Wells Fargo Bar Study
Wells Fargo has strict total debt limits and only offers high interest rates on their bar study loans.
Wells Fargo has been a pretty easy target of criticism lately.
The controversy has gotten so bad that Wells Fargo has spent money on advertising campaigns where they apologize for losing their way.
That being said, a company with a lousy reputation can have a decent product or two. In the world of student loans, a lender offering a low interest rate can cause borrowers to overlook many other flaws.
Unfortunately for Wells Fargo, their bar study loan is a truly terrible product. We are not fans of bar study loans in general, but even when held to the low standard of bar study loans, Wells Fargo still is a bad option.
The Wells Fargo Bar Study Loan Issue
The major problem with the Wells Fargo Bar Study Loan is the interest rate. The best possible interest rate on a bar study loan with Wells Fargo currently sits at 12.01% APR.
Being over 12% puts Wells Fargo at double the starting rates of competitors like Discover, Sallie Mae and PNC. At double digit interest rates, the loan starts to look less like an educational expense and more like credit card debt.
Despite the high interest rates, we know some law students and recent graduates may be desperate enough to consider a Wells Fargo loan. After law school, bar passage is essential, and some might be willing to deal with the high rates if it means they can afford bar study classes and exam fees.
The desperation logic is understandable, so we will take a closer look at bar study loan terms as well as other alternatives that should be examined first.
Wells Fargo Bar Study Basics
Borrowers can get loans of up to $12,000, which should be more than enough for bar application fees, Barbri classes, and living expenses.
Wells Fargo offers both fixed-rate and variable-rate bar study loans and all of their bar study loans are just over 12%, so borrowers will not see a wide range of rates.
One limitation that may be an issue for some borrowers is the $180,000 combined borrowing limit. If you have student debt in excess of 180k, you won’t be able to qualify for this loan. If your student debt currently sits at 175k, the most you will be able to borrow is $5,000.
Similar to other bar study loans, applicants must be in their final year of law school or have graduated within 30 days. Wells Fargo also requires “an established, positive credit history.”
Wells Fargo does get credit for the fact that the loan comes with no application fees, origination fees, or prepayment penalties.
Repayment begins six months after graduation, but we suggest paying back the loan as soon as possible given the interest rates.
Bar Study Loan Options and Alternatives
Recent law school graduates are a lousy credit risk. Many have massive student debt, and some don’t yet have jobs. This is not a recipe for low interest rates.
Those with employment may have jobs that are conditional upon passing the test. Again, this is a risk that most lenders won’t want to touch.
Finally, the fact that a bar study loan is a personal loan rather than a traditional educational loan changes things from the lender’s perspective. Student loans are very difficult to discharge in bankruptcy, but personal loans like a bar study loan lack the same creditor protections.
Thus, it isn’t really a surprise that bar study loan interest rates are higher than other student loans.
For many recent law school grads the best bar study loan may be no bar study loan at all. Those that desperately need the money and have no other alternative should consider traditional personal loans instead. Traditional personal loan lenders like SoFi offer rates starting below 6%, but they go up to 16%. On the low end, this rate is dramatically better than Wells Fargo… on the high end it is noticeably worse.
As far as we can tell, there is no benefit to law students opting for a bar study loan over a traditional personal loan. The only difference is that personal loans do not have the recent graduation requirements or lifetime educational borrowing limits.
Another more dangerous, but possibly better option, would be to find a 0% into APR credit card. After the intro period the credit card interest rate will jump dramatically, but depending upon the regular rate and card terms, it could be a viable solution. Just make sure to have a plan in place to knock out the debt before the rate jumps over 20%.
Borrowing money to study for the bar is not an ideal situation. None of the options we listed are particularly great.
However, even in the world of bar study loans, Wells Fargo falls short of the competition.
Borrowers should shop around and explore traditional personal loans as well as other bar study loans.
If they cannot find anything better than the 12% Wells Fargo charges, then it might make sense to apply with Wells Fargo.