The LACBA Student Lounge Blog

Federal Student Loan Consolidation Interest Cap: 8.25%

At some point, you may find that consolidating your student loans is a good thing. If you go to a private law school school or just have a significant loan balance, the smallest change in your interest rates could make a huge difference.

According to the Studentloanconsolidator.com, the cap on federal student loans is 8.25%. Although most federal student loans are closer to 6%, you shouldn't get beyond 8.25%. Private loans typically don't have caps and can be affected by shifts in the market. Consolidation is unique lending game. Here, walking into a bank to consolidate a federal student loan probably won't work, given that it's hard to beat 6%.

2009-2010 Law School Tuition Up by 3-15%

Ronda Muire at the Law People Blog notes that most law schools are raising tuition in 2009-2010 by 3-15%. Cuts on the public law school front have forced discussions about increases there as well. Law schools may also be expecting a decrease in giving, which could pressure some schools to increase tuition.

The post specifically points to the following increases:

University of Missouri-Kansas City School of Law: 3.8% increase (last year)
Saint Luis University School of Law: 3% increase
Stanford Law School: 3.75% increase

In the UK, the average law school tuition increase is 9%.

"Dear President Obama": The Student Loan Bailout

Over at the Above the Law Blog, an open letter to President Obama, the First Lady, the Treasury Secretary Geithner and the Education Secretary Duncan pleading for a wipe the slate clean bailout approach to student loans.

There's also the rapidly growing Facebook group "Cancel Student Loan Debt to Stimulate the Economy."

But, is it true that  unloading the burden on a large group of people who opted for and have been successful with higher education will do a better job of doing what it may take to get this economy back on the rails? What's the difference between easing the burden on, say, someone who might not have made the best decision in home buying and someone who now has a very expensive piece of paper to pay for?

Disolving Law Firm Pursues Bar Preparation Loans

According to a National Law Journal article, brand new associates who are being laid off at Thacher Proffitt & Wood who received bar preparation loans have been asked to assume responsibility for those loans.

In an unusual move, the firm's dissolution committee and bank are pursuing the former associates for repayment of salary advances issued last year to cover their bar and startup expenses, even as the former associates scramble to find new jobs against a backdrop of law firm layoffs.

According to a former managing partner at the firm, Citigroup holds the firm's debt and made the decision to pursue the bar preparation and startup related loans.

More details at the National Law Journal.

Bar Preparation Loans Show Sings of Dwindling

Some financial aid officials have noted an increase in denials of bar preparation loans to recent law school graduates. Traditionally, these types of post-grad loans help recent graduates pay for costly bar preparation courses, bar exam fees and living expenses between graduation and passing the California State bar exam.

According to a recent Law.com article, the Access Group, a Delaware nonprofit graduate loan provider, noted that there are now only four lenders who have active "law residency" loan products and that this decreasing pool of lenders could be part of the recent increase in denied loan applications.

Access Group pulled the plug on bar prep loans last April. "We don't have the funding to be able to offer these loans, due to the market conditions," Curry said. But as a membership organization serving ABA-accredited law schools, Access Group has been leading a charge to help students gain access to federally guaranteed loans for more expenses tied to bar prep until financial markets correct.

UCI School of Law: Free Tuition for the Entire Class of 2009

When the UCI law school opens its doors next year, all entering students will get a free ride. The law school reports that the number of students in the class will be 60. According the National Law Journal:

Originally, the school, which will focus on public interest law, had planned to offer full tuition scholarships to about half that class; but, in an effort to lure high-quality students and compete with other top 20 law schools, UC Irvine School of Law has expanded that program, he said. While the law school has not yet determined the cost of its tuition, each scholarship is anticipated to be about $100,000, given an estimated rate of about $33,000 per year, Cannon said.

The law school is attempting to raise funds to cover the cost of the promotion, which will amount to about $6 million. So far, it has been reported that they are a third of the way there and the applications started rolling in about a month ago.

Student Loans After Law School: 44% of Mid-Level Associates Still Owe Between $50-100K

According to a recent AM Law survey report, 44% of "mid-level" associates still owe between $50,000 and $99,000 in law student loans. Over 16% of the same type of associates still owe over $100,000 in student loans.

The key term here, of course, is "mid-level". All that that appears to illustrate is that a very large number of law school graduates who have had at least some moderate success still owe quite a lot in student loans. Looking on the bright side, maybe it means that fairly recent law school grads are achieving enough success to be characterized as mid-level associates.