Guide to Bar Loans: Pros, Cons, and More
It can take several months to prepare for the bar exam, and they are some of the most important months in an aspiring lawyerâs life. In that time, many students take preparation courses or devote all their time to studying and preparing, increasing their chances of passing the exam and taking that important step.
Bar loans are a type of financial aid offered to students going through this difficult time. A bar loan can provide them with essential living costs, while covering the cost of academic materials and preparation fees. That way, they can focus on whatâs important, and donât have to worry about getting a part-time job and spending time away from their studies.
What is a Bar Loan?
Also known as a bar study loan, a bar loan is a type of private loan offered by private lenders. Unlike federal student loans, they are not backed by the Department of Education and, as a result, are subject to the same standards and criteria as personal loans.
You have two main options for taking out a bar loan. The first is to simply borrow more money than you need during your last year of school, covering you for all costs during that final year and running over into the bar loan afterward.Â
Alternatively, you can submit a separate application and acquire your loan via one of the bar loan lenders we have listed below. To determine how much you need, simply calculate your living expenses and other costs and contact a lender.
Pros of a Bar Study Loan
- Provide you with the freedom to study without worrying about how youâll afford everything.
- You can apply even after you have graduated.
- You can borrow more money than you need, which isnât always possible with student loans.
- Move you one step closer to achieving your goal
Cons of a Bar Study Loan
- Charge higher interest rates than most other student loans
- Youâre not covered or protected like you are with student loans
- Need good credit to apply
The Best Bar Loans
You can get bar study loans from many major banks, credit unions, and lenders. We have shortlisted a few of our favorites below to help you:
Discover Student Loans
Discover is best known for its credit cards, including the Discover It, which we have highlighted many times on this website. But it also offers a host of additional banking services, including private loans and bar loans.
You can get a loan of between $1,000 and $16,000 for up to 20 years, with both fixed-rates and variable rates available, typically between 7% and 13%. There are no fees for applying, missing payments or pre-paying.
To apply, you must either be in your final year or have graduated within the last 6 months.
A trusted lender that has been in the student loan business for decades, Sallie Mae offers up to $15,000 for 15 years, with interest rates as low as 4.5% and as high as 11.56%. You can apply up to 12 months after graduation and there are no loan fees. Whatâs more, you wonât be asked to make any loan payments while youâre still in school.
Wells Fargo options are a little more restrictive, as you can only borrow a maximum of $12,000 over a maximum of 7 years. Whatâs more, you need to be enrolled in an eligible school or have graduated within 30 days, so if you graduated more than a month ago then youâll need to look at one of the two listed above.
Do You Need A Bar Loan?
You need money to get through this period as you likely wonât have time to work and study, and if you try and force it your studies may suffer. If youâre still living at home, as many students are, your parents may cover most of your living costs. Assuming they can also cover your additional expenses, you wonât need a bar loan.
However, if they canât afford to pay your fees or rent, youâll need to consider one of the following options:
While a traditional part-time job can be overly taxing during this busy period, you may have some time to freelance. It is easier than ever to earn a little extra cash by writing, designing, coding, and even doing some simple consulting work.
Youâre a lawyer, not a writer, but if youâve made it this far it means youâve completed countless essays and assignments and have a good grasp of the English language. You likely canât compete with professional writers getting the big bucks, but you can certainly compete with those at the bottom end of the scale and earn upwards of $20 an hour for your time.
If the idea of writing doesnât appeal to you, think about consulting work. Many smaller companies and individuals canât afford to spend hundreds of dollars an hour on legal fees, not when they just need a little legal advice concerning their property or business. Instead, they turn to students who have the knowledge but donât demand the same high fee.
Ask Your Employer
If you have a job lined up after graduation, your employer may cover some or all of your fees. However, you will need to make a commitment, agreeing to work with them for at least a few years after you have graduated.
A bar loan is a specialized personal loan and may charge higher fees then you can get with a traditional personal loan. If you have a good credit score, you should consider applying for a traditional loan, comparing this to the bar study loan to see which one offers the best fees.
Bottom Line: A Life-Changing Loan
A bar loan can hurt your credit score and give you even more debt to worry about, but at the same time, it means you wonât have to worry about money while you study and focus on your future.
Ultimately, thatâs the main goal here, because as damaging as that extra debt could be in the short term, if you eventually get the job of your dreams then youâll have more than enough money to clear the balance and focus on your future.
Guide to Bar Loans: Pros, Cons, and More is a post from Pocket Your Dollars.