Educational Debt and the Financial Aspects of Planning for Law School The webinar will begin promptly at 7:30 p.m., EST. For audio, please use audio via your computer or dial followed by

Heather Jarvis, Student Loan Expert askheatherjarvis.com John Garcia, Director of Financial Aid, Michigan State University College of Law 2

The complete costs of a earning a law degree The impact of high levels of educational debt Loan programs and repayment options Tools for making an informed borrowing decision Suggestions for minimizing educational debt Answering your questions 3

Tuition: Public: $18,472, Private: $35,743 Indirect costs: –Books, room, board, and health insurance –Range between $12,500 and $25,000 for the academic year Total “cost of attendance” at select law schools approaches $75,000 annually 4

Only a small % of graduates find employment in “big law” firms that pay top dollar Salaries at small/medium firms vary but typically are in the $40,000 to $60,000 range Government and public interest salaries are stagnant The reporting of recent graduate employment data is not uniform – some schools are much more transparent than others 5

STUDENT LOANS Federal Student Loans  Stafford loans  Unsubsidized  Grad PLUS loans  Credit-based Private Student Loans  Variable interest rates  Limited repayment options Note: The cost of federal loans is increasing, effective July 2012, with the discontinuation of subsidized loans for graduate/professional students. 6

Average law school graduating debt: –Public: $68,827 –Private: $106,249 Average undergraduate debt: –$24,500 Various repayment plans are available: –Standard 10-year term –Income-based repayment –Loan repayment assistance and forgiveness programs 7

Examine the full, three-year cost of a cross section of law schools – direct and indirect costs Examine current starting salaries for careers of interest to you and future earnings potential for the career(s) that interests you Calculate loan repayment scenarios factoring in all types of educational debt and reflect upon personal and professional goals -- what will you be postponing or giving up during the 10-, 20-, or 25- year repayment period? 8

Consider the issue of timing: –Law school immediately after undergrad –Law school after undergraduate debt is paid –Law school on a part-time basis Give appropriate attention to “prestige” or “ranking,” in addition to total cost of attendance and other factors when evaluating among and between law schools 9

MSU LAW APPROACH TO ADVISING PROSPECTIVE STUDENTS “If you live like a lawyer while in law school, you must live like a student once you are a lawyer (and repaying your loans)!” 10

UNDERGRADUATE VS. LAW SCHOOL FUNDING Undergraduate Federal need-based grants State need-based grants Institutional need-based grants Institutional merit awards Local, state, regional scholarships Federal need-based loans Federal work study Law School Institutional need- based aid (minimal) Institutional merit or non-need based aid Federal loans Private loans Federal work study 11

STUDENT LOAN DETAILS Interest Rates –Stafford: 6.8% (fixed) –Grad PLUS: 7.9% (fixed) Maximum Available –Stafford: $138,500 (for most students) –Grad PLUS: annual limit is school’s cost of attendance minus aid; no lifetime limit Note: The cost of federal loans is increasing, effective July 2012, with the discontinuation of subsidized loans for graduate/professional students. 12

MSU COLLEGE OF LAW ALUMNI SURVEY Survey of MSU Law Graduates: responses Response Highlights –Debt resulted in students delaying getting married, starting a family, purchasing a home –Debt resulted in some graduates accepting positions that “pay the bills” but were less satisfying –Expressions of surprise regarding the amount owed and regret about not giving more attention to impact of what was borrowed and potential repayment 13

MSU LAW APPROACH TO ADVISING PROSPECTIVE STUDENTS  Develop a three-year budget for law school – see your financial aid office for advice on building your budget  Calculate repayment scenarios based on below-average, average, and above- average starting salaries, and/or on the basis of the salary for your desired employment  Take every opportunity to minimize indirect costs and reliance on loans 14

Repayment Term (in Years) Debt $100,000.00$1,150.80$887.68$763.44$ Total Cost of Loans (over 10, 15, 20 and 25 Years) Debt $100,000.00$138,096.57$159,783.63$183,201.36$208, Student Loan Repayment LOAN REPAYMENT AND YOUR LEVEL OF COMFORT 15

Hypothetical Annual Salary $40,000/$2423 mo $60,000/$3508 mo $80,000/$4570 mo 10-year Repayment Monthly Repayment$575 % of monthly salary24%16%13% 15-year Repayment Monthly Repayment$444 % of monthly salary18%13%10% 25-year Repayment Monthly Repayment$347 % of monthly salary14%10%8% SALARY AND LOAN REPAYMENT: $50,000 IN EDUCATIONAL DEBT 16

Hypothetical Annual Salary $40,000/$2423 mo $60,000/$3508 mo $80,000/$4570 mo 10-year Repayment Monthly Repayment$1151 % of monthly salary48%33%25% 15-year Repayment Monthly Repayment$888 % of monthly salary37%25%19% 25-year Repayment Monthly Repayment$694 % of monthly salary29%20%15% SALARY AND LOAN REPAYMENT: $100,000 IN EDUCATIONAL DEBT 17

Hypothetical Annual Salary $40,000/$2423 mo $60,000/$3508 mo $80,000/$4570 mo 10-year Repayment Monthly Repayment$1726 % of monthly salary71%49%38% 15-year Repayment Monthly Repayment$1332 % of monthly salary55%38%29% 25-year Repayment Monthly Repayment$1041 % of monthly salary43%30%23% SALARY AND LOAN REPAYMENT: $150,000 IN EDUCATIONAL DEBT 18

MSU LAW APPROACH TO ADVISING PROSPECTIVE STUDENTS  Challenge yourself to minimize living expenses and educational debt:  share an apartment  rely on public transportation  prepare your own meals  carefully evaluate study-abroad options  apply for outside grants/awards  consider part-time employment  Be proactive and diligent with career-planning efforts 19

MSU LAW APPROACH TO ADVISING PROSPECTIVE STUDENTS Recommendations if you plan to borrow funds to finance law school  Eliminate consumer debt  Obtain a free copy of your credit report at  Avoid or minimize high-dollar purchases  Explore all types of “free aid”  Investigate law school scholarship opportunities early on:  Criteria used by a variety of law schools  Application timeline 20

CONSIDER COST AND SCHOLARSHIPS WHEN APPLYING TO LAW SCHOOL Columbia University School of Law School 21

INVESTIGATING SCHOLARSHIP AID Duquesne Law School Michigan State College of Law 22

RESOURCES American Bar Association: Access Group: Ask Heather Jarvis: LSAC: MSU Law:

Heather Jarvis, Student Loan Expert askheatherjarvis.com John Garcia, Director of Financial Aid, Michigan State University College of Law YOUR QUESTIONS? 24

Insider’s Guide to Law School Admissions Tuesday, May 1 3:00 p.m., EST Factors important to the admissions committee when reviewing an application for admission Suggestions for crafting an effective personal statement How and when to provide a supplemental statement Advice on when to apply Join our Future Webinars 25