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Financing Your JD

If you need help financing your law school education, there are three approaches to consider. The first type of assistance is through scholarship and fellowship programs administered by the IU School of Law. There are also programs based on financial need which are generally sponsored by the federal government and require an official financial need assessment. In addition, there are private sources of loans if you need assistance beyond that which is provided by the federal programs. Here is a helpful summary of the financial aid application process and the types of assistance available.

Scholarships and Fellowships

Scholarship and fellowship assistance is made possible by the School of Law and by the generous support of alumni and friends. Awards vary in amounts and are primarily based upon merit. In recent years, awards have been made to approximately 60 percent of each entering class and have ranged from $4000 to more than full tuition. Renewals depend upon the terms of each specific award. All applicants accepted are considered for scholarships and fellowships, but priority may be given to those who have completed their admissions application by March 1.

Federal Financial Assistance

In order to begin the application process for federal student aid, you must first meet these basic eligibility criteria:

• Be a citizen or eligible non-citizen of the United States with a valid Social Security Number;
• Enroll at least half time in an eligible program as a regular student seeking a degree;
• Have repaid any financial aid for which you were not eligible;
• Have made satisfactory arrangements to pay off any defaulted student loans.

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Application Required

The form used to apply for federal student financial aid is called the Free Application for Federal Student Aid or FAFSA. The form is available at www.fafsa.ed.gov. For the 2008-2009 academic year, you will be using your 2007 income and asset information to complete the FAFSA. It's best to complete your federal tax return early to have the data handy, but you can file the FAFSA before you actually file your taxes.

For additional help in completing the FAFSA, please go to www.ed.gov/studentaid, or call 1-800-4-FED-AID (1-800-433-3243). Either way, it's a good idea to make a copy of the FAFSA for your own records.

• Filing Priority Date
  You may file the FAFSA any time after January 1, 2008. Each year the ideal time to file the FAFSA is between January 5 and February 15. By filing by February 15, you insure that your data will be available to be considered for all the financial assistance for which you may qualify and miss the rush that occurs closer to the March 1 priority deadline. You also will make sure that the money will be available when you need it to pay for your education. You may also file after March 1 to receive Federal Stafford Loans.

  If you are considering the Summer Start program, please note that in order for you to receive federal financial aid funds for the summer of 2008 we must have received your 2007-2008 FAFSA data. We CANNOT use the 2008-2009 FAFSA data to process summer loans. ("Summer starters" need to file both the 2008-2009 FAFSA for the academic year and the 2007-2008 FAFSA (or update a previously filed 2006-2007 FAFSA) for summer aid by adding Indiana University, school code 001809, as a school on Question 86.)

• Student Aid Report
  You will receive either a yellow Student Aid Report (SAR), or an email directing you to a Web site, in response to filing the 2008-2009 FAFSA. This usually takes about two weeks. Be sure to check your SAR, or your personal information at the Web site, to make sure all data is correct. If it is not, please follow the directions provided on the SAR to make corrections, or contact us with any questions. It also contains your previously borrowed federal loan amounts. Your information will be sent electronically to IU by using the appropriate school code listed below. If you have questions about the status of your FAFSA, please call the Federal Information Center at 1-319-337-5665.
• Title IV Federal School Code
  In order to get your FAFSA data sent electronically to IU, provide the Federal School Code of 001809 for Indiana University-Bloomington on Question 97 in the FAFSA.
• Federal Methodology
  The FAFSA collects income and asset information each year to determine your ability to help pay for your education. The income information collected is based on the previous tax year. An Estimated Family Contribution (EFC) is calculated through an analysis called Federal Methodology. If you would like worksheets that show how a student's EFC is calculated, please contact the Federal Student Aid Information Center at 1-800-433-3243. Your EFC will be subtracted from the estimated Cost of Attendance, also called your Student Budget, to determine your financial need. Your need-based financial aid will be based on this figure. Your non-need-based aid can replace your EFC up to the amount of your Student Budget.

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Budget/Cost of Attendance of Your Legal Education

Here, as a sample, is the current first-year law student budget for the 2008-2009 academic year:

Entering Law Budget for 2008-09
Direct Education Costs
	Resident	Non-Resident
Tuition (Flat rate)	$ 19,125	$ 36,510
Mandatory Fees	900	900
Books & Supplies*	1,600	1,600
Total Direct Costs	$ 21,625	$ 39,010
* Does not include computer, see discussion below on those costs and how to have computer costs included in the budget.

You will have noted that a computer was mentioned in the Books and Supplies line above. However, no actual specific amount has been put into your budget for a computer. Here is why: The Law School requires that new students have a laptop computer but that requirement does not mean that you have to purchase a new machine as your prepare to begin class. If you do purchase a computer, that expense up to $2,500 can be added to your budget, by completing the Unusual Circumstances Form and submitting it, along with documentation of the cost to our Director of Financial Aid, identified later in this notice.

Living Allowance

Your budget also includes a living allowance for the 36 weeks of the academic year but you determine the amount that is needed.

Most students find that they can live comfortably on about $316 or less per week. That would mean that you would want to increase the direct costs by $11,376 ($316 x 36 weeks) when determining your total costs for the first year of Law School.

In considering what your weekly expenses might be, you will want to review your prior educational experiences. In addition to your rent and food, you will want to analyze carefully what you spend on all the personal things you feel you want, including entertainment, clothes, etc. Do not forget to include any car payments, car and health insurance, anticipated car repair, trips home, and (hopefully not) credit card debt.

In order to accommodate those students who have unusually high living expenses, resulting from supporting a family, high consumer debt, or other unusual circumstances, we allow up to $478 per week. That would mean that you could increase the direct costs by up to $17,208 ($478 X 36 weeks) when determining your total costs for the first year of Law School.

Just a reminder that we will use a budget that includes the maximum living allowance of $17,208 minus other resources when determining your eligibility for Federal Financial Aid Programs, but your budget may be substantially less. HOWEVER, IT IS IMPERATIVE THAT YOU PLAN ON BEING ABLE TO LIVE ON $1,900 OR LESS PER MONTH.

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Borrowing Student Loans

If you need further financial assistance to pay for educational costs, there are several loan programs available. The most advantageous are the federal student loan programs. It's very important to understand the implications of borrowing to finance your education. Loans will become a debt that you will be obligated to repay with interest after you graduate or leave school. Some types of loans will accrue interest while you are in school. Loans are a true investment in your education and your future as an attorney. Therefore, it is wise to be cautious and somewhat conservative in the amount you choose to borrow.

You can access your federal student loan history at: www.nslds.ed.gov if you have your federal Personal Identification Number (PIN). If you do not have a PIN, one can be obtained on line at www.pin.ed.gov. Be sure to include your email address when making this request. That will allow it to be emailed to you within just a few days.

Student loans can only cover educational expenses that are non-discretionary and that occur during the time you are officially enrolled as a student. For example, while modest living expenses are covered, student loans cannot pay for the purchase of a car, car payments, credit card debt or a spring break trip.

• Federal Family Education Loan Program
  IU participates in the Federal Family Education Loan Program as opposed to the Federal Ford/Stafford Direct Loan Program. Therefore, you do not need to complete a separate loan application. All IU needs is your FAFSA data which includes your indicated interest in borrowing student loans (Question #26 on the FAFSA with "2" as the response.).
• Subsidized Stafford Loans
  There are two types of loans in the Federal Family Education Loan Program. Neither one requires a credit check. The Subsidized Stafford Loan is one for which the federal government pays the interest while you are at least a half-time student, and during a six-month grace period after you leave school. This loan is based on financial need as determined by the FAFSA, and you can borrow up to $8,500 through this program if you qualify.
• Unsubsidized Stafford Loans
  The Unsubsidized Stafford Loan is a type of loan in which you either choose to pay the accruing interest quarterly while you are a student, or have it added to the principal of your loan. You do not have to show financial need to borrow an unsubsidized loan. It may replace your Estimated Family Contribution from the FAFSA. If you do not show any financial need for a subsidized loan, you could borrow the maximum of $20,500 in Unsubsidized Stafford Loan, otherwise you could borrow $20,500 minus the amount received through the Subsidized Stafford. This of course depends on your total Student Budget and any other financial aid you may have been awarded.
• Aggregate Loan Amounts
  The total Federal Stafford Loan aggregate allowed for undergraduate and graduate/professional loans is $138,500. Up to $65,500 of the $138,500 may be borrowed through the subsidized loans based on financial need, if you qualify.
• Interest Rates and Loan Fees
  The rate effective for new student loans (Subsidized and Unsubsidized Stafford loans) beginning July 1, 2006, is 6.8 percent. There is no origination fee charged for each loan up front at this time. Interest begins on unsubsidized loans at the time of disbursement, but not until repayment begins for subsidized loans.
• Federal Perkins Loan Program
  This loan program is for those students who show exceptional financial need. You need to file the FAFSA by the priority date of March 1, have a current outstanding balance through the Perkins Loan Program, and have a calculated student contribution below a certain level to qualify (for 2007-2008 it was $11,000). The funds are restricted in this way because they are so limited. The amount awarded varies per year but is generally $2500 and the interest rate is fixed for the life of the loan at 5 percent. The interest is paid by the federal government while you are at least a half-time student and during a nine-month grace period, which begins when enrollment drops below half time (4 hrs/sem for graduate students here at IU).
• Federal Work-Study Program and other Work Programs
  Law students submitting FAFSAs by March 1 may apply to IU departments to participate in the Federal Work-Study Program. These awards function as federally funded graduate assistantships. While first-year students are not encouraged to work, a limited number of these assistantships are available in other departments for second and third-year students with superior records or specific skills. Demonstration of financial need is required and students generally work about 20 hours per week. Award amounts vary based on financial need and the departmental stipend amounts. In addition, each year faculty members of the School of Law employ second- and third-year students to work with them on research projects for an hourly wage.
• Federal Graduate PLUS Loan Program
  For those who need to borrow more than the $20,500 currently available through the Federal Stafford Loan Program, the Graduate PLUS (GRADPLUS) Loan Program can be used to borrow up to the remainder of the cost of attendance (including tuition, fees, books and the $17,208 living allowance for the academic year). There is a credit criteria tied to eligibility, although it is less stringent that the criteria for the private educational loans. The interest rate is a flat 8.5% and it begins immediately upon disbursement. The interest can be paid, or it can be left to accumulate and will then be added to the principal (compounded) when the loan goes into repayment after the enrollment drops below half time - or graduation. Although this loan would go into repayment upon the date of the last disbursement, a student could then obtain an in-school deferment, so no payment would be required until after graduation. This loan program could be used instead of the private educational loans described below - but receiving this loan is also a function of having good credit, so please read about the private educational loans, as well since that credit discussion also applies to this program.

Remember, you must have good credit to receive more than the $20,500 allotted through the various educational loan programs.

A borrower would be denied a GRADPLUS loan:

• if the borrower is considered 90 or more days delinquent on the repayment of a debt;
• if the borrower has been the subject of a default determination, bankruptcy discharge, foreclosure, repossession, tax lien, wage garnishment; or
• if the borrower has a write-off of a Title IV debt during the five years preceding the date of the credit report.

The reason for being denied a GRADPLUS loan are not limited to these examples, but the results have shown that good credit is needed to receive a GRADPLUS loan.

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Private Alternative Loans

If you have exhausted your eligibility for federal Stafford loans, are ineligible for a GRADPLUS loan and need supplemental funding, a private educational loan program may be available to you to help finance your education. These private loans are offered by banks or other financial institutions, and the rates are slightly higher than those for the Federal Stafford Loan and GRADPLUS Program and are variable, but much lower than credit card rates. Private educational loan programs have a separate application process but must be certified by our financial aid officer in the Indiana University School of Law.

Securing a private education loan or a GRADPLUS Loan is a function of a good credit rating. A poor credit history could result in your not being able to obtain one of these loans.

If you ever need to borrow more than the $20,500 available in Stafford loans, you should obtain a copy of your credit report to make sure that ll the information recorded is accurate and indentify any items that might need resolution before qualifying for a GRADPLUS or private educational loan.

Information on obtaining a FREE annual credit report from any of the three major credit bureaus, Equifax, Experian and TransUnion, can be found at https://www.annualcreditreport.com/cra/index.jsp. It has a helpful FAQ section. You are encouraged to order your FREE annual credit report so that you are better prepared to pass a credit check, which is necessary to receive a private educational loan, but just as importantly to prevent a possible IDENTITY THEFT problem from starting and taking hold.

If your ability to attend law school is contingent upon borrowing a private loan or a GRADPLUS Loan, it is critical that you find out whether or not you are able to borrow ahead of time.

There are various private educational loan programs available to law students, but we would encourage you to apply through the Sallie Mae Law Loan Program. The terms are very competitive and this would mean that your Private Educational Loans would be through the same entity as your Federal Stafford Loans--resulting in a single repayment source.

If you are initially denied the a private education loan, or the GRADPLUS Loan, for credit reasons, you are encouraged to speak with Mr. Jim Schutter, our Financial Aid Director, for other possible private educational loan programs that might have less stringent credit criteria.

However, again, it is imperative that you determine if you are eligible for private loans or GRADPLUS Loans if you will need more than the $20,500 plus other aid (scholarships, etc) for an academic year before starting a program and then not being able to complete it because of a lack of funds.

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Repaying Your Student Loans

You have many options to choose from in repaying your student loans after you obtain your law degree. There are four different repayment plans ranging from 10 years to 30 years. The shorter the repayment plan, the less interest you pay on your loans. There are also deferment and forbearance options available if you are unable to pay on your student loans for a period of time.

You can access calculators on the web to see how much you would be paying monthly after your grace period once you graduate or cease being at least a half-time student. For more information on all your options please go to: http://www.ed.gov/offices/OSFAP/DirectLoan/index.html.

Possible Reduced Monthly Payments and Loan Forgiveness for Federal Student Loans for Low-Income Graduates

The College Cost Reduction and Access Act which became law during the fall of 2007 has two provisions, Sections 203 & 401, which are of great importance to law graduates and students who have high debts and low incomes, and particularly to those who practice in the public interest area (government and non-government organizations).

• Reduced federal student loan monthly payments available for low-income graduates through income-based repayment (IBR).
  Section 203 creates an income-based method for borrowers to limit their annual educational debt repayment to a reasonable, affordable amount: 15% of their discretionary income as defined to be the adjusted gross income of the student (and spouse) minus 150% of the poverty level for the borrower's family size. (For example, a single borrower who owes $100,000 of debt at an interest rate of 6.8% with an adjusted gross income of $40,000 would pay each month one-twelfth of 15% of (40,000 minus $15,315), or only $309/mo. That would be his payment the first year. That amount would increase as his earnings increased, but would remain significantly lower than the standard monthly payment of $1,155.) Any remaining debt remaining after 15 years on this repayment schedule would be forgiven. In the case above, over $98,000 of debt would be written off by the government. This repayment option becomes available beginning July 1, 2009.
• Loan forgiveness of federal student loans available for certain public interest and government employees after 10 years of qualified employment and repayment via the income-based repayment (IBR) plan.
  Section 401 provides that a borrower who makes ten years of IBR payments while engaged in full-time public service law for those 10 years, can have the remaining loan balance forgiven only after those 10 years rather than 25 years. Any payments made during such a period beginning October 1, 2007 could count toward the 10 years. (Continuing the example listed in the section above, the borrower in a public service job would pay $308/mo, rising to perhaps around $403/mo in the 10th year (assuming a 3% increase in income and cost of living). The borrower would have paid $42,000 toward his initial $100,000 debt but would have the remaining principal and interest of over $126,000 forgiven.)

Based upon the current definition of public service and a catch-all phrase that includes government workers, it currently appears that the benefits of Section 401 may apply to everyone who works for a government, for a 501(c) organization, or in public service for the elderly.

It is possible for all federal loans to ultimately be forgiven through this section.

Loan Repayment and Reduction Programs

For those seeking careers in the public interest, Indiana Law may be the only law school in the country with a unique three-tiered Loan Repayment Assistance Program (LRAP) targeting loan reduction and repayment. Three programs, ranging in awards from $2,000 to $8,000, a special summer Public Interest Fellowship program, and a Legal Services Office Fellowship are just a few options that can make a difference in loan burdens.

More information concerning this program and our Public Interest Law Foundation can be obtained on line at: http://www.law.indiana.edu/students/groups/pilf/index.shtml

Notification of Your Financial Aid

Generally, if you file your FAFSA by March 1, you will be sent a electronic Financial Aid Notification outlining your financial aid including loans from the Indiana University Office of Student Financial Assistance by early June. If you decide to borrow Federal student loans, you will also receive subsequent instructions on how to complete and sign a Master Promissory Note.

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How You Receive Your Money

All student financial assistance, including scholarships and fellowships, is credited to your student account through the IU Office of the Bursar. All charges incurred through the university are covered first and then a refund check for any remaining funds is released to you by the start of each semester or session.

To expedite this process, you may wish to consider the Direct Deposit option offered by the IU Office of the Bursar at: www.indiana.edu/~blbursar/dirdeposit/index.html. As a free service to you, your financial aid refund then can be directly deposited into the bank account of your choice.

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Lifetime Learning Tax Credit

This tax credit is equal to 20 percent of a family's tuition expenses, up to $10,000, for virtually any post secondary education and training including graduate and professional schools. The credit is a reduction of income tax of up to $2000 per year. For more information, please call 1-800-829-3676 or go to: www.irs.ustreas.gov.

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In-House Financial Aid Contact

If you have questions or concerns about federal or private student loans that have not been answered by the information in this document, please feel free to contact Jim Schutter, at iulawfa@indiana.edu or call (812) 855-7746.

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Scholarship and Fellowship Contact

For more detailed information on scholarships and fellowships offered by the School of Law, please contact us at lawadmis@indiana.edu or call (812) 855-4765. You may wish to search for scholarships outside the University on line at www.fastweb.com. This is a free, national search.

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