Reasonable debt load for T1

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ChrisH1487
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Reasonable debt load for T1

Postby ChrisH1487 » Tue Jun 28, 2011 7:45 am

What are people's opinions on a reasonable debt load to take on for attending a top 20-30 school?

(3.77/165 FWIW)

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enron123
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Re: Reasonable debt load for T1

Postby enron123 » Tue Jun 28, 2011 8:53 am

IMHO I would say 120k

scammedhard
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Re: Reasonable debt load for T1

Postby scammedhard » Tue Jun 28, 2011 9:14 am

Some student loans websites (like finaid.org) say:

"...manageable debt load is about the same as your starting salary."

Others put it differently:

"Your student loan payment should be no more than 8 - 10% of your post-degree estimated income."

Do the math for yourself. My rule is no more than 1.25X of your likely starting salary. But the problem is that law school salary data is so polluted, it is impossible to tell what the starting salary really is. Fortunately, other people have tried to answer this question using Payscale online data, and they have come up with about 70-80K (http://blogs.forbes.com/kurtbadenhausen ... ke-160000/), which is in line with the Law School Transparency analysis. So, for a T20-30 school, I'd borrow no more than 100K in total in most cases, but up to 120K depending on the circumstances (like I really want to work in city X because of my family, and 120K is what I have to swallow to get there).

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enron123
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Re: Reasonable debt load for T1

Postby enron123 » Tue Jun 28, 2011 9:34 am

scammedhard wrote:Some student loans websites (like finaid.org) say:

"...manageable debt load is about the same as your starting salary."

Others put it differently:

"Your student loan payment should be no more than 8 - 10% of your post-degree estimated income."

Do the math for yourself. My rule is no more than 1.25X of your likely starting salary. But the problem is that law school salary data is so polluted, it is impossible to tell what the starting salary really is. Fortunately, other people have tried to answer this question using Payscale online data, and they have come up with about 70-80K (http://blogs.forbes.com/kurtbadenhausen ... ke-160000/), which is in line with the Law School Transparency analysis. So, for a T20-30 school, I'd borrow no more than 100K in total in most cases, but up to 120K depending on the circumstances (like I really want to work in city X because of my family, and 120K is what I have to swallow to get there).


What is your likely starting salary?

scammedhard
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Re: Reasonable debt load for T1

Postby scammedhard » Tue Jun 28, 2011 9:42 am

enron123 wrote:What is your likely starting salary?

I am assuming about 70-80K.

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Bill Cosby
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Re: Reasonable debt load for T1

Postby Bill Cosby » Tue Jun 28, 2011 9:57 am

scammedhard wrote:
enron123 wrote:What is your likely starting salary?

I am assuming about 70-80K.


That's a really terrible assumption.

duckmoney
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Re: Reasonable debt load for T1

Postby duckmoney » Tue Jun 28, 2011 9:59 am

scammedhard wrote:
enron123 wrote:What is your likely starting salary?

I am assuming about 70-80K.


I would be very weary of taking out more than this for a T1. Especially because these schools don't usually have LRAPs.

The expected salary is a pretty good way to go. At Florida last year, for example, the median salary was $100,000. But half the class was unemployed / didn't report salary. So the expected salary is only $50k, and that's being generous. I wouldn't take out a penny more than that to attend Florida. And honestly that just feels like way too much for a T1.

de5igual
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Re: Reasonable debt load for T1

Postby de5igual » Tue Jun 28, 2011 10:05 am

duckmoney wrote:
scammedhard wrote:
enron123 wrote:What is your likely starting salary?

I am assuming about 70-80K.


I would be very weary of taking out more than this for a T1. Especially because these schools don't usually have LRAPs.

The expected salary is a pretty good way to go. At Florida last year, for example, the median salary was $100,000. But half the class was unemployed / didn't report salary. So the expected salary is only $50k, and that's being generous. I wouldn't take out a penny more than that to attend Florida. And honestly that just feels like way too much for a T1.


if you'd qualify for lrap, you'd generally also qualify for ibr. 10 years paying only 10% of your disposable income with the rest discharged isn't that bad.

scammedhard
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Re: Reasonable debt load for T1

Postby scammedhard » Tue Jun 28, 2011 10:06 am

Bill Cosby wrote:
scammedhard wrote:
enron123 wrote:What is your likely starting salary?

I am assuming about 70-80K.


That's a really terrible assumption.

It'd be great if you could elaborate a bit more.

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ndirish2010
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Re: Reasonable debt load for T1

Postby ndirish2010 » Tue Jun 28, 2011 10:06 am

scammedhard wrote:
Bill Cosby wrote:
scammedhard wrote:
enron123 wrote:What is your likely starting salary?

I am assuming about 70-80K.


That's a really terrible assumption.

It'd be great if you could elaborate a bit more.


60-70K may be the 'expected value' of your salary, but it's hardly a good assumption due to bimodal distribution.

scammedhard
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Re: Reasonable debt load for T1

Postby scammedhard » Tue Jun 28, 2011 10:09 am

ndirish2010 wrote:60-70K may be the 'expected value' of your salary, but it's hardly a good assumption due to bimodal distribution.

Yes, the bimodal distr. complicates things, but you have to start somewhere: the median. Otherwise, where in the bimodal would you put yourself, the high or the low?

sharklasers
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Re: Reasonable debt load for T1

Postby sharklasers » Tue Jun 28, 2011 10:13 am

It depends how much you really want to be a lawyer.

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Bill Cosby
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Re: Reasonable debt load for T1

Postby Bill Cosby » Tue Jun 28, 2011 10:21 am

scammedhard wrote:
ndirish2010 wrote:60-70K may be the 'expected value' of your salary, but it's hardly a good assumption due to bimodal distribution.

Yes, the bimodal distr. complicates things, but you have to start somewhere: the median. Otherwise, where in the bimodal would you put yourself, the high or the low?


The low. The low tail is much larger than the high tail.

ChrisH1487
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Re: Reasonable debt load for T1

Postby ChrisH1487 » Tue Jun 28, 2011 10:23 am

Is there a place where I can find these numbers and stats? I realize that searching reported school numbers is futile at best and unreliable at worst

scammedhard
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Re: Reasonable debt load for T1

Postby scammedhard » Tue Jun 28, 2011 11:01 am

Bill Cosby wrote:
scammedhard wrote:
ndirish2010 wrote:60-70K may be the 'expected value' of your salary, but it's hardly a good assumption due to bimodal distribution.

Yes, the bimodal distr. complicates things, but you have to start somewhere: the median. Otherwise, where in the bimodal would you put yourself, the high or the low?


The low. The low tail is much larger than the high tail.

I think you are misrepresenting the bimodal distribution. It applies to the aggregate of all law school graduates. We don't know if it also exists in individual schools, do we? If so, can you show me the data?
Last edited by scammedhard on Tue Jun 28, 2011 11:07 am, edited 1 time in total.

scammedhard
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Re: Reasonable debt load for T1

Postby scammedhard » Tue Jun 28, 2011 11:02 am

ChrisH1487 wrote:Is there a place where I can find these numbers and stats? I realize that searching reported school numbers is futile at best and unreliable at worst

Sorry. There is no independent, unbiased agency that collects salary data and presents it in a school-by-schools manner. Law School Transparency is the best we can do for now. Even though the data is still collected by the schools, it is no longer "massaged," or so we think.

There is also NALP, but that deals with the aggregate of all the schools.

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Bill Cosby
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Re: Reasonable debt load for T1

Postby Bill Cosby » Tue Jun 28, 2011 11:12 am

scammedhard wrote:
Bill Cosby wrote:
scammedhard wrote:
ndirish2010 wrote:60-70K may be the 'expected value' of your salary, but it's hardly a good assumption due to bimodal distribution.

Yes, the bimodal distr. complicates things, but you have to start somewhere: the median. Otherwise, where in the bimodal would you put yourself, the high or the low?


The low. The low tail is much larger than the high tail.

I think you are misrepresenting the bimodal distribution. It applies to the aggregate of all law school graduates. We don't know if it also exists in individual schools, do we? If so, can you show me the data?


The best we can do is the school's self-reported data, NALP, and what we hear from others. People from T-14s are going to be clustered near the top, so if anything it's going to look worse for the rest of first tier. Remember that the bimodal distribution only applies to those with jobs. Most TTT and TTTT grads aren't landing jobs at all.

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rinkrat19
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Re: Reasonable debt load for T1

Postby rinkrat19 » Tue Jun 28, 2011 11:20 am

scammedhard wrote:Some student loans websites (like finaid.org) say:

"...manageable debt load is about the same as your starting salary."

So according to finaid.org, absolutely no school, not even Harvard or Yale, is worth sticker price, because not even Cravath is paying $225k to a first year associate (Although Cahill Gordon and Boise Schiller might get close with their insane bonuses).

Or are we making exceptions to the rule for T3/T6/T10/T14?

scammedhard
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Re: Reasonable debt load for T1

Postby scammedhard » Tue Jun 28, 2011 11:24 am

Bill Cosby wrote:The best we can do is the school's self-reported data, NALP, and what we hear from others. People from T-14s are going to be clustered near the top, so if anything it's going to look worse for the rest of first tier. Remember that the bimodal distribution only applies to those with jobs. Most TTT and TTTT grads aren't landing jobs at all.

Excellent point. OP, be careful when looking at the NALP data. In a lot of their "analysis," like in the distribution of salaries, only grads that reported having a job are taken into consideration. So read the small print.

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bk1
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Re: Reasonable debt load for T1

Postby bk1 » Tue Jun 28, 2011 11:25 am

First off, T1 is an absurd and pointless distinction so let me refine it.

The most I think someone should take out for a strong regional school is around 100k. That is because it is feasible to pay back in 10 years on a 50k salary. Is that ideal? Fuck no, but if you want to be a lawyer then it is worth it and probably less risky than a T14 at sticker (200k+ debt).

scammedhard
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Re: Reasonable debt load for T1

Postby scammedhard » Tue Jun 28, 2011 11:27 am

rinkrat19 wrote:Or are we making exceptions to the rule for T3/T6/T10/T14?

I think we can to some degree because most of them have LRAPs, and that takes away some of the risk.

ChrisH1487
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Re: Reasonable debt load for T1

Postby ChrisH1487 » Tue Jun 28, 2011 11:30 am

Thanks for everyones input. It'll give me something to think about for next years cycle

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IAFG
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Re: Reasonable debt load for T1

Postby IAFG » Tue Jun 28, 2011 11:35 am

If you are going to use the starting salary rule of thumb, I'd look at what sort of job the typical median student from the school in question is getting, and what the salary is for that job.

So according to finaid.org, absolutely no school, not even Harvard or Yale, is worth sticker price, because not even Cravath is paying $225k to a first year associate (Although Cahill Gordon and Boise Schiller might get close with their insane bonuses).


It's a rule of thumb, not the gospel, and probably a better guide for T1s than HYS (outliers). Plus, I think you'll find that for most people who come from middle class backgrounds, HYS won't make you pay sticker. You might be surprised by how many people don't have to pay sticker because they're able to privately fund enough of their tuition/expenses to get it under $160k.

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ndirish2010
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Re: Reasonable debt load for T1

Postby ndirish2010 » Tue Jun 28, 2011 11:46 am

scammedhard wrote:
rinkrat19 wrote:Or are we making exceptions to the rule for T3/T6/T10/T14?

I think we can to some degree because most of them have LRAPs, and that takes away some of the risk.


Many T25s have LRAPs, some close to as good as the poorer T14s.

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emciosn
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Re: Reasonable debt load for T1

Postby emciosn » Tue Jun 28, 2011 11:47 am

to someone who knows more about finances than me:

I go to a T20 in the Midwest. I'm looking to go back to my home state to practice where my main competition would be coming from a LS ranked ~30 and a T3. So, lets say I have a good shot at landing a position at a firm that pays like $85-90K. I want to pay off my loans in 10 yrs, I'll have at most 120k debt. After taxes and loan payments about how much money will be left for everything else (per year)? Thanks.




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