The reality of NYU at Sticker

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BruceWayne
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Re: The reality of NYU at Sticker

Postby BruceWayne » Fri Mar 09, 2012 4:34 pm

Tiago Splitter wrote:Cost of living calculators really aren't that practical. It would cost twice as much to live in NYC if you tried to buy a 2500 square foot house with a pool like everyone has here in PHX, but no one lives like that in NYC.

You also will have your loans paid off pretty quickly if you are paying 3K per month on them. So after five years your standard of living should skyrocket if you stay in Biglaw, or alternatively you can switch into a lesser paying job (but still something that lets you live much better than you do now.)

Having said all that, I might be facing the same decision and have thought long and hard about these questions. It's not easy to stomach the thought of all that debt.


They're very practical. For example $2500 a month for an apartment in Atlanta would get you a huge one bedroom apartment with private garage, walk in closets, his and hers sinks, elevator, a living room and a balcony. $2500 for a manhattan or Brooklyn one bedroom near Manhattan might get you a good studio. The cost of living calculator will show you this by telling you that you would need a 350K salary in NYC to live like you would in Atlanta on 160K. Exactly what is the calculator missing?

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Tiago Splitter
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Re: The reality of NYU at Sticker

Postby Tiago Splitter » Fri Mar 09, 2012 4:39 pm

That's all $2500 gets in Atlanta? Jesus. $2500 a month in Phoenix lets you rent a McMansion.

My point is that the OP won't be forced to spend twice as much as he is spending now just to scrape by.

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Tadatsune
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Re: The reality of NYU at Sticker

Postby Tadatsune » Fri Mar 09, 2012 4:43 pm

I know most NYU grads go into NYC biglaw, and biglaw is easier to get in NYC, but...

1) It is not impossible for you to get biglaw somewhere outside of NYC from NYU.

2) It is not impossible to work a few years in NYC biglaw and then go somewhere else.

Nobody
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Re: The reality of NYU at Sticker

Postby Nobody » Fri Mar 09, 2012 4:43 pm

BruceWayne wrote:
Tiago Splitter wrote:Cost of living calculators really aren't that practical. It would cost twice as much to live in NYC if you tried to buy a 2500 square foot house with a pool like everyone has here in PHX, but no one lives like that in NYC.

You also will have your loans paid off pretty quickly if you are paying 3K per month on them. So after five years your standard of living should skyrocket if you stay in Biglaw, or alternatively you can switch into a lesser paying job (but still something that lets you live much better than you do now.)

Having said all that, I might be facing the same decision and have thought long and hard about these questions. It's not easy to stomach the thought of all that debt.


They're very practical. For example $2500 a month for an apartment in Atlanta would get you a huge one bedroom apartment with private garage, walk in closets, his and hers sinks, elevator, a living room and a balcony. $2500 for a manhattan or Brooklyn one bedroom near Manhattan might get you a good studio. The cost of living calculator will show you this by telling you that you would need a 350K salary in NYC to live like you would in Atlanta on 160K. Exactly what is the calculator missing?


That there isn't a cultural bias towards living on that scale in New York City. Someone living in a tiny apartment in Manhattan doesn't feel like someone living in a tiny apartment in Phoenix, because that's how everyone around them is living and because there are elements of living in Manhattan that make the lifestyle better than living in Phoenix, obviously no accounting for taste. The point is that a cost of living calculator compares cost per square foot, when the pleasure you get from your house has much less to do with that than with your expectations in general.

run26.2
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Re: The reality of NYU at Sticker

Postby run26.2 » Fri Mar 09, 2012 4:49 pm

bk1 wrote:
run26.2 wrote:You can factor in the various outcomes better by using a multiplier for the probability of that outcome. E.g. if the chance of getting biglaw at NYU is 55%, you can multiply your take home pay by .55. You should include all the possible outcomes, e.g. PI, solo practitioner, other non-legal job, and what each one's take home is. Then sum all these values together. Then compare that to what you would expect to make if you stayed where you were.

Given that the other outcomes probably pay significantly less, the picture is a bit less rosy.


The problem with this type of analysis is that it basically averages all the possible salaries which ignores the legal field's bimodal salary distribution. If 50% of people got jobs at 160 and 50% of people got jobs at 60, the expected salary would look like 110k. At 110k you might be able to feasibly pay off 250k debt in 10 years if you factored in raises and scrimped/scrounged. But that's not the reality. The reality is that 1/2 of those people can pay off 250k debt in 10 years and the other 1/2 can't.

The bimodal distribution is not a problem because it weights for the percentage at each salary. If OP is not risk averse, i.e. cares more about the average outcome than the certainty, the proposed method will allow him/her to make a better comparison, i.e. by factoring in the probability of biglaw.

This should help inform OP's analysis because it is no longer comparing biglaw salary in NYC vs. present salary in AZ, but a fraction of biglaw salary in NYC with present salary in AZ.

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sunynp
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Re: The reality of NYU at Sticker

Postby sunynp » Fri Mar 09, 2012 5:38 pm

I think it is a huge mistake to count on this biglaw salary as if it is a real thing. Biglaw is only hypothetical for op. You need to make the same calculation using the worst outcome approach. What if you miss out on biglaw entirely? Where will you live and practice? How would you repay that debt?

People seem to make calculations assuming the best possible outcome. You ha e to consider the other likely outcomes as well. Nyu is no lock on biglaw. If you get biglaw you might hate it. What if you decide to go back home?

And in comparing costs in new York- remember that the rent and everything else is going up every year. Your raises aren't going to drastically improve your living situation.

I'm not sure that Nyu has a 55% chance at biglaw. Andif you don't get biglaw is the next salary point 60 or 70,000. I guess the lowest is 0, what are the chances of graduating from Nyu and getting 0? As in no lawjob at all?

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sunynp
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Re: The reality of NYU at Sticker

Postby sunynp » Fri Mar 09, 2012 5:56 pm

I checked the nlj numbers for firms hiring Nyu grads - it was about 40% got jobs in firms in the nlj 250 last year. I don't know what the graduating class size was. There is a thread here about the nlj results.
Last edited by sunynp on Fri Mar 09, 2012 6:06 pm, edited 1 time in total.

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boosk
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Re: The reality of NYU at Sticker

Postby boosk » Fri Mar 09, 2012 5:57 pm

updated OP - situation is even worse than I thought.

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Samara
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Re: The reality of NYU at Sticker

Postby Samara » Fri Mar 09, 2012 5:57 pm

The biglaw analysis also doesn't factor in the money you make from 2L summer. I don't think it's a ton, but it's something.

Also, isn't money that you use to pay down educational loans deductible from your taxable income?

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bk1
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Re: The reality of NYU at Sticker

Postby bk1 » Fri Mar 09, 2012 6:01 pm

Samara wrote:The biglaw analysis also doesn't factor in the money you make from 2L summer. I don't think it's a ton, but it's something.


I don't think it's worth factoring in. You have 1L summer where you will probably hemorrhage money (unless you stay in the city your school is in and get a PI grant) and during 2L summer you will have to pay for living expenses (and possibly 2 rents). Not to mention that you will have to survive from graduation till you actually start working which will be a few months without pay when you'll have to pay for bar prep (if your firm doesn't cover it).

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sunynp
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Re: The reality of NYU at Sticker

Postby sunynp » Fri Mar 09, 2012 6:05 pm

I'm having trouble linking to the study but look at the national law journal go to schools. They have the percentages and numbers for the top 50 schools. I think they are showing Nyu at around 40%

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Bronck
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Re: The reality of NYU at Sticker

Postby Bronck » Fri Mar 09, 2012 6:06 pm

sunynp wrote:I'm having trouble linking to the study but look at the national law journal go to schools. They have the percentages and numbers for the top 50 schools. I think they are showing Nyu at around 40%


Yeah, but that data is old and doesn't tell the whole story. Not really relevant to current hiring.

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Samara
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Re: The reality of NYU at Sticker

Postby Samara » Fri Mar 09, 2012 6:06 pm

bk1 wrote:
Samara wrote:The biglaw analysis also doesn't factor in the money you make from 2L summer. I don't think it's a ton, but it's something.


I don't think it's worth factoring in. You have 1L summer where you will probably hemorrhage money (unless you stay in the city your school is in and get a PI grant) and during 2L summer you will have to pay for living expenses (and possibly 2 rents). Not to mention that you will have to survive from graduation till you actually start working which will be a few months without pay when you'll have to pay for bar prep (if your firm doesn't cover it).

Oh, I was under the impression that people took the COA amount and stretched it out to cover the whole calendar year. Thus, the summer money would be "free money." And OP would be staying put for 1L summer. Is this not what people typically do?

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albusdumbledore
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Re: The reality of NYU at Sticker

Postby albusdumbledore » Fri Mar 09, 2012 6:07 pm

The real question is why you would voluntarily take 10 years to repay that money.

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bk1
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Re: The reality of NYU at Sticker

Postby bk1 » Fri Mar 09, 2012 6:08 pm

sunynp wrote:I'm having trouble linking to the study but look at the national law journal go to schools. They have the percentages and numbers for the top 50 schools. I think they are showing Nyu at around 40%

bk1 wrote:(Thanks to beachbum for compiling these.)

NLJ 2011
NLJ 2010
NLJ 2009
NLJ 2008
NLJ 2007
NLJ 2006
NLJ 2005

Several notes:

1. These are the 250 largest firms and about the best proxy for biglaw. There are more firms that fall under that umbrella (e.g. pay market salary of 160k in NYC or whatever it is in other cities) such as litigation boutiques who aren't as large (e.g. Keker), but this is the best we got.

2. This doesn't include A3 clerkships. People who get A3 clerkships could get have gone into biglaw (in fact many of them have offers to return to their biglaw firms after they finish clerking). Schools like HYS are lower on this list since they generally place more A3 clerks than other schools.

3. It doesn't account for self-selection. For example, HYS kids have more opportunities to go to prestigious PI/gov work (e.g. DoJ) than lower ranked schools and they will often choose this over biglaw. On the other hand since lower ranked schools don't have as much of an opportunity to do this they will choose biglaw instead. But at all of the T14 there is a not insignificant amount of people who self-select to do PI and a handful who don't do OCI at all.

4. This data is lagged. The latest data is for class of 2011. However class of 2011 basically got hired for these jobs in fall of 2009. (To get biglaw you interview during the first summer of your second year during OCI, you then spend your next summer with that firm, and if all goes well you get a full time offer to return.) 2009 was the bottom of legal hiring. Things are definitely better now. Not by a lot, but by an arguably noticeable amount.
Last edited by bk1 on Fri Mar 09, 2012 6:10 pm, edited 1 time in total.

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bk1
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Re: The reality of NYU at Sticker

Postby bk1 » Fri Mar 09, 2012 6:09 pm

albusdumbledore wrote:The real question is why you would voluntarily take 10 years to repay that money.


Because it's not necessarily that easy to grind biglaw long enough to pay it back in less than that.

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Samara
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Re: The reality of NYU at Sticker

Postby Samara » Fri Mar 09, 2012 6:09 pm

albusdumbledore wrote:The real question is why you would voluntarily take 10 years to repay that money.

haha, yeah, if you stay put at $75k, you're paying down your loans a lot faster.

All in all, I think bk1's insight that year 3 or 4 is the crucial year is the important part. Gotta keep hustlin'.

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drdolittle
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Re: The reality of NYU at Sticker

Postby drdolittle » Fri Mar 09, 2012 6:15 pm

OP, are you sure you won't qualify for need based grants or other COA discounts either now or in the years to come as you accrue more debt? Does your predicted $250K graduation debt include UG loans? Otherwise, your calculations indeed would make attending NYU hard to justify, at least financially. Also, how old are you, what's your long-term career/earning potential in your current $45K/yr job?

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Tiago Splitter
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Re: The reality of NYU at Sticker

Postby Tiago Splitter » Fri Mar 09, 2012 6:16 pm

Samara wrote:Also, isn't money that you use to pay down educational loans deductible from your taxable income?


Only the interest is tax-deductible, and only up to $2,500 of it per year, and even then you can't take any deduction if you make more than 75K. So on a biglaw salary none of it would be tax-deductible.

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sunynp
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Re: The reality of NYU at Sticker

Postby sunynp » Fri Mar 09, 2012 6:17 pm

Tha data was published less than a month ago for people working this year as 1l. This should equate to whatever data schools have- unless you can get the most recent nlap data.
If you or OP or anyone has better data about this current SA class, I would love to see it. If you think hiring is up, then include that in your calculations. I wouldn't count on a huge increase, but I'm happy to know if I'm wrong.

Edit: thanks for posting the links! I wouldn't add the article 3 clerk in as biglaw hires because presumably they would have taken someone else's spot out of the gate. But down the road the a3 clerks certainly have a shot at biglaw.

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bk1
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Re: The reality of NYU at Sticker

Postby bk1 » Fri Mar 09, 2012 6:20 pm

Samara wrote:Oh, I was under the impression that people took the COA amount and stretched it out to cover the whole calendar year. Thus, the summer money would be "free money." And OP would be staying put for 1L summer. Is this not what people typically do?

Some people have leftover, but I don't think the majority or even close to it have enough to cover the entire summer. If you stretched NU's CoA to 12 months it would be 1500/month. It is possible to live within that amount but I think very few do, especially if they live close to the school.

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Tiago Splitter
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Re: The reality of NYU at Sticker

Postby Tiago Splitter » Fri Mar 09, 2012 6:21 pm

sunynp wrote:
Edit: thanks for posting the links! I wouldn't add the article 3 clerk in as biglaw hires because presumably they would have taken someone else's spot out of the gate. But down the road the a3 clerks certainly have a shot at biglaw.


I disagree. Most of the Art III clerks work at firms during 2L summer.

http://lawfirmaddict.blogspot.com/

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boosk
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Re: The reality of NYU at Sticker

Postby boosk » Fri Mar 09, 2012 6:21 pm

drdolittle wrote:OP, are you sure you won't qualify for need based grants or other COA discounts either now or in the years to come as you accrue more debt? Does your predicted $250K graduation debt include UG loans? Otherwise, your calculations indeed would make attending NYU hard to justify, at least financially. Also, how old are you, what's your long-term career/earning potential in your current $45K/yr job?


I'm just trying to look at my worst-case scenario for debt, I suppose my actual debt could be closer to 200k, but thats still a beast. I'm 24 and I'm not really sure what the long-term earning potential is at my current position. Knowing that would make the decision of (not)going to law school a lot easier, haha.

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bk1
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Re: The reality of NYU at Sticker

Postby bk1 » Fri Mar 09, 2012 6:22 pm

sunynp wrote:I wouldn't add the article 3 clerk in as biglaw hires because presumably they would have taken someone else's spot out of the gate.


How do you figure? They are likely holding offers to return to their firm after clerking.

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Indifferent
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Re: The reality of NYU at Sticker

Postby Indifferent » Fri Mar 09, 2012 6:24 pm

boosk wrote:after 7 years, you've payed $252,000 back on your loan, but still owe another $110,400

*involuntary snicker*




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