Article updated 6/29/17 to include the latest rate and program information.
During law school, student loans seem like a magic gift. They show up each semester, and all your books and booze are paid for. It isn’t until after graduation that they begin to take their toll. With interest rates at 6%, 8% or even double digits, this debt really hurts. Fortunately, there are options for attorneys, regardless of type of employer, that can keep student loans under control.
Large Firms Employees
If you are enjoying the golden handcuffs of the large firm lifestyle, there are several great student loan consolidation options to consider. These lenders that cater towards young professionals with six figure incomes and high credit scores. Even if you are on track to pay off your debt relatively quickly, locking in a lower interest rate can make a huge difference on any budget. If you have 200k in law school debt and reduce your 8% rate loans to a 2% rate loan, it means you will be saving $1,000 per month.
Three companies worth a look:
- SoFi – SoFi is the lender that tries to provide the most perks to their borrowers. For starters, interest rates with SoFi start below 3%, which puts them as the best in the market. Going beyond the interest rates, they actually have a career services department for their clients. Should you ever find yourself on the short end of the stick in a firm merger, this is a resource that might come in handy. They are also running a $150 sign up bonus for all new customers.
- Laurel Road – Laurel Road is the product of Darien Rowayton Bank, a smaller community bank on the east coast, but don’t be deceived. Their student loan refinancing products are among the best in the market. They have rates that start at 3.6%; and they seem very proud of the fact that many of their customers qualify for their best rates.
- CommonBond – CommonBond like SoFi is a company that specializes in student loans. Like SoFi, they offer interest rates starting below 3%.
Ultimately, the best deal will be the company that offers the lowest interest rates. With these three companies so close in advertised rates, the smart play is to apply at each and go with the lowest bidder.
Government and Non-Profit Employees
If you are working as a government attorney or for a non-profit, your student loan consolidation route will likely be different. For starters, the average law school debt compared against the average government or non-profit salary means that most of you will have a hard time qualifying with the three companies previously mentioned. The good news is that their are still great options.
Without question, the best option is federal government student loan forgiveness. After 10 years of payments based upon your income, the remainder of your debt can be forgiven tax-free. While this is a fact that should be well known to all government and non-profit lawyers, what many may not know is that by consolidating your federal loans into a federal consolidated loan, some loans that might not otherwise be eligible for forgiveness can become eligible as part of the new loan. This applies to many graduate loans from the time before the government got into direct lending (meaning graduate loans pre-2010). Just remember, there is only one place to consolidate your federal loans. Federal consolidation can be a bit tricky and there is no way to undo a consolidation, so be sure to do lots of research before jumping into this route. A good starting point is the Department of Education page on Federal Student Loan Consolidation.
Unfortunately, not all loans are federal, meaning forgiveness isn’t ever going to happen. For these loans, consolidating with a private company is a great way to lower your rates. Even on a more modest government or 501(c)(3) salary, there are options. One of the best choices may be LendKey. This company will match you with a not-for-profit local credit union. They rates they offer aren’t quite as low as some other companies mentioned, but loans starting at less than 3% are definitely worth investigating.
Regardless of where you find yourself on the lawyer income spectrum, there are options for putting a huge dent in your monthly student loan interest. Student loan consolidation isn’t a magic fix, but it can make your massive student loan heartache into a slightly less massive student loan headache.