If you are planning to graduate this semester, and you didn’t save enough money during law school to cover your expenses, you may be considering a Bar Study loan. Below, you will find some information about bar study loans and other related info.
Types of Bar Expenses
- Bar Exam Fees – These are the fees the Bar Association charges for actually taking the exam, and they vary from state to state. These fees can be added to your total cost of attendance by completing a Budget Adjustment Request form. This allows your federal student loan offer to be increased to cover the fees. You will need to submit your receipt for payment of the bar exam fee to the Office of Financial Aid for the adjustment to be processed. This adjustment must be completed before you graduate.
- Living Expenses, Bar Study Classes and Bar Study Materials – These expenses cannot be paid for with federal student aid, so if you have not saved enough money to cover these expenses, a private bar study loan may be an option you need to consider.
Bar Study Loans
Bar Study Loans are loans from private lenders for the purpose of paying for bar study courses and living expenses while you study for the bar.
Things to Know
- A credit check is required. Each lender sets their own credit qualification criteria, but, generally, you need to have a good credit history to qualify. Lenders may allow you to obtain a co-signer if you are not able to qualify on your own.
- In addition to credit history, some lenders have additional criteria that you need to carefully review before applying (as it may disqualify you from the loan, regardless of how good your credit is). This criteria could be:
- that you are an existing customer of the bank – banking, credit cards, student loans, etc
- that you your total student loan borrowing be below a certain level
- Most lenders offer both fixed and variable rate loans; though some only offer a variable option. Rates currently range from 3.25%-13% and are tied to the LIBOR or Prime Rate.
- Variable rate loans may have lower starting rates, meaning that the initial monthly payment would be lower. Remember that these do change over time as LIBOR/Prime changes. These loans typically have a high, or no, interest rate cap; meaning, your rate could increase significantly if the base rate increases. Since LIBOR and Prime Rates are at historic lows, the probability that these rates will increase over time is high.
- Fixed rate loans have higher starting rates, meaning your initial monthly payment would be higher, but give you security that your rate and payment will not change for the duration of your repayment term.
- As these are private loans, they are not eligible for any of the federal student loan repayment options or forgiveness programs, including the Income Driven Repayment plans and Public Service Loan Forgiveness.
- Limits are between $12,000 and $16,000, depending on the lender. This is probably much more than most students will need; so, borrow as little as possible!
- Repayment typically begins 6-9 months after graduation and is made over a 7-20 year repayment period. The length of the grace period and length of repayment are determined by each lender.
- While most lenders will accept applications up to 1 year before graduation, lenders differ on how long after graduation they will accept applications.
- When comparing lenders, find out what interest rate and fees are being offered to you personally, as interest rates and fees will vary by lender and are generally based on your credit history. You are unlikely to qualify for the lowest rate the lender advertises unless you have an exceptionally high credit score.
- Be sure you are applying for a bar study loan and not a law loan, as they are not the same type of loan.
Below is some lender specific information regarding Bar Study Loan eligibility:
- Wells Fargo – only lends to existing Wells Fargo customers; your aggregate loan balance, including the bar loan you are planning to borrow, must be at/below $180,000.
- PNC – your aggregate loan balance, including the bar loan you are planning to borrow, must be at/below $225,000
- Discover – your aggregate loan balance must be below $180,000
Please check their websites for further details about the bar study loan fees and rates, eligibility requirements and repayment information. Compare your options carefully as eligibility and repayment terms vary between lenders.
As a reminder, Bar Study loans are private loans that you will need to repay separate from your existing federal student loans. Borrow only what you need as any payments you need to make on these loans are in addition to the payment you will have on your federal student loans.
The chart below will help you estimate how much your monthly payment would be, per $1000 borrowed, for various loan rates and terms. You can also use a loan calculator, such as the one offered by Bankrate.com to help calculate you payment amounts.
|Length of Repayment|
Remember that the higher your rate and longer the length of your repayment, the more you will pay for the money you borrowed. The chart below shows the total interest you would pay per $1,000 borrowed given different rate/repayment term scenarios.
For example, if you borrowed $7,000 at a 7% interest rate and repaid it over 10 years, your monthly payment would be $81.27 (11.61*7) and you would pay $2,751 in interest ($393*7). If you repaid that same loan over 15 years, your payment would be lower – $62.93 (8.99*7) – but you would pay more in interest – $4,326 ($618*7) during repayment.
|Length of Repayment|