There are a number of details that need your attention prior to entering law school. The decisions you make now can affect your student contribution, financial aid, and general financial well-being throughout your time at law school. We want to help you think through some of the issues and offer some guidance in regard to the following topics:
- Making a Plan
- Your Student Contribution
- Outside Scholarships and Term-Time Jobs
- Consumer Debt
- Consumer Credit
- Deferment Forms for Prior Education Debt
The most important thing you can do before you enter law school is make a plan! Take the time now to think about your money and how you want to spend it. The information in this section will help you think about the details of your plan. You can continue to develop your plan once you arrive on campus and, to help you even further, we will hold workshops throughout the year on topics such as budgeting, financial planning, and taxes.
The student contribution, as a measure of the resources you have available for law school, is comprised of a portion from your summer income (what you earn during the months of June, July, and August) and a portion from your assets (one-third of your total assets as you first report them is used per year). A $2,500 minimum contribution from income is assessed for all incoming students to provide an incentive to work. You can actually earn about $11,000 during the summer without raising your student contribution from income above the $2,500 minimum. Any amount you earn beyond that, including overtime and bonus pay, will increase your student contribution from income for the upcoming year.
It is important to understand what your student contribution means. If you are receiving grant assistance, your student contribution affects the amount of grant assistance you receive. If you borrow education loans, your student contribution also affects the amount of borrowing that will be eligible for loan repayment assistance through the Low Income Protection Plan (LIPP).
Budgeting is not just for students–it is a life skill you can use long after you graduate. It’s about controlling your money instead of letting your money control you, understanding how you are spending your money, and making informed consumer choices. Perhaps most importantly, budgeting can keep you from worrying about your money.
The first step in budgeting is to make a list of your anticipated monthly expenses. The 2014-15 financial aid budget follows a modest but livable standard and allows $20,722 for room/board and personal expenses for the 9-month academic year, or about $2,302 per month. (These allowances will be slightly higher for 2015-16.) If you are fully reliant on financial aid to meet all living costs, $2,302 is what you will have to meet all of your monthly living expenses during the academic year. The following examples demonstrate three different sets of budgeting choices, and the monthly expenses related to those choices.
Examples A and B show that it is possible to live on less than the student budget. The students in Example A and B could then decide whether to allocate the “remaining funds” to other expenses not listed, or to reduce their borrowing. In Example A the student can borrow $3,600 less ($400 x 9) during the academic year than the student in Example B, or $4,068 ($452 x 9) less than in Example C.
|Example A – Living in a Gropius Dorm||Example B – Living Off-Campus with Roommate||Example C – Living Off-Campus without Roommate|
|Rent||$1.000||Rent (share of total)||$1,150||Rent||$1,400|
|Local transportation||$80||Local transportation||$80||Local transportation||$80|
|Personal items||$50||Personal items||$50||Personal items||$30|
|Total Expenses||$1,860||Total Expenses||$2,250||Total Expenses||$2,302|
|Remaining Funds||$442||Remaining Funds||$52||Remaining Funds||$0|
If you are looking for housing in Cambridge, HLS dormitory housing (with some exceptions) is generally the least expensive. If you decide to live off campus, the financial aid student budget assumes that you will share an apartment in Cambridge or within the surrounding towns of Somerville, Arlington, Brighton or Belmont. It can be prohibitively expensive to live alone off campus.
There are many off-campus options for housing. Harvard-affiliated housing is one option; however, you may be able to find a better deal if you search the private market. The Harvard Housing Office has lots of useful resources including a roommate connections service, and you can also use apartment search websites such as CraigsList and Apartments.com.
If you choose to live in Harvard-affiliated housing during the months of June, July, and August and your rent is charged to your student bill, you must pay this rent in full before you will be able to register in September. By federal regulations, you cannot use academic-year financial aid to cover summer expenses, including rent.
It is very costly to have a car in Cambridge, and the financial aid budget cannot be adjusted for car expenses for students who do not have dependent children. The Boston metro area has a comprehensive public transportation network. Discounted passes are available through the Dean of Students Office. Harvard University also has an agreement with ZipCar through which students pay no application fee, monthly minimum, or membership deposit, and pay a reduced annual membership fee. There is even a ZipCar located on the HLS campus! Finally, the University has a shuttle service operating on and around campus.
A good way to reduce the amount of money you borrow is to find other sources of funding. Look for outside scholarships – we list them throughout the academic year and you can search for other possible sources. One website to use is fastweb.com, which is a scholarship listing service. You can also ask organizations that you or your parents belong to, as they may have scholarship funds. Please note that outside scholarships are included as part of your academic year financial resources and will reduce the amount of money you are eligible to borrow. They do not generally reduce your grant funding.
Term-time jobs (research assistant positions, tutoring, etc.) are an extra way to earn money and borrow less. You do not need to report these to us, except for on-campus positions through which you receive free room and/or board. HLS research assistant positions are posted on the HLS Administrative Updates website, and the Harvard University Student Employment Office lists positions on its website.
We strongly advise that you pay off as much of your consumer debt as possible before entering law school. Consumer debt typically has a high interest rate, and monthly credit card payments are not allowed in the student budget as an expense covered by financial aid.
Likewise, while attending law school, you should be especially wary of using credit cards as a substitute for careful budgeting. A credit card can come in handy as a convenient way to pay a bill or manage cash flow, but it is important not to rely on credit cards as a “bail out” for overspending. Wise credit card use can help you establish a good credit record, which is generally a factor in obtaining private education loans as a financing option. If you have poor credit, you may find that the most desirable education loan options are not available to you.
In addition to paying off your consumer debt over the summer, we strongly encourage you to obtain a copy of your credit report from each of the three major credit data agencies: Equifax, Trans Union and Experian. You can get a free copy once a year from all three agencies by going to AnnualCreditReport.com. Requesting a copy of your credit report is a good exercise even if you think you have good credit, since many people find erroneous derogatory information on their reports. It will take a few weeks to eradicate these errors and it will be to your advantage to work on these matters as early as possible in the loan application process. We also encourage you to obtain a copy of your credit score via the web at myFICO for a small fee. Since some of your preferred borrowing options may require creditworthiness, it is important for you to understand your credit score, and this site will give you tips for improving your score.
If you have prior education loans (undergraduate or another graduate program), you may be able to defer the payments while you are enrolled in law school. You will need to confirm the process through which the deferment will take place with each of your lenders. Some lenders use a paper process while others are electronic. Refer to the loan deferment section of our website for more detailed information.