Every aspiring lawyer has to go through the essential step of giving the Bar Exam. Many law students make the terrible decision of signing up for a bar study loan at a brutally high-interest rate. It is not until their studies end and the first repayment bill arrives, that most realize what they have got themselves into. Getting a loan to get your law degree might seem like a good idea at the beginning but with interest rates as high as credit card rates, there must be a way that is more suitable than these loans. It is when these newly graduated lawyers come to terms with their high-interest rates, that they start looking for ways to obtain a more suitable and reasonable interest rate. Unfortunately, though, Student Loan Consolidation and Student Loan Refinancing will most likely never include Bar Study Loans. Perhaps, the only piece of good news is that it is still possible to get a much more manageable interest rate on your Bar Study Loans.
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What makes Bar Study Loans Different?
It seems unnecessary and borderline unfair that someone borrowing money to get through their college pay an interest rate of less than 5% on an average, whereas, a law student taking a Bar Study Loan for the same education in the field of Law must pay back loans with interest rates that well exceed 10%.
This difference can be traced back to the Bankruptcy Law. Congress passed laws and special provisions, which has made Student Loan Discharge during Bankruptcy nearly impossible to achieve. This is also responsible for the fact that many lenders are eagerly offering Student Loans at a lower interest rate, as there is less risk for the Lenders.
But, a Bar Study Loan is very different from a normal Student Loan. Although it is similarly used to study for a particular field, the lenders themselves have much less protection compared to other loan lenders. As there is a higher risk associated with lending the loan, the interest rate for such a loan is also higher. Loaning money to unlicensed or worse, jobless attorneys is a highly risky investment, so lenders offering such loans will charge high-interest rates to keep themselves safe from money loss and stay in profit.
It might be safe to say that you should be viewing your bar study loans like a personal loan, rather than a student loan. Even though you might not be eligible to get a consolidation of your bar study loans, or refinance them like other student loans, there do exist other ways that can help lower the interest rates.
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Finding a Better Loan
Possibly one of the best ways to refinance your bar study loan will be to go and get a new personal loan with better interest rates and use it to pay off your current Bar Study Loans. Some Peer-To-Peer Lending platforms like Lending Club and Prosper are highly attested choices of Bar loan borrowers. The downside with such options is that the interest rates will vary greatly. At the lower end of the scale, you can find some reasonable rates, but they can still more than often exceed the rates offered by some credit card lenders. To add to the injury, there is also an Origination Fee.
For most of the bar study loan borrowers, the better choice would be to work with a local bank and inquire about their personal loan options. Sometimes though, student loan consolidation companies like SoFi will also offer personal loans. These loans will usually have a shorter repayment term compared to most other student loan refinancing, the caveat being the interest rates, typically starting in the 6% to 7% range. These are still better than the rates offered by bar study loans and can help improve your financial situation considerably. Such loans are also free of any origination fees, should be avoided as much as possible.
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The Bottom Line
The main takeaway here is to properly understand what it is that you are looking for. Student Loan Consolidation and Refinancing is not available for debts that do not come under student loans and bar study loans. Once you have made the decision to go for a personal loan instead of a student loan, you might be presented with some better options. Best case scenario, these loans will still have a higher interest rate than student loans but a much lower rate than your original bar study loans, making it still a much more viable option to look at, rather than paying down your high-interest bar study loans, provided you can get a good deal on your personal loan. You can also check out some Bar Study Student Loan Lenders like Discover, PNC, Sallie Mae, and Wells-Fargo, who may be able to get you a better deal on Bar Study Student Loans. In the end, we advise you to explore all options before making the decision that is best suited for your needs.