Bar Exam Loans: A General Overview
Law school is expensive. Beyond tuition, you need to cover books, materials, lodging, and many other hidden fees. These costs can really add up by the time you graduate. Not surprisingly, taking the bar exam is also very expensive! Not only do you have to pay fees for your bar exam course, but there are a lot of other “hidden” expenses (the cost to sit for the bar exam, the cost to be investigated so you can pass character and fitness, travel and hotel costs, general living costs while studying — and not to mention you may want to take time off work!). Many students find that bar exam loans help them handle the immediate costs of sitting for the bar. But what are bar exam loans? Read further for a general overview!
Bar Exam Loans: A General Overview
PLEASE NOTE: This is general advice on bar exam loans. This should not be construed as an endorsement of them. Any financial questions should be directed towards a licensed professional.
1. How do bar exam loans work?
Bar exam loans are similar to student loans. You borrow money to pay immediate bar expenses (bar exam registration fees, living expenses, prep courses, etc.) now and then pay that amount back, with interest, over a set period of time. These loans are meant to help students who do not have the cash to pay for all the expenses associated with sitting for the bar. Taking the bar exam can cost thousands of dollars, and bar exam loans are one way to pay for them.
Generally, after you take the bar exam, you have a grace period before your loan payment starts. Make sure to read any loan terms carefully before committing. If you plan on taking time off after the bar or aren’t sure of finding employment right away, a bar exam loan may not be the best option.
You also should not assume that you will find a job that pays a high salary. Many students who graduate do not make as much as they may have expected to make before or during law school.
2. When can I apply for bar exam loans?
Bar exam loans are available to law students starting in his or her last semester of law school, and up to a year after they graduate. This makes sense because most law students sit for the bar within a year of graduation. So, if you think you may need one to register for the bar exam, make sure you do so with the appropriate time period.
Investigate bar exam loans early so you can make an informed decision.
3. How do I receive the funds?
Generally, bar exam loans are disbursed directly to the person applying so that they can pay for expenses themselves. So, keep this in mind if you do not have the financial discipline to spend the money on bar exam related expenses only.
4. What are the downsides of bar exam loans?
The most obvious downside is that you are taking on a form of debt that you have to pay back. If it all possible, find another way to pay for your bar exam course. Since you will pay interest on any money you borrow, you will end up paying back more than the amount you receive. In addition, some bar exam loans introduce a floating interest rate after a certain amount of time. This can really ratchet up your payment if interest rate increase. Finally, you may need someone to co-sign with you on the loan. Some programs allow you to release this person later.
Unlike many publicly available student loans, bar exam loans are based on your personal credit (or a co-signer’s credit). So, if you have a bad credit history, you may find it difficult to be approved at all. If you are, you most likely will pay a much higher interest rate. Bar exam loans generally have higher interest rates than normal student normal student loans. We cannot stress this point enough: bar exam loans should be a last resort!!!!
Lenders can also limit how much they will lend you by your debt load. Many companies will not lend for the bar exam if you have a large amount of student loan debt. So, if you’ve borrowed more than a certain amount for undergraduate and law school, you may not even be eligible for a bar exam loan.
Finally, bar exam loans are not typically eligible to be refinanced like normal student loans. So, do not take a bar exam loan out at a high interest rate and expect to be able to lower it if you consolidate your student loan debt. You may not be able to roll it into the rest of your student debt.
Bar exam loans can be very helpful and are sometimes necessary. But, you should not apply for a bar exam loan without being aware of the many downsides!
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