NEW! Online Exit Interview:  (http://www.usagroup.com) You may now complete an Exit Interview online for Federal Subsidized and Unsubsidized Stafford Student Loans. 

Your Credit Rating and Your JD: How Your Credit Record Can Affect Your Career Options.
This video explores the real impact that your credit history can have on your admission to the Bar, maintaining your license to practice law, and your future employment opportunities. Guidance will be provided on ways to take better control of your financial health, and how to manage and improve your credit score.

Panelists: Maryland and Virginia Bar Directors of Character and Fitness; Mike Frisch, GULC's Ethics and Adjunct Professor (formerly of the DC Bar Counsel); and the Assistant Director from the of Attorney Recruitment and Management from the U.S. Department of Justice. (Approximate time 1 hr. 45 min.) Click here to view the video.   A copy of this presentation is also available on reserve in the library.

Planning for Your Future

Regardless of where you choose to attend law school, you will find it a rewarding experience, but like any graduate or professional school, it requires a sizable financial commitment on your part. Many students who graduate from Georgetown Law Center choose to accept high-paying positions, but others decide to pursue the tremendous personal fulfillment of a public service career, despite lower financial benefits. Only you can decide which path is appropriate for you, but as with most things in life, the choices you make will affect your future. Regardless of your plans, there is no time better than the present to analyze your current and projected financial positions . If you are unsure as to which path you will take, the best course of events will be to take a conservative view when analyzing your financial well-being. 

Steps to establishing and keeping good credit

Step one: Know the facts.

The first step to determine your financial well being is to examine your credit report. Students, like the rest of the public, should be aware of the information contained within their credit file. You may obtain a report from these major credit bureaus for a small fee. You may also be able to receive one for free if you have been recently denied credit or you are a resident of certain states. Visit the following sites for more information. 

Experian (formerly TRW)  Trans Union  Equifax

http://www.experian.com http://www.transunion.com http://www.equifax.com

Step two: Know where your money is supposed to go.

A large portion of students pay for their attendance through the use of education loans. As long as you know the costs of these loans, it is appropriate to use them. The second step to determine your financial well-being is to know the terms of the education debt which you presently have. The companies listed below deal with many of the students at the Law Center. Even if your loans are not serviced by these companies, the debt calculators will provide a good way to analyze your debt burden. The Access Group also has a specific page dealing expressly with debt management after law school. Don't wait until your exit interview a few weeks before graduation to find out more information. 

The Access Group  Sallie Mae  USA Funds

http://www.accessgroup.org/DebtMan/law.htm http://www.salliemae.com http://www.usagroup.com

You should know who holds the note for your loans. Some lenders sell the loans on a secondary market so the company you borrow from may not be the same company to which you will send payment. Other lenders will still own the promissory note, but will have other companies service the loan by processing payments, billing and correspondence. The lender is required to inform you of any of these arrangements. Keep copies of all documents which you receive in a safe place. 

If you have a Perkins Loan from Georgetown and/or your undergraduate institution, the school acts as the lender, and may have another company servicing the loan. At Georgetown, the Perkins Loans are serviced by ASFA Data Corp. In addition, if you have a Law Center Loan through GULC, that loan is also serviced through ASFA Data Corp. 

Step three: Know your limits.

Once you know your long-term education debt, the third step to determine your financial well-being is to analyze your short term debt. Short term debt usually consists of credit card debt. Destroy and cancel any credit card which you are not using. Ideally you should reduce your use of credit cards to zero. You can analyze your "spending personality" at http://www.healthy.net/library/articles/cash/assessment/assessment.htm . 

Keep your credit lines within reason: Before entering GULC, make every effort to reduce your debt as much as possible. While at GULC, try to remember that you are a student, and try to live on a student's budget. Evaluate your open credit lines and determine if you can pay them with your income. Close all accounts that you do not need. Avoid using loan proceeds to service your credit card debt. You will only be changing the name of your creditor, not the fact that you owe the money and will have to pay it eventually. 

"Sales" are not a reason to charge your cards to the limit. Purchase items that you can pay off within a short period of time so interest charges do not eliminate the "sale" savings. Save your credit line for emergency use. 

Step four: Be a smart consumer.

The fourth step on your way to financial well-being is to be a smart consumer. If you must use credit cards, reduce your credit expenses as much as possible. You can start by eliminating cards which have an annual fee and offer no other benefits. Compare interest rates, and eliminate your cards with the highest interest rates, especially if you "revolve" you balance from month to month. Don't stop there, be a smart consumer and compare all terms including grace periods. There are some cards that have an annual fee, but low interest rates. These may actually be better for you if you "revolve" a balance from month to month. 

If you want to "force" yourself into paying the balance in-full each month, you may wish to consider a charge card such as American Express instead of a credit card. Know your own credit usage pattern and choose the best card for you. Don't use department store cards since they often have interest rates in excess of 20% per year. To get information about low rate/low APR cards you can visit the following site: http://www.bankrate.com . 

If you can manage to service your consumer debt through income, you may wish to consider the following credit/charge cards which offer beneficial programs to students. Please read the terms for each program. The programs listed are for your information only and are not endorsed by Georgetown University, the Law Center or the Financial Aid Office. 

American Express

http://www.americanexpress.com/student

Offers both an Optima Card (revolving credit terms and no annual fee) and an American Express charge card (payments are due in-full each month and a $55 fee). Either of these programs offer significant savings on travel on Continental Airlines. You could fly coast-to-coast for as little as $239 plus taxes and fees. In addition, they offer savings on goods and services periodically through the mail. 

A.T.&T. Universal Card

http://www.universalcard.com/us/cards/ucs/col.htm

Offers a MasterCard with no annual fee. Students in this program receive a free membership in Student Advantage, a discount card service which allows discounts on Amtrak and at business establishments such as Kinko's and Tower Records. 

Step five: Know when you need help.

The fifth step to on your road to financial well being is to know when you need help. Some people are fortunate enough to bypass this step throughout their lives, however if you do not, know that help is available to you. If you are not sure where to turn, you may want to consider visiting The Consumer Credit Counseling Service website. The CCC is a non-profit organization which can help you avoid even greater difficulties with your debts by possibly reducing your monthly payments and restructuring your consumer debt to allow you to pay it more quickly. Through arrangements with many creditors, they may be able to lower your interest rates and bring your accounts back into a current status. If you need assistance, don't delay. 

Consumer Credit Counseling

http://www.consumercredit.com

Low cost help when needed

Unemployment Loan Deferment Form : This form can be used by graduates who have entered repayment, but are experiencing a period of unemployment, to defer Federal Stafford or Federal Consolidation loans. The form should be sent directly to the loan servicer, not to GULC.

Step six: Putting it all together.

Once you discover where you are financially and how you got there, it is time to determine where you are going. The final step to determine your financial well-being is to create a financial plan and stick to it. You may use the planning materials provided in the GULC Financial Aid Guidebook, or grab a pencil and a piece of paper. Determine what your income and your expenses for necessities (food, clothing, housing, insurance) are per month and go from there. Remember, the key word is necessities! Do the same to project your post-graduation budget. 

Make a conscious effort to determine your "luxuries" allowance and try to reduce it as much as possible. For example, if you have to borrow a commercial loan to pay for living expenses above your necessities, a $7.50 ticket to the movies is actually going to cost you $17.75 later. Avoid borrowing for lifestyle augmentation at all costs, it is too easy and too costly. If eligible, use Work-Study or other part-time employment to pay for your luxury purchases. See the following chart to discover how much a typical student has to repay for their federal and commercial loans. If that doesn't get your attention, nothing will. For additional information about personal finance, check out The Motley Fool website at: http://www.fool.com or, you may make an appointment to see someone in the Financial Aid Office. 

Calculating Loan Payments

Your monthly payment for your federal Subsidized Stafford loan is approximately $125 for every $10,000 borrowed and approximately $145 per $10,000 borrowed for the Unsubsidized Stafford. These figures are determined using the standard ten year repayment period and the 8.25% interest rate cap. Loans in repayment have been at the interest rate cap since 1996. If needed, various loan consolidation plans would allow monthly payments to be reduced by extending the repayment period. The longer the repayment period, the greater the total amount paid to the lender. 

What you will owe: Below you will find a chart which lists the estimated indebtedness for both three year and four year students who borrow the full amount of the Federal Subsidized and/or Unsubsidized Stafford Loans each year of attendance at Georgetown University Law Center. These figures also assume that the student is not paying the interest on the Unsubsidized Stafford while attending school. Please note that these numbers are estimates and are for the Stafford Loan 10 year repayment program only. 

	Amount Borrowed		In-school Interest		Total Interest		Total Payments
Loan Program	3 year	4 year	3 year	4 year	3 year	4 year	3 year	4 year
Stafford	$25,500	$34,000	$ 0	$ 0	$12,031	$16,042	$37,531	$50,042
Unsub. Stafford	$30,000	$40,000	$5,176	$8,554	$21,773	$27,427	$51,773	$67,427
Totals	$55,500	$74,000	$5,176	$8,554	$33,804	$43,469	$89,304	$117,469

Calculating Private Commercial Loan Payments: Each private commercial loan has its own interest rate and the basis for calculating that rate changes as frequently as every three months. For the last several years, the interest rate has been between 8.5 and 9% for Law Access and Law Loans. Check your copy of the promissory note to determine how your interest rate is calculated. Based on a 9% interest rate and a 15 year repayment period, your monthly payment would be approximately $140 per $10,000 borrowed. 

What you will owe: Below you will find a chart which lists the estimated indebtedness for three year and four year students who borrow $5,000 per year in commercial loan. This chart assumes a flat 9% interest rate throughout the life of the loan. Most loans have a guarantee fee of approximately 7% which is added into the in-school interest field. This loan has a 15 year repayment period although some loans offer a 20 year repayment period. 

	Amount Borrowed		In-school Interest		Total Interest		Total Payments
Loan Program	3 year	4 year	3 year	4 year	3 year	4 year	3 year	4 year
Commercial Loan	$15,000	$20,000	$ 4,437	$ 7,051	$20,486	$29,386	$35,486	$49,386

Estimating Payment Costs: Assuming as above, if as a 3 year J.D. student you borrowed $18,500 in federal loans per year and $5,000 per year with a commercial loan program, your monthly payments after graduation would be $744 per month for federal loans and $200 for commercial loan payments. The result would be a total loan payment of $944 per month for ten years and $200 monthly for an additional five years. Assuming no other long term debt and payments equal to 15% of gross income, the recommended income to manage this debt without extending repayment is $75,520. 

"Live like a student now, so you don't have to live like a student after you graduate."

Revised August 15, 2003 (JC)