Loans

At Fordham Law School, students can apply for loans within the following three categories: Fordham Loans, Federal Loans, and Private Loans.

Students can use these educational loans to meet their tuition and living expenses by borrowing up to cost of attendance, minus any financial aid (scholarships, grants, etc.) they receive during an academic year.

Federal Loans

Stafford Loans | Graduate PLUS Loan

Many students at Fordham Law School depend on federal loans to finance their law degrees. Federal loans are guaranteed and subsidized by the federal government, and students can obtain these loans through private lenders, such as banks, credit unions and savings and loan associations. These lenders must abide by federal laws that regulate the maximum interest rate and fees they can charge on these loans.

These loans have fixed interest rates. The loans provide deferment options and extended repayments terms, and lenders offer repayment incentives. For Stafford and Graduate PLUS Loans, students must complete a FAFSA. New York State Higher Education Services Corporation (HESC) has printed FAFSA DOS AND DON’TS (PDF) which contains very useful information. Just keep in mind that the HESC article was written for college and university students in general and not just for law students. Please note that Fordham University does not have funding for work-study programs or Pell Grants for law students. Further, please note that because you are becoming a graduate student, you are considered “independent” for federal loan purposes and your parents DO NOT need to sign your FAFSA.

Students can borrow Stafford Loans up to a maximum per academic year of $20,500.  The fixed interest rate is 6.8%.  Staffords come in two parts:  subsidized and unsubsidized.  The maximum subsidized Stafford is $8,500 and the unsubsidized Stafford is $20,500 less any amount received as a subsidized loan.  The subsidized Stafford does not accure interest while the borrower is in school at least half time, or during the grace period.  Unsubsidized Staffords accrue interest from the time of disbursement.  Some students, if they qualify, borrow only the subsidized portion of the Stafford Loan.  Most borrow both the subsidized and unsubsidized Stafford Loans.

Graduate PLUS Loans  are unsubsidized and are available to law students who have the absence of bad credit.  The fixed interest rate is 8.5%.  While Grad PLUS Loans have no grace period, graduating students may ask for forbearance to align repayment with the Stafford Loans.  There is no maximum loan amount except what is dictated by the Cost of Attendance.  Many students borrow both Stafford and Grad PLUS Loans and do not need to borrow private loans.

Fordham Loans

The Fordham Revolving Loan Fund was established almost 25 years ago in order to offer very needy students additional subsidized funding beyond the grants. The loans generally range from $2,000 to $10,800 annually. Fordham Loans are awarded on the basis of need and are guaranteed renewable for the second year. In the third (and fourth) year, they may be reduced by income over $15,000 that was earned in the summer preceding the third (and fourth) year. The equation for this is: (gross income minus $15,000) x 0.6 x 0.5.  - 15,000 x 0.6 x 0.5     

Fordham Loans carry a fixed subsidized interest rate of 8%. Interest does not accrue while you are in school or for the six month grace period following graduation or withdrawal from Fordham. Repayment begins following this six month grace period and ranges from 3 - 15 years depending on the total amount borrowed.

Fordham loans are serviced by Affiliated Computer Services (ACS), and payments are made directly to ACS. Details about repayment, repayment incentives, deferment, and forbearance are provided at the exit interview which all borrowers are required to attend.

See our Application Process for further guidelines on how to apply.

Private Educational Loans

Some Stafford lenders offer private educational loans to law students. These loans differ from federal loans in several significant ways:

Private loans are not federally guaranteed.
Private loan interest rates and fees are not subsidized.
They are only issued to students who have relatively good credit
Credit worthy co-signers may be required if the student has bad credit.
Since there is no guarantee or subsidization, they are usually more expensive.
Private loans may have a longer repayment period.
Private loans are not eligible for deferments, but lenders may offer forbearance.
Private loans are not forgiven in the event of death or disability.
Private loans may not be consolidated with federal loans.

A common question we hear is, "I am in law school, not business school because I don't want to deal with any of this, which loan is best?" Unfortunately there is not an easy answer. As with many things financial, the honest answer is, "it depends". On what does it depend?

One factor is interest rate. This one appears obvious, but it is not. Lenders obtain their funding in a number of different ways. Some borrow it, some take the loans to the financial markets, and some take it from other assets of their corporation. Not surprisingly, these funds may have different costs to the lender. Lenders then often set interest rates to reflect the "index" at which they borrow. Private educational loans may be indexed to the Prime Rate, (Prime), the London Interbank Offering Rate (LIBOR) or the US short term note, the 91-day Treasury Bill (T-bill).

Visit http://www.bankrate.com/brm/ratehm.asp for the current rates on these major indices. Lenders may use other indices (10 year T-Bill, various mortgage bond indices, and others) but most are using Prime, LIBOR or the short-term 91-day T-bill. A "spread" is the additional interest that is added to the index rate. It is the combination of the spread and the interest rate that should be considered as you estimate the actual interest rate. When estimating and comparing the interest rates, be sure to add the spread to the index.

Another factor is the fees that the lenders charge. A few years ago, private lenders charged the lowest interest rate possible but charged fees as high as 13%. The lenders used these fees to either purchase default insurance or self-insure against future defaults. While default rates have not decreased dramatically, the fees have. The lenders are simply building in the insurance costs to the interest rates. There are lenders who may assess the fees based on the risk of default, as estimated by the borrowers credit score. The less risky the loan, the lower the fees.

Because of the current uncertainty in the credit markets, many lenders have decided to tighten the underwriting of their private student loans and adjust the pricing of these loans. Borrowers will be required to meet higher credit standards and pay a higher price for these loans. As a result, we recommend that you take full advantage of the Federal Stafford and Grad PLUS loans before applying for a private loan. Be aware, however, that the Stafford Loans carry a 1% origination fee and a 1% default fee, and the Grad PLUS Loans carry a 3% origination fee and a 1% default fee. Both are what are called up front fees, i.e., they are taken out before the proceeds are distributed. If you still wish to borrow through the private sector, it is always a good idea to apply for a private loan with a creditworthy cosigner who has excellent credit in order to get the best deal.

Grace periods on private loans range from 6 to 9 months, although you may begin repayment earlier, if you wish. Many of the lenders have overall borrowing limits (including Stafford and undergraduate borrowing). These limits are set based on the lender's assessment of ability of the average law graduate to repay the loans. Generous repayment incentives seem to have gone by the wayside, but all seem to have kept the .25% interest rate reduction for automatic bill payment. Most private loans do not carry penalties for prepayment, but that is worth checking before signing on the dotted line.