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How should I Choose a Student Loan?

Carefully.
Tags: student loans, paying for school
Apr 2, 2023

Table of Contents

  1. Overview
  2. Private vs Public Loans
  3. Which is right for you?
  4. Steps to choosing a law school loan

Once you have determined that you want/have to borrow to go to law school, there are a few things to consider. This process can feel overwhelming because of all of the lending specific terms that you may not have heard before. If you want to get a quick primer on (most) of the terms you will need to know, you can check out our Definition Page.  

There are a few decisions that you need to make when choosing a student loan for law school. For this article, we will break down the decisions that add up to a loan, as well as some options for finding one for you.

Aspects of a loan that you should think about:

  1. Private vs. Public
  2. Fixed vs. Variable Rate
  3. Terms Length 
  4. Cost (Fees & Interest Rate)

Private vs Public Loan for Law School

This decision will have more lasting effects than the other options. If you choose to take out private loans, you will not have access to federal loan programs, like PSLF, or the interest and payment relief that the federal government gave during COVID.

So how should you choose between private and public loans?

Public loans have 10-year terms and are fixed rate loans, and the rates are the same for everyone who qualifies. There are two types of public loans that are relevant to you as a law school student. 

First, Direct Unsubsidized loans. These are easy to qualify for and do not require a credit check. Unfortunately, they have a borrowing cap (in 2022 it is $20,500), so you might not be able to pay for all of your costs with these alone. The rates on these loans are low, but you do also have to pay an origination fee, which you should consider when comparing options. 

Next are Direct PLUS Loans. The interest rate and origination fees are higher on these loans than Direct Unsubsidized loans, but the rates are still pretty low. Qualifying for these loans is not guaranteed. 

Are public or private loans right for you?

Federal loans will (almost definitely) have better benefits than private loans. PSLF, IBR, REPAYE, potential loan forgiveness, to name a few. The one benefit private loans do have is that they will be discharged in bankruptcy, while federal loans will not (at least as of May 2022). 

Since federal loans have more benefits than private, we recommend following a decision tree to pick your loans. Below is one example, but not the only option. The important thing is to consider the short and long term costs of your loan, as well as the benefits (or potential benefits) the loan provides.

Steps to choosing a law school loan:

Step 1) Decide if you are going to have a cosigner for your loans. Some loans require a cosigner, and most will give you a better rate if you have one, especially if they have better credit than you.  

Step 2) Determine the cost of Federal Loans and if you will qualify for Grad PLUS. ‘Cost’ includes the interest rate and origination fees. Keep in mind that you will probably have to borrow two types of federal loans (Unsubsidized and Grad PLUS), so you might want to borrow both public and private loans to cover the total cost of attendance. You can find this year’s federal rates here: https://studentaid.gov/understand-aid/types/loans/interest-rates

Step 3) Determine the cost of Private Loan options. You should check as many lenders as possible to find the best option! If you are shopping around, consider looking for lenders that offer rate estimates with a soft credit check so you can shop with confidence knowing that your credit score won’t be affected. 

Step 4) If the cost of the public loans is lower than the cost of private loans, you should strongly consider stopping here and borrowing Federal loans. You will spend less and get better benefits. 

Step 5) If private loans are cheaper for you, then identify the public loan benefits that you might take advantage of. 

Step 6) Determine the dollar value that you think the benefits provide i.e. if you are 100% sure that you are going to go into big law, then you almost definitely won’t take advantage of IBR, so the benefits aren’t worth much, but if you are going to go into public interest and you won’t be making much, then you will probably get a lot of value from delaying full payments on your loans.

Step 7) Compare the savings you are getting from private loans to the potential value of federal benefits. Choose the loan that is best for you. 

Related Articles

  1. What is an Origination Fee? Plus Other Terms you Should Know when Borrowing for Law School.
  2. Oddly specific questions you might be asking when borrowing for law school.
  3. What Law School should I go to?
Windsor MIT '22, Harvard College Advisor

I am the half of LSD that didn't take the LSAT, or go to law school (Sorry about that). But I did go to MIT business school while surrounded by law students and lawyers, so I am somewhat qualified to talk about the intricacies of law school apps and finances.

Windsor (the dog) didn't write this but he WAS a Resident Tutor and career advisor at Harvard College with me, so deserves some credit.

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just some stupid accounting jargon
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my boss told me the pcaob is the enemy and if they are in the office we need to be quiet in the hallways, lmao, so there is that i guess
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lololol
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hey what study mats. have you used and whats your study schedule/routine like? also do you think its beneficial if i hire a private tutor?
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Tutors usually are a waste of money unless you have specific things you need to work on
KnowledgeableRitzyWasp
19:39
7sage is a really good option for studying
[] ararara
20:01
Do not think tutors are a waste of money or that all tutoring experiences are equal but ultimately it’s going to come down to you and how much work you put in!
[] ararara
20:01
Get fee waivers then lsat demon is free for 3 months and 7 sage costs a dollar a month!
Wow Ara out here promoting a demon
Unholy activities
I had a tutor, I worked with for some months.. and he really helped me understand the LSAT... It helped me more than self studying
MightyUnableSphinx
20:38
@Sunshine0303: I use 7sage. I do 1 PT every other day and mostly drill only LG. After I get to -1 or -2 LG super consistently will probably pivot to RC since my LR has always been really great. That's been working great for me.
MightyUnableSphinx
20:38
But yeah I do
MightyUnableSphinx
20:39
PT Drilling, Drilling, PT Drilling, PT , etc etc
MightyUnableSphinx
20:46
Also does anyone think there is a reason to use LSAT Demon over 7sage? Seems just like a more expensive option and not sure if I am missing some differentiator
21:05
I would avoid LSAT demon. They have a documented history of shady practices - see: https://www.reddit.com/r/LSAT/comments/1bhr6hi/why_a_certain_company_is_restricted_here/
KnowledgeableRitzyWasp
21:07
i mean if you are single and want an lsat demon e-bf it might be a good option
21:07
Lmao
[] ararara
21:09
@Mountaineer99: yo ❤️ and everyone else what’s up fools 🤠 hope you’re having a great Saturday!
[] ararara
21:10
I think it’s important for people to find what works for them! Not that prep is better or worse than other prep! Haven’t clicked that link but I’ve seen 7 sage, demon, blueprint all be shady fs!
[] ararara
21:11
(Also what sets demon/7 sage apart fee waiver program makes them free!)
I think 7sage is only good when it comes to it's drilling and analytics, it's curriculum and preptest platform aren't very good and I prefer the official LSAC resources for those. I don't really see why shady practices should stop you from choosing a study material though, sounds chronically online to me
lsat demon may well be good, though I haven't tried it
7sage got me from 162 diagnostic to 177 official in less than 2 months. I recommend it
did cls send a whole bunch of decisions today??
Ijustwannagetinman
21:47
@MangoMuncher99: no i think they’re from the Friday wave which seems way bigger than we realized
Wow this site has gottens ooo much nicer than it was a few years ago
I'm a 20-21 cycle who is a 3L now. Applying to LLM programs, anyone know anything about how those decisions work lol?
[] ararara
22:20
@SouthernYank97: I kind of do but also just want to say this comment means so much! I’m a reapplicant who remembers how it was! I was too scared to even talk here at first and now we’ve been chugging love potion for days so thanks Yank!
@legalknievel did you get rejected today or on Friday?
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