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Financing Law School

Types of Loans Available to Law Students

University of Denver Financial Aid

Students who submit a FAFSA are usually offered at least one federal student loan in their financial aid package. This email will give you an overview of each type of loan available so you can make informed decisions about borrowing for law school.


Federal Direct Unsubsidized Loans:

What are Federal Direct Unsubsidized loans?
Federal Direct Unsubsidized loans are made available by the U.S. Department of Education and are the most widely-used loans for graduate students.

Who is eligible for Unsubsidized loans?
Students who submit the FAFSA, meet the eligibility requirements for all types of federal student aid, and are enrolled at least half-time (4 credits or more) can borrow these loans.

What are the terms of Direct Unsubsidized loans?

Federal Direct Unsubsidized Loan Terms
Maximum Loan Amount: $20,500 per academic year
Interest Rate: 6.00% fixed for the 2017-18 academic year 
Fees: A 1.069% origination fee is proportionately deducted at disbursement of each installment of the loan.
Requirements to Receive Funds: Complete both a Master Promissory Note and Entrance Counseling online at www.StudentLoans.gov, and be enrolled at least half time.
Repayment Terms
Grace Period: 6 months
Repayment Length:  Between 10 and 25 years, depending on total borrowing and chosen repayment plan.
Payment Due: Monthly
Payment Amount: Depends on chosen repayment plan, but not less than $50 per month.

No payments are required while you are enrolled at DU. After you graduate or drop below half-time enrollment, you will have a six-month grace period before repayment begins.


Federal Direct Graduate PLUS Loans:

What are Federal Direct Graduate PLUS loans?
These loans (commonly referred to as Grad PLUS loans) are fixed-interest, federally guaranteed loans available to credit-worthy graduate students. Most law students will have this loan offered as a part of their financial aid award.

Who can borrow a Grad PLUS loan?
Graduate students who submit the FAFSA, meet the general eligibility requirements for federal student aid and pass a credit check are eligible to borrow these loans.

What are the terms of the Grad PLUS loans?

Federal Graduate PLUS Loan Terms
Maximum Loan Amount: Up to your cost of attendance, minus all other financial aid.
Interest Rate: 7.00% fixed for the 2017-18 academic year
Fees: A 4.276% origination fee is proportionately deducted at disbursement of each installment of the loan.
Requirements to Receive Funds: You must complete a Master Promissory Note online at www.StudentLoans.gov, pass a credit check and be enrolled at least half time (4 credits or more). Some borrowers may have to complete PLUS Counseling as well.
Repayment Terms
Grace Period: 6 months
Repayment Length:  Between 10 and 25 years, depending on total borrowing and chosen repayment plan.
Payment Due: Monthly
Payment Amount: Depends on chosen repayment plan, but at least $50 per month.

What does the Department of Education look at during a credit check?
They're looking to see if the borrower has an adverse credit history. However, debt-to-income ratio, credit score, employment status or even lack of credit is not taken into account during this credit check. The credit check for a Graduate PLUS loan is valid for 180 days.

What is considered adverse credit?
For purposes of qualifying for a Grad PLUS loan, a borrower is considered to have an adverse credit history if:

  • he or she has one or more debts with a total combined outstanding balance greater than $2,085 that are 90 or more days delinquent as of the date of the credit report, or that have been placed in collection or charged off (written off) during the two years preceding the date of the credit report; or
  • during the five years preceding the date of the credit report, he or she has been subject to a
    • default determination,
    • discharge of debts in bankruptcy,
    • foreclosure,
    • repossession,
    • tax lien,
    • wage garnishment, or
    • write-off of a federal student aid debt.

What are the options if I'm denied a Grad PLUS loan?
Students who are denied because of adverse credit may:

  • reapply with a credit-worthy endorser (cosigner), or
  • appeal the denial with the Department of Education if there are extenuating circumstances related to their credit history that can be documented.

If you are initially denied, but then subsequently qualified to borrow a Grad PLUS loan by obtaining an endorser or documenting extenuating circumstances, you will be required to complete PLUS Counseling through www.StudentLoans.gov before the loan can be received.


Private Education Loans:

Although you can borrow a private education loan to help finance your law degree, we highly recommend that you borrow your full eligibility of Direct Unsubsidized loans and Direct Grad PLUS loans before borrowing a private education loan. Here's why:

  • Interest rate: Historically, private student loans have typically had higher interest rates than federal student loans, and many have variable interest rates (unlike federal loans, which have fixed rates).
  • Repayment timeline: You do not have to start repaying federal student loans until you graduate or are enrolled less than half-time (below 4 credits). Some private loans require payments while you're still in school.
  • Repayment plans: Federal student loans have many repayment plan options, including plans that base monthly payment amounts on your income. Most private loans have very limited repayment plans available.
  • Forgiveness options: You may be eligible to have a portion of your federal loans forgiven if you work in public service. It's highly unlikely that your private loan lender will offer any loan forgiveness plans.

Find a complete summary of the differences between federal and private loans on the Federal Student Aid website.

Reasons to Consider a Private Student Loan:
In a small number of situations, a private education loan may be a better option. Reasons to consider a private loan include:

  • Overall cost: If you have good credit, and can obtain a low interest rate, it may cost you less over the life of the loan. This depends on repayment options, length of repayment and total borrowing.
  • Non-traditional enrollment: Unlike federal student loans, you may be able to borrow a private loan if you are enrolled less than half time.
  • Grad PLUS loan unavailable: If you are unable to borrow a Grad PLUS loan, a private loan can help cover your educational expenses.

Terms of Private Loans:

Private Education Loan Terms
Lender: Typically a commercial bank or credit union.
Maximum Loan Amount: Up to your cost of attendance, minus all other financial aid.
Interest Rate: Can be fixed or variable; depends on lender and borrower credit. Variable rates generally range from 2.25% to 10%; fixed generally range from 5.25% to 14%.
Fees: Varies, but most private loans do not have upfront fees.
Requirements to Receive Funds: All private loan lenders require a Self-Certification Form; some may have other requirements, such as half-time enrollment.
Repayment Terms
Grace Period: Typically 6 to 9 months, depending on lender.
Repayment Length:  Typically between 15 and 25 years, depending on lender.
Payment Due: Monthly
Payment Amount: Depends on lender and amount borrowed.

Our Preferred Private Loan Lenders:
To help you find the best loan option, our office researches and evaluates many different lenders. We search for companies who provide the most competitive loan products for students, and those lenders are chosen to appear on our preferred lender list. The lenders on this list are chosen because of a variety of factors, including available borrower benefits, zero origination or repayment fees, and competitive interest rates.

Applying for a Private Loan:
If you decide that a private education loan is the right choice, you will need to apply directly with the lender you have chosen. A credit check is always a part of the application process, which may include an evaluation of your credit score and debt-to-income ratio (depending on the lender). You will also be required to complete a Self-Certification Form. Once you apply, the lender will send us a request to certify your eligibility for the loan. If we are able to certify it, the loan will be added to your existing financial aid package.

Please note: Since law students are offered a Grad PLUS loan up to their total cost of attendance, you will not be able to borrow a private education loan unless you choose not to borrow the Grad PLUS loan.


Want even more information?
There are many additional resources available:

We know there is a lot of information about student loans here, so if you still have questions, please don't hesitate to contact us!

 

That's it for this week! Up next week: Next Steps for Borrowers

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Contact Us

303.871.4020  •  finaid@du.edu  •  www.du.edu/financialaid

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