Debt not an Issue - Go to highest ranked school?

(Rankings, Profiles, Tuition, Student Life, . . . )

What to do?

Go to highest ranked school I get into - pay sticker, graduate with no debt/possibly some leftover
42
51%
Go to lower ranked school with $$ - graduate with some leftover
5
6%
Aim for T14 JD/MBA - graduate debt free with two degrees
23
28%
Take the $ and run - do something better with the money besides Law school
13
16%
 
Total votes: 83

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birdlaw117
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Re: $$$ Not an Issue - Go to highest ranked school?

Postby birdlaw117 » Tue Mar 22, 2011 12:20 pm

Patriot1208 wrote:
EDIT: here, i'll do the simple calculation for you using the stock market average of around .08 returns per year and forty years till retirement. FV = 100k (1+.08)^40 is 2,172,452.15. There is a very small chance that the difference in salary will be that large between those two schools.

As Albert Einstein said "The most powerful force in the universe is compound interest".

Good luck getting an 8% return... :roll:

I do agree with your point. Investing the 100k would most likely be the prudent decision.

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Patriot1208
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Re: $$$ Not an Issue - Go to highest ranked school?

Postby Patriot1208 » Tue Mar 22, 2011 12:22 pm

birdlaw117 wrote:
Patriot1208 wrote:
EDIT: here, i'll do the simple calculation for you using the stock market average of around .08 returns per year and forty years till retirement. FV = 100k (1+.08)^40 is 2,172,452.15. There is a very small chance that the difference in salary will be that large between those two schools.

As Albert Einstein said "The most powerful force in the universe is compound interest".

Good luck getting an 8% return... :roll:

I do agree with your point. Investing the 100k would most likely be the prudent decision.

lolwut? Good luck getting an 8% return? My index fund in my IRA returned more than 8% last year and overall I did about 22%. It's not as if I am that active or knowleadgeable either.

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niederbomb
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Re: $$$ Not an Issue - Go to highest ranked school?

Postby niederbomb » Tue Mar 22, 2011 12:24 pm

Patriot1208 wrote:
niederbomb wrote:
Patriot1208 wrote:So, you have 200k in cash? If you really want to be a lawyer I think the credited response is to take half of it and invest and take a scholarship.


Unfortunately, the difference between a scholarship and sticker in this economy is quite often the difference between unemployed and Big Law. Definitely go to the best school you can get into. In 20 years when you're at the height of your career, you will be happy you went to UVA, etc. over some regional JD pump.

Compound interest on 100k is likely to be bigger than any difference in salary he'll have between attending GW and UVA.

EDIT: here, i'll do the simple calculation for you using the stock market average of around .08 returns per year and forty years till retirement. FV = 100k (1+.08)^40 is 2,172,452.15. There is a very small chance that the difference in salary will be that large between those two schools.

As Albert Einstein said "The most powerful force in the universe is compound interest".


Of course, the stock market is not a reliable basis for your analysis. IF only everyone achieved average results! If OP had invested in certain stocks in March 2009, he might be looking at more like 30% per year, averaged. On the other hand, if OP had invested in certain other stocks in October 1998, he'd be in the negative 13 years later and counting. Also, since OP is going debt free, he could potentially invest that extra $$ earned from UVA and vastly eclipse the results predicated on your inflexible assumptions.

keg411
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Re: $$$ Not an Issue - Go to highest ranked school?

Postby keg411 » Tue Mar 22, 2011 12:24 pm

I looked at LSN. OP, pick one of UVA, Penn, Michigan and Northwestern and apply Early Decision.

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niederbomb
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Re: $$$ Not an Issue - Go to highest ranked school?

Postby niederbomb » Tue Mar 22, 2011 12:26 pm

Patriot1208 wrote:
birdlaw117 wrote:
Patriot1208 wrote:
EDIT: here, i'll do the simple calculation for you using the stock market average of around .08 returns per year and forty years till retirement. FV = 100k (1+.08)^40 is 2,172,452.15. There is a very small chance that the difference in salary will be that large between those two schools.

As Albert Einstein said "The most powerful force in the universe is compound interest".

Good luck getting an 8% return... :roll:

I do agree with your point. Investing the 100k would most likely be the prudent decision.

lolwut? Good luck getting an 8% return? My index fund in my IRA returned more than 8% last year and overall I did about 22%. It's not as if I am that active or knowleadgeable either.


Yeah, I got over 60% in 2009 with just a simple small caps Index Fund. 2009-2011 have been great fool-proof years for investing in just about anything. Projecting that out to 40 years? Dumb.
Last edited by niederbomb on Tue Mar 22, 2011 12:27 pm, edited 1 time in total.

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Patriot1208
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Re: $$$ Not an Issue - Go to highest ranked school?

Postby Patriot1208 » Tue Mar 22, 2011 12:27 pm

niederbomb wrote:
Patriot1208 wrote:
niederbomb wrote:
Patriot1208 wrote:So, you have 200k in cash? If you really want to be a lawyer I think the credited response is to take half of it and invest and take a scholarship.


Unfortunately, the difference between a scholarship and sticker in this economy is quite often the difference between unemployed and Big Law. Definitely go to the best school you can get into. In 20 years when you're at the height of your career, you will be happy you went to UVA, etc. over some regional JD pump.

Compound interest on 100k is likely to be bigger than any difference in salary he'll have between attending GW and UVA.

EDIT: here, i'll do the simple calculation for you using the stock market average of around .08 returns per year and forty years till retirement. FV = 100k (1+.08)^40 is 2,172,452.15. There is a very small chance that the difference in salary will be that large between those two schools.

As Albert Einstein said "The most powerful force in the universe is compound interest".


Of course, the stock market is not a reliable basis for your analysis. IF only everyone achieved average results! If OP had invested in certain stocks in March 2009, he might be looking at more like 30% per year, averaged. On the other hand, if OP had invested in certain other stocks in October 1998, he'd be in the negative 13 years later and counting. Also, since OP is going debt free, he could potentially invest that extra $$ earned from UVA and vastly eclipse the results predicated on your inflexible assumptions.

This is such an awful argument. Non active index funds alone would all but guarantee OP 1.5 mil easy.

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Patriot1208
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Re: $$$ Not an Issue - Go to highest ranked school?

Postby Patriot1208 » Tue Mar 22, 2011 12:28 pm

niederbomb wrote:
Patriot1208 wrote:
birdlaw117 wrote:
Patriot1208 wrote:
EDIT: here, i'll do the simple calculation for you using the stock market average of around .08 returns per year and forty years till retirement. FV = 100k (1+.08)^40 is 2,172,452.15. There is a very small chance that the difference in salary will be that large between those two schools.

As Albert Einstein said "The most powerful force in the universe is compound interest".

Good luck getting an 8% return... :roll:

I do agree with your point. Investing the 100k would most likely be the prudent decision.

lolwut? Good luck getting an 8% return? My index fund in my IRA returned more than 8% last year and overall I did about 22%. It's not as if I am that active or knowleadgeable either.


Yeah, I got over 60% in 2009 with just a simple small caps Index Fund. 2009-2011 have been great fool-proof years for investing in just about anything. Projecting that out to 40 years? Dumb.

WHAT??? Projecting over 40 year is EXACTLY how you should be doing it. The market is a predictable beast over the long run, jesus do you not have an even basic understanding of finance?

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birdlaw117
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Re: $$$ Not an Issue - Go to highest ranked school?

Postby birdlaw117 » Tue Mar 22, 2011 12:29 pm

birdlaw117 wrote:
Patriot1208 wrote:Good luck getting an 8% return... :roll:

I do agree with your point. Investing the 100k would most likely be the prudent decision.

lolwut? Good luck getting an 8% return? My index fund in my IRA returned more than 8% last year and overall I did about 22%. It's not as if I am that active or knowleadgeable either.

1 year doesn't mean you can extrapolate it to 40 years. I assume you didn't include the past 3 years and average those returns?

Anyways, it was just a little stab, 8 isn't an outrageous assumption by any means. Just making fun of ITE. I would probably use 7 in my calculations, so it's not like I really think you're wrong.

Like I said, you're making a really good point that a lot of people (I think) are overlooking.

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birdlaw117
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Re: $$$ Not an Issue - Go to highest ranked school?

Postby birdlaw117 » Tue Mar 22, 2011 12:30 pm

Dude, no. That's like saying I found a bag of money on the sidewalk today and assuming I'm going to find one there everyday for the rest of the year. It's not happening.

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niederbomb
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Re: $$$ Not an Issue - Go to highest ranked school?

Postby niederbomb » Tue Mar 22, 2011 12:35 pm

[/quote]Yeah, I got over 60% in 2009 with just a simple small caps Index Fund. 2009-2011 have been great fool-proof years for investing in just about anything. Projecting that out to 40 years? Dumb.[/quote]
WHAT??? Projecting over 40 year is EXACTLY how you should be doing it. The market is a predictable beast over the long run, jesus do you not have an even basic understanding of finance?[/quote]

What? So I get 60% one year and I can extrapolate it over 40? Lulz.

If the market was so predictable, why do so many people lose money in it? Knowledge can help, but luck plays a part, too. The possibilities of making partner at a large firm and securing lucrative consulting jobs 10-20 years out increase drastically between GW and UVA. What I'm trying to say is that UVA brings a value that is difficult to calculate accurately, especially with an analysis based on erroneous assumptions about the stock market.

ElmoHope
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Re: $$$ Not an Issue - Go to highest ranked school?

Postby ElmoHope » Tue Mar 22, 2011 12:38 pm

Once again, i'm liking niederbomb's approach.

Basically, his idea is: Use the money to get to a higher ranked school --> enjoy a more likely chance of a higher salary --> invest the portion of that salary that would otherwise be used to payback debt --> profit.

If the vast majority of law students are taking the RISK of debt in the hopes for market salary, then surely taking the RISK of paying sticker in the hopes for market salary without debt is an even better option?

Also, there is another option that has been presented to me but not raised in this thread: take out loans for my tuition, invest ~200K, hope for better returns on my investment than the interest on my loans, and graduate with more to spare than i would if i paid sticker. I have thought about this, but i think the risk outweighs the potential benefit.

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Patriot1208
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Re: $$$ Not an Issue - Go to highest ranked school?

Postby Patriot1208 » Tue Mar 22, 2011 12:40 pm

niederbomb wrote:What? So I get 60% one year and I can extrapolate it over 40? Lulz.

If the market was so predictable, why do so many people lose money in it? Knowledge can help, but luck plays a part, too. The possibilities of making partner at a large firm and securing lucrative consulting jobs 10-20 years out increase drastically between GW and UVA. What I'm trying to say is that UVA brings a value that is difficult to calculate accurately, especially with an analysis based on erroneous assumptions about the stock market.

I'm sorry I was unclear, not that you can extrapolate exact earnings over the long run, but taht you can extrapolate EARNING at a greater rate than inflation over the long run. Something like 98% of stocks over a 30 year period earn money over inflation. 8% is an example, it could be 12% or it could be 6%. Either way, the likelihood is that the compound interest is far more likely to make him more money than a difference in career between UVA and GW or between Mich and WUSTL. If we are playing percentages it is CERTAINLY a more economically sound decision to invest that money.

ElmoHope
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Re: $$$ Not an Issue - Go to highest ranked school?

Postby ElmoHope » Tue Mar 22, 2011 12:41 pm

Nightrunner wrote:ITT: generic tangent to a generic answer to a generic question.

OP, come back when you have actual offers and options to discuss. You're not going to learn anything here except which posters prefer maximizing options through prestige and which posters prefer maximizing options through limited debt.


Well, I think it is at least somewhat important to discuss now because if people were overwhelmingly in favor of me going to the highest ranked school possible, I would ED somewhere. However, that wouldn't be a good idea if someone convinced me to take scholarship money, because as a splitter my ED is going to get me no scholarships.

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Patriot1208
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Re: $$$ Not an Issue - Go to highest ranked school?

Postby Patriot1208 » Tue Mar 22, 2011 12:41 pm

ElmoHope wrote:Once again, i'm liking niederbomb's approach.

Basically, his idea is: Use the money to get to a higher ranked school --> enjoy a more likely chance of a higher salary --> invest the portion of that salary that would otherwise be used to payback debt --> profit.

If the vast majority of law students are taking the RISK of debt in the hopes for market salary, then surely taking the RISK of paying sticker in the hopes for market salary without debt is an even better option?

Also, there is another option that has been presented to me but not raised in this thread: take out loans for my tuition, invest ~200K, hope for better returns on my investment than the interest on my loans, and graduate with more to spare than i would if i paid sticker. I have thought about this, but i think the risk outweighs the potential benefit.

I wouldn't do this now, especially with taxes. But my grandparents made quite a bit of money doing this in the eighties when interest rates were like 16%.

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birdlaw117
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Re: $$$ Not an Issue - Go to highest ranked school?

Postby birdlaw117 » Tue Mar 22, 2011 12:43 pm

ElmoHope wrote:Once again, i'm liking niederbomb's approach.

Basically, his idea is: Use the money to get to a higher ranked school --> enjoy a more likely chance of a higher salary --> invest the portion of that salary that would otherwise be used to payback debt --> profit.

If the vast majority of law students are taking the RISK of debt in the hopes for market salary, then surely taking the RISK of paying sticker in the hopes for market salary without debt is an even better option?

Also, there is another option that has been presented to me but not raised in this thread: take out loans for my tuition, invest ~200K, hope for better returns on my investment than the interest on my loans, and graduate with more to spare than i would if i paid sticker. I have thought about this, but i think the risk outweighs the potential benefit.

If you invest conservatively, you should take out loans and then try to pay them back quickly. At least that's what I would do. You get a few years of accumulating interest on your investment without accumulating a ton of interest on your student loans. Then again, this strategy could change based on what types of loans you qualify for.

ElmoHope
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Re: $$$ Not an Issue - Go to highest ranked school?

Postby ElmoHope » Tue Mar 22, 2011 12:49 pm

birdlaw117 wrote:
ElmoHope wrote:Once again, i'm liking niederbomb's approach.

Basically, his idea is: Use the money to get to a higher ranked school --> enjoy a more likely chance of a higher salary --> invest the portion of that salary that would otherwise be used to payback debt --> profit.

If the vast majority of law students are taking the RISK of debt in the hopes for market salary, then surely taking the RISK of paying sticker in the hopes for market salary without debt is an even better option?

Also, there is another option that has been presented to me but not raised in this thread: take out loans for my tuition, invest ~200K, hope for better returns on my investment than the interest on my loans, and graduate with more to spare than i would if i paid sticker. I have thought about this, but i think the risk outweighs the potential benefit.

If you invest conservatively, you should take out loans and then try to pay them back quickly. At least that's what I would do. You get a few years of accumulating interest on your investment without accumulating a ton of interest on your student loans. Then again, this strategy could change based on what types of loans you qualify for.


This is interesting. I'm not too familiar with the loans situation, but i'm assuming I would qualify for pretty good private loans because of the amount of funds I already have and because I have good credit. However, wouldn't the aim of paying the loans of more quickly as opposed to over a longer period of time increase the riskiness? Meaning: aren't I less likely to beat the interest on my loans if my investments are only sitting for ~3-5 years? Sure, i'd gain some interest on my initial investment, but its not worth it if the amount i'm paying back to schools is greater than if I had just ponied up in the first place.

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Patriot1208
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Re: $$$ Not an Issue - Go to highest ranked school?

Postby Patriot1208 » Tue Mar 22, 2011 12:54 pm

ElmoHope wrote:
birdlaw117 wrote:
ElmoHope wrote:Once again, i'm liking niederbomb's approach.

Basically, his idea is: Use the money to get to a higher ranked school --> enjoy a more likely chance of a higher salary --> invest the portion of that salary that would otherwise be used to payback debt --> profit.

If the vast majority of law students are taking the RISK of debt in the hopes for market salary, then surely taking the RISK of paying sticker in the hopes for market salary without debt is an even better option?

Also, there is another option that has been presented to me but not raised in this thread: take out loans for my tuition, invest ~200K, hope for better returns on my investment than the interest on my loans, and graduate with more to spare than i would if i paid sticker. I have thought about this, but i think the risk outweighs the potential benefit.

If you invest conservatively, you should take out loans and then try to pay them back quickly. At least that's what I would do. You get a few years of accumulating interest on your investment without accumulating a ton of interest on your student loans. Then again, this strategy could change based on what types of loans you qualify for.


This is interesting. I'm not too familiar with the loans situation, but i'm assuming I would qualify for pretty good private loans because of the amount of funds I already have and because I have good credit. However, wouldn't the aim of paying the loans of more quickly as opposed to over a longer period of time increase the riskiness? Meaning: aren't I less likely to beat the interest on my loans if my investments are only sitting for ~3-5 years? Sure, i'd gain some interest on my initial investment, but its not worth it if the amount i'm paying back to schools is greater than if I had just ponied up in the first place.


The problem here is that it's unlikely you'd make money between your expected rate of return and the capital gains tax.

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birdlaw117
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Re: $$$ Not an Issue - Go to highest ranked school?

Postby birdlaw117 » Tue Mar 22, 2011 1:00 pm

You get your investment back tax free, you only pay tax on the income. OP would make some money, its just a question of if he would beat the loan interest. There is a chance to beat it while in school, but it's tough to know what those chances are without more info.

OP, talk to a financial planner. They could give you some specific advice that nobody on here could give you without a lot more info.

ElmoHope
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Re: $$$ Not an Issue - Go to highest ranked school?

Postby ElmoHope » Tue Mar 22, 2011 1:02 pm

birdlaw117 wrote:You get your investment back tax free, you only pay tax on the income. OP would make some money, its just a question of if he would beat the loan interest. There is a chance to beat it while in school, but it's tough to know what those chances are without more info.

OP, talk to a financial planner. They could give you some specific advice that nobody on here could give you without a lot more info.


Thanks for the advice, everyone. Definitely more informed than I was before.

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birdlaw117
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Re: $$$ Not an Issue - Go to highest ranked school?

Postby birdlaw117 » Tue Mar 22, 2011 1:05 pm

ElmoHope wrote:
birdlaw117 wrote:You get your investment back tax free, you only pay tax on the income. OP would make some money, its just a question of if he would beat the loan interest. There is a chance to beat it while in school, but it's tough to know what those chances are without more info.

OP, talk to a financial planner. They could give you some specific advice that nobody on here could give you without a lot more info.


Thanks for the advice, everyone. Definitely more informed than I was before.

No problem. Best of luck with the whole process. You are in an enviable position

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ahduth
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Re: $$$ Not an Issue - Go to highest ranked school?

Postby ahduth » Tue Mar 22, 2011 7:09 pm

Will you be able to get loans with the amount of liquid assets you (and presumably your parents) have? I don't know how private loans work, but I'm speculating that any of the federally subsidized stuff could be hard to come by? Private loans don't seem like they're nearly as much fun as federally subsidized loans - and that's saying something.

As far as the JD/MBA goes, people say it's a bad idea, because it shows a lack of commitment to the law. Firms look at you and say, why did you get this degree? That being said, if you're going into M&A or something along those lines, it could very possibly be an asset. Just make sure you have your story straight before you interview.

I'll admit that it definitely raises the question in my mind. What type of work experience do you have? If the whole profile paints you as a flight risk, the MBA may very well not be worth it.

09042014
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Re: $$$ Not an Issue - Go to highest ranked school?

Postby 09042014 » Tue Mar 22, 2011 7:12 pm

Just because you have money doesn't mean money shouldn't be an issue. Unless you have so much money that 250K isn't worth a though. In that case why are you trying to be a lawyer anyway?

But with a 171ish/3.15ish you aren't going to get amazing schollies.

ElmoHope
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Re: $$$ Not an Issue - Go to highest ranked school?

Postby ElmoHope » Tue Mar 22, 2011 7:21 pm

ahduth wrote:As far as the JD/MBA goes, people say it's a bad idea, because it shows a lack of commitment to the law. Firms look at you and say, why did you get this degree? That being said, if you're going into M&A or something along those lines, it could very possibly be an asset. Just make sure you have your story straight before you interview.

I'll admit that it definitely raises the question in my mind. What type of work experience do you have? If the whole profile paints you as a flight risk, the MBA may very well not be worth it.


Yea, i've heard this, and I guess it makes sense. But then why do some firms offer hiring bonuses for JD/MBAs? It can't JUST be for M&A. See, my reasoning for being interested is just because I was a social sciences major at a liberal arts college, i've had very little exposure to economics/business, and I want to broaden my knowledge/abilities. I'm not trying to go into academia, so can't an MBA only enhance my resume in the eyes of BigLaw and maybe eventually In house counsels?

ElmoHope
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Re: $$$ Not an Issue - Go to highest ranked school?

Postby ElmoHope » Tue Mar 22, 2011 7:22 pm

Desert Fox wrote:Just because you have money doesn't mean money shouldn't be an issue. Unless you have so much money that 250K isn't worth a though. In that case why are you trying to be a lawyer anyway?

But with a 171ish/3.15ish you aren't going to get amazing schollies.


I don't really understand why you're saying this. When did I say money isn't an issue? It clearly is an issue and thats why I'm seeking advice about what to do with it.

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Attorney
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Re: $$$ Not an Issue - Go to highest ranked school?

Postby Attorney » Tue Mar 22, 2011 7:30 pm

The lesson to be learned ITT is that UNLESS SOMEONE ELSE IS PAYING YOUR WAY, it is somewhat irrelevant to this decision whether it is your money now or your money later. Either way, you're trying to make the choice that maximizes your return on this investment. It's still your $$$ whether you are investing it with cash or through loans.

I suppose there is a slight difference though when actually calculating the ROI. If you're paying upfront, you aren't paying interest on loans later... so that sways the choice a bit toward the "pay up for the better school" end of things and away from the "take the schollie and run" side... but this is not necessarily a dramatic shift that bears copious amounts of analysis.




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