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What is an Origination Fee ? Plus Other Terms You Should Know When Borrowing for Law School

Uhh, can I phone a friend?
Apr 2, 2023

Table of Contents

  1. Origination Fee
  2. Application Fee
  3. Cosigner
  4. Related Articles

Like every industry (probably worse than most industries) finance throws around terms and expects you to keep up or fall behind. This is LSD's attempt to cut through some of the noise and help you understand the terms they will throw at you when you try to borrow money a public (U.S. Government) or private (any lender or bank) loan.

What is an origination fee? 

  1. If your loan has an origination fee then you will receive less money than you borrow. If you have a 4% origination fee, then you will get 96% of whatever you borrow. Borrow $10k, you will receive $9,600, and interest will accrue on the full $10k. -LSData 
  2. “An origination fee is a percentage of your loan amount charged by the lender for the processing of your loan. Federal student loans have an origination fee; therefore, the amount you may receive as a disbursement may be slightly lower than the amount you accept.” -studentaid.gov

The loans I am applying for have application fees, is that normal?

  1. In short, no; You should reconsider the lender if they are charging application fees. None of our partner lenders charge application fees. 
  2. If you are in a credit position where you can’t qualify for any federal loans or private loans (from more reputable lenders) that you need to attend school, then we recommend reaching out to your university for guidance.  

What is a cosigner?

  1. Simply put, a cosigner is someone who agrees to pay your loans if you can't.
  2. Since two people are putting their name and credit on the line (COSIGN-ing, get it?) you can usually get a better rate than you could alone.
  3. Most private lenders require a cosigner, unless your credit is really strong (above a ~650-680).

Related Articles

  1. How should I Choose a Student Loan?
  2. Oddly specific questions you might be asking when borrowing for law school.
  3. What Law School should I go to?
Windsor MIT '22, Harvard College Advisor

I am the half of LSD that didn't take the LSAT, or go to law school (Sorry about that). But I did go to MIT business school while surrounded by law students and lawyers, so I am somewhat qualified to talk about the intricacies of law school apps and finances.

Windsor (the dog) didn't write this but he WAS a Resident Tutor and career advisor at Harvard College with me, so deserves some credit.

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KnowledgeableRitzyWasp
18:47
@TruthTheX: praying for your gulc uprising
TruthTheX
19:15
Ty me too 🙏
TruthTheX
19:15
@Silver: if you want to practice in IL then there’s likely no better school than the in state schools
BankruptcyAndRestructuringLawIsCool
19:53
@SpectacularDefiantMouse: yeah, like condemnedpuffygnome, I'm not really preparing for law school by taking some courses or anything like that. The only way I'm going to be preparing is by getting myself into a rhythm schedule-wise, well enough in advance of the first day of classes, that I think will be necessary for me to do well 1L.
BankruptcyAndRestructuringLawIsCool
19:54
I'm very much not in rhythm now. lol. But I've 3-ish months.
BankruptcyAndRestructuringLawIsCool
19:55
I've got*
jb2028
19:55
@Silver: Cost of attendance is what matters. $37K in-state tuition = $47K sticker price with a $10K scholarship elsewhere, $70K sticker with a $40K scholarship is better than either, $40K sticker with a $0 scholarship worse than both.
jb2028
19:55
(Assuming placement etc. is comparable)
BankruptcyAndRestructuringLawIsCool
19:57
Congrats on Harvard, jb2028. Any reason you applied to A&M but not Texas at Austin? Seems odd.
jb2028
19:58
@BankruptcyAndRestructuringLawIsCool: Family connection, they gave me a CAS waiver so it was free
BankruptcyAndRestructuringLawIsCool
20:00
Ah, gotcha.
BankruptcyAndRestructuringLawIsCool
20:04
Question for the chat about judicial internships (not externships). My understanding is that judicial internships (as opposed to externships) during the summer are unpaid. How, then, do people who get them pay living expenses during the summer? Do they just make loans stretch for 12 months when they're only meant for 9? I heard that some people supplement the internship with, e.g., a research assistant position with a law professor. But would such a person both do the internship and the RA position at the same time? And if so, is that too much work or feasible?
BankruptcyAndRestructuringLawIsCool
20:04
I don't know what the workload is really like for judicial internships and RA positions.
BankruptcyAndRestructuringLawIsCool
20:05
Also curious what other things people might do to supplement an unpaid judicial internship over the summer with something paid.
jb2028
20:20
@BankruptcyAndRestructuringLawIsCool: Many schools will provide some type of stipend for unpaid summer roles with a public interest employer (defined broadly, often includes any gov or judicial job)
BankruptcyAndRestructuringLawIsCool
20:35
Right, I thought so. At BU, though, it appears that what's called BU's public interest project grant is not available to supplement judicial internships. And I think its public service summer funding is also limited. Oh well.
jb2028
21:13
@BankruptcyAndRestructuringLawIsCool: FWIW they allude to some type of funding ("BU Law has implemented separate funding sources for judicial interns") in this packet https://www.bu.edu/law/files/2023/11/Public-Service-Summer-Funding-Applicant-Packet-2024.pdf
jb2028
21:13
Although they don't give details, and as you note they don't guarantee funding to everyone (which is in line with other $ they offer, e.g. the LRAP)
TruthTheX
21:14
Anyone know how hard it is to do pro bono work as a 1L for judges or fed gov in general in the D.C. market
TruthTheX
21:14
Idk much about pro bono opportunities period but thinking I wanna try to get some work experience as soon as humanly possible
TruthTheX
21:14
When I begin law school I mean
jb2028
21:15
Lines up with BU's limited endowment: $81K per student a few years ago, i.e., enough to support a payout of about $3,250 per student per year at a 4% payout rate https://leiterlawschool.typepad.com/leiter/2022/05/per-student-value-of-law-school-endowments-2021.html
jb2028
21:17
Seems like they're trying to compete with other schools on program headlines (we fund X, Y, and Z and we have an LRAP) but the endowment can't really support that, so they have all these programs but don't guarantee funding. Would not rely on that if you have alternatives.
BankruptcyAndRestructuringLawIsCool
21:19
Thanks for those links. I'll give the public service summer funding information packet, in particular, a careful read. But yeah, your takeaway seems right.
KnowledgeableRitzyWasp
22:33
i could really use some fried chicken right now
KnowledgeableRitzyWasp
22:34
kfc or popeyes
KnowledgeableRitzyWasp
22:34
or korean with gochujang
KnowledgeableRitzyWasp
22:35
i might order some gochujang sauce on amazon and cook some air fried chicken breast filets, they’re really good
KnowledgeableRitzyWasp
22:35
just letting you guys know :)
Mohammed
0:14
Where I can find the definition of the false-endowment?
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