I have a general question for everyone I hope someone can give me some answers...
I will be taking out loans for the full cost of tuition for my T-10 Law School (50k) plus another 20k for living expenses (let's just say for ease that I take that full amount).
For 3 years this is 210k plus all fees.
My question is how does this work with monthly payments when I graduate? With the new laws don't you only have to pay 10% of your discretionary income per year and then it is forgiven after 20 years if you haven't paid it off?
By some general math it would seem that if I make (hopefully) 160k first year and follow that path in a NYC or other big market firm, after taxes (38k), rent (lets say a 4k/month aparment for a total of 48k), and food and other essentials (20k).....where at about 54k so 10% is around 5k....
5k a year for the first year but then when you get more years salary goes up and you will obviously pay more, but it seems like you wouldn't have nearly the discretionary income until you would hopefully hit partner and get the big $$$ (millions? if your lucky)
Now it seems like after 20 years if you don't make partner or do and have other expenses like families.....you would never be able to pay off the 210k originially not including all of the 100k+ of interest that would accrue based on a 10% minimum payment? So then I could just discharge them?
Can someone provide me with more info on this or some answers? It would be highly appreciated.
I think most people hope to get biglaw and live very frugally for a few years to pay off their loans. Most people are not expecting to pay $4,000 in rent as a first year biglaw associate, they may live in Brooklyn and save money.
If you don't get biglaw or another high salary, then you may have to go to on IBR. I haven't seen anyone planning to IBR on a biglaw salary, so I am not sure how that would work. I doubt that you calculated it correctly. I have heard that IBR is difficult, but I don't know.
At the end of 20 years you can get discharged and owe the taxes on the amount that was forgiven.
edit: I realize I may have been trolled.