the FAFSA gives you access to, and eligibility for, all kinds of aid — grants and loans from law schools and from federal, state or local governments. For example, through the FAFSA you can apply for a federal Stafford Loan to pay for your legal education.

In addition to the FAFSA, you may find that your law school of choice requires you to complete a supplemental financial-aid application. Law students, like undergrads, also may turn to private student loans. But tread carefully: Their repayment plans are not as flexible as federal loans and their terms less favorable. In general, private loans should be used only as a last resort.

Michelle Kim Hall earned her Juris Doctor degree from Harvard Law School and bachelor's degree (summa cum laude) from UCLA. She is currently the director of law school admissions at Stratus Prep. In this Q&A, Hall talks about how students can incorporate financial-aid strategy into the application process.

Although most law-school students turn to several funding sources, student loans are invariably the principal source. Repayment on student-loan debt begins upon graduation, and these days, the average law school debt is daunting: $130,900 for private law-school students and $89,962 for public law-school students. The larger the loan amounts, the longer the repayment periods — and the greater the stress on graduates, who are just beginning their careers.

• Making Decisions About the Type of Student Loan and Loan Amount
  

You must repay any loan amount you receive, which will influence the type of student loan you pursue. In most cases, your best bet is to stick with federal student loans because they open the way to the most flexible repayment options, avenues to payment relief, and, in some cases, loan cancellation. Private and institutional loans, on the other hand, are inflexible and have limited repayment options.

How are your student-loan type and amount determined? Your law school of choice determines your eligibility for student loans and their amounts. The school's financial-aid office calculates loan amounts based on the school's cost of attendance and policies, as well as federal regulations.

• Consider these tips in seeking out financial aid:

  • Minimize loan amounts: Don't borrow more than you need.
  • Choose federal student loans over other options: Take advantage of more flexible repayment terms and lower interest rates.
  • Avoid private student loans, if possible: International students are not eligible for federal student loans and may need to turn to private loans.
  • Seek out scholarships, grants and fellowships: Such awards exist for law-school students and they don't require repayment, though they are limited in number and amounts.
  • Stay updated: Law-school policies and financial-aid rules and regulations change frequently. Staying current puts you in the position to make the right decision.
    

• Available Types of Loans for Law School

Two federal student loans are available to fund your legal education. With both loan types, interest accrues while you are attending school, and you will be held responsible for paying all interest, even though you are not required to begin repayment until after graduation. Some experts recommend exhausting unsubsidized Direct Stafford loans before turning to Graduate PLUS loans. The following table shows how the two federal loans for law students compare.

You may need to turn to private loan source if you're an international student, if your federal student loan doesn't cover the full amount you owe or if you are otherwise ineligible for a federal student loan. Private lenders will check your credit before approving a student loan. In all cases, carefully review and consider the terms of a private loan; some private lenders don't offer deferment options, requiring you to begin repayment while still in school.

If you hope to defray the costs of your education by working during law school, you'll encounter roadblocks. Many law schools restrict your ability to work, particularly as a first-year, full-time student. They typically follow the precedent once set by the American Bar Association (ABA) which limited weekly work hours to no more than 20. Second- and third-year law students have more flexibility to seek part-time opportunities through the Federal Work-Study Program. Jobs through this program relate to your course of study and focus on public interest.

The financial aid offer for your undergraduate education was probably a straightforward process. A school earmarked a certain amount for you and notified you about it, and you accepted or declined. With law-school financial aid offers, however, you have more room to negotiate. Law schools have seen enrollments decrease in recent years, motivating them to compete for students to meet revenue targets. They need tuition money, and they only get it if you enroll. Sometimes, schools revise their original aid offers to beat out competing schools' offers. To benefit from this situation, however, you must proactively reach out to schools that have accepted you, express your desire to enroll, and place your cards on the table by pointing out a competing school's more attractive financial-aid offer.

Don't hesitate to contact your preferred school's financial-aid office to negotiate the details of your aid package — courteously and professionally, of course. Inform the financial-aid officer that you've received a scholarship or financial aid offer from a peer school. You'll be better positioned if you're forthcoming with the school's name and the amount offered. Ask the officer if his or her school can offer a better deal, and be clear that you will enroll if it can. This may increase the chance of the school responding with a more attractive package.

The type of scholarship you receive affects your negotiating power. You can usually use merit-based scholarships to leverage your position between peer schools. With need-based scholarships, however, schools generally refuse to negotiate. These schools are typically highly ranked— think Harvard, Yale and Stanford — and attract the best of the best students.

Attorney Kyle McEntee, a graduate of Vanderbilt University Law School, is the executive director and co-founder of Law School Transparency, a nonprofit organization devoted to making the legal profession more transparent, affordable and fair to those entering the field. By producing informative reports comparing law schools' job, debt and admissions statistics, his organization encourages law-school applicants to make educated decisions about where to earn their degrees and how to pay for them. Here, McEntee discusses what students should know about negotiating the costs of a law degree.

Loan Repayment Assistance Programs (LRAPs) encourage graduates to work in public interest and government, which are traditionally lower-paying fields for attorneys, by offering repayment assistance with student loans. These programs can ease the financial stress you face as a new attorney by providing funds, usually as grants, to apply to monthly loan payments. Unlike other types of repayment plans, in which your loan balance is forgiven or canceled after completing a certain period of service, LRAPs focus on the now — the monthly payment due next week, next month or the month after.

Law schools establish many of these LRAP programs. Each school determines eligibility requirements. Some law schools are more flexible with eligibility and permit graduates in private-sector jobs, such as in small law firms or as in-house counsel in small businesses, to participate. If you know the type of law you want to practice, you may want to compare schools' LRAPs to see whether you will meet their eligibility requirements and plan accordingly. For example, Harvard Law School's Low Income Protection Plan applies to all nonprofit, government and academic jobs. Graduates who work in law-related private-sector jobs may also be eligible.

Aside from law schools, some public-interest employers have established LRAPs to encourage attorneys to work for them. State bar foundations and other government entities, federal and state, also offer LRAPs. You can learn specifics on MoneyGeek.com's Loan Forgiveness page. In some cases, private employers offer repayment assistance.

Here is a list of questions to ask about any LRAP you are considering:

• What are the payment amounts, and do I receive them monthly or annually?
• What is the maximum total amount I can receive?
• What types of student loans — government, private or both — are eligible?
• Do I need to pass the bar exam to be eligible?
• What are the employment conditions that are eligible for the LRAP? Do I need to practice law to be eligible? What is the service obligation?
• What factors would cause me to lose eligibility? Would salary increases or increased income trigger a loss in eligibility?
• How is the LRAP funded? In other words, do funds come from the organization's general funds, or are funds limited by donations?
• For tax purposes, are LRAP payments considered grants or forgivable loans? (Employer-based LRAPs typically are considered grants, which make them taxable income.)

For law graduates or those nearing graduation, fellowships present opportunities to engage in research, teaching and writing projects. Usually merit-based, fellowships allow students to complete projects without having to worry about supporting themselves. Many law schools have fellowships and typically give preference to alumni and students. Other organizations, such as government agencies or private companies, also offer fellowships.

For example, the Equal Justice Works AmeriCorps Legal Fellowship Program is a well-known national program that facilitates pro bono work and promotes accessibility to legal resources in low-income and underserved communities. The organization funds numerous legal fellowships, including those benefitting low-income and homeless veterans, unemployed and underemployed individuals and natural-disaster victims. These fellowships cover living expenses in addition to awarding each recipient a monetary amount per year of service. Recipients also benefit from loan deferment and participation in loan-repayment programs.

Law School Transparency (LST)
Nonprofit organization assisting individuals who wish to enter the legal profession by pushing for transparency, affordability and fairness in the field. You'll find meaningful information about the legal profession, law schools and state bar associations on the website, and prospective law students can use it to uncover information about specific schools, the legal job market and reforms. LST provides data and research tools and other law-related resources.

Top-Law-Schools.com
Free resources that help evaluate and compare law schools across the country. The site also provides a list of law-school-related forums.

U.S. Department of Education
Find details about the sources of funding for graduate students over a 16-year period in the report "Trends in Graduate Student Financing (1995-96 to 2011-12).

U.S. Department of Justice
The Attorney Student Loan Repayment Program (ASLRP) provides funds directly to a law graduate's student loan holder. The graduate commits to a three-year service obligation and must repay funds if he or she does not complete the obligation. Find additional information at the Dept. of Justice's ASLRP Q&A page.

Equal Justice Works
Refer to this source for relevant debt management resources.

Law School Numbers
Law School Numbers is a publicly accessible database of user-supplied law school application information with the intent of helping applicants judge their chances in the next law school admissions cycle.