How To Avoid The Top Financial Regrets From Law School
Eight years post-graduation and I am still very glad that I went to law school. I do think that had a lot to do with where I went, shout out to Seton Hall Law! But there are definitely some things I wish I had done differently. Here are my top financial regrets from Law School but they can really apply to anyone pursuing higher education.
Borrow Less Student Loans
I was able to obtain a College degree with ZERO debt because I lived at home and obtained a full ride through scholarships. I began law school in 2010 and over the course of 3 years paying for tuition and living expenses I racked up approximately $260,000 in student loan debt (this was just the principal amount). This was with $20,000 in scholarships.
I also wish I had made interest only payments towards my loans while I was in law school. It would not have been that much money per money and it would have saved me thousands of dollars in the long run. I see this as a big mistake, it makes a difference.
I graduated Law School in 2013, it takes about half a year to get admitted to practice law and then for me at least my first few jobs I did not make a lot of money. Needless to say, it’s been difficult to pay off my student loans to date.
It is now 2021 and my student loan debt has only increased because I have been barely making payments through the income based repayment plan and the interest has just been racking up. As of 2021 I still owe about $40,000 in interest alone and have a total student loan debt of approximately $300,000.
Dave Ramsey woke me up and made me realize that making minimum payments based upon income is not how I want to spend the next 20 years of my life to potentially get some money forgiven but also pay tax on the amount forgiven.
Because of this, even 8 years post-graduation from law school I am still living on a strict budget and if my income doesn’t increase substantially I will be paying off my student loans until the age of 40. I really wish I had made different choices that I will outline below to reduce the amount of student loans I took out so that I could be in a different financial position now.
Spend Less Money ($$) On Lifestyle
I have zero excuses for this. I should’ve taken out less in student loans instead of having surplus money to get my nails done, buy Starbucks, or even go out to dinner! These are just silly examples but the truth is that I should have been living more frugally and sacrificing during this time when I was young so that I could have more financial freedom now.
Advice from other attorneys who spoke at my school was always live like a student now so you don’t have to live like a student later, I thought I was but I wasn’t and I am paying the price now. I did have a few peers who managed to live frugally through law school, they lived at home if they could and commuted, they packed lunches and were not spending money.
I wish someone had advised me against maxing out the amount of money I was approved for in loans to get through school. Even just receiving less in loans would have forced me to be on a tighter budget. I really did not have a budget at all, I was just living day to day.
Anyone in school, this is the perfect time to learn how to budget and put yourself on a path to financial success sooner rather than later.
Work Part Time
A friend of mine worked part time at the law school alumni office the entire time we were there and she used this income to make her interest only payments on her student loans (genius). This is also a great way to make some money and reduce the amount of money you are even taking out in student loans to begin with.
Your part time job does not have to be related to your field of study and I think this is where I really missed the mark. If you can find a part time job that isn’t too stressful and just helps keep you on a schedule and budget, I would. This discipline and sacrifice will go a long way when you are done with school and ready to live a nice lifestyle as a professional, which you worked so hard to get! Maybe even start a blog? Just a thought.
Continue to Apply for Scholarships Each Year
I did receive scholarships upon acceptance into law school, but they were clearly not enough. Just because you do not receive a scholarship as a part of your admission to the law school does not mean there’s no more money available to you.
My law school offered many scholarships that people could apply to throughout their law school journey. I really wish I had taken advantage of this and been more assertive in pursuing this free money!
Even outside of your school there are other scholarships you can apply to, even if it takes you half of a day to do 1 application, if you get a couple thousand it is so worth it. So many people fail to pursue scholarships continually throughout their educational journey and it is such a shame! Get all the help you can to reduce your student loan burden.
Purchase Real Estate Instead Of Renting
This might seem extreme to some people, but there were affordable co-ops and condos that I could have probably qualified for since I had a 2 year work history. I paid almost $40,000 in rent during law school (I was living in a city). If I had purchased a condo and sold it 3 years later for the amount I purchased it (broke even) I would have at least recovered the $40,000 in rent money. In addition to that, I know I would have been able to house hack and rent out the other rooms to my friends in law school (which could have allowed me to make interest only payments, take out less in loans overall and provided me with spending money).
An additional benefit is after graduating I could have become a landlord! I had connections at the school and there were 4 other colleges in the area I could have rented the condo out to those students, get incoming students so that they stay in at least 3 to 4year clips. I definitely regret not investing in real estate and becoming a landlord sooner.
All in all, reduce the amount of debt you’re taking on by working part time, making interest only payments, reducing lifestyle by getting a roommate, house hacking, continuing to apply for scholarships and reducing your lifestyle with an appropriate budget.