The legal profession has been around a long time, with the first paid lawyers appearing in ancient Rome two thousand years ago.
Today’s lawyers, however, face a challenge their Roman predecessors did not — inordinately high student loan debt.
In fact, Earnest estimates the average law student leaves school $139,900 in debt.
That isn’t surprising considering the cost of tuition for one year at a private law school averaged $46,164 in 2017, according to U.S. News. Multiply that by three years of schooling, and you’re looking at a total tuition bill of $138,492.
Justin Lovely, now a lawyer at his own firm, encountered this financial hurdle on the way to getting his law degree. Read on to learn how Justin is tackling $120,000 in student loan debt, one monthly payment at a time.
Law school came with a high price tag
After graduating from the University of Tennessee, Justin went on to attend the Appalachian School of Law. Already $20,000 in debt from his undergraduate education, he took on an additional $100,000 in loans to pay for law school.
But Justin says he wasn’t concerned about the hefty debt at the time. “You’re in school and they tell you what the cost is, and you just do it,” he says. “Tuition, cost of books — and we haven’t even gotten to the cost of living, food, apartment, utilities, health insurance, gas, etc. You just do it and pray it works out!”
Justin took out a mix of private and federal loans with interest rates ranging from 4.00% to 8.50%. He also took out a private loan to finance the bar exam. Bar loans help students pay for the bar exam, which can cost $800 or more, according to data from the National Conference of Bar Examiners. You can also use them to cover living costs if you’re taking time off to study for the test.
In retrospect, Justin says that taking out a bar loan was a mistake. “If I could do it over … I would have never taken a bar loan. The interest rate [14.00%] is ridiculous.”
Job opportunities were scarce after graduation
Most student loans come with a six-month grace period before repayment kicks in. But six months isn’t always long enough to find a decent job, even among law school grads.
The American Bar Association reported that only 73 percent of graduates obtained full-time employment within 10 months of graduation. That means almost three out of 10 grads were still searching for work almost a year after law school.
Justin struggled with a tough job market after leaving school, which made paying off his loans impossible. “I deferred payments the first year, because the job market was awful,” says Justin. “The first year was about keeping the lights on, the phones ringing, and me fed.”
He also used this time to open his own practice, which eventually grew into the successful business he owns today. Once he got on his feet, Justin realized he had to take control of his student debt.
“After that year, I realized how the debt was compounding,” says Justin. “I needed to take it seriously or I would never see the light at the end of the debt tunnel.”
Justin took his loans out of deferment and got proactive about conquering his student debt.
He uses the debt snowball method to his advantage
Staring down more than $100,000 of debt, it was tough to know where to start. Justin knew he needed a game plan to deal with his student loans. He decided to give the debt snowball method a try.
“I used the snowball method to pay down these loans,” says Justin. “I became aggressive in paying back my loans, making several smaller payments throughout the month on top of my regular payment.”
The debt snowball method has you tackle your loans with the smallest balances first. You still make the required payments on all your loans, but you throw any extra money toward the smallest loans.
That way, you can completely pay off one debt before moving onto the next. Since you’re starting with the smallest balance first, you’ll get a quick win, which will motivate you to keep going. “The loans start to melt away,” says Justin.
Plus, making extra payments helps you get out of debt ahead of schedule. The faster you pay down your debt, the less you’ll spend on interest overall.
“I recognized that if I didn’t get on top of my student loan debt, I would be swimming in it forever,” says Justin. “Any extra income has been directed to my student loan debt, no matter how big or small.”
Justin paid off high-interest debt with a low-interest loan
Since Justin had six-figure debt, he also sought for ways to lower his interest rates. He decided to replace some of his student loans with a bank loan at a lower interest rate.
He qualified for a loan at a 1.99% rate and used it to pay off his student loans that had an interest rate of 6.80%. Although he still owed money to the bank, he was able to say goodbye to some of his student loan servicers.
Paying off a loan with another loan can help if you reduce your interest rate, as Justin did. But be sure you’re not spending more money in your effort to get out of debt fast.
If your new lender charges an origination fee, for example, you must factor that into your costs. Plus, you’ll need to keep paying all of your loan bills until you’re confident an account has been closed.
For many borrowers, a more straightforward way to lower your interest rate is through student loan refinancing. When you refinance, you transfer one or more loans into a new one with a bank, credit union, or online lender.
Depending on your credit score and income, you could qualify for lower interest rates. Plus, you can choose new terms, whether that means shortening your repayment period or adding a few years to give yourself some breathing room.
According to online lender CommonBond, attorneys were the second-most common occupation to qualify for refinancing in 2016. Because lawyers tend to have high incomes, they’re often strong candidates for student loan refinancing.
Whatever approach you choose, lowering your interest rate is a surefire way to save money on your debt.
Justin will soon be earning interest instead of paying it
Paying off a six-figure debt isn’t going to happen overnight, but it’s possible to pay it back if you stick to it, like Justin did with the debt snowball strategy.
“I have tried to make a strong effort to get my student loans paid off as fast as possible,” says Justin. “If I stay on track I should be paid off by the end of next year.”
Although making extra payments isn’t easy, Justin is eager for his money to start working for him. “I have realized that I will be earning a lot more take-home pay once these payments are off my back,” says Justin.
Once student loan payments stop eating up his income, he’ll be able to redirect his money into investments. That way, his money will start working for him, instead of going to student loan debt and all the interest that comes with it.
Explore your options for paying off law school debt
If you’re a lawyer dealing with student loan debt, research your options for paying it off ahead of schedule.
Learn about the debt snowball and debt avalanche methods to find the best approach for you. Depending on where you work, you might also qualify for federal student loan forgiveness or state-funded student loan repayment assistance.
Whether you come up with a foolproof strategy or refinance for better terms, you can take steps toward a debt-free life.
Interested in refinancing student loans?Here are the top 8 lenders of 2020!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.20% APR (with Auto Pay) to 6.99% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 6.89% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of December 13, 2019, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 12/13/2019. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at email@example.com, or call 888-601-2801 for more information on our student loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for SoFi.
3 Important Disclosures for Figure.
Figure’s Student Refinance Loan is a private loan. If you refinance federal loans, you forfeit certain flexible repayment options associated with those loans. If you expect to incur financial hardship that would impact your ability to repay, you should consider federal consolidation alternatives.
4 Important Disclosures for College Ave.
College Ave Disclosures
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
1College Ave Refi Education loans are not currently available to residents of Maine.
2All rates shown include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.
3$5,000 is the minimum requirement to refinance. The maximum loan amount is $300,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees.
4This informational repayment example uses typical loan terms for a refi borrower with a Full Principal & Interest Repayment and a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
Information advertised valid as of 1/1/2020. Variable interest rates may increase after consummation.
5 Important Disclosures for Laurel Road.
Laurel Road Disclosures
Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. Mortgage lending is not offered in Puerto Rico. All loans are provided by KeyBank National Association.
ANNUAL PERCENTAGE RATE (“APR”)
There are no origination fees or prepayment penalties associated with the loan. Lender may assess a late fee if any part of a payment is not received within 15 days of the payment due date. Any late fee assessed shall not exceed 5% of the late payment or $28, whichever is less. A borrower may be charged $20 for any payment (including a check or an electronic payment) that is returned unpaid due to non-sufficient funds (NSF) or a closed account.
For bachelor’s degrees and higher, up to 100% of outstanding private and federal student loans (minimum $5,000) are eligible for refinancing. If you are refinancing greater than $300,000 in student loan debt, Lender may refinance the loans into 2 or more new loans.
ELIGIBILITY & ELIGIBLE LOANS
Borrower, and Co-signer if applicable, must be a U.S. Citizen or Permanent Resident with a valid I-551 card (which must show a minimum of 10 years between “Resident Since” date and “Card Expires” date or has no expiration date); state that they are of at least borrowing age in the state of residence at the time of application; and meet Lender underwriting criteria (including, for example, employment, debt-to-income, disposable income, and credit history requirements).
Graduates may refinance any unsubsidized or subsidized Federal or private student loan that was used exclusively for qualified higher education expenses (as defined in 26 USC Section 221) at an accredited U.S. undergraduate or graduate school. Any federal loans refinanced with Lender are private loans and do not have the same repayment options that federal loan program offers such as Income Based Repayment or Income Contingent Repayment.
All loans must be in grace or repayment status and cannot be in default. Borrower must have graduated or be enrolled in good standing in the final term preceding graduation from an accredited Title IV U.S. school and must be employed, or have an eligible offer of employment. Parents looking to refinance loans taken out on behalf of a child should refer to https://www.laurelroad.com/refinance-student-loans/refinance-parent-plus-loans/ for applicable terms and conditions.
For Associates Degrees: Only associates degrees earned in one of the following are eligible for refinancing: Cardiovascular Technologist (CVT); Dental Hygiene; Diagnostic Medical Sonography; EMT/Paramedics; Nuclear Technician; Nursing; Occupational Therapy Assistant; Pharmacy Technician; Physical Therapy Assistant; Radiation Therapy; Radiologic/MRI Technologist; Respiratory Therapy; or Surgical Technologist. To refinance an Associates degree, a borrower must also either be currently enrolled and in the final term of an associate degree program at a Title IV eligible school with an offer of employment in the same field in which they will receive an eligible associate degree OR have graduated from a school that is Title IV eligible with an eligible associate and have been employed, for a minimum of 12 months, in the same field of study of the associate degree earned.
The interest rate you are offered will depend on your credit profile, income, and total debt payments as well as your choice of fixed or variable and choice of term. For applicants who are currently medical or dental residents, your rate offer may also vary depending on whether you have secured employment for after residency.
The repayment of any refinanced student loan will commence (1) immediately after disbursement by us, or (2) after any grace or in-school deferment period, existing prior to refinancing and/or consolidation with us, has expired.
POSTPONING OR REDUCING PAYMENTS
After loan disbursement, if a borrower documents a qualifying economic hardship, we may agree in our discretion to allow for full or partial forbearance of payments for one or more 3-month time periods (not to exceed 12 months in the aggregate during the term of your loan), provided that we receive acceptable documentation (including updating documentation) of the nature and expected duration of the borrower’s economic hardship.
We may agree under certain circumstances to allow a borrower to make $100/month payments for a period of time immediately after loan disbursement if the borrower is employed full-time as an intern, resident, or similar postgraduate trainee at the time of loan disbursement. These payments may not be enough to cover all of the interest that accrues on the loan. Unpaid accrued interest will be added to your loan and monthly payments of principal and interest will begin when the post-graduate training program ends.
We may agree under certain circumstances to allow postponement (deferral) of monthly payments of principal and interest for a period of time immediately following loan disbursement (not to exceed 6 months after the borrower’s graduation with an eligible degree), if the borrower is an eligible student in the borrower’s final term at the time of loan disbursement or graduated less than 6 months before loan disbursement, and has accepted an offer of (or has already begun) full-time employment.
If Lender agrees (in its sole discretion) to postpone or reduce any monthly payment(s) for a period of time, interest on the loan will continue to accrue for each day principal is owed. Although the borrower might not be required to make payments during such a period, the borrower may continue to make payments during such a period. Making payments, or paying some of the interest, will reduce the total amount that will be required to be paid over the life of the loan. Interest not paid during any period when Lender has agreed to postpone or reduce any monthly payment will be added to the principal balance through capitalization (compounding) at the end of such a period, one month before the borrower is required to resume making regular monthly payments.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of November 8, 2019 and is subject to change.
6 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers.
7 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 1.76% effective November 10, 2019.
8 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of 5 years and is reserved for applicants with FICO scores of at least 810.
As of 12/019/2019 student loan refinancing rates range from 1.90% to 8.59% Variable APR with AutoPay and 3.49% to 7.75% Fixed APR with AutoPay.
|1.99% – 6.89%1||Undergrad & Graduate|
|2.31% – 7.36%2||Undergrad & Graduate|
|2.06% – 6.81%3||Undergrad & Graduate|
|2.62% – 6.12%4||Undergrad & Graduate|
|2.29% – 6.65%5||Undergrad & Graduate|
|1.99% – 7.06%6||Undergrad & Graduate|
|1.81% – 6.29%7||Undergrad & Graduate|
|1.90% – 8.59%8||Undergrad & Graduate|