Annual Interest Payments on Typical Law School Loans?

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ksllaw
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Annual Interest Payments on Typical Law School Loans?

Postby ksllaw » Tue Aug 14, 2012 7:24 pm

For those who've taken out law school loans already, what are the interest rates for a typical $100-$200K law school loan for you guys?

How much interest on your loan would you be paying back/year after graduation? And what do those absolute numbers look like for you guys? Thanks!

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bk1
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Re: Annual Interest Payments on Typical Law School Loans?

Postby bk1 » Tue Aug 14, 2012 7:25 pm

7-8%

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ksllaw
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Re: Annual Interest Payments on Typical Law School Loans?

Postby ksllaw » Tue Aug 14, 2012 7:37 pm

bk1 wrote:7-8%

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Thanks, BK. Would you say that that's a competitive or "good" rate? Above/below/average?

I'm ignorant of what good rates are on these big loans for law school. Trying to just get more informed. 8)

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bk1
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Re: Annual Interest Payments on Typical Law School Loans?

Postby bk1 » Tue Aug 14, 2012 7:42 pm

ksllaw wrote:
bk1 wrote:7-8%

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Thanks, BK. Would you say that that's a competitive or "good" rate? Above/below/average?

I'm ignorant of what good rates are on these big loans for law school. Trying to just get more informed. 8)


Those are the ones given by the government. Most people I know just get 20.5k in Unsubsidized Stafford at 6.8% (the subsidized version is no longer available for grad programs) and the rest (upwards of 50-60k at some schools) in GradPLUS at 7.9%. I didn't shop around for private loans but the below link has some info on it.

See viewtopic.php?f=22&t=124530

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2014
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Re: Annual Interest Payments on Typical Law School Loans?

Postby 2014 » Wed Aug 15, 2012 11:36 am

6.8-7.8 (and absurd origination fees) are objectively abysmal rates compared to private loans given current rates there, but by doing private loans you are exposing yourself to significant risk by taking Income Based Repayment and Loan Forgiveness out of play while also having inherent risk in variable rates. Thus basically all students don't really rate shop they just go with government loans as BK said.

ksllaw
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Re: Annual Interest Payments on Typical Law School Loans?

Postby ksllaw » Wed Aug 15, 2012 7:53 pm

2014 wrote:6.8-7.8 (and absurd origination fees) are objectively abysmal rates compared to private loans given current rates there, but by doing private loans you are exposing yourself to significant risk by taking Income Based Repayment and Loan Forgiveness out of play while also having inherent risk in variable rates. Thus basically all students don't really rate shop they just go with government loans as BK said.



Perfect. Just the type of info. I was looking for. But, let me ask one other question. What is exactly is loan forgiveness for a law school student. I had heard that law school debt cannot be wiped away through bankruptcy as other types can be.

So: a.) what is loan forgiveness for a law loan; and b.) what would trigger it's application (e.g. a law student being unemployed X amt. of time?)?

Greatly appreciate and have a great one!

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2014
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Re: Annual Interest Payments on Typical Law School Loans?

Postby 2014 » Wed Aug 15, 2012 9:59 pm

First of all you have to enroll in Income Based Repayment (IBR) to qualify for any forgiveness. That caps your loan payments at a certain percent of your income, so even if you have like 300 grand in debt, if you are making 35 a year at Starbucks you end up only paying a couple hundred a month. You don't even touch your interest that way, but it keeps you from having debt collectors call.

For forgiveness, if you have a public interest job, not necessarily even legal (Google PSLF to figure out what qualifies) and make 10 years worth of payments, the balance of your loans is forgiven. If it is a public interest legal job many schools, especially t14s, will make those 10 years of payments for you as long as you aren't making over 50-80k depending on the school.

If you do not get a public interest job, your loans are forgiven anyway after 20 years of payments. As it stands now however, you are liable for taxes on the forgiven amount that year. So if you are paying like 200 bucks a month and not even scratching interest, you will have well over a million dollars forgiven which is taxed at 45% or whatever and will probably bankrupt you. Since IBR is not even 10 years old yet, it is still unclear whether this tax bomb will actually happen in practice, but it certainly is a potentially huge negative. Even if they make that forgiven amount tax exempt, having a ballooning student loan will basically destroy your ability to live a normal life over those 20 years anyway.

There currently is no way to get your loans forgiven for unemployment (though if you are unemployed your IBR payment will be $0 and still count), the only way to get out of loans without paying is to have a permanent disability or die.

6lehderjets
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Re: Annual Interest Payments on Typical Law School Loans?

Postby 6lehderjets » Wed Aug 15, 2012 10:16 pm

2014 wrote:If you do not get a public interest job, your loans are forgiven anyway after 20 years of payments.


I thought it was 25 years. Did it recently change?

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fatduck
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Re: Annual Interest Payments on Typical Law School Loans?

Postby fatduck » Wed Aug 15, 2012 10:32 pm

6lehderjets wrote:
2014 wrote:If you do not get a public interest job, your loans are forgiven anyway after 20 years of payments.


I thought it was 25 years. Did it recently change?

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