Dane Rennier turned down several federal student loans during his law school tenure at the University of Missouri—Columbia. He wasn't going to stress himself out about borrowing what was needed to complete his education, but he also didn't want to go into any unneeded debt.
He worked as much as he could to reduce the amount he needed to take out in student loans. He also always kept in mind starting salaries for a criminal prosecution attorney and his future monthly payments.
Rennier borrowed less than $60,000 during his time at the public law school – less than the typical law student. According to data from the American Bar Association cited in "Getting a Grip on Your Student Debt" by Heather Jarvis, a student loan expert and licensed attorney, public law school students borrow an average of $75,728 and private law school students borrow an average of $124,950.
[Explore ways to pay for law school.]
Before law school students choose a school and accept their first student loans, they should take these steps to help determine how much to borrow.
1. Research likely postgraduation salaries: "Research the legal employment market and realistically estimate your starting salary," says Jarvis. The big salaries for lawyers just out of school do happen, but they are not the salaries most graduates get, even in corporate law, she says.
A study by NALP — the Association for Legal Career Professionals estimated 10 percent of 2011 graduates made $160,000. The average salary was $76,000; $50,000 to $70,000 for small firm lawyers and $52,000 for legal work in the government.
Some schools also provide information readily available on their websites. If they don't post salaries, prospective students should contact schools directly for the data, Jarvis says.
[Find out how to evaluate law schools' jobs data.]
2. Don't bank on loan forgiveness: Getting a job after law school is as much about experience and networking as it is about grades, according to Jarvis. Public defender and prosecutor positions don't pay well, but they're also competitive, she says.
Students shouldn't count on a government job in order to qualify for public service loan forgiveness, a program under which the remaining balance on federal student loans – made under specific repayment plans – is forgiven after 10 years of work in a field or occupation of public benefit, Jarvis says.
To increase postgraduation employment chances, students should volunteer in offices where they'd like to work, she says.
[Find out about student loan repayment assistance.]
3. Borrow private loans carefully: Even when interest rates are lower, private loans don't have some of the extra protection and assistance federal student loans potentially come with, such as public service loan forgiveness.
Sallie Mae spokesperson Patricia Nash Christel says private student loans are a good option for people who are working and plan to pay off a specified amount during a short period of time. They may be able to lock in an interest rate lower than the nearly 8 percent interest currently offered under the Graduate PLUS loan program.
For example, a student in his or her final year of law school has a job lined up after graduation that would not allow him or her to qualify for public loan forgiveness. If the student wants to borrow $10,000 or less and will repay the loan within five years, a private loan could work out in the student's favor.
[Learn more about graduate school loan options.]
4. Consider the cost of borrowing: In Rennier's first two years of law school, some subsidized federal student loans were available to graduate students, so interest wasn't part of his initial calculations.
On July 1, 2012, for his final law school year, this program was eliminated. One year of interest on a $10,000 Graduate PLUS loan is nearly $800. Law students need to be aware of the growth of their student loans due to interest when determining how much they're willing to borrow, Jarvis says.
Rennier, who says he couldn't have gone to law school without student loans, adds that he is always cognizant of how much he's borrowing and how much his debt is growing.