How should I Choose a Student Loan?

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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[] WhisperingWillingBoar
@SquidwardsHouse: Thanks! With UPenn now being 4 in the rankings, I personally think it will drive up their applicants and scores.
Could lose applicants too
[] WhisperingWillingBoar
I mean yeah there is always the possibility of either happening, but I don't think the number of high stat applicants will decline because they went up in the rankings.
Why can’t you take it again
@WhisperingWillingBoar: Penn won’t be 4 this year
Yea who knows tbh with the new rankings methodology
Also I know several OOS reverse splitters that go to uva fwiw
Bro Keygan Church is peak and y'all ain't ready for that
if you want some HYPE music that's where it's at
Asgretalos and Tenebre Rosso Sangue are bangers
[] WhisperingWillingBoar
@hilltern: Your guess is as good as mine, but I've always been shocked that they weren't t6. I don't see them falling lower than 6 for the foreseeable future. Penn, to me, does better than Columbia and NYU in placements. So I think it stays within the t6 and Columbia and NYU join penn back into the t6. All of them are great schools, obviously, we are nitpicking very minor details when you get to schools ranked that high and that highly regarded.
Penn Columbia and nyu are the same but nyu does pi better Columbia does biglaw better and Penn is cheaper
U need higher grades at Penn for the v10
Not much of a difference until you hit Chicago at which point HYSC are a league of their own
[] WhisperingWillingBoar
@ConservativeFlagBearer: I agree with your sentiment that HYSC are in a league of their own, but using v10 to distinguish Columbia from penn is odd. While we are pre-law/law school applicants and may care about those, no one in the legal industry cares at all about the v5/10/15/20/30/50 distinctions. They all pay the same (most of them at least) and many of the ones that actually pay more are ranked lower because they are smaller. NYU is the best school for public interest, maybe outside of yale.
What does v5/10 etc mean?
I said they’re basically the same, but this is something that differentiates them. V10 is desirable to some due to exit ops. And i think HLS has much better PI ops than NYU.
Vault rankings, basically rankings for BL firms
Anyone willing to give opinion on a 166 3.56 Puerto Rican, currently working as a biglaw paralegal? :)
For GW and Georgetown
@FurtiveBonobo: youre below both 25ths for georgetown and both medians for GW so in either case i think it'll be tough...i think even with URM status georgetown will be a reach but GW could be a lock with strong statements/applying earlier
do you plan on retaking the lsat?
Yeah, in October
do your best and you'll kill it!
Does anyone know much about the University of Minnesota? I have a 165 LSAT score but a 3.09 CAS GPA. I have a valid reason for the GPA and I will obviously explain that. I was planning on applying Early Decision, but I’m not sure if I should wait until after the October LSAT to try for a better score or if it would be better to get it in earlier.
Any thoughts on a 168 3.7? Thinking of applying to Georgetown early decision. Korean American dual citizen who is currently a senior at Georgetown
Retake lsat and break 171 and yeah you got a sho
Unless you take a bunch of classes and get A+’s and somehow break median
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