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Logically speaking, due to interest, I'm thinking about using most of my law school savings the first year so that I borrow the least 1st year and borrower more 2nd + 3rd year. To keep interest accruing on a smaller principal 1st year.

Seems like that sounds about right, but wanted to see if I'm missing anything.

rambleon65 wrote:Logically speaking, due to interest, I'm thinking about using most of my law school savings the first year so that I borrow the least 1st year and borrower more 2nd + 3rd year. To keep interest accruing on a smaller principal 1st year.

Seems like that sounds about right, but wanted to see if I'm missing anything.

If you'll be borrowing the same amount either way, I think you're right that postponing the borrowing is a good idea, unless you can put that cash into some kind of short-term investment that will earn you more interest than the interest on the loans will cost you. The only other way I can think of offhand that it might hurt you would be if you decided to drop out partway through. In that case, you've already blown through your cash reserves and might find yourself in dire straits while looking for a job. But that's a pretty specific case.

It really depends on how much your savings is. If we're talking about less than $10k, you might be better off having access to emergency cash than saving the interest from that year. Unexpected expenses can come up, such as a car breaking down. Or you could totally underestimate your expenses. This is especially true if you're not used to being on your own and budgeting, although if you have significant savings, it would seem that you have a pretty good idea about managing money. If your savings is more significant than $10k or $15k, then I'd say why not save a few grand in interest?

Agree with the rainy day fund. Consider keeping some cash in your back pocket. For example, a lot of students don't get paid jobs for 1L summer, even at T-14 schools. So you'll need a couple months living expenses for that. Also, your Bar course + exam fees + living expenses while studying for the Bar add up pretty quickly if you don't have a firm paying for it. Or worst case scenario, you don't even get a job until several months after the Bar.

Not to freak you out, but I would just be hesitant about spending down all your cash during 1L. It might put you in a tough spot later on.

Thanks guys!

Yes, the "law school savings" is in addition to emergency funds.