Law school keeps getting more expensive. If you’ve decided to become a lawyer, you have a responsibility to yourself to minimize expenses and make smart financial decisions.
Gone are the days when you can go to law school, take out the maximum amount of loans and assume you’ll be okay “because everyone else did the same thing.” Those lawyers are drowning in debt and by virtue of reading this article, I already know you don’t want to be one of those lawyers.
The commitment to professional studies is not without its out-of-the-classroom challenges. Perhaps one of the most glaring is figuring out a way to keep up with school related expenses while keeping debt at a minimum.
Back in 2008, the average law student graduated from law school with a student loan balance of approximately $100,000 – $200,000. A decade since, the cost of attending law school has more than doubled making it even more of a challenge to complete law school without walking away with an extra mortgage payment.
It sounds bleak, but the solution is to develop an action plan for how you’ll be paying for law school, whether it’s through financial gifts, assistance from family, grants from institutions, scholarships, loans or working a part time or full time job. In reality, it’s probably a a combination of all of the above.
How much does law school cost?
Before you can understand how you’ll pay for law school, you need to understand how much it costs.
Every school has a cost of attendance calculation that includes both the annual tuition and the school’s estimate of living expenses.
The cost of attendance is the amount you’ll pay for your first year of law school only.
Got that? It’s only the first year. Tuition and living expenses are going to go up during your second and third year, so you can’t just multiply the cost of attendance by three to get a total cost for law school. I’d build an increase of at least 5% in each of your second and third-year expenses.
If you plan on taking out loans to finance your education, understand that those loans will accrue interest while you’re in school. Assuming they are government loans, you’ll be accruing 5-7% in interest each year.
Notice that I didn’t say that you’ll be paying that interest, since the government gives you a free pass until you start working but make no mistake about it, you’ll eventually have to pay back the interest too.
As an example, if you borrow $50,000 during your first year, you’ll owe $61,000 by the time you graduate. If that surprises you, I see it all the time. People borrow $150,000 and then wonder how they end up owing $170,000 at graduation. The answer is that interest gets started working against you very quickly.
Get your mindset right
Before and during law school it’s very easy to think of law school loans as Monopoly Money™. You wouldn’t be the first law student to think there’s not much difference between $140,000 of debt and $190,000 of debt (especially if you’re expecting your first job to be on the Cravath scale). Once it crosses six figures, student loans can feel nebulous.
Your number one goal is to fight this feeling. Some days you’ll win. Some days you’ll lose. Roll with the punches. Be easy on yourself. Just don’t give up the fight.
I find it useful to divide up your expense between two big buckets: (1) law school tuition and (2) living expenses.
Law school tuition is a fixed behemoth. Other than choosing the cheapest law school you can find, once you’re enrolled you can’t influence the cost of tuition.
Living expenses are entirely within your control. Law school is a good time to practice setting yourself up with a budget and spending within your means. Since you won’t have a salary, it’s a good time to practice choosing your income.
Overall, anything you can do to make your law school debt a little lower is something worth pursuing. Here’s a few ideas for how you can raise some cash to help cover law school expenses.
How to raise money for law school
It’s clear that the average law student is more than likely to accrue student loan debt. I’m not telling you that you can make it out of law school debt free. However, by being creative and informed you can come up with strategies that will help reduce your overall debt burden.
1. Ask family for financial help
This can be a touchy subject as your family may or may not be in a position to help. Additionally, you’re probably going to law school with the goal of becoming a functioning independent adult and you may not want to burden your family with requests for money.
But you’re probably not asking your family to pay for your entire legal education either. You’re just asking them for help if they’re able to do so.
Depending on your situation, this may involve asking a family member for a significant five figure contribution.
Or it could be something as simple as setting up a 529 plan for yourself and then kindly requesting that all birthday and holiday gifts for the next three years be deposited in cash into that account.
Either option works.
If you don’t want to just take money form your family, explore the possibility of borrowing money from them. You can even offer to pay them a low interest rate, lower than you could get from the federal government but more than they would get from a standard savings account. If you can cut the interest all the way down to zero, you’ll still save tens of thousands of dollars over the course of paying off your loan.
I think that’s worth saying again. You don’t need your family to give you the money to pay for law school. If they’re able to loan it to you, that by itself could save you tens of thousands of dollars.
2. Work a part time or a full time job
Prior to 2014, the ABA encouraged law students to spend no more than 20 hours a week working. Then, they realized that law students were drowning in debt and they dropped the requirement. Now law students are free to work as much as they want.
It’s still probably not a great idea to take on a lot of responsibilities during your first year of law school. Grades from your 1L year have a disproportionate impact on your career trajectory, so I’d probably spend my entire first year focused on academics.
However, from the moment you finish your first year of law school you should be considering how you can integrate some type of paid work in the remaining two years of law school (including the summers).
Depending on your situation, a full-time job may work (not easy but I’ve seen it done). More likely you’ll be looking for something to do part-time. While waiting tables or bartending might not seem like it’s making a big dent in your legal debt, if you can use that money to subsidize your living expenses you’ll be doing more good than you think in reducing your overall debt burden.
3. Scholarships and grants
Earning a scholarship or grant to go to law school is a big deal. This is probably not a new idea to you.
For most law students, the competing factors here are whether you should go to a higher-ranked school (and pay full price) or go to a lower ranked school (and receive financial assistance).
It’s beyond the scope of this particular article to answer that question, but I respect the fact that this is a tough decision to make. In hindsight, it’s easy to congratulate the Biglaw lawyer from Brooklyn Law School that has no debt but when you’re making the decisions yourself you can never know what will happen if you go with the less expensive school.
To increase your odds of getting financial aid, apply to as many schools as possible and try to leverage acceptance at the various schools into more money.
Even if you never plan on attending a particular school, if you apply and get a scholarship, it’s very easy to send that scholarship over to your target school and to ask them if they are able to match it.
4. Consider a public law school
The main difference between a public and private law school is in the funding. Public schools receive funding from the government while private law schools receive funding from private donors. Because public law schools receive their funding from the government, their overall tuition fees are often much lower making it more affordable to attend.
Another huge advantage of a public law school is that they may admit more students compared to private schools. This increases the chances of you being able to leverage financial aid from a public school into financial aid from a private school.
Cast a wide net and see what offers you receive from the various schools.
5. Take out student loans
It is very likely that you will have to take out a student loan in order to cover the rest of your law school expenses that cannot be covered by all the other efforts to raise money.
If you have to borrow, research the best options. It may not be the obvious federal loans. Student loan refinancing companies like Credible and others are jumping into the private lending market and may have offers worth considering. Given then you’re a law student, put those research skills to use and explore what is available in the marketplace.
Whatever you do, try to limit the amount of borrowing as much as you can. Occasionally, law students get into a mindset of “Monopoly Money” when it comes to student loans since it’s hard to wrap your mind around such staggering amounts of debts. Make sure you understand that you’ll need to continually bring yourself down to earth. Your Biglaw salary isn’t guaranteed and your starting date could be delayed. The easiest way to keep yourself on track is to plan out for what you’ll need (and to borrow that amount rather than the full cost of attendance). It’s easier said than done. Just remember to roll with the punches.
Joshua Holt A practicing private equity M&A lawyer and the creator of Biglaw Investor, Josh couldn’t find a place where lawyers were talking about money, so he created it himself. He is always negotiating better student loan refinancing bonuses for readers of the site or finding honest companies that provide student loan advice for a fair price.