20 Jan What are the loan options for law school?

Q. My daughter will be pursuing a law degree. I would like to know my finance options without paying from my pocket. What are the best loan options? We live in New Jersey with combined gross income of $130,000. My daughter has no income.
— Dad

A. Law school can mean big bills, so we understand why financing the education is important for you.

Begin by completing the Free Application for Federal Student Aid, also called the FAFSA.

The options are similar to those who apply during their undergraduate studies, said Dean Shah, a certified financial planner with Stonegate Wealth Management in Oakland.

He said your daughter should apply for any and all scholarships and grants for which she may be eligible. Grants and scholarships are free money and will not need to be repaid after graduation.

Depending on the school, there may be a work-study program.

“This typically means that the student will need to work part-time while school is in session and full-time in the summer, possibly also during breaks,” Shah said. “In exchange for work, the student will receive a paycheck or a discount on credits to put toward classes.”

Then, the loans.

Shah said your daughter can start, and federal loans are preferable to private loans because they have lower interest rates and more flexibility with regards to repayment, he said.

Then you can consider Parent PLUS loans, which would be taken in your name.

“These come with higher interest rates and are not subsidized, which means interest begins accruing as soon as the payment is disbursed and continues even if the loans are in deferment,” he said.

“Due to negative effects on retirement savings, Parent PLUS loans are not typically recommended, but if the goal is to keep the financial burden off your daughter, they are an option,” he said.

Your daughter can also look at Grad PLUS loans, which are similar to the Parent PLUS but is in the student’s name, not the parent’s, he said. Unless you plan to cosign, your daughter must have a decent credit history to qualify.

If you have equity in your home, you can always consider a home equity line of credit.

Shah said there’s another option to consider. Some law firms will pay for law school for their employees in exchange for a promise to remain employed by the company for a certain time period. She could look to get a job with a company that would help pay those bills.

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This story was originally published on Jan. 20, 2020.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.