parent wondering - how DO you pay for law school?

Graduate School Law School
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<p>I know – you borrow the money, right? I guess I’m looking for info on how borrowing for law school works. If current law students, lawyers, and/or parents who’ve assisted their kids with law school costs could chime in here, I’d be grateful.</p>

<p>Where does the money come from? It looks as if much of it is provided by Federal Direct Stafford loans and Federal Direct GradPLUS loans - is that correct? Do the students apply through the law school itself? </p>

<p>How does the EFC work? My d is 24. She submitted her FAFSA, with our info, last month and the EFC was around $14K. Is the EFC for grad school figured in the same way as for undergrad, or do they use another formula? Is the same amount of parental contribution expected? I can’t tell if her EFC is so low because we still have another kid in college, for whom we pay $45K COA, or if it’s because less is expected from parents for students of that age.</p>

<p>When do law students receive finaid offers? We’ve done the FAFSA and NeedAccess but will have to update when we complete our taxes. Her top admit schools have generous need-based aid. Is it possible that she’d receive grants for the some of the amount in excess of the EFC, or will all aid likely be loans? Is it possible to borrow the EFC as well as the excess? </p>

<p>When is a parental co-sign necessary? It looks as if that’s for private lenders only. This is torturing my husband, who has never borrowed a dime in his life except for the mortgage and every other car. If any parents out there have co-signed for law school loans, have you bought term life or disability insurance for your child? Please pardon the awful question but I don’t know if my dh would cosign without something like that in place.</p>

<p>In other words, I’m totally ignorant and will appreciate any help. Many thanks!</p>

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<p>Financing law schools is different from financing undergrad. Most law schools assume that a student will be receiving financial assistance from their families until the student is somewhere between 26 and 30 years old, regardless of whether that law student is actually independent, lives on his/her own, has a family of his/her own, etc. Therefore, a family’s income and ability to pay is almost always going to be taken into account in calculating a law student’s “need”. Most law schools will also require a “student contribution” regardless of a student’s resources. The amount of the student contribution increases as the student makes more money/has more assets. (So, if, for example, a law student succeeds in getting a high-paying summer associate position, the law school will expect a portion of that summer income to be spent on that student’s law school education. If a law student has no income/assets, the student contribution will have to be replaced by loans.)</p>

<p>Some law schools offer part or full merit scholarships, though these are relatively few when the number of students attending law school is taken into account. Some law schools will give a law student some amount of grant money based upon that law school’s assessment of a law student’s financial need. However, there is often a significant gap between any grant and the law student’s paper/real need. </p>

<p>A law student meets the remainder of his/her student budget by taking out loans. </p>

<p>First, a law student may receive a Perkins loan, granted by the law school based upon the financial aid application. A Perkins loan is a subsidized loan (no interest accrues until graduation) of up to $6,000 per year. Not every student with “need” will be given a Perkins loan. It is up to the law school financial aid office to decide.</p>

<p>Second, a student may take up to $20,500 of Federal Stafford loans for each year of attendance. Of this amount, $8,500 is subsidized (no interest accrues until graduation) and $12,000 is unsubsidized (interest accrues from the moment the loan is taken). There is a cumulative limit of $138,500 of Stafford loans available to any student, including any undergraduate loans. Repayment begins six months after graduation, and I believe that Stafford loans are cancelled upon the death of the borrower. Again, a student must apply for financial aid in order to receive a Stafford loan, though I believe they are given out as a matter of course (unsubsidized is always given out before subsidized).</p>

<p>Finally, any remaining financial need is met through loans granted by a law school (somewhat rare) or private loans, which are readily available to law students who have good credit and often a co-signer. </p>

<p>In my experience, “need” for a law student is not typically influenced by the cost of attendance of sibling’s schools (“you chose to go to that expensive school”) nor by the fact that a law student’s parents will not actually be helping that law student pay for school. In addition, for those law students who are married, the spouse’s income will be taken into account (in addition to the parents’ income) in determining “need”. Furthermore, many (if not most) law school assume that over the three years of attendance, any grants given to a law student in his/her first year will be reduced as the student makes money during the summer/holidays, etc.</p>

<p>However, loans are typically readily available (again, for those with good credit) so if a law student really wants to pay for law school, he or she can usually find a way.</p>

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<p>Thanks for such a helpful reply, sallyawp! So if she takes $20.5K per year in Stafford loans, and her top school is showing an all-inclusive COA of $70K/year, she’ll need to borrow … wow, a lot more. Is that where the Federal Direct GradPLUS loan might come in?</p>

<p>We’re thinking we might be able to help her out with $1K a month for rent or other expenses, and maybe cover her health insurance and incidentals like her cell phone. I’m trying to get a feel for how much of her borrowing might need to be from a private lender and therefore have a co-signer.</p>

<p>It seems pretty helicopterish to call a grad school about finaid, but since they’re still considering parental income, would it be that unusual? The finaid website makes it sound as if they expect phone calls, but I don’t want to be the only mom who’s ever called. :D</p>

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<p>I have two kids in grad school right now. Both the law student and the other student were not required to put any parental financial information into their FAFSA. They both verified this with the financial aid offices of their schools, and were told that graduate students are considered to be independent for purposes of financial aid. You’ll find that many schools expressly affirm on their financial aid websites that grad students are not required to provide parental information. </p>

<p>A very few schools do require financial information for parents. If doing the FAFSA in that situation, you can have the first version sent to schools that don’t need the informatio. You can then amend the FAFSA to add parental info and change the schools that receive the amended FAFSA. </p>

<p>The information could also be required on supplemental financial aid applications or separate scholarship applications required by a few schools. Most of the supplemental financial forms that my kid completed did, however, state that parental information was not required. </p>

<p>After my law student was admitted, he worked with the financial aid offices to confirm loans. He got financial aid letters that showed the amount of each of the loans (Stafford & GradPlus) that he was eligible to borrow. The maximum amount of the available loans shown in the letters covered the full amount of his school expenses and living expenses. If he needed more money, he would have been required to go find private loans that might have required co-signers. He didn’t receive scholarships from the schools he attended (the net costs for the schools that offered him scholarship $ and grants was more than the cost of the schools he attended). He considered the net cost of the school when selecting his law school, along with other factors such as location, bar passage rate, employment statistics etc. </p>

<p>He did not receive the final financial aid letters until after he had put down his deposits. </p>

<p>He handled signing the notes through the financial aid offices. He didn’t shop for his Grad Plus loans (which might have saved him some money) but just went through the law schools for everything. He did very well his first year, and transferred to another law school for his 2L year. (He went up 30+ rankings in the new school but the new school also saved him about $30,000 in debt even though none of the transfer students he has spoken to received transfer scholarships). No co-signer was required for his grad school loans, since his credit was fine. </p>

<p>I definitely would purchase life insurance if co-signing loans. I know a parent who whose kid passed away in undergrad school, and the parent was required to pay-off the student loans that the parent had co-signed.</p>

<p>I purchased a life insurance policy for my kid upon graduation from college anyway. I’m paying for it since the premium for the term policy to age 65 (several hundred thousand) is only $160/yr. My reason for purchasing a life insurance policy for him is that my spouse was uninsurable by the 40s. My spouse now has a terminal illness, and has no life insurance. I would have been extremely grateful for even a small policy at this point. My own coverage had been through my job, with no conversion rights. When getting a policy for myself, I decided to also get each kid a term policy when they graduated from school. I’ll turn the policies over to them eventually and they can make their own decisions about whether to keep them up or not.</p>

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<p>The GradPlus loan is a loan to the parent for a student’s educational expenses (unless things have recently changed). It is not a loan to the student. The parents are obligated to repay the GradPlus loan. </p>

<p>Neonzeus, your experience with your law student (not requiring parents’ financial information), while fortunate, is not as common as you indicate. I would recommend that anyone considering law school visit the websites of the law schools they are considering to determine the current policies on providing parents’ financial information. The three students who I helped with applications this year (among others, applying to Harvard (parental information required up to age 29), Penn (age 30), Yale (age 29) and Stanford (age 29)) had to provide parental financial information on all of their financial aid forms. The parental information was not required on the FAFSA, but on supplemental forms used by each of the schools (Need Access). Graduate students are treated quite differently than professional students (law, business, medicine) for these purposes.</p>

<p>frazzled, I would go ahead and let your son/daughter make the calls to the financial aid office. You can certainly discuss the issues with your son/daughter and guide them, but particularly at the professional/graduate school level, it seems odd for parents to be making phone calls for an adult student.</p>

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<p>SallyAwp: There are certainly loans for parents, but Grad Plus loans from the Dept. of Ed direct loan program are credit-based loans made directly to grad students. Perhaps your applicants were getting Direct Plus loans instead of Grad Plus loans (different loan product). I agree that the schools’ financial websites and financial offices are the best sources for finding out about those supplemental applications and requirements, especially when the cost of the school is going to exceed the Stafford and Grad Plus funds. Some of the schools could have very short timeframes for submitting whatever supplemental applications might be required. I know that one of my kids’ classmates complained that he had missed a major scholarship application deadline before even getting an admissions decision from that particular school.</p>

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<p>we too had to provide full family financial info to d’s law school, even though she was 24 years old and was fully employed for 2 years after college.
As there is an outside chance, she may take advantage of LRAP programs, all loans were taken out by her. We did not do any parent loans as they are excluded for LRAP purposes.<br>
everything is handled very quickly&easily through the law school. In fact so easily, I really have little info as to what the actually process was.<br>
all I know is -kid asked school for a certain amount of loans- and financial aid office took care of everything else.<br>
we too our helping out a bit with rent-living expenses etc. so d was able to ask for a bit less in loans than what her actual needs are.</p>

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<p>Your daughter is considered an independent student on the FAFSA and should supply her income and assets on the FAFSA not the families. On another note, your other child may benefit from your daughter being in law school (ask the school) however, your daughter will not benefit from her younger sibling being in school.</p>

<p>You (the parents) will have to fill out the Need Access from schools that require it (think of it as the law school version of the CSS profile).</p>

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<p>Hi Sally (glad you are back on the boards),</p>

<p>Neonzeus is correct and things have changed (just recently) as law students can borrow the full amount of their COA to attend law school through a combination of Stafford loans (20k) and Gradplus loans. There are a couple of schools where the student only has to file the fafsa and no information is needed from the parents.</p>

<p>Grad Plus loans based on their own creditworthiness (this is the main reason that they should establish and make sure they maintain good credit as undergrads). Unless the student has bad credit a co-signer is not needed for their grad plus loans. Marny is right that any loans should be taken out in your daughter’s name so that they can be considered for LRAP (you can pay the interest on the unsubsidized loans if you want to help her out). We paid to set her up in her apartment (1st month’s rent, security deposit, furniture, household items), pay for plane tickets home , she is still on the family plan for cell phone, and give her a couple of $ for incidentals.</p>

<p>Hope this helps.</p>

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<p>The credit requirements for Grad Plus are so relaxed that “building good credit” isn’t wholly necessary. Really, just ensuring that one never defaulted or that there aren’t any current accounts that are delinquent is good enough.</p>

<p>If one’s credit is good, though, I think private loans are the way to go. Though the interest rate is variable, some of my private loans are now hovering around 2%-3% interest. Grad Plus’ interest rate is fixed, and I think somewhere north of 7%.</p>

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<p>Would have been 8.6% if I had taken them.</p>

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<p>Wow - that’s quite a difference between the interest rates for private lenders and GradPLUS. There are benefits to the federal programs, though. My husband has a peasant terror of being in debt (it’s okay for me to call him a peasant - I’m one myself :)). Between us we have zero financial sophistication and the guarantees with the Stafford and GradPLUS loans seem a little more reassuring.</p>

<p>I don’t know why we filled out our part of the FAFSA except that our d sent us her login info and asked us to do it. We did the NeedAccess at the same time. Maybe the FAFSA folks just disregarded our info and that’s why she had a relatively low EFC.</p>

<p>She received her packet from the need-only school and filled out the form in about 20 minutes. No parental info was required for the school’s own form if the applicant doesn’t expect to qualify for a grant. I think her credit will be considered strong. She’s got a 2-year fulltime job history, a paid-up car loan in her name (we helped), and a credit card she pays in full each month. </p>

<p>Thanks, everyone, for the very helpful responses.</p>

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<p>The biggest downside to private loans is that if Op’s D decides to do public interest, private loans may end up being ineligible under IBR and loan cancellation after making loan payments while working public interest.</p>

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<p>Since public interest law is her career plan, thanks for pointing this out! :)</p>

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<p>frazzled- that is how my kid is thinking too. But certainly things can change and then they are left with loans to repay at a higher interest rate.</p>

<p>Thanks for the posting- this discussion may force us to have another family discussion prior to when she takes out additional loans for next year. I even spent some time this AM on her schools website re: student finances, loans etc. I think between this posting and listening to suzy orman on PBS this AM, I’m just getting nervous about the debt my kid is taking on.
I’m beginning to think it may be prudent for her to take some private loans out at the better interest rate just in case she doesn’t go the public interest route.<br>
With this job market, I think you go where the jobs are- and from what I am reading on TLS, governement/public interest jobs aren’t that easy to get either. There is also some discussion on getting a high paying job- work in that environment for a few years and pay off the loans ASAP. So what seemed likely last year in terms of career plans, may change. </p>

<p>I guess we just need to think positive, hope for the best, and wish our kids a bright, happy, successful and nearly debt free future.</p>

<p>sybbie- thanks for the posting from equal justice works. There is just so much info. My initial feeling is that it’s a great program for those going into public service. But I’d hate for my own kid to take all loans out at higher interest with the anticipation that she will go that route.
so now my thought process is that she should broaden her loans out and take out some lower interest private loans too.<br>
Anyway that is my rant for this AM. Coincidentally, we are planning to see d next week so this discussion will continue in person.</p>

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<p>If it’s not too personal, marny, would you mind sharing how you feel about co-signing for private loans? (Wonder what suze says about that … ;))</p>

<p>My d’s commitment to public interest seems unshakable at the moment but there have been many insightful posts on this and other forums about how and why law students often change their minds. Just now the higher interest rate GradPLUS loans are allowing d to feel more comfortable about her employment options after law school, and her dad to feel more comfortable about not being on the hook as a co-signer for a huge amount.</p>

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<p>we haven’t gotten that far with the discussion yet. What I can say is that my kid is extremely grounded and financially responsible. She is a saver and very prudent when it comes to financial matters. Our family has always been that way. suze would be proud.
so in that regard- I think she will be a good financial risk.
but at this point- even hubby doesn’t know I’m thinking that d should think of taking out some private loans.<br>
Once I get a better feel as to how this will all play out, I’ll PM you with more details.
The amount of debt these kids may face is staggering. I just hope my kid doesn’t kick herself 3 years from now for not taking the full scholarship at Cordoza- </p>

<p>but I will say, she is finding her time at law school very satisfying and I do think she feels she made the right choice in passing up the scholarship for the education, contacts and experience she is getting from her law school.</p>

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<p>So it sounds as if she has nearly her first year under her belt - wonderful! It’s always a leap of faith when young people make a big decision like this. My d went for a scholarship offer as an undergrad but, like your d, will probably pass it up for law school. If they’re already grounded and financially responsible, they understand what they’re signing on for and will (we hope!) find a way to make it work in the end.</p>

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<p>There are programs to forgive loans if you work at public interest law. However, at the very least, if you D is frugal and fiscally responsible and perhaps lucky enough to work at biglaw after graduation, she could repay her loans under 4 years. My D’s BF did just that, totally retiring his law school loans in 3 1/2 years, even living in high price Manhattan.</p>

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<p>cbreeze- I think a bit of that mentality is coming into play. If she were lucky enough to get a high paying job, I think she’d prefer paying the entire loan off ASAP and move on with her life. I’m overly impressed that your d’s BF was able to pay off his loans within
3 1/2 years. He’s a keeper!!</p>

<p>frazzled- I’m seeing that what her career plans were when she started law school can change dramatically after a semester or two of law school. But as both our girls seem level headed and responsible, I think they’ll do just fine regardless of the path they follow.</p>

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<p>I am so glad I searched this forum for financial aid help. As the mom of an incoming 1L, I feel totally clueless to all of this (or at least, a bit less clueless since reading all of your thoughtful responses to the OP’s questions). S is 22 years old, and when we did the FAFSA we only used his information, as we knew adding ours would make him ineligible for anything. However, looking at the forms for need-based/merit or need-based from his law school clearly indicate that they want parental information for each parent (and it’s very comprehensive in what they ask for). So, we know the minute we fill that out, he’ll most likely be ineligible for anything need-based. Our goal has been to help him, but as my husband says, “he needs some skin in the game,” so we expect him to do the rest in loans. Whether or not we help him take care of those loans in the future partially depends on how well he takes law school seriously and handles his own financial responsibilites. Thankfully, he’s hugely frugal and pragmatic, and I don’t have any doubt he’ll be fine in that area. Again, I appreciate “the tutorial.” We’ll need to evaluate the whole fixed higher rate gov loans vs private loans at a lower rate. Hmmmm … so much to ponder. :)</p>

<p>zebes</p>