Bar study loans are not student loans. They are private loans.

As a result, borrowers need to apply a different strategy for bar study loan elimination. Even though traditional tactics may not work, there are options unique to bar study loans.

Why are bar study loans different than other student loans?

It seems silly that someone borrowing money to study for the bar exam gets interest rates well above 10%, while an average first-year college student can easily find a student loan with an interest rate of under 5%.

The difference goes back to bankruptcy law. Congress passed special provisions that make student loans nearly impossible to discharge in bankruptcy. This is the reason that so many lenders are eager to offer student loans at low interest rates. There is less risk to the lender.

A bar study loan is different. Even though it was used to study, the lenders have much less protection. Because there is more risk associated with the loan, the interest rate is higher. Loaning money to jobless, unlicensed attorneys is risky, so lenders increase the rates to ensure profits.

Rather than treating your bar study loan as a student loan, view it as a personal loan. Even though it cannot be consolidated or refinanced like other student loans, there are other ways to lower the interest rate.

Find a better personal loan

Perhaps the best method of refinancing a bar study loan is to get another loan and use the funds to pay off the old loan.

Peer-to-peer lenders such as Lending Club and Prosper are common choices. The downside with these options is that the interest rates can vary greatly. At the low end of the spectrum, some of the rates are reasonable. However, the rates on these loans can often exceed those offered by some credit card lenders. The other downside is that there is an origination fee.

For most, working with a local bank and inquiring about a personal loan might be the best option.

Occasionally, student loan consolidation companies like SoFi also offer personal loans. These loans typically have shorter repayment terms than most student loan refinancing. With interest rates starting in the 5 to 7% range, they can considerably improve the bar study loan interest rate. They also are free of origination fees, which should always be avoided.

Lender	Interest Rates	Loan Amounts
	7.99% – 22.73%	$5,000 – $100,000
	Sherpa Thoughts: The SoFi Personal Loan has interest rates very competitive with the bar study loan lenders. SoFi is one of many lenders offering personal loans, but the SoFi interest rates are among the very best, which is why they were included here.
	5.99% – 24.99%	$2,500 – $35,000
	Sherpa Thoughts: Looking at the Discover personal loan compared to their bar study loan a couple things stick out. First, the interest rates are pretty close on the low end, but can get much higher for the bar study loan. Second, bar study borrowers have a longer period of time to repay their loans.

Borrowers with a good job may even wish to consider a credit card with a 0% interest introductory rate. The savings may be substantial if you will be able to pay off all of the debt before the credit card rate kicks in. However, this is a risky option as the full credit card interest rate may exceed the bar study loan rate.

Playing hardball with your lender

Some attorneys don’t pass the bar on the first try. Others struggle to find a job.

While federal loans have great protections like income-driven repayment and student loan forgiveness, bar study loans are less generous.

Bar study borrowers can use the viability of bankruptcy to their advantage. Some lenders have temporary rate reduction programs to help struggling borrowers. Though bar study loans are not student loans, they are excellent candidates for temporary relief.

Most lenders are large bureaucracies, and customer service representatives rarely have authority to make interest rate changes. However, a savvy law school grad may be able to track down a person who can help and persuade them that rate assistance is better than bankruptcy.

Refinance and Consolidation Options for Bar Study Loans

The key here is to understand what you are shopping for.

Student loan consolidation and refinancing is not an option for debt that isn’t actually a student loan. Once you target personal loans instead of student loans, you might find better options.

Even in the best of circumstances, the interest rates on these loans will still be higher than what you can find for student loans. For this reason, even if you can lower the interest rate slightly, this will still probably be the loan you want to pay off first.

Due to the high interest rates of personal loans and bar study loans, borrowers should prioritize eliminating this debt first.

Next Steps

• Find the lowest possible monthly payments and interest rates on your student loans.
• Attempt refinancing or consolidation or negotiating rates as described above.
• Repay the bar study loan as fast as possible.

The post Bar Study Loan Consolidation and Refinancing Options appeared first on The Student Loan Sherpa.

I say this both as a former bar study loan borrower and as someone who closely watches the student lending marketplace.

The big problem with bar study loans is that interest rates normally range from average at best to terrible. Many students end up with interest rates of over 10%.

Despite the shortcomings, many borrowers choose to get a bar study loan each year. Today we will cover the lenders offering bar study loans and look at some alternatives to a bar study loan.

Bar Study Loan Lenders

At present, four national lenders are offering bar study loans.

Lender	Interest Rates	Loan Amounts
	2.39% – 11.29%	Max $15,000
	Sherpa Review: Of the major bar study loan lenders, PNC is probably the best bet. PNC offers fixed-rate and variable-rate loans, has a variety of repayment lengths, and has the lowest advertised interest rate. However, the lender that actually offers the best rate may not be PNC. This is why all borrowers should shop around. Read the full review on PNC.
	4.39% – 14.03%	$1,000 – $15,000
	Sherpa Review: Sallie Mae is still a huge name in the bar study loan business. The interest rates offered by Sallie Mae on the low end are competitive with other lenders, but many borrowers end up with double-digit interest rates... even those with co-signers. Read the full review on Sallie Mae.
	4.99% – 13.99%	$1,000 – $16,000
	Sherpa Review: Discover has a reputation for excellent customer service, and that service definitely applies to their bar study loans. The zero fee offer, which includes zero late fees, is very customer friendly. Though Discover doesn't advertise the lowest possible interest rates, checking rates with Discover may still be time well spent. Read the full review on Discover.

The Bar Study Loan Issues

Despite being a rather sophisticated demographic, law students who are about to sit for the bar are not the best consumers.

After borrowing massive sums of debt to pay for law school, one last student loan — even with a lousy interest rate — doesn’t seem like a big deal.

Enter the bar study loan companies. Not many lenders offer bar study loans (four by my count), so there isn’t much competition. The bar study loan is presented as one final student loan and a useful tool to help ensure bar passage. Law students apply for one loan, get approved, and move on to more pressing concerns.

Many law students don’t realize that a bar study loan is not a student loan at all. In reality, it is just a fancy-dressed personal loan.

Because a bar study loan is just a personal loan, prospective borrowers shouldn’t limit themselves to loans labeled as bar study loans. A personal loan can be a credit card payoff tool, a home construction loan, or a loan for paying for bar expenses.

A quick look at a couple of personal loans shows that they may be a reasonable alternative:

Lender	Interest Rates	Loan Amounts
	7.99% – 22.73%	$5,000 – $100,000
	Sherpa Thoughts: The SoFi Personal Loan has interest rates very competitive with the bar study loan lenders. SoFi is one of many lenders offering personal loans, but the SoFi interest rates are among the very best, which is why they were included here.
	5.99% – 24.99%	$2,500 – $35,000
	Sherpa Thoughts: Looking at the Discover personal loan compared to their bar study loan a couple things stick out. First, the interest rates are pretty close on the low end, but can get much higher for the bar study loan. Second, bar study borrowers have a longer period of time to repay their loans.

Bar Study Loans vs. Personal Loans

The biggest difference between a bar study loan and a traditional personal loan seems to be the repayment length. Personal loan lenders are often able to offer interest rates as low or lower than a bar study loan, but these loans have to be paid off in a much shorter period. The downside is larger monthly payments; the upside is significantly less spending on interest over the life of the loan.

When comparing the four bar study loan lenders against a couple of personal loans, it becomes apparent that bar study loans are not the only reasonable option to get through the bar exam.

Law students looking for funds to get through the bar examination process would be wise to consider both bar study loans and personal loans.

Looking Outside the Box

Those looking for a very short-term loan to cover bar exam and class costs may also want to consider a credit card with a 0% introductory interest rate. A quick google search will show up to date promotions and offers.

This strategy is dangerous because the interest rates jump to high levels after the introductory period.

This route comes with high risk, but the reward is 0% interest, which is significantly better than bar study loans and traditional personal loans.

Final Thought: Consider All Options

No lender or loan type sticks out as an ideal option for bar study.

This means that potential borrowers need to consider all of their options and way the pros and cons carefully.

Borrowing during bar study is expensive, but with some planning and research, money can be saved.

The post Bar Study Loan Options and Alternatives appeared first on The Student Loan Sherpa.

Discover is pretty transparent about its policies. The US-based customer support is a huge plus, and Discover doesn’t charge any fees on the loan — not even a late fee for borrowers who miss a payment.

Unfortunately, Discover falls short where most other bar study loans fall short: the interest rates offered are pretty lousy.

As a result, going to Discover for a bar study loan is a viable option, but borrowers should also be shopping around.

Discover Bar Study Loan Basics

In order to be eligible for a Discover Bar Study Loan, law students must either be in their final year of school or have graduated within the past 6 months.

Loan amounts range from $1,000 on the low-end to a maximum of $16,000.

Once the loan is issued, the borrower is either issued a check directly or the money is deposited into the borrower’s account.

Discover advertises zero fees. Like most bar study loan companies, that means no loan origination fees or late fees. Where discover is a little different is that they don’t charge late fees. This feature will come in handy to borrowers who have issues setting up an automatic withdrawal or who miss a deadline by a few days.

Loans are all on a 20-year repayment term and interest rates range from 3.87% to 10.87% on the variable-rate loans. Fixed-rate loans start at 5.49% and can be as high as 11.99%.

Discover also has an “aggregate loan limit” for their bar study loans. This loan limit is a cap on the total amount of existing student debt that a borrow can have. However, this isn’t one single limit. The aggregate loan limit is adjusted according to application factors such as the borrower’s credit score.

Finally, Discover does not have a cosigner release policy. That means cosigners are attached to the loan until it is paid in full. Not being able to be released from the loan is definitely a negative, but the cosigner release policies are often more myth than reality with other lenders, so Discover gets points for being upfront with borrowers.

Comparing Discover to Other Bar Study Lenders

All bar study loans seem to suffer from high interest rates, and Discover is no exception.

The rates with Discover start slightly higher than the rates with PNC and Sallie Mae, but they are better than the rates offered by Wells Fargo.

PNC has slightly better advertised interest rates than Discover, but the PNC repayment period is 15 years compared to the 20 with Discover. This means monthly payments could be lower with Discover, even if PNC has a better rate.

Sallie Mae also advertises slightly better rates than Discover, but again, for shorter loans. We also think Discover has a much better customer service reputation than Discover.

However, it is important for law students and recent graduates not to limit themselves to bar study loans.

Personal Loans vs. Bar Study Loans vs. Student Loans

In reality, a bar study loan is just a personal loan with a couple of extra requirements.

A bar study loan is not a student loan and the rules that apply to student loans do not apply to bar study loans. For example, student loans get special treatment in bankruptcy, but bar study loans and personal loans are treated like all other forms of debt.

Many future lawyers limit themselves exclusively to bar study loans, and it could be to their detriment. Just because a loan is designed for a single purpose does not mean it is the best choice.

A traditional personal loan could be the best option for paying for bar prep.  Some personal loan lenders have rates starting below 6%. Because the personal loan marketplace has more lenders, it is also more competitive. This could explain why some borrowers are able to find better rates with a traditional personal loan over a bar study loan.

Discover Bar Study Repayment Strategy

On the very low end of the Discover interest rate spectrum, the rates are pretty good for a 20-year loan.

However, even on the low end, the rates are still too high to carry long-term. Borrowers should have a plan to quickly repay the debt after taking the bar. Odds are pretty good that the bar study loan interest rates will be higher than the interest rates on existing student loans. The options to refinance are bar student loans are also very limited.

Borrowers who are offered rates on the high end of the Discover spectrum should only use the loan as a last resort. Repayment of high-interest bar study debt should be a priority.

Final Thoughts

Despite the name, a bar study loan isn’t always the best option to pay for bar study.

That being said, Discover is one of the best bar study lenders available.

Ultimately, the best choice will depend upon the actual interest rates offered. Law students and recent grads may be busy, but shopping around to find the lowest possible interest rates for their bar study needs is time well spent. We think Discover merits consideration, but it should only be part of the investigation.

The post Discover Bar Study Loan Review appeared first on The Student Loan Sherpa.

The bad news is that most bar study loans are pretty terrible and the PNC loan certainly has its fair share of warts.

Bar Study Loan Basics

The purpose behind a bar study loan is to cover an aspiring lawyers living costs as well as bar study costs. This allows recent law school grads the opportunity to prepare for the bar without having to worry about how rent is going to get paid.

What makes bar study loans unique is that they are not student loans. Instead of the money going to your school’s office of financial aid, the money is sent directly to the borrower.

A bar study loan is nothing more than a personal loan with a couple of extra requirements.

In the case of the PNC bar study loan, borrowers must be finishing law school within six months, or have graduated from law school no more than six months prior. The borrower must also be planning on sitting for the bar within six months of graduation.

PNC Bar Study Loan Terms

PNC offers both fixed-rate and variable-rate bar study loans.  The variable-rate loans start at 1.96% while the fixed-rate loans start at 3.49%. On the low end, these rates are quite good. The bad news is that rates can start as high as 8.96% for a variable-rate loan and 10.49% for a fixed-rate loan. On the high side, these rates are awful.

Borrowers have up to 15 years to repay the loan and the loan also includes a six-month grace period.

PNC will loan a maximum of $15,000 for bar study. However, applicants must have a total aggregate student debt of less than $225,000, including federal and private student loans.

A Red Flag for Cosigners

One of the major issues with the PNC bar study loan is the cosigner release policy.  

Because these loans are likely to be utilized by many unemployed recent grads, we suspect that many will need a cosigner. PNC advertises that there is a cosigner release policy, but we suggest that all cosigners expect to be on the loan for the life of the loan.

In order to secure a cosigner release a borrower must:

• Make 48 consecutive on-time payments,
• Provide proof of income, and;
• Pass a credit check

Making four years worth of payments is a pretty high bar.

One late payment or one forbearance starts the 48-month clock at zero. For some perspective, many student loan lenders require 12 months of on-time payments.

The big concern on the cosigner release is the credit check that the borrower must pass at the end. PNC has almost no incentive to release cosigners from loans, and they don’t disclose what is necessary in order to “pass” the credit check.

The combination of these requirements makes any cosigner release a long shot.

Reviewing PNC Alternatives

For many grads, there is definitely the temptation to just suck it up and live with a lousy loan while getting ready for the bar. After many years worth of student loans, a bar study loan may seem like a drop in the bucket.

As we alluded to earlier, competitor bar study loans like the one offered by Sallie Mae could be an even worse option. The only comparable bar study loan to PNC would be the one offered by Discover.

Sadly, the best option may be to forgo incurring any additional debt. Crashing on a futon for a few months and living on ramen noodles may not sound ideal, but the approach has merit.

Another area worth investigating is a traditional personal loan. These options are more plentiful and less restrictive. Interest rates can vary considerably, but with lenders like SoFi offering rates starting under 6.00%, this avenue could be the ideal option.

Final Thoughts

Bar study loans are not consumer-friendly.  

They may be better than payday loans, but with interest rates over 10% in some cases, a bar study loan is a really expensive debt.

The PNC bar study loan is better than some of the other bar study loans available, but future lawyers would be wise not to limit themselves to loans specifically for bar study.

The post PNC Bar Study Loan Review appeared first on The Student Loan Sherpa.

The idea is simple: take out one last educational loan, focus on studying for the test, and be able to pay rent and put food on the table during that time.  

To recent law school grads with 100k+ in student debt, borrowing an extra $10,000 or so in order to help ensure bar passage may seem like an easy call.

Unfortunately, the Sallie Mae bar study loan may prove to be a mistake for many aspiring lawyers.

Bar Study Loan Basics

The most important thing to know about a bar study loan is that it is not a student loan. Instead, it is a personal loan.

Unlike student loans, personal loans don’t have to be used for qualified educational expenses. If you get a bar study loan from Sallie Mae, you will receive a check from Sallie Mae.

Personal loans are treated like most other debts in a bankruptcy proceeding. Borrowers do not have to meet the rigorous “undue hardship” standard specifically required for student loans. The relative ease of discharging a bar study loan in bankruptcy isn’t a major consideration for most borrowers, but it matters a great deal to lenders. As a result, interest rates on bar study loans are usually much higher than most student loans.

Unlike other personal loans, bar study loans usually require that applicants be recent law school graduates and plan on sitting for the bar. These loans may also include a grace period where payments are not required, but interest does accrue.

Sallie Mae Bar Study Loans

In order to be eligible for a Sallie Mae Bar Study loan, applicants need to be current law school students or have graduated within the past 12 months from an ABA-accredited law school.

Sallie Mae offers variable interest rate loans for bar study and the rates currently range from a reasonable 2.90% APR to an awful 11.56% APR. Fixed-rate loans range from 5.75% to 12.68%. Borrowers are able to borrow between $1,000 and $15,000.

We like that Sallie Mae does not charge any prepayment or loan origination fees, but we don’t like the emphasis that they put on having “creditworthy cosigners” on the loan.

Sallie Mae advertises a cosigner release possibility after 12 months of payments, but due to vague credit requirements that borrowers must meet in order to secure a release, cosigners should play it safe and plan on being on the loan for the life of the loan.

Reviewing Sallie Mae vs. Other Bar Study Options

Sallie Mae’s interest rates on the high end are especially terrible.

Anecdotally, the majority of the borrowers that we have seen end up getting approved for rates on the high end of the spectrum.  At around 12%, these rates look more like onerous credit card rates. Lenders like Discover and PNC have slightly more appealing bar study offerings.

In many cases avoiding a bar study loan can be the best option. Many people like to avoid working while studying for the bar, but a distraction from a job can be a healthy break from studying. Plus, the income generated can help avoid a really expensive loan.

Another option is to look into a more traditional personal loan. As an example, SoFi currently offers fixed-rate personal loans starting below 6%. Because the personal loan marketplace is far more crowded than the bar study marketplace, the competition is more fierce, and borrowers may be able to score a better rate.

Borrowers who only qualify for the high interest rate loans may also consider paying their living expenses on a credit card with a 0% introductory APR rate. This route is extremely risky because the interest rate jumps considerably after the intro period, but for people who need the cash to cover food and bar study classes, it might be a reasonable option.

Final Thoughts

Sallie Mae seems to do an excellent job advertising their bar study loan to aspiring lawyers. They also emphasize a quick application process.

The Sallie Mae approach appears to be predicated on getting the applicants who will not shop around and consider other options.  

Sallie Mae is normally the first bar study loan that law students are exposed to, but it is unlikely that it will be the best choice. Law students who are willing to shop around and/or be creative will likely find better options elsewhere.

Even though we are not fans of the Sallie Mae bar study loan, or bar study loans in general, there is no harm in checking your rate with Sallie Mae. For some students, it might be a lousy option, but still the best option available.

Click here to check your rate with Sallie Mae.

Click here to check your rate for a traditional personal loan with SoFi.

The post Sallie Mae Bar Study Loan Review appeared first on The Student Loan Sherpa.