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Educational Debt and the Financial Aspects of Planning for Law School

Educational Debt and the Financial Aspects of Planning for Law School. The webinar will begin promptly at 7:30 p.m., EST. For audio, please use audio via your computer or dial 1-866-642-1665 followed by 334512. PRESENTERS. John Garcia, Director of Financial Aid,

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Educational Debt and the Financial Aspects of Planning for Law School

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  1. Educational Debt and the Financial Aspects of Planning for Law School The webinar will begin promptly at 7:30 p.m., EST. For audio, please use audio via your computer or dial 1-866-642-1665 followed by 334512

  2. PRESENTERS John Garcia, Director of Financial Aid, Michigan State University College of Law Heather Jarvis, Student Loan Expert askheatherjarvis.com

  3. AGENDA • The complete costs of a earning a law degree • The impact of high levels of educational debt • Loan programs and repayment options • Tools for making an informed borrowing decision • Suggestions for minimizing educational debt • Answering your questions

  4. COSTS OF A EARNING A LAW DEGREE • Tuition: Public: $18,472, Private: $35,743 • Indirect costs: • Books, room, board, and health insurance • Range between $12,500 and $25,000 for the academic year • Total “cost of attendance” at select law schools approaches $75,000 annually

  5. CAREER AND SALARY DATA • Only a small % of graduates find employment in “big law” firms that pay top dollar • Salaries at small/medium firms vary but typically are in the $40,000 to $60,000 range • Government and public interest salaries are stagnant • The reporting of recent graduate employment data is not uniform – some schools are much more transparent than others

  6. STUDENT LOANS Federal Student Loans • Stafford loans • Unsubsidized • Grad PLUS loans • Credit-based Private Student Loans • Variable interest rates • Limited repayment options • Note: The cost of federal loans is increasing, effective July 2012, with the discontinuation of subsidized loans for graduate/professional students.

  7. EXAMPLES: THE COST OF DEBT • Average law school graduating debt: • Public: $68,827 • Private: $106,249 • Average undergraduate debt: • $24,500 • Various repayment plans are available: • Standard 10-year term • Income-based repayment • Loan repayment assistance and forgiveness programs

  8. MAKING AN INFORMED DECISION • Examine the full, three-year cost of a cross section of law schools – direct and indirect costs • Examine current starting salaries for careers of interest to you and future earnings potential for the career(s) that interests you • Calculate loan repayment scenarios factoring in all types of educational debt and reflect upon personal and professional goals -- what will you be postponing or giving up during the 10-, 20-, or 25-year repayment period?

  9. MAKING AN INFORMED DECISION • Consider the issue of timing: • Law school immediately after undergrad • Law school after undergraduate debt is paid • Law school on a part-time basis • Give appropriate attention to “prestige” or “ranking,” in addition to total cost of attendance and other factors when evaluating among and between law schools

  10. MSU Law Approach to advising prospective students “If you live like a lawyer while in law school, you must live like a student once you are a lawyer (and repaying your loans)!”

  11. UNDERGRADUATE VS. LAW SCHOOL FUNDING Undergraduate • Federal need-based grants • State need-based grants • Institutional need-based grants • Institutional merit awards • Local, state, regional scholarships • Federal need-based loans • Federal work study Law School • Institutional need-based aid (minimal) • Institutional merit or non-need based aid • Federal loans • Private loans • Federal work study

  12. STUDENT LOAN DETAILS • Interest Rates • Stafford: 6.8% (fixed) • Grad PLUS: 7.9% (fixed) • Maximum Available • Stafford: $138,500 (for most students) • Grad PLUS: annual limit is school’s cost of attendance minus aid; no lifetime limit Note: The cost of federal loans is increasing, effective July 2012, with the discontinuation of subsidized loans for graduate/professional students.

  13. MSU COLLEGE OF LAW ALUMNI SURVEY Survey of MSU Law Graduates: 1995-2009 • 748 responses • Response Highlights • Debt resulted in students delaying getting married, starting a family, purchasing a home • Debt resulted in some graduates accepting positions that “pay the bills” but were less satisfying • Expressions of surprise regarding the amount owed and regret about not giving more attention to impact of what was borrowed and potential repayment

  14. MSU law approach to advising prospective students • Develop a three-year budget for law school – see your financial aid office for advice on building your budget • Calculate repayment scenarios based on below-average, average, and above-average starting salaries, and/or on the basis of the salary for your desired employment • Takeevery opportunity to minimize indirect costs and reliance on loans

  15. Student Loan Repayment LOAN REPAYMENT AND YOUR LEVEL OF COMFORT

  16. SALARY AND LOAN REPAYMENT: $50,000 IN EDUCATIONAL DEBT

  17. SALARY AND LOAN REPAYMENT: $100,000 IN EDUCATIONAL DEBT

  18. SALARY AND LOAN REPAYMENT: $150,000 IN EDUCATIONAL DEBT

  19. MSU law approach to advising prospective students • Challenge yourself to minimize living expenses and educational debt: • share an apartment • rely on public transportation • prepare your own meals • carefully evaluate study-abroad options • apply for outside grants/awards • consider part-time employment • Be proactive and diligent with career-planning efforts

  20. MSU law approach to advising prospective students Recommendations if you plan to borrow funds to finance law school • Eliminate consumer debt • Obtain a free copy of your credit report at www.annualcreditreport.com • Avoid or minimize high-dollar purchases • Explore all types of “free aid” • Investigate law school scholarship opportunities early on: • Criteria used by a variety of law schools • Application timeline

  21. CONSIDER COST AND SCHOLARSHIPS WHEN APPLYING TO LAW SCHOOL Columbia University School of Law School

  22. INVESTIGATING SCHOLARSHIP AID Michigan State College of Law Duquesne Law School

  23. RESOURCES American Bar Association: http://www.americanbar.org Access Group: www.accessgroup.org Ask Heather Jarvis: http://askheatherjarvis.com/ LSAC: http://lsac.org/jd/finance/financial-aid-overview.asp MSU Law: http://www.law.msu.edu/finaid/other-resources.html http://www.law.msu.edu/admissions/scholarships.html

  24. YOUR QUESTIONS? John Garcia, Director of Financial Aid, Michigan State University College of Law Heather Jarvis, Student Loan Expert askheatherjarvis.com

  25. Join our Future Webinars Insider’s Guide to Law School Admissions Tuesday, May 1 3:00 p.m., EST Factors important to the admissions committee when reviewing an application for admission Suggestions for crafting an effective personal statement How and when to provide a supplemental statement Advice on when to apply

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