How to Minimize Debt in Law School

Editor's Note: Today's post comes from Bailey, a reader in law school that regularly blogs at Caffeine and Case Briefs. I found her blog several months ago and was impressed with her dedication to keeping her law school loans as low as possible, particularly since it's pretty easy to consider it funny money at a certain point. Given that I'm getting farther and farther away from law school, I asked her to write this post discussing how you can minimize debt while in law school. If you have any friends or family in law school (or considering law school), it might be a good idea to send them a link to this post).

If you ask me about my list of greatest accomplishments, graduating from college with no debt would be close to the top. As someone in my early twenties, I see plenty of my colleagues obtaining degrees and thrusting forward into the professional world, weighed down by a heavy student loans that they accumulated during college. However, despite my lack of debt, I also graduated with very little savings and ambitions of obtaining a law degree. Before I knew it, I was soon struggling with the world of student loans and trying to figure out how I could minimize my debt. I was determined to get out of law school with the least amount of debt possible, and I am pleased to say that I’m on track to do just that.

As a current or future law student, trying to figure out how to pay for law school will put you so many steps ahead in the game of life and finances. I cannot begin to tell you how many of my classmates in law school don’t even think about their finances, aside from getting whatever beer is the cheapest at happy hour. The overall best way to set yourself up for success with your law school finances is to be actively thinking about it now, rather than waiting to deal with it later. With that being said, there are some action steps that you can take before and during law school to minimize expenses and reduce your law school loans.

Before law school

For those of you that haven’t fully immersed yourself in the law school world yet, there are a couple of things that you can do to help future you be in a better financial position.

• Have a job during college. It seems like these days, most college students have part-time jobs. It’s almost impossible not to. Although it might not feel like you’re making a lot of money at the time (trust me – I cleaned toilets at a theme park for $9/hour in undergrad – I know the minimum wage struggle), each dollar reduces the amount of debt you’ll accumulate in college, and puts you one step closer to financial freedom. I was able to work full-time in college, which was one of the reasons I was able to graduate with no debt. While I know not everyone can handle juggling both, even working a little bit can mean saving hundreds or thousands of dollars in the long run.

• Shop around for the best law school deal. When I first decided to go to law school, my dream was to attend either Georgetown, or the University of Florida to get my degree. As a hopeful future tax lawyer, these two schools have some of the best programs in the country. Unfortunately, both of those schools come with pretty high price tags, at $57,576 and $38,904 in 2016-2017, respectively. Although law school is always expensive, some schools are much more affordable. For example, the University of Nebraska was only $10,612 for residents in the 2016-17 school year, and full-time tuition for in state students at Georgia State University is only $16,858. Of course, some schools are better than others and there are reasons for the high price tags, but shopping around for the best value might be worth it. No matter where you graduate from, you’re still going to have a J.D. So apply to a lot of law schools and find the best deal.

• Apply for scholarships. This goes hand-in-hand with shopping around for the best law school deal. Applying to schools where you have high scholarship changes can change your life. Although there were two law schools within an hour of my hometown, I decided not to limit myself, and apply all over the country to schools where I thought I could get a decent law school education. Turns out, I was offered three full-tuition scholarships at wonderful schools, and some pretty great scholarships elsewhere. Applying to schools where my scholarship chances were high means that I get to go to law school for free – which is a dream come true.  

• Plan ahead. Last, but not least, before you go to law school, always be planning for the future. In law school, you’ll be spending three years with tight finances, and an emergency could end up costing you for more than you are prepared for. Have a car that is on its last legs? Maybe it’s time to invest in a new one so you don’t spend your law school years scrambling for money for car repairs. Laptop starting to crash a lot? Grab a new one because you don’t want to be worried about finals and concerned about how to afford a new MacBook. Think about setting aside some money in case you have a medical emergency, put some money into an account in case you have to travel unexpectedly. A little bit of planning can go a long way.

During law school

Alas, you have finally made it to law school and all of your dreams of success are going to come true. After three years of high stress and burying yourself in debt, that is. Although I like to kid about crushing debt and emotional abuse, there can some truth to that if you’re not careful. Luckily, I’ve figured out some helpful tips and tricks to minimizing debt while in school. With a few of these steps and a little luck, law school debt shouldn’t be too painful in the long run.

One thing that makes reducing debt in law school so hard is that most people will recommend that you don’t work. After going through a year myself, I would second this recommendation. Thus, you’ll have to pay for your living expenses in some other manner, usually loans. Although I have a full-tuition scholarship, I still take out loans each year to pay for things like rent, food, utilities, travel, etc. And these aren’t necessarily small loans either, because life is really expensive. Therefore, I want to do as much as I can to keep these loans to a minimum. Luckily, I’ve found a few things that really help with this.

• Create a budget. One thing I’ve noticed about young people is that the idea of budgeting is almost a foreign concept. Either that, or people just loosely budget in their heads. However, if you want to truly be financially responsible, you need to get serious about budgeting. I’m talking sit down with a calculator, pen and pencil, and create an excel spreadsheet type of budgeting. While budgeting can be kind of hard, I figured out a way to make it work for me, and wrote all about it here – so  check it out if you need a bit of help figuring out how to budget.

• Live like you’re broke. . . because you are. Listen, you may be living off $20,000+ from your law school loans, which can be pretty comfortable in the right geographic area. But now you also owe $20,000+ to various creditors. What does this mean? Well, it means you’re broke, kid. So live like it. Now, I’m not saying you have to live in a studio apartment in the ghetto and eat only ramen noodles and instant rice, but maybe don’t go out for every meal and not drop $500 every time Apple debuts a new iPhone. Doing things like cooking at home, sharing an apartment with a roommate, and shopping the sale racks are easy ways to live like you’re broke without truly feeling poor, which saves a ton of money in the long run.

• Use your summers to make money. Getting an internship during your law school summers is one of the best ways you can further your future career. In fact, it’s basically a requirement to be successful. However, a lot of my friends are working public interest jobs or clerking for judges this summer, which means that they are working for free. Although any experience is good, many firms have summer associate programs that will pay you close to or as much as starting attorneys. Depending on your geographic region, this can mean earning anywhere from $1,000 to $3,500 per week. So if you do a ten-week internship making $2,000 a week, that means you’re making $20,000 in one summer! This can go a long ways if you’re being smart and living like a broke law student. During my first summer, I clerked at a law firm and made enough money to take out half the amount of loans I took out my first year.

• Utilize your resources. First of all, your school probably has a financial aid office where their job is to help you manage your money – use them! They can also give you a ton of information about financial aid in law school. Along with that, one of the perks of going to college is the amount of things you can get for free. Don’t pay for a gym if the campus one is free. Health services on campus is probably cheaper than an outside doctor. Instead of spending money on vacations or concert tickets, go to whatever free concert or even your university probably has. Taking advantage of these resources is one of the best ways you can save money and minimize your expenses.

• Once again, plan ahead. And lastly yet again, make sure you’re planning ahead. The next step after law school is (hopefully) working your dream job, and paying back those loans. So make things easier on yourself now. I spent less money than I budgeted last year, so I took the extra and paid off my interest that had accumulated on my loans throughout the year. I sat down and readjusted my budget to figure out where I can cut my expenses and take out less in loans next year. Never forget that managing finances is a long-term project rather than just something that’s happening now.

Although the world of finances and student loans can be ever-so-complicated, doing your best to reduce your debt means a less-complicated future of trying to pay back more debt than you can manage. Doing just a few things to minimize your expenses can mean so much in the long run, and before you know it, your law school debt will be a long-gone memory.

Joshua Holt is a former private equity M&A lawyer and the creator of Biglaw Investor. Josh couldn’t find a place where lawyers were talking about money, so he created it himself. He knows that a good law school budget will set you on the right path to financial independence and that if you want to get smart on personal finance you can read his weekly email.