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.
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rman1201
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Law School Loan Financial Calculator

Postby rman1201 » Sun Mar 13, 2011 4:07 pm

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.

Here's the link:
https://spreadsheets.google.com/ccc?key=0AjvrvK3gHYfLdFB2Um1wa2NvZDQ2b1kwQnVJS1JiMEE&hl=en#gid=1

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

adt231
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Re: Law School Loan Financial Calculator

Postby adt231 » Sun Mar 13, 2011 4:21 pm

Cheers!

ku1185
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Re: Law School Loan Financial Calculator

Postby ku1185 » Sun Mar 13, 2011 4:22 pm

This is awesome. Many thanks to you.

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brose
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Re: Law School Loan Financial Calculator

Postby brose » Sun Mar 13, 2011 4:31 pm

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

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rman1201
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Re: Law School Loan Financial Calculator

Postby rman1201 » Sun Mar 13, 2011 6:15 pm

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.

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TR Fan
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Re: Law School Loan Financial Calculator

Postby TR Fan » Sun Mar 13, 2011 6:23 pm

Thank you, very useful!

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birdlaw117
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Re: Law School Loan Financial Calculator

Postby birdlaw117 » Sun Mar 13, 2011 6:27 pm

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.

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rman1201
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Re: Law School Loan Financial Calculator

Postby rman1201 » Sun Mar 13, 2011 6:28 pm

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.


http://taxes.about.com/od/bankruptcy/qt ... cy_tax.htm

tipler4213
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Re: Law School Loan Financial Calculator

Postby tipler4213 » Sun Mar 13, 2011 6:41 pm

This is sweet

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birdlaw117
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Re: Law School Loan Financial Calculator

Postby birdlaw117 » Sun Mar 13, 2011 6:42 pm

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.


http://taxes.about.com/od/bankruptcy/qt ... cy_tax.htm

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.

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rman1201
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Re: Law School Loan Financial Calculator

Postby rman1201 » Sun Mar 13, 2011 6:44 pm

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.


http://taxes.about.com/od/bankruptcy/qt ... cy_tax.htm

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.

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BigBlueLaw
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Re: Law School Loan Financial Calculator

Postby BigBlueLaw » Sun Mar 13, 2011 6:47 pm

tag...thanks!

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TheTopBloke
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Re: Law School Loan Financial Calculator

Postby TheTopBloke » Sun Mar 13, 2011 6:51 pm

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.


WHOA. Please clarify, verify.

Anonymous Loser
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Re: Law School Loan Financial Calculator

Postby Anonymous Loser » Sun Mar 13, 2011 6:52 pm

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.

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rman1201
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Re: Law School Loan Financial Calculator

Postby rman1201 » Sun Mar 13, 2011 6:52 pm

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
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Re: Law School Loan Financial Calculator

Postby Anonymous Loser » Sun Mar 13, 2011 6:56 pm

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

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TheTopBloke
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Re: Law School Loan Financial Calculator

Postby TheTopBloke » Sun Mar 13, 2011 6:58 pm

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.

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rman1201
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Re: Law School Loan Financial Calculator

Postby rman1201 » Sun Mar 13, 2011 7:01 pm

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.

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rman1201
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Re: Law School Loan Financial Calculator

Postby rman1201 » Mon Mar 14, 2011 11:02 am

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

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Bill Cosby
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Re: Law School Loan Financial Calculator

Postby Bill Cosby » Mon Mar 14, 2011 11:17 am

Sweet Jesus that's terrifying.

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afc1910
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Re: Law School Loan Financial Calculator

Postby afc1910 » Mon Mar 14, 2011 11:40 am

This is awesome. Thank you.

TheStrand
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Re: Law School Loan Financial Calculator

Postby TheStrand » Mon Mar 14, 2011 11:44 am

You are amazing. Thank you!

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angelkiss3148
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Re: Law School Loan Financial Calculator

Postby angelkiss3148 » Wed Mar 30, 2011 3:29 pm

This is the greatest. Thank you!!!

bigben
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Re: Law School Loan Financial Calculator

Postby bigben » Tue Apr 19, 2011 7:40 pm

Wow, this is really good.

tothePAIN
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Re: Law School Loan Financial Calculator

Postby tothePAIN » Tue Apr 19, 2011 7:57 pm

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.




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