Preparing for Law Student Loan Consolidation

When preparing to consolidate your law school loans, there are several issues to keep in mind that will help to make the process go more smoothly. The consolidation process for law students who have graduated differs somewhat from the consolidation process for standard student loans in a few critical areas. Understanding those differences can help make the process run smoothly.

Types of Law School Loans

The major difference between law school loans and undergraduate loans is that law school loans almost always involve a blend of subsidized Federal Stafford loans, unsubsidized Federal Stafford Loans and private loans. Undergraduate loan programs do not necessarily blend as wide a range of loan types. The standard interest rates that apply to these types of loans may differ significantly as well.

All of the three types of loans all can be consolidated. Typically, federal loans must be consolidated under one type of program while private loans must be consolidated separately. This is true even in cases where the same lender arranged all of the loans – borrowers are required to apply for consolidation through the Department of Education for federally insured money, while each lender will have a separate application process for private loans.

Process Preparation

In preparation for this process, a borrower should get a breakdown of which loans qualify for federal consolidation and which must be directly negotiated with the lender of record. Depending on the split, it may be advantageous to pay off the private loans more quickly, but in any case, having this information readily available will be useful.

Furthermore, when considering payment arrangements, most lenders will not require a borrower to pay back more than 20% of their monthly income to debt service. It is important to have a firm grasp of how each lender treats the aggregation of private and federal loans before beginning the application process.

Other Considerations

Another important consideration to make before beginning the application process is at what interest rate each piece of the aggregate debt was borrowed. In the case of federally insured money, the consolidation interest rate will be set and not subject to much negotiation. In the case of private loans, however, there may be more room for negotiation. Remember that the lender wants to be repaid and is not incentivized to cause the borrower financial hardship.

Under the new bankruptcy law, student loans are not forgiven in bankruptcy. If a borrower has no means of paying the loan back, the bank loses. Knowing this, lenders are more likely to negotiate to a more reasonable and manageable payment plan if they believe the borrower can and will meet the schedule. This can be used to one’s advantage to reduce the interest rate whenever possible.

Overall, the key is simply to be prepared and to do research your options to avoid mistakes because it is much more difficult to correct errors than to get it done correctly the first time.


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