Finances for students who took worked FT before LS Forum

[summerinparis]

I'm sure many are in my situation or have been in my situation before, so I had wanted to start a general thread for everyone to discuss this, while also beginning to compile links with previous substantive discussions on this. (The ones I've seen from previous years are usually limited to OP's personal situations, and while that's fine, I was hoping to have a more long-term thread that could be possibly useful to future posters by having everything in one place).

Feel free to use this thread to bring up your personal situations and/or any advice that could help others. I'll post mine shortly. The main concern is for students who worked full time for a few years before applying/attending law school. When filling out our FAFSAs based on tax information from the prior year, it would appear that we have significant income that we would no longer have once becoming a fulltime student. Law schools most likely understand this as well, but they still derive our FA packages based on FAFSA, which is primarily based on our income... which in turn, makes our EFC a lot higher... I read elsewhere that some people have paid off UG loans with their assets to be able to access need-based loans... but other than that, I am still researching this more, and would appreciate hearing back from others about this.

[summerinparis]

As promised - here's the sticky situation I find myself in. Note, I'm still researching this topic further, so I don't know all there is to know... I apologize in advance if some of my concerns

After undergrad, I took time off to work because I wanted to save up to have some kind of financial cushion. Here's the thing. The whole point of me taking time off was to SAVE money. I'm dirt poor--and my undergrad experience was rough in terms of finance, so before law school I wanted to be financially more secure.... But NOW I'm reading that this might actually work against us. I read in some older threads that students who worked FT were expected to use anywhere from 25-30+% of their earnings/assets to pay for law school... I've read experiences of others who put away a few K for a rainy day, only to be expected to use all of that few K as the _% student contribution.

Now this is a bit discouraging for me, but now I'm considering other options....

So far, I've saved up a few K, and was hoping to be able to keep that, as an emergency fund of some sorts. Would it be better for me to use the few K I do have saved up? To buy a used car or to pay back UG loans? I'm still confused with all this and am trying to sort things out. Advice much appreciated...

[09042014]

As promised - here's the sticky situation I find myself in. Note, I'm still researching this topic further, so I don't know all there is to know... I apologize in advance if some of my concerns

After undergrad, I took time off to work because I wanted to save up to have some kind of financial cushion. Here's the thing. The whole point of me taking time off was to SAVE money. I'm dirt poor--and my undergrad experience was rough in terms of finance, so before law school I wanted to be financially more secure.... But NOW I'm reading that this might actually work against us. I read in some older threads that students who worked FT were expected to use anywhere from 25-30+% of their earnings/assets to pay for law school... I've read experiences of others who put away a few K for a rainy day, only to be expected to use all of that few K as the _% student contribution.

Now this is a bit discouraging for me, but now I'm considering other options....

So far, I've saved up a few K, and was hoping to be able to keep that, as an emergency fund of some sorts. Would it be better for me to use the few K I do have saved up? To buy a used car or to pay back UG loans? I'm still confused with all this and am trying to sort things out. Advice much appreciated...

The truth is that need based aid barely exists. So you really aren't getting screwed out of much, if anything.

[arvcondor]

As promised - here's the sticky situation I find myself in. Note, I'm still researching this topic further, so I don't know all there is to know... I apologize in advance if some of my concerns

After undergrad, I took time off to work because I wanted to save up to have some kind of financial cushion. Here's the thing. The whole point of me taking time off was to SAVE money. I'm dirt poor--and my undergrad experience was rough in terms of finance, so before law school I wanted to be financially more secure.... But NOW I'm reading that this might actually work against us. I read in some older threads that students who worked FT were expected to use anywhere from 25-30+% of their earnings/assets to pay for law school... I've read experiences of others who put away a few K for a rainy day, only to be expected to use all of that few K as the _% student contribution.

Now this is a bit discouraging for me, but now I'm considering other options....

So far, I've saved up a few K, and was hoping to be able to keep that, as an emergency fund of some sorts. Would it be better for me to use the few K I do have saved up? To buy a used car or to pay back UG loans? I'm still confused with all this and am trying to sort things out. Advice much appreciated...

The truth is that need based aid barely exists. So you really aren't getting screwed out of much, if anything.

TITCR. I was really disappointed to learn that I'm not getting anything shaved off the bill aside from scholarships. I had an income of $8k last year and no EFC and received nothing need-based.

[sidhesadie]

As promised - here's the sticky situation I find myself in. Note, I'm still researching this topic further, so I don't know all there is to know... I apologize in advance if some of my concerns

After undergrad, I took time off to work because I wanted to save up to have some kind of financial cushion. Here's the thing. The whole point of me taking time off was to SAVE money. I'm dirt poor--and my undergrad experience was rough in terms of finance, so before law school I wanted to be financially more secure.... But NOW I'm reading that this might actually work against us. I read in some older threads that students who worked FT were expected to use anywhere from 25-30+% of their earnings/assets to pay for law school... I've read experiences of others who put away a few K for a rainy day, only to be expected to use all of that few K as the _% student contribution.

Now this is a bit discouraging for me, but now I'm considering other options....

So far, I've saved up a few K, and was hoping to be able to keep that, as an emergency fund of some sorts. Would it be better for me to use the few K I do have saved up? To buy a used car or to pay back UG loans? I'm still confused with all this and am trying to sort things out. Advice much appreciated...

The truth is that need based aid barely exists. So you really aren't getting screwed out of much, if anything.

TITCR. I was really disappointed to learn that I'm not getting anything shaved off the bill aside from scholarships. I had an income of $8k last year and no EFC and received nothing need-based.

This. I also had in income of under 10K, I have a minor dependent child, an EFC of 0, and aside from merit scholarships, got no additional aid outside of the loans everyone gets. No need based aid from anyone.

[Gideon Strumpet]

All of the above. One consequence of the rankings race is that law schools have shifted almost all of their "scholarship" funding to 100% "merit based" aid (i.e., buying numbers). The beating that all the big endowments took over the past decade didn't help either, but basically there is no "need based" aid anywhere.

So, you wouldn't have gotten anything even without income or savings, and having some money saved up is a good thing; you will almost certainly need it to get through your first summer, when it's very hard to get a paid job and rare to get funding of any kind. Some schools do have limited 1L funding, but a lot of people are going to be living lean that first summer in the gap between spring and fall loans.

[Older Chest]

Would anyone happen to know what type of assets may preclude someone for qualifying for subsidized Stafford loans?

[Gideon Strumpet]

Would anyone happen to know what type of assets may preclude someone for qualifying for subsidized Stafford loans?

None. Your assets and income do not matter for federal loans. If you're a U.S. citizen and you have no prior drug convictions or federal student loan defaults, you can always borrow up to 100% of the student budget through the Stafford and PLUS programs. There is a minimal credit check with PLUS loans, but if you have nothing 90-days or more past due, you will pass it.

[Lawst]

As promised - here's the sticky situation I find myself in. Note, I'm still researching this topic further, so I don't know all there is to know... I apologize in advance if some of my concerns

After undergrad, I took time off to work because I wanted to save up to have some kind of financial cushion. Here's the thing. The whole point of me taking time off was to SAVE money. I'm dirt poor--and my undergrad experience was rough in terms of finance, so before law school I wanted to be financially more secure.... But NOW I'm reading that this might actually work against us. I read in some older threads that students who worked FT were expected to use anywhere from 25-30+% of their earnings/assets to pay for law school... I've read experiences of others who put away a few K for a rainy day, only to be expected to use all of that few K as the _% student contribution.

Now this is a bit discouraging for me, but now I'm considering other options....

So far, I've saved up a few K, and was hoping to be able to keep that, as an emergency fund of some sorts. Would it be better for me to use the few K I do have saved up? To buy a used car or to pay back UG loans? I'm still confused with all this and am trying to sort things out. Advice much appreciated...

The truth is that need based aid barely exists. So you really aren't getting screwed out of much, if anything.

Yes, this. I was worried about this too, because I've been working for 16 years and am going to school FT to change careers. It turns out that it doesn't really matter. I even qualified for some subsidized Stafford loans. I have no assets, but I did make a decent - though not six-figure - salary last year and many years before that.

[Older Chest]

Would anyone happen to know what type of assets may preclude someone for qualifying for subsidized Stafford loans?

None. Your assets and income do not matter for federal loans. If you're a U.S. citizen and you have no prior drug convictions or federal student loan defaults, you can always borrow up to 100% of the student budget through the Stafford and PLUS programs. There is a minimal credit check with PLUS loans, but if you have nothing 90-days or more past due, you will pass it.

I hope you are correct. I do have some savings but will be paying for the majority of school via loans. While it's only a small chunk of the total debt, it would be nice to have some support by way of government subsidy.

[Renzo]

Would anyone happen to know what type of assets may preclude someone for qualifying for subsidized Stafford loans?

None. Your assets and income do not matter for federal loans. If you're a U.S. citizen and you have no prior drug convictions or federal student loan defaults, you can always borrow up to 100% of the student budget through the Stafford and PLUS programs. There is a minimal credit check with PLUS loans, but if you have nothing 90-days or more past due, you will pass it.

I hope you are correct. I do have some savings but will be paying for the majority of school via loans. While it's only a small chunk of the total debt, it would be nice to have some support by way of government subsidy.

It's not true. Your assets will effect your eligibility for subsidized loans, but I have no idea how qualification is determined.

[delusional]

FWIW, HYS, which do offer need-based aid, base it on assets, EFC, and how much you're making while in law school. So what you report on Fafsa is not hugely relevant to grants (although it might be relevant to loans).

[Gideon Strumpet]

It's not true. Your assets will effect your eligibility for subsidized loans, but I have no idea how qualification is determined.

It's nearly impossible to not qualify for them. Also, the only diff is "subsidized" loans do not accrue interest while you're in school, which is going to be trivial compared with your overall balance.

[birdlaw117]

Would anyone happen to know what type of assets may preclude someone for qualifying for subsidized Stafford loans?

None. Your assets and income do not matter for federal loans. If you're a U.S. citizen and you have no prior drug convictions or federal student loan defaults, you can always borrow up to 100% of the student budget through the Stafford and PLUS programs. There is a minimal credit check with PLUS loans, but if you have nothing 90-days or more past due, you will pass it.

I hope you are correct. I do have some savings but will be paying for the majority of school via loans. While it's only a small chunk of the total debt, it would be nice to have some support by way of government subsidy.

I doubt this is true, but I don't know for sure. There are both subsidized and unsubsidized Stafford Loans. It seems unlikely to me that they would ask for all that info on the FAFSA if none of it mattered. Then again, maybe that's just bureaucracy being bureaucracy.

[Gideon Strumpet]

I doubt this is true, but I don't know for sure. There are both subsidized and unsubsidized Stafford Loans. It seems unlikely to me that they would ask for all that info on the FAFSA if none of it mattered. Then again, maybe that's just bureaucracy being bureaucracy.

You will get them. It won't matter anyway. The interest subsidy is a marginal benefit at best. I know of one person with a full-time working spouse, $100K+ in non-retirement assets, and no kids, and she got the full amount of subsidized Staffords. They ask for the information because it's the same form for everyone who applies for any program, and a non-trivial amount of savings will cut you out of the sideline programs like Perkins loans, which you weren't going to get anyway. It will also cut you out of Pell grants, but those aren't available for grad school.

[Older Chest]

Sir Gideon - If it is possible to pay less in interest, then of course that would be preferred. But you are correct in saying that the interest saved on subsidized Stafford loans is minor compared to the overall interest that will accrue while in law school.

[Gideon Strumpet]

Sir Gideon - If it is possible to pay less in interest, then of course that would be preferred. But you are correct in saying that the interest saved on subsidized Stafford loans is minor compared to the overall interest that will accrue while in law school.

Yeah. Nobody is going to have a problem getting the loans. It's that whole getting rid of them part that gets a little sticky.

[Renzo]

the only diff is "subsidized" loans do not accrue interest while you're in school, which is going to be trivial compared with your overall balance.

This is very true. The total limit on subsidized loans is tiny, so even if you qualify, the bulk of your loans will still be unsubsidized Stafford and GradPlus loans.