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Personal & Financial

Can Lawyers Save While Paying Off Student Loans?

LJ Jones


  • It isn't easy, but paying off your loans while saving for future goals is possible. Save first, then focus on student debt and other goals more aggressively.
Can Lawyers Save While Paying Off Student Loans? Gollop

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Graduating with student loans from law school is typically a 10-year repayment commitment. This commitment is not only a financial commitment but a mental and personal commitment.

An average lawyer will graduate from law school owing $160,000 in student loans. With an average interest rate of 5.28 percent, lawyers will face monthly payments greater than $1,600. Financially, this is a substantial amount of money to pay each month out of a paycheck. Mentally, these payments can lead to sleepless nights and general financial anxiety. Personally, these payments restrict us from following our passions because few early career opportunities can pay enough to pay for student loans and our living expenses. It may also force you to delay buying a home, getting married, or starting a family.

You may not know how to pay off these loans while saving for today’s financial security and tomorrow’s goals. It isn’t an easy balance to achieve, but you can do it!

Money Is a Tool to Achieve Goals

Money is something to save and spend toward our goals. Each of us has unique dreams, and we prioritize these goals differently. How important is paying off your student loans? Do you lie in bed at night worried about your debt? Are you worried that you can’t achieve goals like buying a home or starting a family because of student loans?

We each have different answers to these questions. These answers will impact how we decide to save and pay off our student loans.

How Can I Save and Pay Off Student Loans?

Saving and paying off student loans is about balance. Student loans are a necessary payment that you should make every month, especially if you have privately refinanced your student loans. But making student loan payments is a lower priority than saving.

If you face an unexpected medical bill or lose your job without savings to fall back on, you are in financial trouble. By saving first, you can pay for your financial emergency and then figure out how to manage your student loan payment. If you cannot pay your student loan or the financial emergency, the consequences are even worse. The sooner you implement this financial practice, the better you will be in the long run.

Manage your income based on priority. The priorities should go:

  1. Taxes
  2. Savings
  3. Necessary loan payments and expenses
  4. Investing
  5. Discretionary spending

The Balance between Saving and Student Loans

First, set up automatic transfers to a savings account, and aim to save between 15 and 20 percent of your income. This is commonly done through automatic transfers. Set the transfers to happen immediately after a paycheck is deposited.

Once this is done, allocate the next 30–50 percent of after-tax income toward loan payments and necessary expenses. These expenses include:

  • Rent/Mortgage payments
  • Utilities
  • Groceries
  • Transportation
  • Insurance
  • Medication
  • Pet supplies

After the money for these two priorities is fulfilled, the remaining 30–55 percent of income can go toward investing and discretionary spending.

A notable part about saving is that you don’t need to keep saving aggressively after a certain amount. Once you establish an emergency fund (approximately three to six months of necessary expenses), savings is no longer a top priority. Future savings can now go toward exciting goals like saving for a home or buying a car. This allows necessary loan payments and expenses to shift up the list of priorities to second.

While these percentages will not fit everyone’s financial situation, the priorities should be universal. Save first, pay for necessities next, and enjoy the rest.

Final Takeaways

After you have saved enough for an emergency fund, you have more money to spend in different ways. If student loans are overwhelming and you are losing sleep over the amount you owe, make additional payments. If you want to start saving for a down payment on a home, go for it!

Save first, then focus on student debt and other goals more aggressively.

The 2021 ABA YLD Law School Student Loan Debt Survey Report examines the issues at the heart of the student loan crisis and offers recommendations. Read the report.