cosigner release makes for a bad loan

PNC Bar Study Loan Review

Michael Lux Blog 0 Comments

The good news is that compared to other bar study loan lenders, PNC is one of the best options available. The bad news is that most bar study loans are pretty terrible and the PNC loan certainly has its fair share of warts. Bar Study Loan Basics The purpose behind a bar study loan is to cover an aspiring lawyers living costs as well as bar study costs.  This allows recent law school grads the opportunity to prepare for the bar without having to worry about how rent is going to get paid. What makes bar study loans unique is…

PNC Bar Study

Interest Rates
Loan Terms
Cosigner Release

Not Bad for Bar Study

Bar study loans are usually a bad option, but PNC is one of the better bad options.

The good news is that compared to other bar study loan lenders, PNC is one of the best options available.

The bad news is that most bar study loans are pretty terrible and the PNC loan certainly has its fair share of warts.

Bar Study Loan Basics

The purpose behind a bar study loan is to cover an aspiring lawyers living costs as well as bar study costs.  This allows recent law school grads the opportunity to prepare for the bar without having to worry about how rent is going to get paid.

What makes bar study loans unique is that they are not student loans.  Instead of the money going to your school’s office of financial aid, the money is sent directly to the borrower.

A bar study loan is nothing more than a personal loan with a couple extra requirements.  In the case of the PNC bar study loan, borrowers must be finishing law school within six months, or have graduated from law school no more than six months prior.  The borrower must also be planning on sitting for the bar within six months of graduation.

PNC Bar Study Loan Terms

PNC offers both fixed-rate and variable-rate bar study loans.  The variable-rate loans start at 5.10% while the fixed-rate loans start at 5.79%.  On the low end, these rates are quite good.  The bad news is that rates can start as high as 11.60% for a variable-rate loan and 12.29% for a fixed-rate loan.  On the high side, these rates are awful.

Borrowers have up to 15 years to repay the loan and the loan also includes a six month grace period.

PNC will loan a maximum of $15,000 for bar study.  However, applicants must have a total aggregate student debt of less than $225,000, including federal and private student loans.

A Red Flag for Cosigners

One of the major issues with the PNC bar study loan is the cosigner release policy.  Because these loans are likely to be utilized by many unemployed recent grads, we suspect that many will need a cosigner.  PNC advertises that there is a cosigner release policy, but we suggest that all cosigners expect to be on the loan for the life of the loan.

In order to secure a cosigner release a borrower must:

  • Make 48 consecutive on-time payments,
  • Provide proof of income, and;
  • Pass a credit check

Making four years worth of payments is a pretty high bar.  One late payment or one forbearance starts the 48 month clock at zero.  For some perspective, many lenders require 12 months on on-time payments.

The big concern on the cosigner release is the credit check that the borrower must pass at the end.  PNC has almost no incentive to release cosigners from loans, and they don’t disclose what is necessary in order to “pass” the credit check.

The combination of these requirements makes any cosigner release a long shot.

Reviewing PNC Alternatives

For many grads there is definitely the temptation to just suck it up and live with a lousy loan while getting ready for the bar.  After many years worth of student loans, a bar study loan may seem like a drop in the bucket.

As we alluded to earlier, competitor bar study loans like the one offered by Sallie Mae could be an even worse option.  The only comparable bar study loan to PNC would be the one offered by Discover.

Sadly, the best option may be to forgo incurring any additional debt.  Crashing on a futon for a few months and living on ramen noodles may not sound ideal, but the approach has merit.

Another area worth investigating is a traditional personal loan.  These options are more plentiful and less restrictive.  Interest rates can vary considerably, but with lenders like SoFi offering rates starting under 6.00%, this avenue could be the ideal option.

Final Thoughts

Bar study loans are not consumer friendly.  They may be better than payday loans, but with interest rates over 10% in many cases, a bar study loan is really expensive debt.

The PNC bar study loan is better than some of the other bar study loans available, but future lawyers would be wise not to limit themselves to loans specifically for bar study.