I’m a Lawyer: How Do I Pay Off My Law School Loans?

Lawyers are typically high-earners, and law school debt is often treated with less attention than it deserves. For many people, the idea of a wealthy lawyer struggling financially fails to elicit much sympathy.

So why are so many lawyers struggling with student loan debt?

Getting that JD is more expensive than most laypeople realize, and even successful lawyers can have trouble paying their loans back after graduation, especially in an industry that often goes hand in hand with expensive suits and pricey client dinners.

What options do lawyers have to eliminate their debt and put that income to good use? Read on to find out.

Loan Forgiveness Programs

Even though lawyers are known for their high salaries, their profession is also known for high debt.

The average lawyer has more than six figures in student loans – $30,000 from undergrad and $84,000 to $122,158 for law school.

In 2013, the average salary for a lawyer was $131,990, according to the Bureau of Labor Statistics. Doesn’t sound too bad, right?

Those numbers hide a more serious problem. Starting salaries for lawyers are down, while law school debt is up. Debt problems are all relative, and high salaries mean very little in the face of even higher debt totals.

So what’s a lawyer to do? Here are some programs that can help lawyers repay their student loans:

• John R. Justice Program
  This program is available for public defenders and state prosecutors who work in that position for three years or more. The amount forgiven will equal $60,000 or less and be determined by the individual’s demonstration of need.
• Public Service Loan Forgiveness Program
  After making 120 consecutive eligible payments, your loans are forgiven under this program. The PSLFP is only available for federal loans, and borrowers must work in a qualified public service field. If you choose this route, switch your payment plan to an income-based one. That way, you’ll make smaller payments while paying back your loans. You’ll have to pay taxes on the amount forgiven, so plan ahead once tax time rolls around.
• Department of Justice Attorney Student Loan Repayment Program
  This program is offered to those who have $10,000 or more in federal loans and are willing to serve three years in the Department of Justice. The loans that are eligible for this program include the following: Stafford Loans, Supplemental Loans, Federal Consolidation Loans, Defense Loans (made before July 1, 1972), National Direct Student Loans (made between 7/1/72 and 7/1/87), William D. Ford Direct Student Loans, Perkins Loans, Nursing Student Loan Program loans, Health Profession Student Loan Program loans and Health Education Assistance Loan Program loans.
• The Herbert S. Garten Loan Repayment Assistance Program
  This competitive program helps less than 100 lawyers a year, giving about $5,600 each. Awards are distributed by individual state programs, listed here. While the chances of being selected may be small, the potential benefits are worth the application process.
• Loan Repayment Assistance Programs (LRAPs) By School
  Various law schools offer their own assistance programs for graduates, and very few think to take advantage of those programs once they leave school. To find out if your alma mater is one of those, go here.
• Loan Repayment Assistance Programs (LRAPs) By State
  Certain states have repayment programs for lawyers, with varying eligibility requirements and repayment standards. See if your state is included in that list.

General Advice

At the end of the day, even with assistance, most lawyers will need to pay significant portions of their student debt out-of-pocket. Here are some tips to make that process easier and more effective.

• Pick a repayment method. There are two debt repayment methods to choose from: the snowball method and the avalanche method. Both of these can only be used for those with multiple loans. The snowball method encourages borrowers to repay the loan with the smallest balance first. Once that debt is cleared, the borrower puts the amount they were paying toward the next smallest balance. The avalanche method is when a borrower repays the loan with the highest interest rate first. This strategy is the best way to save money on interest. The snowball method feels more gratifying, but the avalanche method makes more sense for those with significant debt.
• Refinance your loans. Companies such as LendKey were designed to help people refinance their student loans. Someone with law-school debt might be able to save as much as $12,000 by refinancing – that’s $1,000 a month each year. Current rates for federal student loans range from 4.29% to 6.84%, and private loan rates can be even higher. LendKey’s rates start significantly lower. You can refinance your federal and private loans into one, simplifying the process and saving money over the course of the loan. So go ahead and use a refinancing calculator to estimate whether refinancing makes sense for you.
• Avoid new debt. This may seem like a no-brainer, but for recent graduates with flashy jobs it can be tempting to splurge on a new sports car or penthouse apartment. Ignore the temptation to upgrade your lifestyle and continue living like a college student for as long as you can. By sticking to a tight budget, you’ll be able to pay more than the minimum on your loans and repay them faster.
• Create a budget. Budgeting is the golden method when it comes to loan repayment. Sticking to a budget will help ensure your salary goes toward your loans and not eating out every night. Use your budget to track your expenses and designate where your money goes. Many people are not aware of how they spend money until they see it on paper. Sites like Mint and You Need a Budget can help automate and simplify the process.
• Set rewards. It can be discouraging to attempt to pay off $100,000 in debt; that’s why you need a rewards system. Every time you pay off $10,000, treat yourself to a nice dinner or a new video game. By rewarding yourself periodically, you’ll feel like you’re making progress toward your debt, and keep yourself motivated for the life of your loan.