heathbar88 wrote:I was just playing around with the calculator and for a $150k loan, with a 6.5% interest rate, paid back in 5 years it's a little under $3000/month. That doesn't really seem like that much to me, if you're making over $10,000/month after taxes and having loans paid off in 5 years is great; $7000/month is an absolutely livable salary (even in NYC, considering I make about 1/6 of $7000 and get along just fine living frugally), especially in places like TX. Of course, this is assuming you're making $165k out of law school and for me (and I assume other posters), full sticker at a T10 is worth the risk of not getting biglaw.
EDIT: But then again, maybe I'm missing something, because the calculator says one might experience difficulty trying to this pay this loan at a $250k+ salary. What am I not getting?
1) $160k in Manhattan is basically middle class
2) If you aren't in Manhattan or Chicago or LA where the COL completely ridiculus, then you probably aren't making $160k/year right out of LS
3) It seems only 1/3 of T10 classes are getting those salaries. The other 2/3, poor bastards, are going to have to pay those loans off on half that salary.
4) Even if your scenario pans out, you're still paying about a third of your money to student loan debt. Financial advisors typically advise that your total debts should be about 10-15% of your income.
I'm thinking about paying sticker at Michigan, but when I go through the numbers and consider my statistical chance of pulling one of those top jobs, it really scares me. Now, that's not saying I couldn't bust my ass and get lucky, but to wager such a large sum on money on my ability to outperform a group of people I have absolutely no idea about except that they scored in the 97-99%ile on the LSAT and had great grades... well, that has me thinking twice.
1) I live in Manhattan. I make ~1400/month and pay my rent, credit card bills, monthly payment for my 30k in undergrad loans & extra expenses with my parents paying only for my food & tuition.
2) I want to practice in TX..the specific firm I have some a connection with and other firms I've looked at start at $160k+ bonuses.
3) We don't know the figures for this year, but that seems about right from what I've read. I've also heard predictions of the market beginning to recover soon which would up that 1/3 -> 2/3. Even if that doesn't happen, I understand real life. I know law school is difficult and the majority of people won't be in the top, but it's a risk I'm willing to take going to a T10. I also have some connections which could help & I'm URM.
4) I've heard that before, but I don't see how paying down loans quickly, if I can, is going to hurt. I know I can live on $7000/month or less easily in NYC..and if I'm in TX even easier. I'd pay less interest paying the loans back in 5 yrs than in 10 as well.
I'm not trying to be a smartass, just explaining my logic because I still don't see what I'm missing. The one thing I may have not considered enough is the tax rate..but it's not 39% (I know someone else said this)..it's 28% for 2008, 2009 and 2010 for a 160k salary.http://moneychimp.com/features/tax_brackets.htm