For most students, taking on debt is an expected but unwelcome part of the law school experience — and many start out with a handicap in the form of debt from their undergraduate degree. But how can you keep your debt from getting unmanageable?
We asked financial advisers, managers at law school financial aid offices, and a few law students about how to keep student debt in check.
1) Know your loans and your costsIt’s a small thing, but understanding the terms of your student loans — what you owe, when, and to whom, and what the interest rates are — is important, if for nothing else than to reduce your own stress, says Jeff Schwartz, executive director of Consolidated Credit Counseling Services. “The first thing that we would suggest so [students] don’t get discouraged or frustrated with the fact that they’re carrying this debt load or that they see it mounting along the way is to get organized,” Schwartz says.
Still, student debt is something that Hinal Ghelani, a University of Ottawa law student going into her second year, says is an ever-present concern. “The first year of law school is what they say is the hardest of all of your three years, and then having the stress of debt on top of it, it just adds to it and it creates more stress,” she says. “It’s not very conducive to doing better in school because you’re worried about everything.”
Christine Hunter, the manager of admissions and student financial services at Osgoode Hall Law School, agrees with Schwartz. “[Students should] understand the costs really well, so that includes understanding the costs of not just one year of law school but the full three years,” she says. “Just planning ahead and understanding what are the tuition costs and what are the living costs and making a budget and a plan for the three years.”
2) Price out law school optionsThe cost of law school tuition varies from school to school, and going with the less expensive option of your top choices can help to cut back the amount of debt you’ll need to pay off. At the University of Windsor, for example, tuition is $9,000 a semester, and, at the University of Ottawa, it costs just more than $8,000 per semester. At the University of Toronto, it’s $15,000.
“I didn’t apply to [the University of] Toronto — their tuition is over and above anywhere else,” says Vanessa Frey, a University of Windsor student starting her second year. “When I graduate from law school, I don’t want to be in the situation where I’m taking any and every law job just because I have this debt that’s putting a time pressure on me.”
3) Make a budgetIt can be an intimidating process, but making a budget — even an informal one — is essential. “Many Canadians don’t budget, and, in many cases, it’s really because they’re afraid. Either they’re afraid of not knowing how to do it, or they’re afraid of what they might find,” Schwartz says. But, he adds, budgeting “is a great opportunity to take a step back, once you’ve put that all down on paper, to really understand how you’re spending your money.” With that knowledge comes the power to change spending habits that might be aggravating your debt load.
To cut down on the cost of food, Christina Bender, another University of Windsor law student going into her second year, says she has a food budget. “I do meal planning to make sure I don’t spend more on food than I need to, and I don’t ever eat out. I just can’t afford it,” she says.
4) Be frugalLiving expenses such as food, and course requirements such as textbooks, are unavoidable, but there are ways to cut down on the costs of both. At the beginning of the year, check used bookstores and textbook exchange groups on Facebook for reduced pricing. When buying groceries, Frey pays attention to grocery store sales. “I use flyers when I go grocery shopping. I’m just very price conscious,” she says. “Some of my friends don’t do this, but if strawberries are really expensive one week, I’m not going to buy them. It’s just not in the budget.”
Being frugal also means cutting back on what Brent Vandermeer, a portfolio manager with HollisWealth, calls the “social budget,” which encompasses expenses such as eating out regularly and partying.
5) Consider your housingWhere you live can have a huge impact on the amount of debt you’ll shoulder. If it’s possible to live at home, the amount of money you can save is worth forgoing the freedom of living away from mom and dad. For students living away from home, Teresa Alm suggests they consider shared accommodations.
“The greatest cost students are going to have outside of their direct education-related expenses are their living expenses, and those are the ones they have the most control over,” says the associate university registrar of student awards at Queen’s University. “So my advice is to try to be moderate in their accommodation choices.”
Frey lives with another law student, which she says, in addition to providing a “mini support system in my own home,” helps keep her living expenses lower. “To live in a one-bedroom, it’s like an extra $200 a month,” she says.
6) Apply for awardsLaw schools often have an incredible amount of money for merit- and need-based scholarships and bursaries. “I apply to a lot of scholarships and bursaries so I can supplement the funds that I have to pay for my schooling,” says Ghelani.
Even though the awards are highly competitive, it’s worth it to throw your hat in the ring. According to Alm, Queen’s Faculty of Law gives away more than $1 million in non-repayable financial assistance to students. Osgoode, Hunter says, allocates $4 million per year in scholarships, bursaries, and prizes.
“Really just make sure that you’re applying to all of those different programs and maximizing your chances of getting funding,” she says. “Bursaries are not repayable, they’re just free money, so that is an amazing burst of funding.”
7) Take a summer jobHaving a part-time job during the school year, while juggling demanding class schedules and fitting in time for studying, is a challenging task for students, and many opt to dedicate fully to their studies.
“The key [to debt management] really is their ability to earn an income to help offset it while they’re in school, and that’s such a personal thing,” Vandermeer says. “Some people are able to manage that and some people, the workload is so intense it’s impossible to do, and no judgment either way on their abilities.”
The summer months can be the best time to save some money to help mitigate the cost of next year’s tuition and, Frey says, gain some professional work experience to boot. “Right now, I’m working at a legal clinic here in Windsor,” she says, “so I have a little bit of income and I have the bonus of really getting valuable legal experience.”
Adviser-recommended appsMint (mint.com): Backed by the same company that makes Turbotax, Mint is a free budgeting app and web interface that pulls together all your financial information in one place. You can connect your accounts, bills, and cards, and it will categorize them to show you where your money’s going. It also allows you to set budgeting goals for yourself, and it will update you with your status throughout the month. “It tries to help you be proactive in the budgeting side so it actually affects your behaviour, which is the key thing to budgeting,” Vandermeer says.
Budget Tool: Consolidated Credit’s free iPhone app tracks your total expenses and helps you create a budget to manage your finances. You can compare your current budget to the “ideal” budget, and find out if you’re living within your means or if there’s room to cut. “You can track your expenses on the go and you can download it to a spreadsheet after the fact,” Schwartz says.
You Need A Budget (YNAB.com): The YNAB app, which is free for students, encourages you to consider where each dollar you earn is going, and lets you know when you’ve gone over-budget. Overspending is deducted from the next month’s budget, to keep you on track.