Some students enter law school directly from their undergraduate studies and are used to living on a modest student budget. Others have been working and are used to the lifestyle created by their previous earnings. Whatever your current situation is, you’ll need to plan carefully for your law school costs.
As a rule, you should plan to borrow the minimum amount necessary to maintain basic needs required to complete your degree. Never borrow (via loans or credit cards) to support a lifestyle. You could end up spending well over $1,500 a month in loan payments. It’s important that you maintain a lifestyle in keeping with your current financial means so that you can realize the benefits of your chosen profession once you are employed.
Its usually necessary to increase resources, cut expenses, or do both. Consider the following suggestions:
The Importance of Good Credit
Good credit is necessary to take advantage of the various financing options available for law school. We suggest that you verify that your credit report is accurate and that your credit is in good standing. Credit reports may contain misinformation that can take time to correct. Obraining a copy of your credit report early allows you to correct any adverse information prior to applying for loans that require a credit check.
You may request a free copy of your crdit report from each of the three credit reporting agencies once every year. For mor information, go to www.annualcreditreport.com, or contact the credit reporting agencies directly. If you have been denied credit, you have the right to a free copy of the credit report used in the decision within 60 days of the denial from the appropriate credit reporting agency.
Credit Reporting Agencies
Experian 888.397.3742 www.experian.com
TransUnion 800.888.4213 www.tuc.com
Equifax 800.685.1111 www.equifax.com
Your Credit Score
Credit scoring is a quick and consistent method of determining the likelihood that you will repay your loans based on your past credit history. Some factors used to calculate your credit score can include promptness in paying bills, number of credit cards, total credit limit, and the amount owed on accounts.
Although it is often a concern for student borrowers, having multiple student loans and/or a significant amount of education debt does not necessarily mean you will have a poor credit score. How well you managed credit in the past is far more important.
Some factors that can negatively affect your credit score are:
- serious delinquency, derogatory public records, or collection accounts
- the proportion of balances to credit limits is too high
- the proportion of loan balances to loan amounts is too high
- too many new accounts
- too many accounts with balances
- insufficient time since account was established
- too many credit inquiries in the past 12 months
- too many finance accounts
For more information on credit scoring, contact Fair Isaac at www.fairisaac.com.
Organizing your Financial Activities
Keeping well-organized records of your financial activities will greatly assist in managing your loans and achieving your financial goals. You should keep the following documents relating to all loans that you borrow:
Create a filing system that works for you and stick with it.
You should also keep track of all telephone or e-mail communications with your lender, holder, and servicer. Remember to write down the name of the representative you speak with when calling, so that you can refer to the call later on if necessary.