At what point does LRAP make monopoly money out of Debt Forum

[littletophat]

Another NYU vs. Columbia question, but with a twist.

Background: I want to stay in NYC and I want to do PI. Seriously. Not a "oh I want to save starving babies but I guess I could do biglaw as a back up if that's what has to happen" sort of person. More of a "I've been working in public service for over 7 years and I want to work anti-discrimination/civil rights law in NYC (not counting on DOJ Honors, but if it happens hello DC)" sort of person.

I'm going to be in debt, and I'm going to be riding the LRAP forgiveness train all the way.

Consensus seems to be that NYU is the better choice for PI, but from my research and talking to folks I get the idea that Columbia is underappreciated in this regard and as long as you are serious about your commitment to PI, you can do well for yourself at Columbia.

And here's the kicker: Columbia's LRAP surprisingly better than NYU's in a couple of ways.

1) Columbia gives the option of keeping LRAP separate from IBR/PSLF so they'll pay the full standard 10 year repayment amount (on salaries under $50K, required contribution of 34.5% of income over threshold). This is good on the tiny chance that 5-7 years down the line all of the universe aligns and lands me in a unicorn, holy-crap-this-is-a-well-paying PI job that is not PSLF eligible. that would make the negative amortization of IBR a pain in the rear. NYU offers a one-time make-it-up payment if this happens, but it's less good than Columbia's program.

2) Columbia's IBR-based income threshold before you have to contribute is $100K (required contribution of 34.5% of income over limit) while NYU's is $80K (required contribution of 40% of income over limit).

comparing my current financial aid packages using Gtown's financial aid calculator, my debt at repayment would be approximately $50K more at Columbia [aside: Columbia's projected tuition+fees in 2017/18 is going to be almost $70K. holy f--k]. Keep in mind that this isn't $0 vs $50K. It's more along the lines of $175K vs $225K. Standard monthly payments of $2100 vs $2700.

I'm going to keep trying to negotiate more money out of both schools, but assuming that doesn't work, should I be more concerned about the difference in debt or about the difference in LRAP plans? Is that actual debt just monopoly money if I'm going to be relying on LRAP no matter what?

Even suggesting that I ignore a difference of $50K in debt nauseates me. That's crazy. But when I think about the fact that I'm going to be depending on LRAP either way, I have this inkling that maybe it isn't so crazy after all. But then I have a second inkling that the first inkling is prestigewhoriness dressed up all pretty as logic.

[twenty]

Columbia's LRAP last year had a cap of 71k. For them to move it up to 100k is a HUGE shift, and makes Columbia overwhelmingly the best IBR-based LRAP by a significant margin. But there's more, if you make less than 50k, Columbia's LRAP will pay out as if you were on the traditional program while you're still on IBR. That not only makes Columbia the best IBR LRAP, it also makes its non-IBR program better than both Harvard and Stanford's non-IBR programs.

[bretby]

Another NYU vs. Columbia question, but with a twist.

Background: I want to stay in NYC and I want to do PI. Seriously. Not a "oh I want to save starving babies but I guess I could do biglaw as a back up if that's what has to happen" sort of person. More of a "I've been working in public service for over 7 years and I want to work anti-discrimination/civil rights law in NYC (not counting on DOJ Honors, but if it happens hello DC)" sort of person.

I'm going to be in debt, and I'm going to be riding the LRAP forgiveness train all the way.

Consensus seems to be that NYU is the better choice for PI, but from my research and talking to folks I get the idea that Columbia is underappreciated in this regard and as long as you are serious about your commitment to PI, you can do well for yourself at Columbia.

And here's the kicker: Columbia's LRAP surprisingly better than NYU's in a couple of ways.

1) Columbia gives the option of keeping LRAP separate from IBR/PSLF so they'll pay the full standard 10 year repayment amount (on salaries under $50K, required contribution of 34.5% of income over threshold). This is good on the tiny chance that 5-7 years down the line all of the universe aligns and lands me in a unicorn, holy-crap-this-is-a-well-paying PI job that is not PSLF eligible. that would make the negative amortization of IBR a pain in the rear. NYU offers a one-time make-it-up payment if this happens, but it's less good than Columbia's program.

2) Columbia's IBR-based income threshold before you have to contribute is $100K (required contribution of 34.5% of income over limit) while NYU's is $80K (required contribution of 40% of income over limit).

comparing my current financial aid packages using Gtown's financial aid calculator, my debt at repayment would be approximately $50K more at Columbia [aside: Columbia's projected tuition+fees in 2017/18 is going to be almost $70K. holy f--k]. Keep in mind that this isn't $0 vs $50K. It's more along the lines of $175K vs $225K. Standard monthly payments of $2100 vs $2700.

I'm going to keep trying to negotiate more money out of both schools, but assuming that doesn't work, should I be more concerned about the difference in debt or about the difference in LRAP plans? Is that actual debt just monopoly money if I'm going to be relying on LRAP no matter what?

Even suggesting that I ignore a difference of $50K in debt nauseates me. That's crazy. But when I think about the fact that I'm going to be depending on LRAP either way, I have this inkling that maybe it isn't so crazy after all. But then I have a second inkling that the first inkling is prestigewhoriness dressed up all pretty as logic.

One caveat that made a decisive difference in my decision. I assume that since you have over 7 years work experience you are relatively far-removed from college and thus maybe (hopefully?) have some assets. NYU takes account of those assets and reduces your LRAP eligible debt by the same amount. They do this through the expected student contribution. So say you have $50,000 in stocks/bonds/funds/etc., this would reduce your annual LRAP eligible loan amount by roughly $16k. Say you have $100k, this reduces your LRAP eligible loans by 33k/year, and so forth.

This was something that I wouldn't have known about if it wasn't for someone on TLS pointing it out, and I have since gone in and sat down with an NYU Fin Aid person who confirmed the sad truth. So if you have any assets now, and want to have any assets left after you graduate, Columbia is clearly the better choice as Columbia does NOT calculate an expected student contribution and does not reduce your LRAP eligible loan amount.

[littletophat]

One caveat that made a decisive difference in my decision. I assume that since you have over 7 years work experience you are relatively far-removed from college and thus maybe (hopefully?) have some assets. NYU takes account of those assets and reduces your LRAP eligible debt by the same amount. They do this through the expected student contribution. So say you have $50,000 in stocks/bonds/funds/etc., this would reduce your annual LRAP eligible loan amount by roughly $16k. Say you have $100k, this reduces your LRAP eligible loans by 33k/year, and so forth.

This was something that I wouldn't have known about if it wasn't for someone on TLS pointing it out, and I have since gone in and sat down with an NYU Fin Aid person who confirmed the sad truth. So if you have any assets now, and want to have any assets left after you graduate, Columbia is clearly the better choice as Columbia does NOT calculate an expected student contribution and does not reduce your LRAP eligible loan amount.

Well that sucks. Are retirement assets excluded?

And I wonder about marital assets that my wife brought into the marriage and aren't in my name?

[littletophat]

Columbia's LRAP last year had a cap of 71k. For them to move it up to 100k is a HUGE shift, and makes Columbia overwhelmingly the best IBR-based LRAP by a significant margin. But there's more, if you make less than 50k, Columbia's LRAP will pay out as if you were on the traditional program while you're still on IBR. That not only makes Columbia the best IBR LRAP, it also makes its non-IBR program better than both Harvard and Stanford's non-IBR programs.

This made me think that I read the program terms wrong. I had to go back and check to make sure I wasn't hallucinating. But it's true:

" LRAP benefit eligibility will be calculated using a higher adjusted gross income threshold in accordance with the chart below. LRAP will cover 100% of eligible IBR
payments for participants whose annual income does not exceed $100,000. Participants will be expected to contribute 34.5% of income above $100,000 toward their annual debt service on educational loans. "

Paying out on the standard repayment while I'm on IBR is crazy awesome. Seems like Columbia has really decided to throw it's hat into the public interest ring. No one else competes with this.

[twenty]

Bret, if you're in a position where your assets exceed your sticker debt at NYU (or at least comes very close to), you'd probably be just fine on straight IBR without an LRAP at all. Since you'll be in negative amortization territory very quickly if you qualify for NYU's LRAP and have sticker debt, I wouldn't be super worried about it.

[legalmindedfellow]

Columbia's LRAP last year had a cap of 71k. For them to move it up to 100k is a HUGE shift, and makes Columbia overwhelmingly the best IBR-based LRAP by a significant margin. But there's more, if you make less than 50k, Columbia's LRAP will pay out as if you were on the traditional program while you're still on IBR. That not only makes Columbia the best IBR LRAP, it also makes its non-IBR program better than both Harvard and Stanford's non-IBR programs.

This made me think that I read the program terms wrong. I had to go back and check to make sure I wasn't hallucinating. But it's true:

" LRAP benefit eligibility will be calculated using a higher adjusted gross income threshold in accordance with the chart below. LRAP will cover 100% of eligible IBR
payments for participants whose annual income does not exceed $100,000. Participants will be expected to contribute 34.5% of income above $100,000 toward their annual debt service on educational loans. "

Paying out on the standard repayment while I'm on IBR is crazy awesome. Seems like Columbia has really decided to throw it's hat into the public interest ring. No one else competes with this.

If you've actually thought through career goals, and are committed PI like you say, then you are going to be in good shape under either program. Really and truly. The complications here for these programs primarily emerge when you try to hop between private and public, or when there are long periods of non-legal work. That's not going to be your situation.

Under the circumstances I think it's more important to figure out what institution you clicked with more and what will be better for your interests. It's three years of your life, and three years where your spouse will want you to be happy rather than not happy, and where you will want to be happy for them. That matters, and it matters a lot. NYU and Columbia are different places.

No one can answer that fit question for you, though talking with grads or students or faculty from both schools will obviously help. But reducing this to financial #s in your specific circumstances seems like the wrong approach because I think it will barely make a difference either way. You really should be thinking about what place feels like it will be a better fit for you for the next three years and which place might better set you up for the specific PI interest you have.

Please feel free to PM me, happy to talk over more. And good luck!

[timbs4339]

Columbia's LRAP last year had a cap of 71k. For them to move it up to 100k is a HUGE shift, and makes Columbia overwhelmingly the best IBR-based LRAP by a significant margin. But there's more, if you make less than 50k, Columbia's LRAP will pay out as if you were on the traditional program while you're still on IBR. That not only makes Columbia the best IBR LRAP, it also makes its non-IBR program better than both Harvard and Stanford's non-IBR programs.

This made me think that I read the program terms wrong. I had to go back and check to make sure I wasn't hallucinating. But it's true:

" LRAP benefit eligibility will be calculated using a higher adjusted gross income threshold in accordance with the chart below. LRAP will cover 100% of eligible IBR
payments for participants whose annual income does not exceed $100,000. Participants will be expected to contribute 34.5% of income above $100,000 toward their annual debt service on educational loans. "

Paying out on the standard repayment while I'm on IBR is crazy awesome. Seems like Columbia has really decided to throw it's hat into the public interest ring. No one else competes with this.

If you've actually thought through career goals, and are committed PI like you say, then you are going to be in good shape under either program. Really and truly. The complications here for these programs primarily emerge when you try to hop between private and public, or when there are long periods of non-legal work. That's not going to be your situation.

Under the circumstances I think it's more important to figure out what institution you clicked with more and what will be better for your interests. It's three years of your life, and three years where your spouse will want you to be happy rather than not happy, and where you will want to be happy for them. That matters, and it matters a lot. NYU and Columbia are different places.

No one can answer that fit question for you, though talking with grads or students or faculty from both schools will obviously help. But reducing this to financial #s in your specific circumstances seems like the wrong approach because I think it will barely make a difference either way. You really should be thinking about what place feels like it will be a better fit for you for the next three years and which place might better set you up for the specific PI interest you have.

Please feel free to PM me, happy to talk over more. And good luck!

This is asinine advice.

For all practical purposes CLS and NYU are essentially the same school. They send an overwhelming number of students into large corporate law firms. They both pretend to be PI oriented while knowing full well that without their biglaw alumni donating huge sums of money they wouldn't be able to pay their professors $400K a year and give them seven-figure interest free loans to buy townhouses. They enroll from the same group of stressed-out, overachieving mostly 21-25 year olds. They both have sizeable, very active communities of PI students. They are both in NYC, so you will have the same access to internships and externships during law school.

Unless you really really really want to live in the Village, if CLS gives you a better financial deal, take it.

One thing I would caution you against is ruling out private practice work at this point. There is a lot of private practice work that is "public interest" oriented. Ask the lawyers at Neufeld, Scheck and Brustin or Sanford Wittels if they are not Public Interest Lawyers. The gulf between private and gov't/PI practice narrows a lot as you get more experienced in a particular area.

[littletophat]

One thing I would caution you against is ruling out private practice work at this point. There is a lot of private practice work that is "public interest" oriented. Ask the lawyers at Neufeld, Scheck and Brustin or Sanford Wittels if they are not public interest lawyers. The gulf between private and gov't/PI practice narrows a lot as you get more experienced in a particular area.

This is why the idea of the Columbia covering my standard 10-year payment is so appealing. It would be nice to not have to worry about negative amortization if I end up doing public-focused private practice a few years down the line.

[Nomo]

Use an online calculator to see the difference what you'll pay through NYU's LRAP and what you'd pay on regular IBR with different salaries and asset amounts. I'm pretty sure you'll find that the benefits NYU provides are marginal. The real benefit is IBR/PAYE keeping your payments low, and forgiveness through PSLF. The money NYU provides to help make those already low payments (they are way below the interest you're accruing) is just a cherry on top.

Plans that are not connected to IBR/PAYE are far more valuable. On those plans your debt actually decreases each year you're in the program. This gives you options. And some time in the next 14 years, you might appreciate those options. Even if you'll never want biglaw you still might want to work half-time or 3/4 time, take a few years off to have a child, start your own law firm that emphasizes pro bono work, start a business that's unrelated to law, etc. If you're debt has dropped from 225k to 75k during your years in Columbia's LRAP those decisions might be realistic. If your debt has jmped from 175k to 240k on the NYU plan then those decisions aren't going to be realistic. And of course there is the possibility that PSLF gets gutted.

[legalmindedfellow]

Columbia's LRAP last year had a cap of 71k. For them to move it up to 100k is a HUGE shift, and makes Columbia overwhelmingly the best IBR-based LRAP by a significant margin. But there's more, if you make less than 50k, Columbia's LRAP will pay out as if you were on the traditional program while you're still on IBR. That not only makes Columbia the best IBR LRAP, it also makes its non-IBR program better than both Harvard and Stanford's non-IBR programs.

This made me think that I read the program terms wrong. I had to go back and check to make sure I wasn't hallucinating. But it's true:

" LRAP benefit eligibility will be calculated using a higher adjusted gross income threshold in accordance with the chart below. LRAP will cover 100% of eligible IBR
payments for participants whose annual income does not exceed $100,000. Participants will be expected to contribute 34.5% of income above $100,000 toward their annual debt service on educational loans. "

Paying out on the standard repayment while I'm on IBR is crazy awesome. Seems like Columbia has really decided to throw it's hat into the public interest ring. No one else competes with this.

If you've actually thought through career goals, and are committed PI like you say, then you are going to be in good shape under either program. Really and truly. The complications here for these programs primarily emerge when you try to hop between private and public, or when there are long periods of non-legal work. That's not going to be your situation.

Under the circumstances I think it's more important to figure out what institution you clicked with more and what will be better for your interests. It's three years of your life, and three years where your spouse will want you to be happy rather than not happy, and where you will want to be happy for them. That matters, and it matters a lot. NYU and Columbia are different places.

No one can answer that fit question for you, though talking with grads or students or faculty from both schools will obviously help. But reducing this to financial #s in your specific circumstances seems like the wrong approach because I think it will barely make a difference either way. You really should be thinking about what place feels like it will be a better fit for you for the next three years and which place might better set you up for the specific PI interest you have.

Please feel free to PM me, happy to talk over more. And good luck!

This is asinine advice.

For all practical purposes CLS and NYU are essentially the same school. They send an overwhelming number of students into large corporate law firms. They both pretend to be PI oriented while knowing full well that without their biglaw alumni donating huge sums of money they wouldn't be able to pay their professors $400K a year and give them seven-figure interest free loans to buy townhouses. They enroll from the same group of stressed-out, overachieving mostly 21-25 year olds. They both have sizeable, very active communities of PI students. They are both in NYC, so you will have the same access to internships and externships during law school.

Unless you really really really want to live in the Village, if CLS gives you a better financial deal, take it.

One thing I would caution you against is ruling out private practice work at this point. There is a lot of private practice work that is "public interest" oriented. Ask the lawyers at Neufeld, Scheck and Brustin or Sanford Wittels if they are not public interest lawyers. The gulf between private and gov't/PI practice narrows a lot as you get more experienced in a particular area.

When you say something is the same school for all practical purposes, it's strange to yell at me for saying fit is important. Except of course when there are different financial calculations, but here I don't think there are significant differences where someone is pure PI the whole way through. And OP has said this is the plan and that they are fully committed to it, not in the "kinda sorta" way.

Obviously if "Columbia is giving you a better financial deal" then that's excellent and relevant. My read was that Columbia was not in fact doing so because the considerations only matter for things OP has said they are not going to do, like hopping between biglaw, etc. If you're pure PI the whole way through then the differences are negligible. And the certainty with which you're saying Columbia is a better deal is curious, given that OP said NYU is going to leave him $50k ahead on debtload and the differences come down to repayment schemes and things like that.

We don't seem to disagree at all except in one assumption, and I'm basing my assumption on what OP said. If this is asinine, okay.

[littletophat]

But there's more, if you make less than 50k, Columbia's LRAP will pay out as if you were on the traditional program while you're still on IBR.

Ok. I have to revisit this. This just seems too good to be true.

According to the program terms (at https://web.law.columbia.edu/sites/defa ... c_2014.pdf), this means that I can consolidate and get on IBR, but have Columbia calculate my LRAP payment on the standard scale [where they will pay the full 10-year payment minus my annual participate contribution, which equals (salary-$50K)*.345 as long as I pay at least the amount that Columbia is giving me.

Which means that I would be on IBR, but paying well above the IBR amount, thus not only preventing negative amortization, but also significantly lowering my debt load.

And it also means that as my salary rises, I can continue not contributing to my loan payment but merely paying less in addition to my IBR payment up until the fact that my calculated annual contribution is greater than the difference between my standard payment and my IBR payment (which if I have a standard payment of $2,700 per month, wouldn't happen until I made $98,030).

That seems insanely generous. Did I miss something here?

[bretby]

One caveat that made a decisive difference in my decision. I assume that since you have over 7 years work experience you are relatively far-removed from college and thus maybe (hopefully?) have some assets. NYU takes account of those assets and reduces your LRAP eligible debt by the same amount. They do this through the expected student contribution. So say you have $50,000 in stocks/bonds/funds/etc., this would reduce your annual LRAP eligible loan amount by roughly $16k. Say you have $100k, this reduces your LRAP eligible loans by 33k/year, and so forth.

This was something that I wouldn't have known about if it wasn't for someone on TLS pointing it out, and I have since gone in and sat down with an NYU Fin Aid person who confirmed the sad truth. So if you have any assets now, and want to have any assets left after you graduate, Columbia is clearly the better choice as Columbia does NOT calculate an expected student contribution and does not reduce your LRAP eligible loan amount.

Well that sucks. Are retirement assets excluded?

And I wonder about marital assets that my wife brought into the marriage and aren't in my name?

This I can't answer for you, but the Fin Aid people at NYU are very helpful when you know the right questions to ask.

[twenty]

Which means that I would be on IBR, but paying well above the IBR amount, thus not only preventing negative amortization, but also significantly lowering my debt load.

That is correct. Keep in mind that there's also a dollar amount (I'm too lazy to calculate it right now) even above 50k/year where you're still paying less on Columbia's secondary plan than you would on the basic IBR payment. It appears to be roughly 65k/year. Of course, the argument at that point is that maybe you'd rather save the $4k/year and switch to Columbia's $100k cap plan.

And it also means that as my salary rises, I can continue not contributing to my loan payment but merely paying less in addition to my IBR payment up until the fact that my calculated annual contribution is greater than the difference between my standard payment and my IBR payment (which if I have a standard payment of $2,700 per month, wouldn't happen until I made $98,030).

$2,700 seems abnormally low for someone taking out sticker debt. My guess is the number is actually north of $3,600? Adjusting those two numbers, though, and you're correct.

That seems insanely generous. Did I miss something here?

Yeah, while you can consolidate, Columbia isn't going to pay on the ten year of your consolidated loan, just the law school debt part. Otherwise you could just roll your undergrad debt into a consolidated loan and have Columbia pay off the principal on that, too.

[littletophat]

Thank you so much for all of your help. I'm not taking out sticker debt. But I didn't get enough money that it really effects the big picture of things.

Columbia's LRAP seems like the winner. Still feel gross about the amount of debt. Even if I won't actually be paying it.

[bretby]

Bret, if you're in a position where your assets exceed your sticker debt at NYU (or at least comes very close to), you'd probably be just fine on straight IBR without an LRAP at all. Since you'll be in negative amortization territory very quickly if you qualify for NYU's LRAP and have sticker debt, I wouldn't be super worried about it.

My assets don't exceed sticker, more like 50-75%, retirement assets excluded. Why wouldn't you worry about being in negative amortization territory?

[twenty]

Bret, if you're in a position where your assets exceed your sticker debt at NYU (or at least comes very close to), you'd probably be just fine on straight IBR without an LRAP at all. Since you'll be in negative amortization territory very quickly if you qualify for NYU's LRAP and have sticker debt, I wouldn't be super worried about it.

My assets don't exceed sticker, more like 50-75%, retirement assets excluded. Why wouldn't you worry about being in negative amortization territory?

Because unless the value of your assets are increasing faster than your loans at 8% with no capitalized interest, NYU's IBR-award amount won't change based on the loans you're qualified for. It wouldn't matter if you're eligible based on 300k worth of loans or 100k worth of loans (because you have 200k in assets) as long as you're making less than the difference in income in the year. And at that point, you probably wouldn't qualify for NYU's LRAP anyway.

But even if you have 300k in assets and 300k in debt (which would mean 0k of your loans are eligible for assistance via NYU's LRAP), you won't be precluded from using straight-up IBR. That kind of sucks, but 1) you can probably manage to dispose of/hide your 300k in assets if you really wanted to, and 2) worst case scenario you pay (over ten years) 50k-60k more for your NYU degree than you would have from Columbia. I guess I can see how that would be a pretty legitimate reason to pick Columbia over NYU, though, if you were actually in that position.