What Happens to Student Loans After Failing or Dropping Out of Law School?
If you are considering dropping out of law school, or, worse, you're on the verge of failing out, you might be wondering about all that student loan debt you took on.
Unfortunately, unlike just about every other kind of debt, student loans cannot be discharged via bankruptcy. This means that, like your family, student loans are basically forever. However, there is a counterintuitive silver lining for law students: the more you take out in loans, the less likely you are to default. This is generally due to the fact that the student debt a person accrues corresponds to education that person has received, and generally, the more educated a person is, the more earning capacity that person has.
If you haven't failed out, you might want to seriously second guess dropping out.
Give Loan Money Back
If you decide to drop out early in the semester, or you fail out at the mid-year point, don't let the loan companies send you or your school any more money. If you have any of loan money sitting around gathering dust in a bank account, or you can afford to pay down your loans immediately, you probably want to do just that, as the interest can quickly add up, particularly on unsubsidized loans, and particularly if you don't start making payments on time.
If you don't have the money to give back, you better get yourself a job ASAP as the longer you wait to start repayment, the worse it will be.
Forbearance and Deferment
Generally, once you stop going to school, your loans will become due and payable. Often there is a grace period. However, upon request, you may be able to qualify for a forbearance or deferment (which basically just means you can avoid paying your loans for a few months). However, note that interest may continue to accrue during a forbearance period.
While it may be burdensome, calling up your loan companies and letting them know your situation is better than just hiding from the problem, which thanks to interest and late fees, will only get bigger if you do nothing.
Related Resources:
- Was Your JD Worth the Cost? Survey Says 'No' (FindLaw's Greedy Associates)
- Lawyer Censured After Disbarred Wife Used His Office (FindLaw's Greedy Associates)
- Judge Accused of Stealing Almost $100,000 From a Dead Client (FindLaw's Greedy Associates)