Bar study loans and bar exam loans are designed to help potential lawyers cover bar study courses, living expenses while preparing to take the exam, and the cost of the bar exam itself.
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.
How to Compare Bar Loans
Compare lender interest rates
Bar loans may come in fixed or variable interest rates. Compare your rate options from different lenders to find the best deal. Bar loan interest rates are typically higher than the interest rates for federal and private student loans.
Compare repayment terms
Just like interest rates, repayment terms vary from lender to lender. It’s important to find a repayment term that will be manageable for you. When considering your repayment term, make sure to factor in your existing student loan payments as well, even if you have not entered repayment.
Read the Fine Print
Bar loans are different from student loans. It’s important to read the fine print on your loan agreement to make sure you understand the terms you are agreeing to.
Only borrow what you can pay off quickly
Bar loans typically have a higher interest rate than student loans. You will want to be sure you only borrow what you can pay off relatively quickly to prevent unnecessary interest from accruing.
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 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.
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.
Is a bar loan a student loan?
A bar loan is not classified as a private student loan. However, it does require you to be in your last year of law school, or sitting for the bar exam within 12-months of graduation from an ABA-accredited law school. A bar loan is considered to be a personal loan.
Can I refinance a bar loan with a private student loan refinance?
You can refinance your bar loan with a personal refinance loan. However, you will not be able to include a bar loan in a private student loan refinance with your other student loans because it is considered a personal loan.
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. Keep these incentives in mind when comparing lenders.
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.
Alternatives to Bar Loans
If you cannot or do not wish to take out bar loans, there are alternatives you can explore, which include:
Employer support — If you are currently working check with your human resources department to see if you qualify for any financial programs they may offer.
Search for bar prep scholarships — Some universities, state, and local bar and legal associations offer bar prep scholarships. Check with your university’s financial aid office or contact local associations to learn more.