Young, gifted and broke
20 October 1998
Money is the big problem for anyone entering legal training. Rebecca Towers looks at how students can avoid the debts. The TSG gekokube us avaukabe ib 0171 320 5794.
As anyone who has made the trip knows, it is a long road to legal qualification. A law degree, pupillage or training contract demands hard graft and dedication - and money. And as the responsibility for degree funding falls ever more on the student, and awards for post-graduate study evaporate, the prospective lawyer needs deep pockets - or an understanding bank manager.
The statistics for student debt make grim reading. Over 50 per cent of students questioned by Midland Bank this year for its Degrees of Debt survey named money as one of the big worries of college life, while 70 per cent expected to borrow heavily during their studies. The high cost of legal training means law students are hit harder than most.
"Debt is the biggest issue that trainee solicitors face," says Trainee Solicitors Group (TSG) chairman Nick Armstrong. He points out that the figure for average trainee debt of around #7,000 is misleading. "Twenty five per cent of trainees have professional sponsorship. Take them out of the equation and the average shoots up to around #15,000 - a debt which may be going onto a salary of #11,000," he explains.
Armstrong urges prospective trainees to seek financial advice before embarking on a professional studies course. One place to turn is the TSG's own volunteer-run helpline, which will advise on issues such as finance, training and employment.
Luckily, banks have the business nous to realise that the broke trainee solicitor or pupil barrister of today may be the wealthy customer of tomorrow. They now offer flexible finance packages tailored to meet the needs of law students and trainees. But Armstrong advises close scrutiny of loan terms, in particular the implications of failing to secure a training contract after graduation or of not being offered a position after completing a training contract.
With student and trainee debt growing in the legal education system, lenders are having to work harder to help borrowers manage their money. Barclays is one of the few banks to recognise that law students face higher than average training costs and its professional studies loan scheme allows those in full-time legal post-graduate courses to borrow up to #20,000 (double the maximum for other post-grad' courses), repayable over nine years.
Jenny Loynds, Barclays head of student banking, says the package is a response to customer demand. "We recognise that student lawyers have greater expenses and that we need to be more flexible to meet their needs," she says.
The bank's student business officers also help ease the financial strain: "The key thing is to sit down with students and work out exactly what they will need," says Loynds.
NatWest hands responsibility for its professional trainee loan scheme accounts to dedicated managers. Based at NatWest's Temple Bar Legal Centre on The Strand, London, manager Ian McKay handles the finances of pupil barristers and LPC students. "It's my job to give students a personal account service as well as financial assistance. Our customers find the personal service and understanding of their financial needs just as, if not more important than, the loan package," he says.
Like NatWest, Lloyds has a professional studies loan scheme as well as a package for those who have just graduated. Those in professional training can borrow up to #10,000 at a reduced interest rate, with no repayments for the duration of the course or training period.
Lloyds spokeswoman Helen Thompson says: "Financial advice is free, so I would recommend [any] trainee solicitor has a chat with someone at the bank about their new career, their likely earnings and their banking needs."
Midland's post-graduate and professional studies scheme offers a number of repayment terms. For students borrowing up to #15,000, the maximum repayment term is seven years but students with a loan over #15,000 have 11 years to pay up. Like other banks, Midland tries to stress its concern about understanding borrowers' needs: "We provide financial advice through a network of student financial advisers," says a spokesman. "When agreeing loan facilities banks need to be as aware as possible and there needs to be a two-way dialogue between bank staff and customers."
One bank that differs from the pack is the Royal Bank of Scotland, which manages its trainee barristers' accounts as business accounts. Andrea Aitken, responsible for accounts held by CPE and LPC students, explains that barristers are more likely to become self-employed and as a result are more likely to need larger overdraft facilities.
The best bet is to shop around for the best deal. Or just consult our guide to what is on offer.
The TSG helpline is available on 0171 320 5794.