Simple Guide to Law School Loans

Types of Loans

There are several types of loans that law school students can apply for. Each loan offers its own benefits and downfalls. The loan that most often used is called the Federal Direct Stafford Loan. The loan has a set amount of $20,500, broken into both subsidized and unsubsidized parts.

Up to $8,500 of the loan is subsidized, meaning the student will pay no interest until six months after completing school. The loan is based on FAFSA, the program that the government uses to determine financial need.

Another type of loan that is used often by law students is the Federal Perkins Loan. This loan is given to institutions each year and divided up as the institution sees fit. The loans come in varying amounts and are based on financial need. They are generally small amounts, never surpassing $6,000 per student. These types of loans are also deferred if a student becomes temporarily disabled and forgiven should the student because permanently disabled or deceased.

Another type of loan that is used often by law students is called the Federal Direct GradPLUS Loan. This supplementary loan is based on a student’s budget minus any other aid he has already received. Most law students use this loan to pay for anything that was not already covered by grants or other loans.

The last type of loan that is used is called a Private Loan. Private loans are offered by banks and used to supplement Federal loans. The loans are usually only used if no other options are available to the student and are used to replace GradPLUS loans in some cases.

The Pros & Cons

There are several pros and cons to both Federal loans and private loans. GradPLUS loans carry the benefit of allowing for deferment in the case of health issues or other hardships, which makes them easier to handle. GradPLUS loans can also be deferred if a student decides to get a PhD. These loans are also all under one lender, making them easier to manage.

There are also benefits to private loans. They can be much lower in initial costs and interest rates over the term of a student’s loan. Private loans are good options for certain types of students. Students that wish to use private loans must be willing to forego deferment. They must also be sure to attend a law school that has its own LRAP program for both private and Federal loans.

LRAP programs are used when a student wants to use an IBR (Income Based Repayment) program to forgive their loans. A student that chooses a private loan should have financial assets or can accept some risks. Students that want private loans should have good credit or a co-signer with good credit.

How to Know What to Borrow

One important thing that law students should always remember is to not take out more than they can pay back. There are a few methods that can be used, including looking carefully at the school that is chosen. Do not go to a high dollar school for a low dollar career and always pay for school with grants and scholarships whenever possible.

Law school is an important decision that may seem overwhelming, but being armed with the proper knowledge about student loans will make it easier to make the right decisions for your education and future.

About the Author: Brett Martin is a law researcher and published blog author – he most recently finished editing a piece for: