So You've Started On Your Way To A Career In Law...

It's not just how much debt you take on -- the kind of debt you take on can also have a big impact on the cost of law school.

So you’re on your way to a career in law? Congratulations — after peaking in 2013, the number of students graduating from law school is in decline, and demand for lawyers is picking up.

The employment rate for 2014 law school graduates rose 2.2 percentage points, to 86.7 percent — the first increase since 2007, according to the National Association for Law Placement (NALP).

The number of students taking the Law School Admission Test (LSAT) has declined for five years in a row. According to the Law School Admission Council, only 101,689 students took the LSAT last year, levels not seen since the late 1990s.

As a result, the class of 2017 is expected to be at least 30 percent smaller than the class of 2013. Some analysts think that soon, there won’t be enough new law school graduates to meet the demand for entry-level lawyers.

It’s no surprise that interest in a career in law has cooled off. The Great Recession, coupled with rising law school costs, generated endless media reports about law school graduates with six-figure loan debt who couldn’t find a job.

It’s true that law school costs have been climbing while salaries headed in the other direction. According to the New America Foundation, back in 2004 you could expect to graduate from law school with $88,634 in student debt, on average. By 2012, that figure had climbed to $140,616.

The latest NALP data suggests that salaries have bottomed out, and could already be on the rebound. But it goes without saying that prospective lawyers should look for schools that provide the most bang for the buck, and minimize the amount of debt they take on.

It’s not just how much debt you take on — the kind of debt you take on can also have a big impact on the cost of law school.

Government vs. private loans

In the interests of making college more accessible to all, the U.S. government provides federal direct student loans to undergraduates at subsidized rates.

Unfortunately, subsidized government student loans for graduate school are history — Congress eliminated them in 2012. That doesn’t government loans for law school aren’t available, they’re just more expensive to pay back than they used to be.

The main government loan options for law school students are Direct Unsubsidized Loans (sometimes referred to as “Stafford loans”) and Direct PLUS loans.

Stafford loans carry lower rates than Direct PLUS loans — 5.84 percent for loans disbursed before July 1, 2016 — but the amount you can borrow each year is capped at $20,500 per year with a lifetime cap of $138,500.

If you need to borrow more, rates on Direct PLUS loans are a full percentage point higher than Stafford loans — 6.84 percent for loans disbursed before July 1, 2016. You can borrow as much as you need to cover all of your out-of-pocket costs, including living expenses, but you’ll also need to pass a credit check.

Direct PLUS loans also come with hefty fees — 4.272 percent of the loan amount is deducted from loan disbursements made before July 1, 2016. Stafford loans carry a more modest fee of 1.068 percent.

Private loans

With the demise of subsidized government loans for grad school, many private lenders are offering loans at rates that can beat the rates on unsubsidized government student loans.

Keep in mind that private loans may lack some borrower protections provided by government loans, such as loan forgiveness for government employees and public-interest lawyers once they’ve made 10 years of payments.

But it’s not unusual for private lenders to provide benefits like a grace period for repayment and protections against loss of income.

Shop around

If you’ve decided that a private loan could save you money, you’ll need to shop around to find which lenders offer the best deal for you. Underwriting decisions are made on a case-by-case basis, and lenders offer products that vary widely in rates and terms.

One place to compare competitive loan offers from private lenders is Credible.com. Credible is a multi-lender marketplace that lets borrowers fill out one form, receive and compare personalized offers from vetted lenders, and choose the offer that best suits them.

Lenders offering in-school loans through the Credible platform include Citizens Bank CommonBond, College Ave, PAVE, RISLA, and community banks participating in iHELP. Borrowers can also use the platform to shop for private lenders who are willing to refinance student loans.

While the chart below includes some general parameters about those lenders’ offerings, the best way to find out what you can qualify for is to get personalized offers through at Credible.com.