Tips and Tricks for Tackling Law School Debt
1. Use your grace period wisely
Usually you have six months from the time you graduate from law school to the time you are required to start repaying your loans. For a law school graduate, this time is usually spent studying for the bar exam. In addition to studying for the bar exam, you can and should use the grace period to understand your loans and their repayment options. Be aware of how much you owe, and put yourself on a budget. During your grace period, start setting aside the amount you are required to pay. This will get you in the habit of not having that money readily available, and will get you a small head start on repayment.If your federal student loan payments are high compared to your income, you may want to repay your loans under an income-driven repayment plan. Federal Student Aid offers four income-driven repayment plans: (1) Revised Pay As You Earn Repayment Plan; (2) Pay As You Earn Repayment Plan; (3) Income-Based Repayment Plan; and, (4) Income Contingent Repayment Plan. If you are eligible, enroll in an income-driven repayment plan. Your repayment amount will be based upon your income from the previous tax year—which, if you have no income, can really help you get on your feet until you are generating income.
2. Stay on top of your loans and communicate with your lender
Although student loans can be stressful, do not ignore or neglect them. Not paying your student loans can have serious consequences that can lead to delinquency and default and ruin your credit. Communicate with your lender if you are having trouble making payments. If you are having trouble making payments because of unemployment, health problems, or other financial hardships, there are legitimate ways to temporarily postpone your federal loan payments, such as deferments and forbearance.During deferment, you do not need to make payments. You may be eligible for a deferment of your loans under certain circumstances including, but not limited to, enrollment in college, enrollment in active duty military, or economic hardship.
If you can’t make your scheduled loan payments, but don’t qualify for a deferment, your loan servicer may be able to grant you a forbearance. With forbearance, you may be able to stop making payments or reduce your monthly payment for up to twelve months. Interest will continue to accrue on your subsidized and unsubsidized loans, but it will buy you time.
3. Be smart about repayment
If you are considering paying off any of your loans ahead of schedule, start with the loans with the highest interest rate. This will almost always mean paying off your private student loans first, then your federal loans. Also, consider consolidating your loans. Consolidating allows you to put all your loans together into just one monthly payment. This can be particularly beneficial if you have private student loans with higher interest rates. If you are going to consolidate your loans, do so before your loans go into repayment. If you plan to seek loan forgiveness (as discussed below), consolidating your loans will restart the qualifying payments, so it’s best to do so before you have started repaying.Another cost-saving measure for repaying student loans is to enroll in an automatic payment program with your lender. Some student loan lenders offer a discount on your interest rate if you agree to set up automatic withdrawal. Also, if you are able, pay more than what you owe each month, as this will lower the amount of interest you pay over the life of the loan.
4. Loan forgiveness
There are various programs that will forgive some or all of your federal student loans if you work in certain fields or for certain types of employers. Public Service Loan Forgiveness is a federal program that forgives any student debt remaining after ten years or 120 consecutive qualifying payments for people in government, nonprofit, and other public service jobs. In some extreme circumstances, you may be able to apply for forgiveness, cancelation, or discharge of your student loan. You could be eligible if your school closed before you finished your degree, you become totally and permanently disabled, or paying the debt will lead to bankruptcy (which is rare).If you are having difficulty repaying your law school loans, find an experienced attorney to help you with your options by quickly posting a short summary of your legal needs on www.legalserviceslink.com and letting the perfect attorney come to you!
Get More Clients With Legal Services Link
Create your FREE profile and get listed in our attorney directory to start receiving email notifications of relevant legal projects.
Posted - 05/31/2016
Connect with us:
Learn about us:
