## Law School Loan Financial Calculator

Discuss various money matters here. Loans (federal and private), scholarships, lottery winnings, or other school finance related information and queries.
rman1201

Posts: 957
Joined: Mon Jan 25, 2010 4:11 pm

### Law School Loan Financial Calculator

I posted something similar to this earlier, but I've since made lots of changes (you no longer have to download anything, it's now a GoogleDoc, there are clear instructions, some of the math was wrong for IBR calculations).

I've made a law school loan calculator to see the full effects of a law school loan. This is useful for various purposes:

1) Calculates effective interest rate (boring, but finds the weighted average interest rate on your loan)

2) Calculates the loan balance after each year of law school, and at graduation (assumes \$8,500 of which isn't being charged interest - subsidized).

3) Determines the minimum monthly payments required to pay off the loan in 5, 10, 25, or x years. X is edited by you to find out exactly how much you must pay to pay off the loan in x years.

4) Determines if you're eligible for Income Based Repayment, if so it will tell you your minimum required payment based on your expected income and number of dependents.

5) Calculates the tax due on the loan forgiveness if you go into the private sector. Note: This can be very high, in many cases the minimum IBR payment doesn't even pay for the interest on the loan, in which case the loan will continue to grow for 25 years. Also, if you go into the public sector there is no tax due after forgiveness, and the loan is forgiven after 10 years instead of 25.

If you play with this a bit, you can see its very dangerous to go into the private sector if you aren't making a substantial amount of money. The tax bomb at the end can very easily be equal to the original amount of the loan at the time you graduated law school, in which case you've been making payments for the past 25 years for nothing. If you have a high balance after law school, do not go into the private sector making less than \$80,000 per year. Any public sector job will meet the public requirement, this can even be teaching high school, the military, peace corps, Americorps, politician, Public Defender, etc.
Anyone with substantial finance/accounting experience can feel free to double check my math. Everything looks right, but a second opinion never hurts.

This has 10 rows for comparing various schools if you're trying to decide between schools.
Only edit the cells in blue, editing anything else will cause the calculator to be useless and malfunction.

Anyone can use/edit/overwrite the free copy, but in case it gets destroyed by an egregious user theres also a protected copy. You can go to file -> download -> Excel/OpenOffice to download your own copy to use.
If that doesn't work you can also download a copy here: http://www.mediafire.com/?ezl0fnndb3xgz48

Posts: 241
Joined: Thu Oct 21, 2010 4:51 pm

### Re: Law School Loan Financial Calculator

Cheers!

ku1185

Posts: 176
Joined: Fri Sep 05, 2008 5:18 pm

### Re: Law School Loan Financial Calculator

This is awesome. Many thanks to you.

brose

Posts: 646
Joined: Sun Nov 16, 2008 2:05 am

### Re: Law School Loan Financial Calculator

thanks - I might duplicate and mess with it to account for paying down the interest while in school... useful!

rman1201

Posts: 957
Joined: Mon Jan 25, 2010 4:11 pm

### Re: Law School Loan Financial Calculator

The silver lining to the Tax Bomb is at least you can finally erase the debt in bankruptcy (the debt is now considered tax debt and not student loan debt). Paying on debt for 25 years only to go bankrupt because of it isn't exactly 'winning', but it least it will finally be gone and won't haunt you for all of your life.

TR Fan

Posts: 83
Joined: Tue Sep 14, 2010 12:46 pm

### Re: Law School Loan Financial Calculator

Thank you, very useful!

birdlaw117

Posts: 2167
Joined: Thu Sep 16, 2010 12:19 am

### Re: Law School Loan Financial Calculator

rman1201 wrote:The silver lining to the Tax Bomb is at least you can finally erase the debt in bankruptcy (the debt is now considered tax debt and not student loan debt). Paying on debt for 25 years only to go bankrupt because of it isn't exactly 'winning', but it least it will finally be gone and won't haunt you for all of your life.

Umm... as far as I know tax debt can't be discharged in bankruptcy, not that I'm planning on having to deal with this.

rman1201

Posts: 957
Joined: Mon Jan 25, 2010 4:11 pm

### Re: Law School Loan Financial Calculator

birdlaw117 wrote:
rman1201 wrote:The silver lining to the Tax Bomb is at least you can finally erase the debt in bankruptcy (the debt is now considered tax debt and not student loan debt). Paying on debt for 25 years only to go bankrupt because of it isn't exactly 'winning', but it least it will finally be gone and won't haunt you for all of your life.

Umm... as far as I know tax debt can't be discharged in bankruptcy, not that I'm planning on having to deal with this.

tipler4213

Posts: 634
Joined: Thu May 29, 2008 11:16 am

### Re: Law School Loan Financial Calculator

This is sweet

birdlaw117

Posts: 2167
Joined: Thu Sep 16, 2010 12:19 am

### Re: Law School Loan Financial Calculator

rman1201 wrote:
birdlaw117 wrote:
rman1201 wrote:The silver lining to the Tax Bomb is at least you can finally erase the debt in bankruptcy (the debt is now considered tax debt and not student loan debt). Paying on debt for 25 years only to go bankrupt because of it isn't exactly 'winning', but it least it will finally be gone and won't haunt you for all of your life.

Umm... as far as I know tax debt can't be discharged in bankruptcy, not that I'm planning on having to deal with this.

All I know is I'm studying for the CPA Exam right now and loans for payment of federal taxes are not dischargeable. Also, taxes within three years are not dischargeable.

rman1201

Posts: 957
Joined: Mon Jan 25, 2010 4:11 pm

### Re: Law School Loan Financial Calculator

birdlaw117 wrote:
rman1201 wrote:
birdlaw117 wrote:
rman1201 wrote:The silver lining to the Tax Bomb is at least you can finally erase the debt in bankruptcy (the debt is now considered tax debt and not student loan debt). Paying on debt for 25 years only to go bankrupt because of it isn't exactly 'winning', but it least it will finally be gone and won't haunt you for all of your life.

Umm... as far as I know tax debt can't be discharged in bankruptcy, not that I'm planning on having to deal with this.

All I know is I'm studying for the CPA Exam right now and loans for payment of federal taxes are not dischargeable. Also, taxes within three years are not dischargeable.

That's all included in the link I posted. They have to be 3 years old, you have to have the last 2 tax returns on file, and apparently loans to pay them aren't dischargeable, but there are ways to discharge tax debts, whereas there just is no way to discharge student loan debt.

BigBlueLaw

Posts: 725
Joined: Tue Dec 14, 2010 2:46 pm

### Re: Law School Loan Financial Calculator

tag...thanks!

TheTopBloke

Posts: 486
Joined: Sat Jun 13, 2009 7:29 pm

### Re: Law School Loan Financial Calculator

rman1201 wrote:The silver lining to the Tax Bomb is at least you can finally erase the debt in bankruptcy (the debt is now considered tax debt and not student loan debt). Paying on debt for 25 years only to go bankrupt because of it isn't exactly 'winning', but it least it will finally be gone and won't haunt you for all of your life.

Anonymous Loser

Posts: 568
Joined: Fri Sep 11, 2009 11:17 am

### Re: Law School Loan Financial Calculator

You might want to edit the worksheet so it is clear that scholarship amounts should be entered as an annual figure, rather than a total award amount. I'm assuming that BU isn't actually offering \$90,000 a year to attend.

rman1201

Posts: 957
Joined: Mon Jan 25, 2010 4:11 pm

### Re: Law School Loan Financial Calculator

Anonymous Loser wrote:You might want to edit the worksheet so it is clear that scholarship amounts should be entered as an annual figure, rather than a total award amount. I'm assuming that BU isn't actually offering \$90,000 a year to attend.

It is an annual amount

Edit: This is a google Doc, which apparently links what everyone does, thats just what someone else input. If you want the original you have to download it or just look at the protected sheet.

Anonymous Loser

Posts: 568
Joined: Fri Sep 11, 2009 11:17 am

### Re: Law School Loan Financial Calculator

rman1201 wrote:
Anonymous Loser wrote:You might want to edit the worksheet so it is clear that scholarship amounts should be entered as an annual figure, rather than a total award amount. I'm assuming that BU isn't actually offering \$90,000 a year to attend.

It is an annual amount

Edit: This is a google Doc, which apparently links what everyone does, thats just what someone else input. If you want the original you have to download it or just look at the protected sheet.

I realize that the formulas are assuming an annual amount, but the instructions might be misleading for some users:

Worksheet Cell B13 wrote:Enter the total scholarships/grants received from each school

TheTopBloke

Posts: 486
Joined: Sat Jun 13, 2009 7:29 pm

### Re: Law School Loan Financial Calculator

FYI, law school debt is not wiped out with BK. Please prove me wrong because I'd really love to be proven wrong on this point.

rman1201

Posts: 957
Joined: Mon Jan 25, 2010 4:11 pm

### Re: Law School Loan Financial Calculator

TheTopBloke wrote:FYI, law school debt is not wiped out with BK. Please prove me wrong because I'd really love to be proven wrong on this point.

What I was referring to is tax debt, after the loan debt is forgiven.

After 25 years of IBR the remaining balance of your student loan debt will be forgiven, however you have to pay income tax on whats forgiven (if you were in the private sector). This can be extremely high, however there is a way to discharge tax debt in Bankruptcy.

rman1201

Posts: 957
Joined: Mon Jan 25, 2010 4:11 pm

### Re: Law School Loan Financial Calculator

I added on an after-tax income estimator for a clearer idea of what you have to work with to pay off the loans.

There are after tax incomes for:
NYC
DC
Illinois
California
Massachusetts
All states with no state/city tax

Bill Cosby

Posts: 331
Joined: Sat Feb 20, 2010 2:56 am

### Re: Law School Loan Financial Calculator

Sweet Jesus that's terrifying.

afc1910

Posts: 99
Joined: Tue Jan 04, 2011 12:25 pm

### Re: Law School Loan Financial Calculator

This is awesome. Thank you.

TheStrand

Posts: 179
Joined: Mon Dec 13, 2010 5:53 pm

### Re: Law School Loan Financial Calculator

You are amazing. Thank you!

angelkiss3148

Posts: 3
Joined: Thu Sep 09, 2010 5:51 pm

### Re: Law School Loan Financial Calculator

This is the greatest. Thank you!!!

bigben

Posts: 703
Joined: Sat Sep 29, 2007 2:44 pm

### Re: Law School Loan Financial Calculator

Wow, this is really good.

tothePAIN

Posts: 93
Joined: Thu Sep 16, 2010 2:53 pm

### Re: Law School Loan Financial Calculator

If you could add a line allowing payments from savings to be made, that would be great. Also, some scholarships aren't equal amounts year to year.