National Jurist - March 2009 - (Page 40) able to graduates starting this July. Under the Income-Based Repayment program, grads can lower their monthly payments, which will be capped at 15 percent of discretionary income. All Federal Direct loans and federally guaranteed loans are eligible. Both Jarvis and Berman advise students to at least check into incomebased repayment after graduation to see if they qualify. For many students, a loan deferment can also be a life-saver. For example, students who are studying for the bar exam may use a deferment based on economic hardship or unemployment, Berman said. Those who are continuing on with their education, such as by enrolling in an LL.M. program, can also benefit from deferring their loans. Loan consolidation programs have become less popular. Berman said the mantra of “graduate, consolidate” that was so prevalent in the recent era of variable interest rates, is no longer the norm. Still, consolidation may make sense for some grads. For example, Berman said that for some students, consolidation can serve as a debt management tool, simplifying repayment if they have several different types loans and other debt. And what if you’re having trouble with payments? “For people who are struggling with their student loans, there are options for managing that debt,” Jarvis said. “I would encourage people to educate themselves and work with their lenders before they miss a payment.” Your lender may, in turn, work with you towards more favorable terms that will allow you to stay current on your loan. When it comes to loan repayment, you may have options: $Look into income-based repayment to see if you qualify for reduced payments. the terms and requirements of your student loans. $Understand $Consider a deferment based on economic hardship or unemployment, if applicable. $If you’re having trouble paying back student loans, try to work with your lender early on — before you start missing payments. “It’s important to live within your means and to understand that you have likely paid for your education with some of your current earnings.” — Heather Jarvis, Equal Justice Works Budgeting and financial management One last important piece of advice in law student finances? Live like a student! First and foremost, create a budget as early as possible (during the spring or summer before the school year begins), and update that budget at least once a year and whenever your financial situation changes. Include your tuition costs, books and study materials, living expenses (such as your rent or mortgage, food, utilities, transportation and entertainment), insurance and medical costs and any other fees charged by your school and/or your lender. Don’t forget to budget for costs that may not be readily apparent in your cost of attendance, Berman said. Two examples are professional clothing and the costs of paying off any prior debts, such as credit card payments. Johnson recognizes that budgeting isn’t exactly entertainment, but says that for 40 THE NATIONAL JURIST March 2009 him, it’s been an essential step in staying financially sound. “We hate to sit down and do it; it’s not fun, but I think it’s something you have to do,” he said. “A lot of times, we know those good, sound pieces of advice…but it’s hard to implement them.” In creating a budget, Johnson said he keeps track of where he and his wife spend their money. He also said he’s learned to cut out the “latte factor” — those little expenses that can add up to significant financial trouble. For example, Johnson said he packs meals ahead of time rather than spending more on take-out, accounting for the fact that law school gets stressful and that he — like many other students — often needs to eat on the run. After you’ve created your budget, stick to it and try to minimize your costs, Matasar said. For example, he recommends that students live at home or with roommates if possible, watch their everyday spending, avoid credit card use whenever possible and only finance what’s necessary. “Students should never treat the loan market as a way to live a [lavish] lifestyle,” Matasar said. The importance of budgeting and sound financial management also extends to the beginning of your legal career. “It’s important to live within your means and to understand that you have likely paid for your education with some of your current earnings,” Jarvis said. For careful budgeting and sound financial management $Come $Stick up with your budget early and revise it at least once a year. Include all of your anticipated expenses. of loans. In some loan forgiveness programs, consolidation may even be required. In order to understand repayment options, students must be familiar with the terms and requirements of their loans. Jarvis recommends consulting the National Student Loan Data System, the central database for student aid run by the Department of Education. She adds that students should also get a copy of their credit reports and be familiar with the terms of their private to your budget and live within your means. As one person put it, if you live like a lawyer while you’re a law student, you’ll likely live like a law student when you’re a lawyer! Our new website has launched. Our editor’s blog, Advice & Consent, covers the critical issues in legal education. You can also find up-to-date law school news featured within Law School 360 at www.NationalJurist.com. http://www.NationalJurist.com
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