Paying for law school with savings vs loans

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starrydreamz3
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Paying for law school with savings vs loans

Postby starrydreamz3 » Tue Jan 31, 2012 8:45 pm

So I'm on a two year deferral from last cycle to Columbia. I'll be entering law school in August 2013. Here is my question:

What is the benefit of paying for law school out of savings vs taking out loans to cover everything and then paying it back? I know the simple answer is that interest will accrue on the unsubsidized loans, which will just mean more to pay off later. But I keep thinking of the (small) possibility that I may end up utilizing Columbia's LRAP program coming out of law school.

So really I have two worst case scenarios:

1. Deplete my life savings (~$90k) to minimize the amount of loans I take out. Possibly even apply for a no interest loan from the bank of Mommy and Daddy. End up working in qualifying employment for the program for 5 years and have the small amount of qualifying debt (if any) forgiven.

2. Take out the max allowable qualifying loans to cover cost of attendance. End up working in the private sector and have to pay off the extra interest that's accrued on all those loans that I really didn't need.

I guess I'll have to consider how much that interest will amount to. Anyone have any resources on the current going interest rate for these loans and a rough estimate of how much I'd accrue in interest on $77k a year?

YAY Columbia @ sticker!

Nobody
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Re: Paying for law school with savings vs loans

Postby Nobody » Tue Jan 31, 2012 8:58 pm

[nevermind. In my desire to be snarky I forgot I was an idiot]

In general, though, I think if you're at all unsure about using LRAP, I would use your savings. There are plenty of people who really want PI who end up not doing it, and I think a lot of LRAP advocates underestimate what a ten year commitment really looks like. If you really commit to LRAP, you have to be ok with never advancing to a point where you're making more money over that entire ten year period, or you'll be responsible for all the debt that accrued while you were making minimum payments.

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starrydreamz3
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Re: Paying for law school with savings vs loans

Postby starrydreamz3 » Tue Jan 31, 2012 9:08 pm

Nobody wrote:[nevermind. In my desire to be snarky I forgot I was an idiot]

In general, though, I think if you're at all unsure about using LRAP, I would use your savings. There are plenty of people who really want PI who end up not doing it, and I think a lot of LRAP advocates underestimate what a ten year commitment really looks like. If you really commit to LRAP, you have to be ok with never advancing to a point where you're making more money over that entire ten year period, or you'll be responsible for all the debt that accrued while you were making minimum payments.


I thought that Columbia was a 5 year commitment? But regardless, thank's for your input! (Sad I missed the snark!)

Nobody
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Re: Paying for law school with savings vs loans

Postby Nobody » Tue Jan 31, 2012 9:20 pm

I was just basically like "why on earth would you take out loans that accrue interest while you let your savings lie there?" but then I actually read your post.

(I'm just bitter because I really wanted Columbia and didn't get in. Maybe I should be the one with the Blair Waldorf avatar.)

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starrydreamz3
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Re: Paying for law school with savings vs loans

Postby starrydreamz3 » Tue Jan 31, 2012 9:21 pm

Nobody wrote:I was just basically like "why on earth would you take out loans that accrue interest while you let your savings lie there?" but then I actually read your post.

(I'm just bitter because I really wanted Columbia and didn't get in. Maybe I should be the one with the Blair Waldorf avatar.)


Hey she transferred from NYU to Columbia in her second year! There's always that option! =P

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Nelson
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Re: Paying for law school with savings vs loans

Postby Nelson » Tue Jan 31, 2012 10:58 pm

Grad plus loans are 7.9%.

Columbia doesn't require you to pay them back for the payments they have made to date after 5 years, but that doesn't mean they forgive the balance of your loan. That only happens at 10 years when the federal forgiveness kicks in. If you don't spend all 10 years in qualifying employment, you will have one heck of a loan balance still.

Spend your savings and minimize your loans.

ETA: Columbia LRAP info from http://www.law.columbia.edu/null/LRAP+P ... howthumb=0

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starrydreamz3
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Re: Paying for law school with savings vs loans

Postby starrydreamz3 » Wed Feb 01, 2012 12:31 am

Nelson wrote:Grad plus loans are 7.9%.

Columbia doesn't require you to pay them back for the payments they have made to date after 5 years, but that doesn't mean they forgive the balance of your loan. That only happens at 10 years when the federal forgiveness kicks in. If you don't spend all 10 years in qualifying employment, you will have one heck of a loan balance still.

Spend your savings and minimize your loans.

ETA: Columbia LRAP info from http://www.law.columbia.edu/null/LRAP+P ... howthumb=0


Thanks for clearing that up!




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