Even if you spent every summer of law school with a high-paying summer associate position, there’s a good chance you ended up with a significant amount of student loan debt.
And even if you lucked into a well-paid job right after graduation, managing that debt can pose a challenge.
The good news is there are more resources than ever before to help you manage, reduce, or eliminate your debt. The key is figuring out which loan management strategies make the most sense for you.
Below are some of the best ways to get a handle on your debt.
Use the Snowball Method …
If you’re like most law school graduates, you have multiple student loans with different balances and interest rates. With the Snowball Method of loan repayment, you apply as much money as you can each month to the loan with the smallest principal balance first. The theory is that once you’ve paid off one loan, you can then put more money toward the loan with the second-lowest balance, and then the third-lowest – like a snowball rolling downhill and growing bigger.
… Or the Avalanche Method
The Avalanche Method is an alternative to the Snowball Method, in which instead of paying off the loan with the smallest balance first, you pay off the loan with the highest interest rate first, no matter its size. When it comes to the numbers, this makes a lot of sense, as you’ll save money on interest and most likely be able to pay off your law school debt sooner. Some lawyers prefer the Snowball to the Avalanche, but it really boils down to personal preference.
Refinance Your Loans
Refinancing isn’t for every lawyer, but it can help many achieve better interest rates and repayment terms. If you can refinance and get a lower interest rate, you’ll automatically be able to apply more of your hard-earned money to your principal balance. You can also change the terms of a loan, which means you can shorten your repayment plan (if you have the ability and desire to pay your loans off faster), or lengthen it if you need to lower your monthly minimums.
Find a Loan Repayment Program
While you were in law school primarily concerned with earning a J.D., you might have missed the memo on a couple other abbreviations: SLRPs (student loan repayment programs) and LRAPs (loan repayment assistance programs). There are a number of such programs specifically for lawyers that can help reduce the amount of debt you have to pay. In addition to lawyer-specific options, there are school-based and state-based repayment programs, so it might be worth doing some research to see what’s out there that you might qualify for.
Work Toward Forgiveness
Do you qualify for Public Service Loan Forgiveness, or plan to in the not-too-distant future? It might make sense to contribute only your minimum monthly payment for the time being. If you expect to qualify for loan forgiveness, you’ll want to leave as much debt unpaid as possible, as the leftover amount will be what’s forgiven or repaid by a third party. Just a caveat here: Depending how much time will pass before you qualify for a forgiveness program, you could end up accruing a lot of interest. Make sure you fully understand the terms of loan forgiveness, and have a backup plan in place in case you change careers or job functions in the future.
Whether you’re bringing home a plush six-figure salary or something more modest, law school student loan debt is a burden. However, from debt repayment strategies to assistance programs, there are ways to get a handle on your loans, no matter your circumstances. Your law school, the government, and possibly even your employer can provide more information and advice about what’s out there.