With the July 2014 bar results now published for just about every state, you may have spent some time celebrating if you made the grade. However, it's not time to kick back and relax if you haven't tackled the small matter of how to best manage your law school loans, which on average surpass $140,000 per graduate. Here's a three-step guide for newly minted lawyers to assess and take control of their graduate student debt.
1. Reprioritize. Passing the bar is a great achievement, and if you are fortunate enough to be employed, one that could mean you're finally in a position of financial stability for the first time since you started law school. If so, then you can take a serious look at your finances to see where your priorities might have changed—maybe now you feel comfortable finally paying off that last bit of credit card debt or buying the car you need to get to work.
2. Refinance. Refinancing could make sense if you're looking to get a lower interest rate on your student loans or pick a loan term that's a better fit for your lifestyle, e.g., you'd like a 15-year loan to lower your monthly payment but presently have a 10-year option. As you reprioritize your finances, consider refinancing to a lower rate, which could save you thousands in interest over the life of your law school loans. For example, if you have $100,000 in law school debt at an interest rate of 8%, and you refinance to a rate of 6%, youâ'll save more than $12,000 over the life of a 10-year loan.
3. Reamortize. Through reamortization, you can reset your monthly loan payments after making a significant one-time payment. If you're considering making a prepayment to lower your loan balance by several thousand dollars—for example, by putting a bonus from your firm towards your student loan principal—reamortization could be the right choice if you also want to lower your monthly payments each month. If you are thinking of making a large payment on your account, contact your loan servicer or lender first in order to assess your options for reamortization. (For example, some lenders may allow one-time reamortization only, which might affect when you opt to change your payments if you might make multiple large prepayments.)
Have any questions on what to do with your student loans now that you've passed the bar? Leave a comment, and we'll try to help you out!
Kaitlin Butler is Content Manager at CommonBond, a student lending platform that provides a better student loan experience through lower rates, superior service and a strong commitment to community. CommonBond is also the first company to bring the 1-for-1 model to education.
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