Law School Loan Repayment Options
Student loans, debt, and repayment. Those are subjects you’ve likely thought about as a prospective law student, current law student, or recent law school graduate. Student loans are a hot topic in the country right now for good reason. The vast majority of students pursuing higher educations will likely take out a student loan (or multiple). These loans are often thousands of dollars, and for those considering law school, often exceed $100,000.00 on average. With all that debt you might be asking yourself a common question. “How on earth am I ever supposed to realistically pay that back?” In this post, we cover law school loan repayment options.
Law School Loan Repayment Options
Public Service Loan Forgiveness
After you have graduated law school and are ready to start practicing law, consider this. Some attorneys can qualify for public service loan forgiveness. Public service loan forgiveness is available to those attorneys who work full time for a qualifying employer. Generally, qualifying employers include government and nonprofit organizations and institutions. Besides working for a qualifying employer, borrowers must make 120 payments towards their student loans. In addition, attorneys must work for a qualifying employer for 10 years. The good news is that payments and employment do not need to be consecutive. For example, you could work for a nonprofit for several years and make payments, switch employers, and switch back.
Pay As You Earn (PAYE)
Income-based repayment plans base your monthly loan payments on the amount of income you earn and family size. This is a great option if you find your student loan payments are too high in relation to earned income. One of the four income-driven plans is known as “Pay As You Earn” or PAYE. Under a PAYE plan, payments are generally based on 10% of your discretionary income and last 20 years. The monthly payment will never be higher than the standard 10-year repayment plan. Any outstanding balance at the end of the 20 years is automatically forgiven.
Revised Pay As You Earn (REPAYE)
Similar to the PAYE plan mentioned above, the “Revised Pay As You Earn,” or REPAYE is another income-driven plan. Much like a PAYE plan, under a REPAYE plan, your monthly payments are generally 10% of your discretionary income. One of the main differences between PAYE and REPAYE plans is the amount of time you will be making payments. For law school graduates that amount of time is 25 years, compared to the 20 years under the PAYE plan. Any outstanding balance at the end of the 20 years is automatically forgiven.
Income-Based Repayment Plan (IBR Plan)
Under an income-based repayment plan, the percentage of income borrowers will base payments from differs depending on one factor. You will either be considered a “new borrower” or “not a new borrower.” If you are a new borrower, you must have borrowed on or after July 1, 2014. For new borrowers, payments are based on 10% of discretionary income and payments will be made for 20 years. If you borrowed before June 1, 2014, payments are based on 15% of discretionary income. However, payments will be made for 25 years rather than 20. Any outstanding balance at the end of either 20 or 25 years is automatically forgiven.
Income-Contingent Repayment Plan (ICR Plan)
Under an income-contingent repayment plan, payments are based on the lesser of two options. The first is 20% of discretionary income. The second is what you would pay on a repayment plan with a fixed payment over the course of 12 years, adjusted according to your income. The ICR plan lasts for 25 years. Any outstanding balance at the end of the 25 years is automatically forgiven.
If you find yourself needing support with student loans, there are several resources to help. The first is loan repayment assistance programs. These programs are offered to graduates from over 100 different law schools. Eligibility for a repayment assistance program is based on income level and public interest employment. The second is statewide loan repayment assistance programs. These are provided individually by state and are designed to help public interest attorneys.
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