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Choice and Flexibility:
LOAN REPAYMENT OPTIONS
Your income after law school is an important factor
in determining what constitutes manageable
payments on your education loans. Although it may
be difficult to predict what kind of job you will get
(or want) after law school, or exactly what kind of
salary you will receive, it is important that you make
some assessment of your goals for the purpose of
sound debt management. The money you borrow
will be paid back from your future earnings. This
could have a significant impact on your lifestyle if
you do not understand your payment options and
plan for repayment strategically after you graduate.
In addition to assessing expected income, you
must also create a realistic picture of how much
you can afford to pay back on a monthly basis while
maintaining the lifestyle that you desire.
You may have to adjust your thinking about how
quickly you can pay your loans back, how much
money you can afford to borrow, or how
extravagantly you expect to live in the years
following your graduation from law school.
Your education loan debt represents a serious financial
commitment that must be repaid. A default on any
loan engenders serious consequences, including
possible legal action against you by the lender
or the government, or both.
Federal loans offer a variety of flexible payment
options including fixed, graduated, extended, and
income-driven repayment plans that lower monthly
payment amounts but increase the number of years
of repayment. The Federal Direct Consolidation Loan
allows students to refinance any of their existing
eligible federal student loans on an extended
repayment schedule, lasting up to 30 years.
Be strategic when repaying your federal student
loans. Understand the repayment options that are
available and take advantage of the flexibility that is
available when deciding how to manage repayment.
Learn more about repayment and check out the “Loan
Simulator” that is available from the U.S. Department
of Education at studentaid.gov.
Strategies for Graduates Seeking Public
Service Careers
Students who seek to work in public service face
special challenges in financing their legal education
because salaries for such jobs are often lower
relative to comparable work in the private sector.
Students graduating from law school with the
average amount of indebtedness may find that the
average entry level public sector or public interest
salary will not provide the resources needed to
repay their law school loans while at the same time
affording their basic living expenses.
Students can employ a number of strategies to make
it easier (or possible) to pursue a career in government
or public interest law. First, students can borrow less
during law school (attend a lower-tuition institution;
follow some of the debt management strategies
mentioned here). Students may also take advantage
of programs developed at some law schools to relieve
the debt burden for those interested in public service
careers, including fellowships, scholarships, and
loan repayment assistance programs (LRAPs). LRAPs
provide financial assistance to law school graduates
working in the public interest sector, government,
or other lower-paying legal fields. In most cases, this
aid is given to graduates in the form of a forgivable
loan to help them repay their educational debt.
Upon completion of the required service obligation,
schools will forgive or cancel these loans for program
participants. The number of law schools sponsoring
LRAPs is limited. Most schools are unable to
provide assistance to all applicants. LRAPs are also
administered by state bar foundations, public interest
legal employers, and federal and state governments
to assist law graduates in pursuing and remaining in
public interest jobs.