If you are like most law school students, then getting that admissions offer in the mail was one of the most exciting experiences.
There are few things more thrilling than knowing that your future is leading to a career faceted in one of the most lucrative professions in the country. The Bureau of Labor Statistics indicates that the median pay for a lawyer is $113,000 per year.
However, regardless of whether you are a current law student or one who is about to begin practicing, you have probably started to realize that median salary quoted above does not represent most starting salaries for those who are entering the law profession.
In reality, most lawyers start at a median of about $76,000 per year. If you are like most beginning lawyers, a salary that high does sound good – until you consider the crippling student loan debt that you need to pay back.
Fortunately, there are ways you can manage your private student loan debt and avoid the many pitfalls that cause people to fail at overcoming the challenge.
Keep Track of What You Owe
There are many ways to manage your private student loan debt, but one of the most important methods is to understand exactly what you owe and to keep track of those figures. Many law graduates make the mistake of entering into loans without understanding what loans they are taking out.
The advantage of keeping track of your loans is that you are able to readily understand what you owe to which lender and the interest rate at which the debt is accumulating at. Therefore, when you start the repayment process, you can decide which loan would be best to begin paying off first.
According to the Consumer Financial Protection Bureau, when it comes to tracking what you owe each private loan lender, the best thing to do is to contact each lender by phone or reach out in person at the institution’s local branch. While there is no website that can give you a clear picture of all your loans in one place, personally speaking to a representative can give you more individual and personalized care.
In addition to reaching out to each lender, you can also view your annual credit report. Some lenders report your loans to credit reporting agencies and as a result, the loan may appear on your annual credit report.
Knowing Your Loan’s Grace Period
Another common problem that most new lawyers with student loan debt face is that they are unaware of what a grace period is and what the grace period duration period is for each of their private loans.
When you take out a private loan, there is a set amount of time that you have before you need to start paying back your loan. Many financial lenders typically set the grace period at six months after you graduate, however this figure can fluctuate depending on who your lender is.
To determine what your grace period is, you can simply reach out to your lender and ask. Once you have determined what your grace period is, you should figure out when your first payment is due and how much you should put towards repayment.
Failure to repay your student loan debt over time will result in what is known as negative amortization, which is when the loan payment you owe is less than the interest charged for that same period. If you are looking to pay off your loans and get out of debt, then you can talk to your lender about increasing loan payments so that you are paying off both the interest and the premium.
Make Smart Financial Decisions
Completing law school and landing a position at a law firm with a corresponding salary is certainly an accomplishment to be proud of, but that doesn’t mean that you should be reckless with your earnings. Meaning, instead of spending your new law firm salary and disregarding your law school debt, you should be more modest and find ways to pay your debt off and to afford certain necessities.
For instance, if you are looking to buy a home, instead of disregarding your private student loans, you can consolidate your debts and use your new home as collateral.
Debt consolidation is the process of taking out a line of credit to repay your existing debts. When you consolidate your loans, you are left with one loan to repay instead of numerous private school loans. As a result, you’ll find your repayments are easier to manage and sometimes, you can even negotiate a lower interest rate for your new loan.
Discuss Repayment Options
Finally, another issue that many new lawyers have when it comes to their student loans is that they are unaware that they can work with their lender regarding their private loan repayment options. When it comes to private lenders, the negotiation process for loan repayments is known as loan modification.
As Forbes points out, it is important to be aware that the loan modification process undertaken by you and your lender needs to be beneficial to both parties. While some lenders may be hesitant to modify your loan, it certainly does not hurt to reach out to your lender regardless.
To increase the likelihood that your lender will allow you to modify your loan, you should be prepared to bring as much information as possible regarding your financial situation. For instance, you should bring paystubs, other income information, and any financial documents that you have to support your case.
If your lender does agree to modify your loan, you may have an easier time making payments and putting an end to your debt.
For many, private loans are necessary to get that law school education. While the repayment process may be a challenge, repaying your student loans is one of the best things that you can do for your personal and financial future. With the above tips, you’ll be able to manage your debt and organize your finances with ease.