What You Need to Know About Law School Financial Aid
By Alice Foley, Associate Law School Consultant
Law school is expensive. Like, it’s really not cheap. Sure, there are scholarships, or maybe you’re independently wealthy (go you!). But most people that go to law school don’t have Bezos-sized bank accounts helping them out. So, what are your options? Is there financial aid? What is financial aid? Can I get that?
One of the cornerstones of S. Montgomery Admissions Consulting is breaking generational cycles of poverty and debt through increasing access to education. We’re not here to send you off to law school to graduate with tons and tons of school debt. We want you to be smart about this. We want you to graduate with a little debt as makes sense (more on that in a post coming soon!).
In this post we’re going to jump into these major topics: FAFSA, eligibility for need-based aid, applying for need-based aid, and different types of law school loans.
The FAFSA
The FAFSA is the Free Application for Federal Student Aid. You may remember this from college (no worries if you don’t). This is the form that you must fill out if you want to be considered for ANY federal student aid, such as federal grants, work-study, and federal student loans. In addition, a lot of colleges/universities/law schools use the FAFSA to determine your eligibility for state and school-based aid. The form for the upcoming year is made available on October 1 each year, and must be submitted by June 30 (so, the FAFSA for the 22-23 school year opened on October 1, 2021 and is due on June 30, 2022). Corrections can typically be made until early September of the aid year (so, September 2022 for our example above).
You can find out all the details and begin your FAFSA at studentaid.gov. You’ll need to create an FSA account to begin. Then you’ll need the following documents:
Your Social Security Number
Your Alien Registration Number (if you are not a U.S. citizen)
Your federal income tax returns, W-2s, and other records of money earned.
Note: You may be able to transfer your federal tax return information into your FAFSA using the IRS Data Retrieval Tool.
Bank statements and records of investments (if applicable)
Records of untaxed income (if applicable – this means things like child support, alimony, etc.)
If you are a dependent student, then you will also need most of the above information for your parent(s).
The TL;DR of this: Fill out the FAFSA if you even sort of think you want to be considered for *any* federal student aid.
Factors that affect your eligibility for need-based aid
Your personal resources can factor heavily in your eligibility for NEED-BASED aid. You may have noticed that most of the documents needed for the FAFSA deal with your financial situation. One of the other big factors is how the school has allocated its financial aid resources. Many law schools opt to allocate much more money to MERIT-BASED aid (this is often scholarships based on your GPA, LSAT, or other academic merit-related things). Law schools have an interest in making an attractive offer to high-achieving applicants and merit-based scholarships or grants are one of the more popular ways to accomplish this.
However, several of the top law schools in the US (think T5 - T10 institutions) allocate all of their resources for need-based aid so as to make the school more affordable for middle- and lower-income applicants.
Your dependent status will also affect your eligibility to qualify for need-based aid. While the FAFSA considers every graduate/professional school student “independent,” many schools may ask you to provide information on your parents’/guardians’/spouse’s income if you are being supported by them (or plan to be supported by them) while you are in law school.
How to Apply for Need-Based Aid
Step 1: Fill out the FAFSA (see above).
Step 2: Fill out any school-specific forms. It’s likely that you’ll need the same types of information that the FAFSA required. Just a quick heads up - schools may ask for income information for your parent/guardian/spouse if you are being claimed as a dependent, are under age 27, have no children, etc. This is different from the FAFSA.
Some law schools will not open their need-based applications until after an admission decision has been rendered. Keep an eye on any communications from the schools and the law school website – information on these things should be in one of those two places.
Another note on need-based aid – there’s no room for “negotiating” like you may with a merit-based offer. However, you can often appeal or have a conversation about how a school determined your need-based offer. If you think they calculated wrong, it’s always worth having a conversation with the financial aid team.
Different Types of Law School Loans
There are a couple of different types of loans that are available to you to help cover the costs of law school. First up is Federal Direct Loans, then we’ll talk about Federal Grad PLUS Loans, and finally, we’ll touch on private loans.
Federal Direct Loans come in two varieties – subsidized and unsubsidized. In undergraduate school, you may have qualified for Federal Direct Subsidized Loans. These are great because interest on the loan doesn’t start accruing until after you graduate. Basically, the government takes care of the loan interest while you’re in school, so your loan amount isn’t increasing (unless you take out more loans!) until you’re finished with school (and hopefully gainfully employed!).
Unfortunately, subsidized direct loans aren’t available for graduate or professional school. Thanks, government. Instead, grad/prof school students can qualify for up to $20,500 in Federal Direct Unsubsidized Loans per year. Because no one is covering (subsidizing!) the interest here, your loan will begin to accrue interest as soon as it’s disbursed.
Don’t panic though! You don’t have to make payments on either type of federal loan while you are enrolled in school at least half-time (typically 5-6 credit hours per semester, but always check with your school if you want to drop to part-time school!). Plus, both types of federal direct loans have a 6-month “grace period” after you graduate before you are required to begin making payments.
You might be saying to yourself right now, “if I can only take $20,500 per year in direct loans…how do I pay for a school that costs more than that per year? How do I pay rent and eat?!” Don’t worry, there’s still one more type of federally backed loan that will help with this: Grad PLUS loans! We’ve also got another post coming soon with more help about how to pay your bills and, ya know, feed yourself while you’re in school.
Grad PLUS Loans are another type of federal direct loan program. Unlike the unsubsidized loans we were talking about, Grad PLUS loans are tied to your credit and have an origination fee (a fee to “create” the loan). If your credit is good, you may be able to get a very low interest rate. If your credit isn’t great, you don’t have to abandon Grad PLUS loans entirely – you just might want to find a co-signer! Like the other types of direct loans, you don’t have to make any payments on Grad PLUS loans until 6 months after you’ve finished being in school.
One of the other benefits of federal loans, regardless of the type, is that these are the loans that you hear about when the government is talking about loan forgiveness or canceling student debt. The most well-known loan repayment programs (like Public Service Loan Forgiveness) are also typically tied to federal loans only. There are also different kinds of school-sponsored loan repayment assistance programs. We’ll be talking more about loan repayment and assistance programs in some later posts!
Finally, there are private loans. Private loans are not backed by the federal government, and the interest rates can vary widely across providers. These loans are also almost entirely tied to your credit score. Because there are so many different providers for private loans the basics for each can be really, really different. Some may mirror some of the federal programs and have grace periods after graduation or not require payments until you’ve finished school, but there is no guarantee.
This was a LOT of information, but financial aid and considering the overall cost of law school is a huge piece of the law school decision process. For support throughout your law school application process, make sure to check out the variety of services we offer!