Joshua Holt* Graduating from law school is meant to be a life-affirming milestone that should immediately begin yielding fantastic job opportunities––and equally fantastic starting salaries. Well, while these expectations are possible (though, not a guarantee), the journey from law school to the workforce is not so typically seamless for all with student loans.
If you have a freshly printed law degree hanging above your bed, then you know all too well how expensive it was to obtain. The average amount of law school debt currently sits somewhere around $140,000––one of the most expensive graduate degrees out there (beaten only by medical school).
And, based on statistics, lawyers are graduating with more student loan debt than before (if you have graduated law school recently, chances are you’re experiencing this firsthand).
However, a law degree does not necessarily mean that insurmountable debt should follow behind you for the rest of your life.
The key is to know how to manage your debt. And one of the first steps, quite simply, is knowing just how much you owe. By acknowledging the number, you can then set up a plan of action to swiftly and effectively pay it down.
Here are a few tips you can implement to manage your law school debt.
1. Discover Your Grand Total in Student Loans
This might seem like a no-brainer, but it is absolutely the most important step of your debt-repayment journey (and one that many recent law grads fail to address).
The motivation is typically based on fear. And it’s the same reason many of us dread opening our credit card statements each month––knowing what you owe means having to come to terms with that fear and acknowledging a big, intimidating number.
Trust: the reality is not so scary once you dive in. If you are unsure of everything that you currently owe, visit the National Student Loan Data System for an itemized breakdown of every outstanding payment at the federal level.
For best results, take those numbers and print them out or keep them in a document on your desktop for quick reference. Source the monster, then work towards tearing it down.
2. Create a Payoff Path
There are three specific avenues that you can take towards getting out of student loans: repayment, loan forgiveness, and death. Needless to say, let’s completely bypass the third option.
In choosing to pursue loan forgiveness, you will likely be doing so under the Public Service Loan Forgiveness program, or another income-driven repayment plan like IBR (Income-Based Repayment) or PAYE (Pay As You Earn). PSLF offers a fairly simple and straightforward platform, provided you work for 10 years in public interest.
Refinancing your debts can significantly bring down your current interest rates, providing thousands of dollars worth of savings each year.
Joshua Holt
However, it is important to pay close attention to the fine print before pursuing it as a viable solution to your specific situation. You need to have the right loans and ensure that you’re making qualified payments each month. I recommend submitting an ECF each year to make sure your servicer is giving you proper credit for qualifying payments.
3. Repay – And Refinance
In choosing to repay the loans, you might find that refinancing is a smart and often overlooked move. Why? When paying thousands of dollars’ worth of unnecessary interest each year, you can forget that costs add up––so much that the interest keeps you from paying down the actual loan balance.
Refinancing your debts can significantly bring down your current interest rates (if you qualify), providing thousands of dollars worth of savings each year. And the process doesn’t have to be intimidating.
There are plenty of online tools that can confirm rates across a bunch of lenders quickly, like Credible and LendKey ––before you even step into a bank.
But, as with any financial decision, there are cons as well as pros. The key is research. Plug your numbers into a comprehensive online loan calculator and compare what you could be paying to what you currently are paying. If you feel that a refinancing option is right for you, by all means, take advantage of it.
4. Set Aside The Bonuses
Unfortunately, the ability to fast-track your debt repayment is not available to everyone. If you are lucky enough to have secured a well-paying job post-law school, then you can take advantage of certain perks and greatly accelerate your financial situation.
How? Set aside your salary raises, bonuses, commissions, and any other work-related pay incentives and send them––in full–– towards paying off your student loans. Not only is this a surefire way of getting ahead of the curve, in doing so, you will also have the added benefit of helping you build on top of your personal wealth once your debts are gone.
5. Manifest Your Goals
Everybody works toward achieving a personal goal differently. Sometimes, the simplest task to some is a monumental effort for others (and, by no means, is conquering student loan debt a simple task). However, a successful tip for ensuring that you remain focused and on-track towards achieving any type of goal is to manifest a result.
Get creative: while paying off your student loans, try also assembling a debt repayment chain––complete with visual aids––and keep it in a space where it can serve as a physical reminder and everyday motivator. The sooner you’ve got an idea in mind of what you want your future to look like, the sooner it will become a reality.
There you have it! A few simple, straightforward and stress-free tips for paying off student loans. With this information, and the understanding that law school debt is conquerable, you too can experience the feeling of financial freedom––quickly and easily.
Author Bio
Joshua Holt is the publisher of BigLawInvestor and an associate at Goodwin Procter LLP. He may be contacted through LinkedIn and on Twitter.
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