For many, preparing for the bar is a full-time job. The balancing act of working to support yourself or your family while committing the appropriate time to studying for your future career can be incredibly stressful. Enter the bar loan; a loan specifically geared to assist graduating law students in their efforts to help pay for bar exam related expenses.
What is a Bar Loan?
A loan designed to help potential lawyers cover the bar exam cost, and study and living expenses associated with preparing for and taking the bar.
Bar loans or Bar Study Loans® (Sallie Mae) are typically only available to students who are in their last year of study, or will be sitting for the bar exam within 12 months of graduation from an ABA-accredited law school. Many lenders require that you are a US citizen or permanent resident, or that you are applying with a creditworthy cosigner who is a US citizen or permanent resident.
There are no universal one-size-fits-all bar loans. Each lender has its own set of criteria, so you may need to read the fine print (But hey! You’re going to be an attorney, so you are all about the fine print.)
What Types of Expenses Does a Bar Loan Cover?
Bar loans can be used to pay for review courses and living expenses while preparing for the bar, as well as fees associated with the exam itself (basically, the common expenses that need to be covered between law school and sitting for the bar).
Bar Loan FAQs
Is there a federal loan option for bar loans?
If you are still enrolled in regular coursework on at least a half-time basis, the cost of sitting for the bar can be covered with a Grad PLUS Loan. However, living expenses and the cost of bar review classes are typically not covered by federal loans.
Is there a minimum amount I have to borrow?
The minimum loan amount you may be eligible to borrow is usually $1,000 but you will want to check with your lender.
Are there fees?
Most lenders do not charge fees. So you will typically find there are zero origination fees and zero disbursement fees associated with a bar exam loan.
What is the typical interest rate on a bar loan?
Similar to other private loans, the interest rate on a bar loan can be fixed or variable. Note that your creditworthiness will play a large role in the rate you receive. (i.e., the rates that are advertised may not be the rate you qualify for).
What are the repayment terms for a bar loan?
Repayment terms are typically 10 to 20 years depending on the loan amount borrowed, and there is no pre-payment penalty. Repayment typically begins after a grace period (usually six months, but some lenders offer a nine-month grace period).
TIP: Pay attention to your repayment start dates. The repayment dates on your federal student loans, private student loans, and bar exam loan may be staggered.
Bar Loan Incentives and Perks
Review the various options presented by private lenders to understand which repayment incentives may be available. For example, there may be a number of ways to save money in both the short-term and long-term through programs that can immediately shave points off your interest rate. The offers will vary by lender, but here are the types of repayment incentives that exist for bar exam loans:
Auto debit (ACH) — Lenders offer a savings of between 0.25% and 0.50% off your interest rate when payments are automatically deducted from your checking or savings account.
Customer or loyalty discount — Some lenders may offer a rate reduction (typically 0.25%) if you are an existing customer with a prior or existing, qualifying account.
Cosigner release option — Your lender may offer a cosigner release option. This option may be available after making the initial 12 to 48 monthly payments on-time, but varies by lender. Be sure to read all terms and conditions listed in the loan promissory note.
We've Got Your Back
We recognize that you may need a bar loan to transition to the next phase of your career. With responsible and informed borrowing, you can make an educated decision on how best to take the next step!