I don’t like bar study loans.
I say this both as a former bar study loan borrower and as someone who closely watches the student lending marketplace.
The big problem with bar study loans is that interest rates normally range from average at best to terrible. Many students end up with interest rates of over 10%.
Despite the shortcomings, many borrowers choose to get a bar study loan each year. Today we will cover the lenders offering bar study loans and look at some alternatives to a bar study loan.
Bar Study Loan Lenders
At present, four national lenders are offering bar study loans.
|Lender||Interest Rates||Loan Amounts|
|4.41% – 11.49%||Max $15,000|
|Sherpa Review: Of the major bar study loan lenders, PNC is probably the best bet. PNC offers fixed-rate and variable-rate loans, has a variety of repayment lengths, and has the lowest advertised interest rate. However, the lender that actually offers the best rate may not be PNC. This is why all borrowers should shop around.
Read the full review on PNC.
|3.27% – 12.68%||$1,000 – $15,000|
|Sherpa Review: Sallie Mae is still a huge name in the bar study loan business. The interest rates offered by Sallie Mae on the low end are competitive with other lenders, but many borrowers end up with double-digit interest rates... even those with co-signers.
Read the full review on Sallie Mae.
|5.37% – 12.74%||$1,000 – $16,000|
|Sherpa Review: Discover has a reputation for excellent customer service, and that service definitely applies to their bar study loans. The zero fee offer, which includes zero late fees, is very customer friendly. Though Discover doesn't advertise the lowest possible interest rates, checking rates with Discover may still be time well spent.
Read the full review on Discover.
|9.99% – 12.67%||Max $12,000|
|Sherpa Review: Wells Fargo does offer bar study loans. With the best rates starting at 12%, it is hard to see a reason why a consumer might go in this direction.
Read the full review on Wells Fargo.
The Bar Study Loan Issues
Despite being a rather sophisticated demographic, law students who are about to sit for the bar are not the best consumers.
After borrowing massive sums of debt to pay for law school, one last student loan — even with a lousy interest rate — doesn’t seem like a big deal.
Enter the bar study loan companies. Not many lenders offer bar study loans (four by my count), so there isn’t much competition. The bar study loan is presented as one final student loan and a useful tool to help ensure bar passage. Law students apply for one loan, get approved, and move on to more pressing concerns.
Many law students don’t realize that a bar study loan is not a student loan at all. In reality, it is just a fancy-dressed personal loan.
Because a bar study loan is just a personal loan, prospective borrowers shouldn’t limit themselves to loans labeled as bar study loans. A personal loan can be a credit card payoff tool, a home construction loan, or a loan for paying for bar expenses.
A quick look at a couple of personal loans shows that they may be a reasonable alternative:
Bar Study Loans vs. Personal Loans
The biggest difference between a bar study loan and a traditional personal loan seems to be the repayment length. Personal loan lenders are often able to offer interest rates as low or lower than a bar study loan, but these loans have to be paid off in a much shorter period. The downside is larger monthly payments; the upside is significantly less spending on interest over the life of the loan.
When comparing the four bar study loan lenders against a couple of personal loans, it becomes apparent that bar study loans are not the only reasonable option to get through the bar exam.
Law students looking for funds to get through the bar examination process would be wise to consider both bar study loans and personal loans.
Looking Outside the Box
Those looking for a very short-term loan to cover bar exam and class costs may also want to consider a credit card with a 0% introductory interest rate. A quick google search will show up to date promotions and offers.
This strategy is dangerous because the interest rates jump to high levels after the introductory period.
This route comes with high risk, but the reward is 0% interest, which is significantly better than bar study loans and traditional personal loans.
Final Thought: Consider All Options
No lender or loan type sticks out as an ideal option for bar study.
This means that potential borrowers need to consider all of their options and way the pros and cons carefully.
Borrowing during bar study is expensive, but with some planning and research, money can be saved.