How the Heck Do You Pay Back Sticker?

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bananasplit19
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How the Heck Do You Pay Back Sticker?

Postby bananasplit19 » Thu May 16, 2013 1:39 am

So I've been crunching numbers as I contemplate going to a school at sticker price, and I just can't seem to get the math to work. Nowadays, total COA at ranges from $250K-$300K. Conventional wisdom dictates the only justifiable instance to jump at sticker is if you can guarantee a $160K/yr BigLaw gig (ie HYS, for example). But even if you get a BigLaw job, seems to me you'd need at least five years of aggressive frugality just to break even, and the average burnout time for a BigLaw associate is three years. So even if you get the job, after three years you're still $100K-$150K in the hole, and possibly burned out of BigLaw.

So if BigLaw is the optimum result, and it still doesn't get you back to square one without some severe financial gymnastics and a four-leaf clover, Yale or otherwise, then how the heck do people do it? I'm obviously missing something: people make it work somehow. If everyone who paid sticker price, from Yale all the way down to Cooley (BigLaw pays the same regardless of what school you go to, right? It's just the odds of snagging the job that's different), largely ended up bankrupt, then I feel like we would know about it. Or not? Thanks in advance :|

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Blessedassurance
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Re: How the Heck Do You Pay Back Sticker?

Postby Blessedassurance » Thu May 16, 2013 1:44 am

you go around being this rational and the tls gang will start calling you a troll and crazy...

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Clearly
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Re: How the Heck Do You Pay Back Sticker?

Postby Clearly » Thu May 16, 2013 1:56 am

Blessedassurance wrote:you go around being this rational and the tls gang will start calling you a troll and crazy...

I'd guess the only weak spot in your thing is applying average biglaw burnout to everyone. Also, not factoring in things like exit-options, and IBR/PAYE etc. Its not like you burn out from biglaw and never earn income again. Also, a good number of students at many schools have significant family contributions (I'm not one of them).

Mal Reynolds
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Re: How the Heck Do You Pay Back Sticker?

Postby Mal Reynolds » Thu May 16, 2013 2:00 am

I would ask this question in the NU 3Ls thread. There are people there who believe sticker was worth it for them. I don't think I would do it, but I guess it depends on what your other options are.

HeavenWood
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Re: How the Heck Do You Pay Back Sticker?

Postby HeavenWood » Thu May 16, 2013 2:10 am

Mal Reynolds wrote:I would ask this question in the NU 3Ls thread. There are people there who believe sticker was worth it for them. I don't think I would do it, but I guess it depends on what your other options are.

So basically those who got well-paying legal jobs vs. those who ended up SOL?

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Balthy
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Re: How the Heck Do You Pay Back Sticker?

Postby Balthy » Thu May 16, 2013 3:01 am

The depressing answer: They keep paying it off after biglaw ends, at a slower rate.

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jselson
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Re: How the Heck Do You Pay Back Sticker?

Postby jselson » Thu May 16, 2013 3:06 am

Basically, what the OP is about really worries me since I'm heading to HLS, but my parents (apparently) make just enough for me not to get any aid, and they've told me straight up they won't help me with any law school funding. In fact, they've never paid a dime towards any of my education. LIPP is a great program, but burning out isn't an option for me.

09042014
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Re: How the Heck Do You Pay Back Sticker?

Postby 09042014 » Thu May 16, 2013 3:24 am

If your career goes decently you'll be making 150K+ for the rest of your 40 year career. That's 6 million dollars. 300k is 5% of that. 40 years is probably too long to consider, but 10 years is a reasonable pay off time.

Big law isn't the only place lawyers make good money, it's just (mostly) the only place new graduates can make money.

I'm not saying fullride is a good idea. Or that if you get big law you'll make 150k forever. For plenty (maybe even most) sticker price is stupid. But if your career goes well it's definitely worth it.

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jbagelboy
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Re: How the Heck Do You Pay Back Sticker?

Postby jbagelboy » Thu May 16, 2013 4:39 am

jselson wrote:Basically, what the OP is about really worries me since I'm heading to HLS, but my parents (apparently) make just enough for me not to get any aid, and they've told me straight up they won't help me with any law school funding. In fact, they've never paid a dime towards any of my education. LIPP is a great program, but burning out isn't an option for me.



This is why I always tell people who are 100% set on biglaw that a half or full tuition scholarship at CLS or UChi is the better choice since the result will be the same without the absurd debt. HYS is much more worth it for a baller PI position or fed clerkship where a powerful LRAP or lower income debt repayment plan activates. idk then again I haven't been presented with that scenario myself haha

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Blessedassurance
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Re: How the Heck Do You Pay Back Sticker?

Postby Blessedassurance » Thu May 16, 2013 4:39 am

Clearlynotstefan wrote:
Blessedassurance wrote:you go around being this rational and the tls gang will start calling you a troll and crazy...

I'd guess the only weak spot in your thing is applying average biglaw burnout to everyone. Also, not factoring in things like exit-options, and IBR/PAYE etc. Its not like you burn out from biglaw and never earn income again. Also, a good number of students at many schools have significant family contributions (I'm not one of them).


you think they overwhelmingly waltz into chill-as-fuck exit options, right?

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Clearly
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Re: How the Heck Do You Pay Back Sticker?

Postby Clearly » Thu May 16, 2013 5:00 am

Blessedassurance wrote:
Clearlynotstefan wrote:
Blessedassurance wrote:you go around being this rational and the tls gang will start calling you a troll and crazy...

I'd guess the only weak spot in your thing is applying average biglaw burnout to everyone. Also, not factoring in things like exit-options, and IBR/PAYE etc. Its not like you burn out from biglaw and never earn income again. Also, a good number of students at many schools have significant family contributions (I'm not one of them).


you think they overwhelmingly waltz into chill-as-fuck exit options, right?

Not what I said home slice. I'm correctly pointing out that burnout from biglaw =/= never make loan payment again. I also pointed out that PAYE factors in. The reality is the original statement equated 2-3 year average burnout with defaulting on loans by ignoring exit-options entirely, as well as IBR/PAYE etc. The reality is far fewer people default on LS loans than do never get/burnout from biglaw. Somewhere along the line something else is picking up the slack.

NanaP
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Re: How the Heck Do You Pay Back Sticker?

Postby NanaP » Thu May 16, 2013 5:31 am

This is what I've been thinking all along.....I think it's crazy to give up a full ride at a school like CCN, or MVP, for sticker at HYS.....I rather come out with minimum debt, than 300k of debt, even if it is HYS...I think I'm alone on this site in thinking that way.....seeing too many folks give up full rides for HYS.......

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Clearly
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Re: How the Heck Do You Pay Back Sticker?

Postby Clearly » Thu May 16, 2013 5:44 am

NanaP wrote:This is what I've been thinking all along.....I think it's crazy to give up a full ride at a school like CCN, or MVP, for sticker at HYS.....I rather come out with minimum debt, than 300k of debt, even if it is HYS...I think I'm alone on this site in thinking that way.....seeing too many folks give up full rides for HYS.......

I'd actually say the majority advice is CC full ride (rarely N) over H, the only time the majority jump ship is when need based aid is involved (or family $$) for H.

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rickgrimes69
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Re: How the Heck Do You Pay Back Sticker?

Postby rickgrimes69 » Thu May 16, 2013 7:11 am

OP is 100% correct. Paying back sticker debt, even from Biglaw, is approaching the range of impossibility. The problem is threefold: stagnating legal wages, increasingly high COL in most big legal markets, and tuition that's rising 3-4x faster than inflation. Combine that with the fact that most associates are out by year 3 (often not by choice) and you have a gamble that's unwinnable for nearly everybody.

All of this could be solved if we stopped giving out unlimited fixed-interest student loans to everyone and their grandma, just saying.

Myself
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Postby Myself » Thu May 16, 2013 7:18 am

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Last edited by Myself on Sun Nov 24, 2013 11:07 pm, edited 1 time in total.

NYstate
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Re: How the Heck Do You Pay Back Sticker?

Postby NYstate » Thu May 16, 2013 8:00 am

rickgrimes69 wrote:OP is 100% correct. Paying back sticker debt, even from Biglaw, is approaching the range of impossibility. The problem is threefold: stagnating legal wages, increasingly high COL in most big legal markets, and tuition that's rising 3-4x faster than inflation. Combine that with the fact that most associates are out by year 3 (often not by choice) and you have a gamble that's unwinnable for nearly everybody.

All of this could be solved if we stopped giving out unlimited fixed-interest student loans to everyone and their grandma, just saying.


I was against people paying sticker back when it was only $200,000. The only reasoning I've been able to follow is that 0Ls see the big law salary and think it is their only chance for a career ever making that much. The justification is something like I have a useless degree and live in the middle of nowhere with no jobs and this is my only chance. Now there is IBRAHIM and PAYE they just say if it doesn't work out they will use those plans.

They don't seem to understand how few big law jobs there are now and how difficult it is to get and keep one. Or if they do, they feel that the chance is worth it.

On TLS we don't hear too much from the grads of good schools who end up going back to their pre-law career, if they have one, only this time with $200,000 in debt.

So mostly I think people still see law school as a golden ticket to the future . I remember one person said that HLS means you will make at least $100,000 a year for life.

One more thing: I think NALP said last year nationwide big law salaries had dropped for the first time in years.

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reasonable_man
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Re: How the Heck Do You Pay Back Sticker?

Postby reasonable_man » Thu May 16, 2013 8:02 am

If you decide to do it you resign yourself to the fact that the only way you are going to do it is to live within a budget and pay it off slowly over time. You also become 'ok' with the fact that you are going to pay a ton in interest as well. It aint fun.

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2014
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Re: How the Heck Do You Pay Back Sticker?

Postby 2014 » Thu May 16, 2013 8:08 am

I think the extent to which Associates are forced out the door before about year 5-6 is overstated first of all, and so if you assume that people are rational overall, then anyone who jumps ship from biglawl before that is doing so because it makes fiscal sense for them to do so. Like DF alluded to you don't burn out of big law and go open up a criminal defense shop making 40k, most people go do something else that still pays 6 figures. Since your loans are now down to ~100k or whatever, your payment can go down a little bit, and the loans you have left will be the lower interest rate ones (i.e. not grad plus) so they balloon slower.


Basically the only way I see sticker being a problem is 1. If you don't get biglawl 2. If you get canned before year 4 or so. and 3. If you irrationally self select out of it to a low paying job.


Also if you make it through year 4, your salary is 210k + a larger bonus, which is a lot of extra $$$ to dump on your loans.

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Bronck
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Re: How the Heck Do You Pay Back Sticker?

Postby Bronck » Thu May 16, 2013 8:23 am

2014 wrote:I think the extent to which Associates are forced out the door before about year 5-6 is overstated first of all, and so if you assume that people are rational overall, then anyone who jumps ship from biglawl before that is doing so because it makes fiscal sense for them to do so.


Yeah... no.

NanaP
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Re: How the Heck Do You Pay Back Sticker?

Postby NanaP » Thu May 16, 2013 8:29 am

I still think it's crazy to pay sticker when you have full or nearly full rides from other T10's. If I was strictly paying with loans and no help from parents I would easily take full rides from CCN, or even P...Would rather not put myself or my future family in that kind of a hole...

LittleTree
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Re: How the Heck Do You Pay Back Sticker?

Postby LittleTree » Thu May 16, 2013 8:31 am

Disclaimer: on my phone and I'm bad at typing on it.

I've wonderered why no one on here ever assumes someone could, or rather, SHOULD have savings before paying sticker. This whole argument about taking out 300k for a shot at biglaw seems foreign to me because every single applicant who can get in to even just one law school can get in to another one with a huge scholarship. Every applicant also has the option of taking time off and saving up money (also improving their application).

I agree that tuition is stupidly high, but what makes everyone think that the world owes them the ability to go K-Jd, borrow the entire amount without ever working or saving, and then easily pay it back?

If you can't afford it, don't buy it.

NanaP
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Re: How the Heck Do You Pay Back Sticker?

Postby NanaP » Thu May 16, 2013 8:34 am

LittleTree wrote:Disclaimer: on my phone and I'm bad at typing on it.

I've wonderered why no one on here ever assumes someone could, or rather, SHOULD have savings before paying sticker. This whole argument about taking out 300k for a shot at biglaw seems foreign to me because every single applicant who can get in to even just one law school can get in to another one with a huge scholarship. Every applicant also has the option of taking time off and saving up money (also improving their application).

I agree that tuition is stupidly high, but what makes everyone think that the world owes them the ability to go K-Jd, borrow the entire amount without ever working or saving, and then easily pay it back?

If you can't afford it, don't buy it.



I doubt most people have that kind of savings to even make a dent in tuition

LittleTree
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Re: How the Heck Do You Pay Back Sticker?

Postby LittleTree » Thu May 16, 2013 8:39 am

NanaP wrote:
LittleTree wrote:Disclaimer: on my phone and I'm bad at typing on it.

I've wonderered why no one on here ever assumes someone could, or rather, SHOULD have savings before paying sticker. This whole argument about taking out 300k for a shot at biglaw seems foreign to me because every single applicant who can get in to even just one law school can get in to another one with a huge scholarship. Every applicant also has the option of taking time off and saving up money (also improving their application).

I agree that tuition is stupidly high, but what makes everyone think that the world owes them the ability to go K-Jd, borrow the entire amount without ever working or saving, and then easily pay it back?

If you can't afford it, don't buy it.



I doubt most people have that kind of savings to even make a dent in tuition


Which is why I advocated other means. Take a few years to save up a little, which also improves your app. Get scholarships. If you really have no money by the time you get into HYS, they'll help. There are so many ways to not pay sticker...if most people don't have the savings to mitigate sticker maybe that means that most people shouldn't borrow sticker.

fallingup
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Re: How the Heck Do You Pay Back Sticker?

Postby fallingup » Thu May 16, 2013 8:40 am

Yeah I've worked for two years after graduation in a good job and have saved enough money to pay living expenses for the first year, and that's it. It's basically nothing.

Paul Campos
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Re: How the Heck Do You Pay Back Sticker?

Postby Paul Campos » Thu May 16, 2013 8:42 am

Sticker is now for

(1) Rich kids. Huge numbers of people from big money backgrounds go to law school. 20% to 30% of the class at lots of fancy schools graduate with no law school debt, and another significant percentage graduate with relatively minimal debt.

(2) Suckers

(3) People with low opportunity costs, a high tolerance for risk, and a spot at one of N law schools (N is very small and shrinking).




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