UVA2B wrote:DCC covered this, but you're assuming a lengthy career in Biglaw, which is statistically unlikely considering law firms work mostly on heavily leveraged business models that necessarily requires attrition. So you could be the Biglaw associate coming from Penn with $60k debt a year later who will more likely than not get pushed out for a number of reasons after 3-5 years, or you could be a Columbia grad with $140k debt that gets pushed out a year earlier.
That might not end up being you and you might become a shiny, really expensive partner at your biglaw firm, but statistics will tell you that's unlikely to happen. So you're really looking at getting back to zero net worth and then moving on to a lower paying gig sooner.
TLS and math. First, the length of his career doesn't correlate with when he goes into law school. Assume a number of years he'll be in biglaw and stick with it. If he's going to have five years as a biglaw associate going in this year, his career isn't magically going to lengthen (or shorten) to six (or four) years just because he decided to defer a year.
Even if you're risk-averse (because he might be forced out) or assume he'll job-hop once he reaches a certain age, OP went to a TTT in the 160s. What does a realistic entry-level job from that rank of school make? Optimistically, 40-50k? The delta between that and the in-house job he lands up with is still going to >! $60k.
First, I did pick a number and stuck with it. I went with 3-5 years total in Biglaw from either school. The only difference then becomes whether they transition out in 6-8 years from this fall (taking current options) or 7-9 years (reapplying and ideally getting better options because they refine their app to be stronger for scholarships in lower T13).
Now, assuming they make $40-50k for this year while saving themselves potentially (because nothing is guaranteed) $80k+, we're now talking about $120-130k difference in total current value because you can't pretend like that salary in an entry level job doesn't count in calculating the value of waiting a year and reapplying (which does not take into account present value vs. future value of increased income or increased cost paying off the extra debt).
Lastly, you really can't compare a potential in-house salary that you'll get a year sooner to the pay you'll be getting in the upcoming year because that's really apples and oranges. Let's assume, however, you're paying off $60k debt at a school like Penn or paying off $140k debt at Columbia. On a standard 10 year debt repayment plan, you'll be paying ~$700/month for a total debt repayment of ~$84,000. Columbia at $140k on a standard debt repayment plan would be ~$1600/month for a total debt repayment of ~$197k. Both of those amounts are reasonable in a vacuum when considering the amount of income you're looking at coming out of both schools, but what we're talking about here is relative value. You're signing on for paying $100k more in debt repayment to get into the same career arc one year sooner. And that's $100k that could be put into smart investing when you pay off the debt early, which is likely to improve the return on that extra $100k to be even greater.
Present value of money really does matter here, because looking at future salaries in isolation is really, really incomplete.