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Bar Exam & Study Loans: Refinancing Options

Bar Exam Loans for Law Students: Financing Tips
Rebecca Safier
Rebecca SafierUpdated October 31, 2023
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Graduating law school is a huge accomplishment, but you can’t practice law just yet — first you need to pass the bar exam. Many students spend months studying for the bar exam, during which time they’ll need to cover the costs of not just the exam itself, but also living expenses like groceries, rent, and transportation. Since you’re not earning an income as a lawyer yet, you may consider borrowing a bar exam loan to cover these costs. Read on for a closer look at how bar exam loans work, along with tips on how to apply and some alternative financing options. 

What Are Bar Exam Loans?

A bar exam loan is a type of loan specifically designed for law school graduates. It’s meant to help you pay for expenses between graduating law school and taking the bar exam. You can use a bar study loan for a variety of expenses, including the cost of the bar exam itself, which is often several hundred dollars and varies by state. You can also use a bar exam loan to cover other living costs during this period of preparation, like rent and food. Similar to student loans, you’ll have to pay a bar exam loan back with interest. Your interest rate will vary by lender, with creditworthy borrowers usually getting the lowest rates. Repayment terms will also vary, but may be as long as 15 years. 

Bar Exam Loans vs Student Loans

Bar exam loans are similar to student loans, but they’re specifically designed to cover costs between graduating law school and taking the bar exam. You can only find these specialized loans from certain private lenders — they’re not available from the federal government. Regular student loans, on the other hand, may be private or federal. They’re available to students who are currently enrolled at least half-time in an eligible college or university. You can often borrow up to your cost of attendance in student loans and use them on tuition, fees, books, supplies, and living expenses. Federal student loans are eligible for a variety of repayment plans, including income-driven repayment and extended repayment. Bar exam loans, on the other hand, often max out at $15,000, depending on the lender. Interest rates may be higher than what you’ll find with a regular student loan, but will ultimately depend on your (or your cosigner’s) credit and other financial credentials. Loan terms will vary, but some lenders let you pay back a bar exam loan over 15 years. 

How to Get a Bar Exam Loan

You can borrow a bar study loan from a private lender, such as a bank or online loan company. Here are the steps you’ll need to take to obtain one of these loans. 
  1. Check your credit. Take a look at your credit score to see what range it falls in, whether fair, good, or exceptional. If your credit is weak, you might take steps to build it before you apply. Alternatively, you could enlist a cosigner to help you qualify for a bar exam loan or access better interest rates. 
  2. Compare lenders. Research lenders that offer bar exam loans and make sure you meet their eligibility requirements. For instance, some lenders require that you’ve graduated from law school within a certain number of months of applying for the loan. 
  3. Prequalify for a loan, if possible. Some lenders let you check your rates online through prequalification. This option helps you compare offers without harming your credit score. Keep in mind, though, that the details of your offer could change after you submit an official application. 
  4. Compare your loan offers. As you compare bar exam loans, look for a loan with a competitive interest rate and low (or no) fees. Review your repayment term options, as well as what your monthly payment would be. You might also read over customer reviews of the lender to see if other borrowers had a decent experience. 
  5. Gather your documentation. Once you’ve selected a loan offer, gather any documentation you’ll need to apply, such as your ID, bank account information, or pay stubs from work. 
  6. Submit an application. At this point, you’ll fill out a full application with your personal details and any required documents. You can generally apply online, and the lender will likely run a hard inquiry to check your credit.
  7. Receive your loan. Once the lender processes and approves your application, you’ll receive your bar exam loan. Read over your loan agreement to see when your first payment is due. 

Alternatives to Bar Exam Loans

Bar loans for law students are not your only option for covering expenses as you’re preparing for the bar exam. If you have leftover student loan money from law school, for instance, you could put that toward your expenses. Other options include:Federal Grad Plus Loans. Students who are still enrolled in school can borrow a federal Grad PLUS Loan up to their cost of attendance, minus any other financial aid they’ve already received. The average cost of law school is high, and many students take on loans to cover it. Working part-time. Earning income from a part-time job to earn income is also an option if you’re able to balance working with preparing for the exam. You might look for a local gig or a remote job that you can do online, ideally with a flexible schedule. Personal loans. You could also explore personal loans, which are typically unsecured, fixed-rate loans that you pay off over one to seven years. You can use a personal loan for almost any purpose and must meet a lender’s credit and income requirements to borrow one. Credit cards. Credit cards are also an option, but proceed with caution. The average credit card interest rate is 20.68%, according to the Federal Reserve Bank of St. Louis, and some cards have even higher APRs. Credit card debt is notoriously expensive and difficult to pay off, so you want to avoid racking it up whenever possible. 

Refinancing and Consolidation Options for Bar Exam Loans

If you borrow a bar exam loan with a high interest rate, you may be able to lower your rate through refinancing. Refinancing law school loans involves exchanging one or more loans for a new loan. Depending on your credit, that new loan might have a better interest rate than you have now. Lowering your student loan interest rate can save you money over the life of your loan, assuming you keep the term length the same (or shorter).Refinancing also lets you choose new loan terms with an adjusted monthly payment. Plus, you can consolidate multiple loans into one, thereby simplifying repayment. Keep in mind, though, that when you refinance federal student loans, you lose access to federal benefits, including student loan forgiveness and federal repayment plans. If you’re planning on using federal benefits, it’s best to keep your loans as they are.

The Takeaway

Bar exam loans can be a useful financing option while you’re preparing for the bar exam and aren’t yet earning a full-time income. Once you pass the bar exam and start working as a lawyer, you may be earning enough to pay your bar exam loan off quickly. Check with the lender about repayment expectations, since terms will vary from one lender to the next. Some may offer a grace period, for example, whereas others may require you to start making payments right away. Before you borrow, it’s always a good idea to shop around and compare your options. That way, you can find a bar exam loan or other financing tool that’s the best fit for your situation. If you’re looking to refinance for better rates, Lantern can help you compare student loan refinancing rates.

Frequently Asked Questions

What is a bar study loan?
Are bar study loans worth it?
What are some alternatives to bar study loans?
What percentage of law students take out loans?
How fast do law students pay off student loans?
Photo credit: iStock/AzmanJaka

About the Author

Rebecca Safier

Rebecca Safier

Rebecca Safier has nearly a decade of experience writing about personal finance. Formerly a senior writer with LendingTree and Student Loan Hero, she specializes in student loans, financial aid, and personal loans. She is certified as a student loan counselor with the National Association of Certified Credit Counselors (NACCC).
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