How do I choose a loan program?

“Federal loans” are offered by the U.S. Federal government. “Private loans” are offered by private banks and lending institutions. Your citizenship status determines the loan program(s) through which  you can borrow.

• U.S. citizens and permanent resident students can borrow through any of the Federal and/or private loan programs on the HLS Preferred Lender List for Domestic Students.
• International students are not eligible for Federal loans, but can borrow through the private loan programs on the HLS Preferred Lender List for International Students without obtaining a U.S. co-applicant. More information is available on our Additional Loan Information for International JD Students webpage. Additionally, some international students can obtain a student loan from other private lenders if they have a creditworthy U.S. co-applicant.

Students attending HLS are not required to borrow from the lenders on the Preferred Lender List, and can borrow through any qualified student loan program.

U.S. citizens and legal permanent residents may qualify for federal student loans, and the terms and conditions of these federal funds may be more favorable than the terms and conditions of private education loans.

We ask all students to submit the FAFSA as this form gives students access to federal loans and summer federal work study funding according to their eligibility. U.S. citizens and eligible non-citizens will have access to a maximum amount of $20,500 in Unsubsidized Federal Direct Loan funds in accordance with FAFSA regulations if qualified.  Students are not required to borrow through this program and should refer to Step 3 of the overall Financial Aid process for instructions on how to accept or decline this particular loan.

As a result of the Federal CARES Act, the accrual and payment of interest on federal student loans was suspended from March 13, 2020 to September 1, 2023. At that time, various proposals were made for legislation or federal administrative action on the cancellation of federal student loan debt. HLS cannot predict whether the accrual and payment of interest on federal student loans will ever again be suspended, nor whether the principal balances will ever be canceled. HLS recommends that students be aware of these circumstances, but conduct such additional inquiry as they deem appropriate in making their own decisions as to whether to select a federal or private student loan.

This is a key part of your decision. A small decrease in the interest rate can reduce your total repayment cost by thousands or even tens of thousands of dollars. These are the main factors that affect the total repayment cost of a loan:

• Interest rate
• Loan fees
• Length of repayment term

While total repayment cost is important, you should consider all of the factors outlined on this page before making your final choice.

You may want to use a loan calculator to help you determine the cost of a loan, or to compare the cost of two loans. Keep in mind that loan calculators will give you an accurate estimate of total loan cost for fixed-rate loans, but only a rough estimate for loans with variable interest rates because future interest rate changes cannot be predicted.

• FinAid.org
• Direct Loan Calculator

Most of the lenders on the HLS Preferred Lender List offer a fixed rate loan in which the interest rate does not change during the life of the loan. Because the interest rate is fixed, the total repayment cost is highly predictable as long as the assumptions about the deferment and repayment periods are accurate. A variable rate loan, by contrast, has an interest rate that fluctuates periodically, usually according to a market rate such as the prime, LIBOR, or SOFR rate. Variable rate loans may feature lower initial rates than fixed rate loans, however, because there is no reliable way to forecast future interest rates, the total repayment cost of variable rate loans is less predictable.

Also note that interest on all federal and private loans available to graduate students accrues continuously during any deferment, forbearance, and repayment period. There are no “subsidized” federal or private loans (where interest does not accrue) for graduate students.

You’ll want to consider the impact a loan fee has on the disbursement amount and the total repayment cost of the loan.

Most of the lenders on the HLS Preferred Lender List do not charge a loan fee. However, all Federal Direct loans and some private loans include a fee. A loan fee is either added to the loan amount by the lender after disbursement, or deducted from the loan amount by the lender prior to disbursement. Either way, you will pay interest on the fee for the life of the loan (deferment, grace, repayment).

All Federal Direct loans have a fee that is deducted from the loan amount prior to disbursement. If you decide to borrow through the GradPLUS loan program you may increase the amount of money you borrow to make up for the fees. We will increase your budget to compensate for the additional GradPLUS fees. (Note that the Federal Direct Unsubsidized loan has an annual borrowing limit of $20,500 and cannot be increased to cover the loan fee.) For example:

• You want to borrow a Direct GradPLUS loan of $25,000.
• Since there is a 4.228% fee deducted prior to disbursement of your loan, you’ll need to decide whether you want to increase the loan to account to cover the fee, or if you’re ok with the loan disbursing for less than $25,000.
• If you want to have a disbursement of exactly $25,000 to your student account (meaning $12,500 for each semester), you’ll want to apply for a loan of $26,104 (or $25,000 / 0.95772)
• In this example, your student financial aid budget will be increased by the loan fee amount, or $1,104.

Other private student lenders typically add the fee to the original loan amount and, as a result, no adjustment will be made to your budget to compensate for the fees and you will not need to increase the amount you borrow to cover the fees.

Most of the lenders on the HLS Preferred Lender List offer a standard repayment term of 10 years. This term also mirrors the shortest repayment term under which a loan will be covered by the HLS Low Income Protection Plan (LIPP) for J.D. students. A loan with a repayment term of less than 10 years is not eligible for LIPP assistance.

Federal Direct Loans offer a Standard (10 year) repayment term, along with a number of alternate repayment options, such as Graduated (up to 30 years), Extended (up to 25 years), and a number of income based plans. These alternate repayment plans can provide more flexibility, but come with potential costs:

• Extending the repayment term beyond 10 years lowers the monthly payment amount. It also lowers the amount of each monthly payment that is allocated to reducing the outstanding principal balance of the loan, meaning that the total repayment cost of the loan increases. In order to avoid a substantially higher repayment cost, it is generally a good idea not to extend the repayment term unless absolutely necessary.
• Borrowers pay a significant premium, in terms of higher interest rates and fees, to have extended repayment options, because these plans increase the cost of lending.

Consider carefully whether you are likely to need an extended repayment plan. For J.D. graduates, LIPP provides coverage based on the 10 year repayment amount and offers predictability (out-of-pocket payment amounts in LIPP are based on income) to help students and graduates plan out their repayment.

A deferment or forbearance allows you to temporarily stop making payments or make reduced payments on a loan due to continued enrollment or economic hardship. During any deferment or forbearance period, interest continues to accrue on the loan and unpaid interest is capitalized (added to the outstanding principal balance of the loan) at the end of any such period.

All of the loan programs on the HLS Preferred Lender List offer an “in-school” deferment that covers the enrollment period, and usually includes at least a 6-month grace period after graduation. The grace period is also used to during a withdrawal or leave of absence period, but once used generally cannot be reinstated. Some loan programs offer additional in-school deferment once repayment of the loan has begun (for example, if you return to school for an additional degree), but this benefit varies by program. If you are likely to need additional in-school deferment after graduating from law school, you should look carefully at each program’s deferment provisions to ensure that it will meet your needs.

All of the loan programs on the HLS Preferred Lender List also offer forbearance provisions, but the amount of forbearance available varies. Forbearance is typically granted during a period of non-enrollment (for example, due to economic hardship such as short-term unemployment) at the request of the borrower and at the discretion of the loan servicer (the entity that collects and process your loan payments). Forbearance can also be used by graduates in judicial clerkships if they will not be eligible for LIPP assistance. If you are strongly considering a clerkship of longer than a year, be advised that most private lenders will offer more than one year of forbearance while the federal loans offer a longer period of time.

As shown on the HLS Preferred Lender List comparison chart, Federal Direct loans offer the most generous deferment and forbearance benefits, but there is a cost associated with this flexibility in terms of higher interest rates, loan fees. and overall total repayment cost. If you choose to borrow Federal Direct loans, it is worth carefully considering whether you are likely to use the additional deferment and forbearance allowance for which you will be paying.

Most of the lenders on the HLS Preferred Lender List do not use your credit information to determine the interest rate of the loan. However, your credit history and credit score may be a factor in determining your eligibility to borrow.

• Consider obtaining a copy of your credit report, even if you believe you have good credit. Some students find erroneous derogatory information on their report. It will take some time to eradicate these errors and it’s to your advantage to make sure that your credit report is accurate.
• Your credit score takes into account your credit history and how many credit cards you hold, the limit on each of those cards and the amount that is accruing in interest.
• Approval for GradPLUS loans and some private loans is based on your credit history and the absence of adverse credit. A basic credit check will be run. If you are denied a GradPLUS loan, you may be given the option of borrowing with a co-applicant.
• If you are denied a private loan due to poor credit, you can contact J.D. Student Financial Services or the Graduate Program Financial Aid Office (for LL.M. and S.J.D students) to learn about loan options that have less stringent credit criteria.
• Some private lenders on the list may offer a rate reduction for a well-qualified co-borrower, but this is not required. Each lender has a specific credit score number or range that a co-borrower must meet to be approved. You can contact the specific lender directly for more details.

As described on the Federal Student Aid website, “The Public Service Loan Forgiveness (PSLF) Program forgives the remaining balance on your Direct Loans after you have made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer.”

Private loans are not eligible for public service loan forgiveness, so you must borrow only Direct Loans if you wish to retain eligibility for PSLF. However, as described below, relatively few HLS graduates would benefit from PSLF, and the traditional Low Income Protection Plan (LIPP) provides much more flexibility than PSLF. Because the Direct Loans on the HLS Preferred Lender List may have a higher repayment cost than private loans, you should carefully consider whether you are likely to qualify for or use Public Service Loan Forgiveness when evaluating your borrowing options.

To receive a benefit from PSLF, a borrower must be enrolled in an income-driven repayment plan for at least part of the repayment period in order to ensure that there will be a remaining loan balance to forgive after 120 qualifying payments (10 years of payment) have been made. A qualifying payment must be made while the borrower is in qualifying employment as defined on the Federal Student Aid website. Qualifying employment is limited to work in government organizations at any level, not-for-profit entities that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code, and other entities that provide “certain types of qualifying public services.” Work at for-profit organizations, including private public interest law firms, labor unions, partisan political organizations, and government contractors is not qualifying employment under PSLF. Borrowers who do not meet all the conditions of PSLF will not qualify for forgiveness.

There is a significant risk associated with PSLF: depending on your income level, loan payments in an income-driven repayment plan may not be sufficient to pay the monthly accruing interest on your loans. In that case, during the time you are enrolled in an income-based plan, the outstanding debt on your Federal loans could increase depending on the repayment plan and you will make no progress repaying your loans. This could dramatically increase the total repayment cost of those loans unless you qualify for loan forgiveness under PSLF.

The traditional HLS Low Income Protection Plan (LIPP) is not integrated with PSLF and does not require participation in PSLF. HLS’s PSLF based program is most beneficial if all borrowing is done through the federal government. It is is necessary to understand that the PSLF program requires 10 years of qualifying employment, and could carry with it a significant risk of a higher total repayment cost on certain income-driven repayment plans.

Which HLS graduates might benefit from Public Service Loan Forgiveness?

• Graduates who will meet all the PSLF qualifications as described on the Federal Student Aid website (typically, those who will be in eligible public service work for at least 10 years of repayment) and are not eligible for traditional LIPP assistance due to their income, assets, or ineligible debt. Please note, HLS’s PSLF based program has the same loan eligibility requirements.
• Graduates who will meet all the PSLF qualifications as described on the Federal Student Aid website (typically, those who will be in eligible public service work for at least 10 years of repayment), have determined that they can pay a lower amount on an income-based repayment program than the traditional LIPP Participant Contribution, and are willing to take the risk of a substantially higher total repayment cost if they fail to meet the PSLF qualifications.

If you are considering future participation in the Low Income Protection Plan, here are a few points to keep in mind as you evaluate your options:

• All types of loans on the HLS Preferred Lender List are eligible for the traditional LIPP program as long as the amount borrowed is within your individual LIPP-eligible borrowing limit. Only federal loans within your LIPP-eligible borrowing limit are eligible for HLS’s PSLF based LRAP. You can find your individual LIPP borrowing limit for the current academic year by logging into the SFS Self Service Portal and clicking on the Budget & Awards tab.
• The traditional LIPP program provides assistance based on the ACTUAL required payment and only covers a repayment term of 10 years or longer. A loan with a repayment term of less than 10 years will not be LIPP eligible, and estimated payments on a shorter schedule that are recalculated to a 10 year repayment term will not be considered for LIPP purposes unless the lender/servicer is willing to formally re-amortize the loan to a 10 year repayment term. (Note that Harvard FCU will permit, for any borrower who originally selected a 5 year repayment term, a one time modification of the repayment period to a 10 year term in order to qualify for LIPP assistance BEFORE you enter repayment.)
• Some graduates in judicial clerkships can receive conditional LIPP assistance during a clerkship. Typically, graduates in clerkships who are eligible to receive LIPP assistance will not need to take advantage of loan forbearance provisions, even in cases of multiple-year clerkships.

We encourage you to borrow the amount you need in order to meet all of your academic year expenses in one loan application, however, you are able to increase your borrowing through April 15th of the current academic year. Keep in mind interest does not accrue on your unsubsidized loans until the funds are disbursed to  your student account.  Fall disbursements generally take place in late September and Spring disbursements in late January. During the months of July, August and September all loans are used as an anticipated credit towards your student account until the loans actually disburse. This is also true for the months of December and January for the spring account notice.

Additionally, it is important for you to understand that each loan you borrow is considered independently of any additional funds you may borrow. This is to say that if you apply for a GradPLUS loan in the amount of $10,000 and decide later you need an additional loan of $5,000, you will have two separate loans because they will have unique disbursement dates from which interest will begin accruing. This is true for private loans as well.

All loans have a minimum monthly payment amount when they enter repayment. This is generally $50 per month. If you apply for multiple loans from the same program your minimum monthly repayment amount will increase accordingly. For example, a student who borrows one $20,000 loan for the academic year will have a 50 minimum monthly payment, while a student who opts to take four $5000 loans will have a minimum monthly payment of $200 ($50 x 4).

If you find you have more loan funding than necessary, you are able to decrease your loan during the academic year in most cases and within specific guidelines. Lenders offer a window of time from the date of disbursement, ranging from 30-60 days, during which you can return unneeded funds. If your request to return loan funds is within the window of time allowed by the lender, the interest that has accumulated, as well as any associated fees, can be returned as well. You need to be mindful that your request is made via the instructions on the adjustment form in your SFS portal and that SFS needs 10 business days to process the return. If you are interested in returning funds you should check with your lender directly to see their full return of funds policy.

A few more points to consider as you evaluate your options:

• Since electronic debiting makes managing several payments at one time easier, and some lenders offer an interest rate discount for ACH electronic payment, keeping all of your loans with one lender is less of a consideration than it was in the past.  You’ll want to review all loan programs from year to year in order to take advantage of the best interest rates and repayment incentives available due to the fact that rates and terms of loan programs generally change annually.
• There is no penalty for early repayment of a student loan. You can accelerate the repayment of any loan simply by paying more than the required monthly payment. You can always choose to make a higher monthly payment without changing your repayment schedule. This approach gives you more flexibility in that you can pay the monthly standard amount one month while the next month making a higher payment as you are able.