ajax wrote:Tiago Splitter wrote:ajax wrote:It's not obvious at all. Keep in mind that interest on 225k in loans is 1600/mo over a 30 year period.
You need to re-do the math here.
Do I need to re-do the math? Do you realize you can't make that statement without knowing the rate I used. Classic TLS poster with a BA.
The rate you used, if you did it right, is 8.53% APR monthly. But it's difficult to see why that matters. The point is that, on a big law salary for five years, one can pay down an entire $225,000 loan with an average salary of $70,000 after taxes. And that is using a conservative 8.00% interest rate and ignoring bonuses and benefits, which are substantial. This is just math. No amount of obfuscation is going to get you out of it.
Now, I'll be the first to tell you that going to law school is a shitty idea for most people. In fact, I tell people that all the time of these boards. As a general proposition, it is very unwise to take out six figures of debt to attend a school that gives you only a 50% chance of legal employment, much of which is low-salary, soul-crushing work.
However, "don't take on more debt than your first year's salary" is clearly not a reasonably proposition. First, and most importantly, the entire problem is that 0Ls cannot know their first year salary. So this rule of thumb begs the question. Second, because roughly $180,000 is effectively the highest salary available out of law school, this rule of thumb would prohibit people from attending Harvard, Yale, and Stanford at full freight. A rule that says the top three schools in the nation are out overstates the problem.
Most importantly, this rule of thumb creates a false dichotomy. It makes it seem as if it's safe to take out $160,000 to go to Harvard but not safe to take out $180,000. In reality, if it's unsafe to take out $180,000, it's unsafe to take out $160,000. It's either you get big law or you don't. If you do, you can pay down either loan. If you don't, you can't pay down either loan. The heuristic won't have helped you much if you end up with low six figures of debt but no job.