Editor's Column

By:  Aaron Capps

Loans. I despise them. Car loans, student loans, home loans. It doesn’t matter; I equally disdain all of them. Unfortunately, the reality for many of us is that loans are part of our lives. We took out a loan to buy a house, a car, or further our education. And every month, we watch our hard-earned money go toward paying down those loans.         

I’m not writing this for the purpose of discussing how to approach home or car loans (although, what I discuss in this article likely applies to them). I’m writing this to discuss student loans. If you’re still reading this, then you probably fall within the category of people who have them. According to Experian, student loans increased by 84 percent since the recession. As a result, student loans now exceed $1.2 trillion.

So what are you supposed to do as a law student taking out these loans or a lawyer burdened by them? If you’re a law student, you should first look for easy ways to reduce your expenses. Avoid buying items you do not need. Carpool with friends or invest in a pass on your local mass transit. Find a roommate or do the unthinkable and move in with any nearby relatives.

You may also want to consider maintaining a job during school. Low-paying jobs at law firms or companies might lead to a job after school. So, view it as not only a “win” because of the paycheck you receive but also because of the potential long-term benefit in that it might lead to a job after graduation.

Next, become a cynic. Do not believe everything your law school financial aid department tells you. Do your own research. I remember when I arrived at law school the financial aid department suggested I take out a loan that would have carried an interest rate of more than 7 percent. I left the office and researched other options. By doing my due diligence, I found loans through the Texas Higher Education Coordinating Board offering interest rates between 5 percent and 6 percent. One to two points makes a big difference when the time comes to pay on those loans, so take the time to ensure you select the best loan option available.

What about attorneys who graduated and have loans that carry a high interest rate—that is, a rate currently higher than 4.5 percent? There a numerous options right now to help remedy your plight. These options come in the form of private lenders such as SoFi, CommonBond, and Earnest, to name a few. You can consolidate federal and private loans with these lenders, or you can use their services to pay in full one specific loan in order to obtain a better interest rate. It does not matter if you previously consolidated any of your loans; you can use these new private lenders to refinance them with a better interest rate. I did, and it resulted in reducing the 6.25 percent interest rate on my federal loans to an interest rate of less than 3 percent.

Also, keep in mind that when you apply for refinancing, you should shop around by applying to more than one lender. Do not apply only to one lender based on what you read online or heard from a friend. Apply to a couple of them. For those concerned about the impact of multiple credit pulls, the impact is minimal and short-lived. You may be surprised at who offers the best rate.

Reducing your interest rate may enable you to pay off your student loan principal quicker than you might have otherwise. Keeping down your expenses as a law student or practicing attorney will likely help, too.

My goal is to see that all lawyers free themselves of the weight that comes with having student loans. I have seen some lawyers use their newfound freedom to leave their high-paying jobs for a position that allows them to work with those in need. For others, paying off student loans means having the ability to donate to charities or other organizations that can then pay it forward. Whatever you do with the freedom, I wish you luck getting there

Enjoy the issue,