Law school graduates have a lot to worry about these days. The job market is tight, many facets of legal work are being outsourced, competition in the professional field is high, and the economy is in the doldrums. Such are the facts of modern life for many professionals, but the sheer amount of debt that law school graduates are accumulating is truly worrisome. When it comes to higher education, the cost of getting a legal degree has become exorbitant.
The range of debt accumulated in law school ranges from just under $70,000 to more than $100,000, depending on the school. Tuition rates at both public and private universities have been on the increase in the last three decades, an unfortunate that is bound to continue. The high cost of getting a law degree guarantees that most students will leave school with heavy debt burdens to carry.
Upon graduating from law school, budding legal practitioners set their sights on three important aspects of their careers: obtaining the coveted bar membership, getting a good job and to begin reducing their debt as soon as they can. While all three aspects are equally important, debt reduction is often set aside or even neglected. Reducing debt law school debt is not a cut-and-dry affair, but it can be very rewarding. Here are five ways it can be done:
1 – State Loan Repayment Assistance Program (LRAP)
State bar associations or professional legal associations in several states provide these programs, which are implemented by the legislatures. According to the American Bar Association, there are currently 24 LRAPs in several states, although some states are no longer accepting applications. Each program works in a different fashion. The Maryland state LRAP, for example, offers assistance to attorneys who choose to work in the public sector and who earn no more than $60,000 a year, or $130,000 if they are married.
2 – School-level LRAPs
More than a hundred law schools across the United States offer their own LRAP versions. Students are highly advised to inquire about the availability of these programs before they get into debt, or while looking at potential law schools to attend. The University of Chicago, for example, offers an LRAP that requires the applicant to work full time for a period of nine months in a public service position or a judicial clerkship.
3 – Public Service and the College Cost Reduction and Access Act (CCRAA)
In 2009, the much-needed CCRAA went into effect. This federal legislation is a program designed to bring relief to hundreds of thousands of college graduates manage their student loan debt. Teachers and other professionals, including attorneys, who work for non-profit organizations or government agencies, may qualify for loan forgiveness under the CCRAA. The program calls for ten years of public or non-profit service while making payments in order to earn the full loan forgiveness. Other applicants who work in the private sector may also benefit from income-based repayment programs.
4 – Making Extra Payments
Reducing the amount of debt does not always imply an obligation to work in the public sector or in a non-profit institution. Lawyers working in the private sector are generally paid better than their counterparts in public service, and it is thus incumbent upon them to make good use of their salaries by adding just a few dollars more for each monthly student loan payment. Doing so with regularity will significantly reduce overall debt.
5 – Loan Consolidation and Deferment
Consolidating loans are also a way to make debt more manageable, but a loan consolidation will have a better effect when combined with the income-based program offered by CCRAA. Loan deferments are generally not recommended unless there are absolutely no other options due to hardship or lack of work. Professionals who are working part-time are better off applying for CCRAA, due to the forbearance clause of student loans that can end up creating more debt.
Law school is a worthwhile endeavor but it should be entered into with much thought and consideration to the costs it may bring. By utilizing these 5 debt reducing strategies, you can be several steps closer to achieving your dream.
Sheila Barnett writes on personal finance and budgeting for financialcalculator.org, a site with helpful tools and financial calculators for investments, loans, net worth and even a free retirement calculator.