cflames7 wrote:$110,000 loans + interest ($90,000) = $200,000. Saving this by working after Penn vs. paying off a loan from Harvard ($10,000 in interest accumulation for 20 more years = $200,000).
Total cost of a Harvard education on career earnings = $400,000
Where are you getting those ridiculous interest figures? On a 10-year repayment, which is entirely possible with biglaw, interest on $100k of loans comes out to $45,000. So the total cost delta is $145k assuming you don't pre-pay.
cflames7 wrote:This is exactly it. The underlying assumption is that the a student will land the SAME (or substantially similar) job regardless of law school choice between Penn and Harvard.
That's a dumb assumption. According to the initial reports, 2-3x as many people from Penn struck out of biglaw as from Harvard. You have to factor in that risk.
I am not trying to say my assumption is right, I am just looking for proof that the assumption is wrong.
What interest rate are you using? I used 8%. Given that the majority of these loans will be interest bearing from the moment you take them (the start of each academic year), i see a debt of roughly $128,000 before even graduating. Then assuming it takes 10 years to pay that debt... i come out at roughly $180,000.
Then I am investing that (after having saved it, rather than giving it to Harvard). 5% interest per year for an additional 20 years, until i retire. I just did the math, taking into interest compound annually:
Future Value = Present Value (1 + interest rate)^years
Future Value = $180,000 (1 + 0.05) ^ (20)
Future Value = $477593
So, in 30 years (plus 3 years law school), the cost of my debt in interest paid and foregone interest earned would be NEARLY half a million!
Again, we are assuming that the person lands a job paying the same SALARY from both Penn and Harvard.