Monochromatic Oeuvre wrote: jbagelboy wrote: Monochromatic Oeuvre wrote:
jbagelboy wrote:What? by COA I include interest at loan repayment
Then yes, by that definition, dollar amounts become an apples-to-apples definition. A lot of people use COA to mean "total debt at graduation," in which dollar differences mean different things based on different amounts.
I think you are a little confused, or maybe we are talking about the same thing? your debt at repayment (graduation + whatever grace period applies) always includes your interest, that's what capitalization means. there is no COA debt at graduation sans interest
edit: you can have total cost without interest if you're paying in cash, but thats not debt
I'm now definitely confused as to whether we're talking about the same thing. My point was just to say over a given period by which you pay your debt off (say, seven years after graduation), each additional dollar costs more and more because interest compounds over a longer period of time. Suppose $250k of debt at graduation eventually costs $320k to pay off, and $200k of debt at graduation eventually costs $255k to pay off. The difference of $50k of graduation debt turns out to be $75k. But if $100k of debt at graduation costs $115k to pay off and $50k of debt at graduation costs $55k to pay off, then the difference of $50k of graduation debt is only $60k. At higher debt levels, each dollar costs more because it has a longer time to compound over the longer repayment periods. This is something one has to take it account, but it isn't considered if one just uses COA to mean "total debt at graduation." In that instance, the phrase "50k COA difference" means something different, depending on how high the total debt levels are.
okay. we were talking about different phenomena. prolly my bad for not reading thru the entire thread; I thought you were saying that sticker would be $220K debt w/o interest, which would never occur with unsubsidized loans.
however, even w/ your approach, I never advise ppl to look at the total amount of repayment 7-10 yrs out. same with buying a car, you look at monthly payment structure not end of 60/72 month total paid. I mean, sure, it's good to have a ballpark figure, but when you put your put a mortgage on a $400K house at like 3% interest, yea its gonna be close to a million $ after 30 yrs but you don't say "I'm buying a million dollar house"
the approach you are advocating leads to the thought pattern that paying off $5K/month on biglaw and living in a cardboard box is TCR out of fear of growing debt absolute debt. personally I'm less concerned about that then the debt level when you graduate, but this is probably rooted partly in my financial training and life planning, your point is noted and I see where you are coming from