Anyone pay for Law school (not including housing) out of their own pocket? Forum

[Blueberrypie]

For those who did so, did you pay all upfront (by year) or were you put on a payment plan?

I'm not trolling...this is a serious question.

[OhBoyOhBortles]

https://youtu.be/cCwh657L6no?t=2m18s

These guys did.

[A. Nony Mouse]

You're charged tuition by the semester, but I don't know if there is a payment plan option. Loans get disbursed at the beginning of each semeste, so that's when most people pay.

[Blueberrypie]

https://youtu.be/cCwh657L6no?t=2m18s

These guys did.

I legit thought you were showing me something.

[Blueberrypie]

You're charged tuition by the semester, but I don't know if there is a payment plan option. Loans get disbursed at the beginning of each semeste, so that's when most people pay.

lol thanks!

[Johann]

You'd be financially stupid to pay it all out of pocket.

[albpert]

You'd be financially stupid to pay it all out of pocket.

Care to explain?

[Blueberrypie]

You'd be financially stupid to pay it all out of pocket.

If your getting partial scholarship why take out the rest in loans if you can pay for ti yourself.? I think taking out loans is financially stupid, however many people can't go to school without them. If you are in a situation where you don't need loans and scholarships/grants don't cover anything, what is the use of getting into debt?

That is stupid.

The same thing goes if you got minimal to no scholarships. If you really want to be a lawyer and can pay for it, why not?

[ChemEng1642]

You'd be financially stupid to pay it all out of pocket.

If your getting partial scholarship why take out the rest in loans if you can pay for ti yourself.? I think taking out loans is financially stupid, however many people can't go to school without them. If you are in a situation where you don't need loans and scholarships/grants don't cover anything, what is the use of getting into debt?

That is stupid.

The same thing goes if you got minimal to no scholarships. If you really want to be a lawyer and can pay for it, why not?

Ahh but I think the point was paying "it all" would be bad - no scholarship

[Johann]

The reason you would be dumb to pay out of pocket is because you can't predict future and there are a lot of jobs that allow for forgiveness depending on the career route you go (and you can get interest deductions in this scenario too). If you end up going into biglaw, then have an agressive loan repayment once you start biglaw. Cash is flexible. Having $250k in cash and $250k in debt is better than $0 in cash and $0 in debt.

[Blueberrypie]

The reason you would be dumb to pay out of pocket is because you can't predict future and there are a lot of jobs that allow for forgiveness depending on the career route you go (and you can get interest deductions in this scenario too). If you end up going into biglaw, then have an agressive loan repayment once you start biglaw. Cash is flexible. Having $250k in cash and $250k in debt is better than $0 in cash and $0 in debt.

Correct me if I'm wrong, isn't their a huge indebtedness problem among the law community, no? I mean the odds of many receiving loan forgiveness doesn't seem too good, less you do public service.

I guess I could get a loan for the small amount and pay it right off after, if circumstances dictate such.

[Johann]

How do you know you won't work in government?

[ChemEng1642]

But if you know you're going into Biglaw at least for some time (obv at a school that can almost guarantee it) wouldn't it be better to not gain that extra interest? Obviously this is assuming that your savings at the end wont be zero. Leaving no savings for emergencies is dumb.

[WeeBey]

But if you know you're going into Biglaw at least for some time (obv at a school that can almost guarantee it) wouldn't it be better to not gain that extra interest? Obviously this is assuming that your savings at the end wont be zero. Leaving no savings for emergencies is dumb.

Even HYS grads who landed jobs got fucked over in the reccesion. You never know what the future holds, so it makes sense to pay a little in interest for added security. Since you said youre at a school that can almost gurantee biglaw, I assume you mean HYS.

Scenario 1: Pay full sticker in cash at HYS. Get no-offered/strike out cause youre aspie/layed offed as a first year. You end up with $0 cash and $0 debt.

Scenario 2: Pay full sticker through loans at HYS. Get no-offered/stike out cause youre aspier/layed as a first year. You end up with $250k in cash and also $250k debt. However, HYS have awesome LRAPs. Basically this will mean you you can take a job making $70k, not have to make tuition payments and you still have $250k in the bank.

[ChemEng1642]

But if you know you're going into Biglaw at least for some time (obv at a school that can almost guarantee it) wouldn't it be better to not gain that extra interest? Obviously this is assuming that your savings at the end wont be zero. Leaving no savings for emergencies is dumb.

Even HYS grads who landed jobs got fucked over in the reccesion. You never know what the future holds, so it makes sense to pay a little in interest for added security. Since you said youre at a school that can almost gurantee biglaw, I assume you mean HYS.

Scenario 1: Pay full sticker in cash at HYS. Get no-offered/strike out cause youre aspie/layed offed as a first year. You end up with $0 cash and $0 debt.

Scenario 2: Pay full sticker through loans at HYS. Get no-offered/stike out cause youre aspier/layed as a first year. You end up with $250k in cash and also $250k debt. However, HYS have awesome LRAPs. Basically this will mean you you can take a job making $70k, not have to make tuition payments and you still have $250k in the bank.

Yeah I've been going back and forth with this, and that is my biggest fear with my current plan . My situation is a little different because I'm taking a no interest loan from my parents for school and paying housing/food/etc. out of pocket - but it's basically the same concept since those loans won't be eligible for any school loan repayment assistant plan. I'm also a hard science so I'm hoping that helps somewhat in my favor if all else fails. Maybe I'll end up taking a minor loan from the school. Thanks for the input!

[bretby]

But if you know you're going into Biglaw at least for some time (obv at a school that can almost guarantee it) wouldn't it be better to not gain that extra interest? Obviously this is assuming that your savings at the end wont be zero. Leaving no savings for emergencies is dumb.

Even HYS grads who landed jobs got fucked over in the reccesion. You never know what the future holds, so it makes sense to pay a little in interest for added security. Since you said youre at a school that can almost gurantee biglaw, I assume you mean HYS.

Scenario 1: Pay full sticker in cash at HYS. Get no-offered/strike out cause youre aspie/layed offed as a first year. You end up with $0 cash and $0 debt.

Scenario 2: Pay full sticker through loans at HYS. Get no-offered/stike out cause youre aspier/layed as a first year. You end up with $250k in cash and also $250k debt. However, HYS have awesome LRAPs. Basically this will mean you you can take a job making $70k, not have to make tuition payments and you still have $250k in the bank.

Yeah I've been going back and forth with this, and that is my biggest fear with my current plan . My situation is a little different because I'm taking a no interest loan from my parents for school and paying housing/food/etc. out of pocket - but it's basically the same concept since those loans won't be eligible for any school loan repayment assistant plan. I'm also a hard science so I'm hoping that helps somewhat in my favor if all else fails. Maybe I'll end up taking a minor loan from the school. Thanks for the input!

I am in a similar situation in that my tuition is covered by scholarship and I have been debating how to pay for living expenses. I have assets that I could use, but my friends in finance are saying that it makes more sense to take out the Stafford to cover at least a portion of my living expenses, for much the same reasons Johann was mentioning above. What I'm not sure of is whether to supplement the Stafford with additional federal loans or liquidate assets to make up the difference. I am inclined toward the former - thoughts?

[Blueberrypie]

The reason you would be dumb to pay out of pocket is because you can't predict future and there are a lot of jobs that allow for forgiveness depending on the career route you go (and you can get interest deductions in this scenario too). If you end up going into biglaw, then have an agressive loan repayment once you start biglaw. Cash is flexible. Having $250k in cash and $250k in debt is better than $0 in cash and $0 in debt.

nvm...

[Blueberrypie]

But if you know you're going into Biglaw at least for some time (obv at a school that can almost guarantee it) wouldn't it be better to not gain that extra interest? Obviously this is assuming that your savings at the end wont be zero. Leaving no savings for emergencies is dumb.

Even HYS grads who landed jobs got fucked over in the reccesion. You never know what the future holds, so it makes sense to pay a little in interest for added security. Since you said youre at a school that can almost gurantee biglaw, I assume you mean HYS.

Scenario 1: Pay full sticker in cash at HYS. Get no-offered/strike out cause youre aspie/layed offed as a first year. You end up with $0 cash and $0 debt.

Scenario 2: Pay full sticker through loans at HYS. Get no-offered/stike out cause youre aspier/layed as a first year. You end up with $250k in cash and also $250k debt. However, HYS have awesome LRAPs. Basically this will mean you you can take a job making $70k, not have to make tuition payments and you still have $250k in the bank.

Isn't loan forgiveness mostly geared toward lawyers who work in public interest?

[albpert]

The reason you would be dumb to pay out of pocket is because you can't predict future and there are a lot of jobs that allow for forgiveness depending on the career route you go (and you can get interest deductions in this scenario too). If you end up going into biglaw, then have an agressive loan repayment once you start biglaw. Cash is flexible. Having $250k in cash and $250k in debt is better than $0 in cash and $0 in debt.

Question: why does having equal amount of debt and cash better than having no debt and no cash?

It's beneficial (1) if you're so nervous that you make your financial decisions based on relatively unlikely worst case outcomes, or (2) if interest rates are sufficiently low (0 to ~3%) that your cash can reasonably outperform the guaranteed interest and origination fees on your debt. When we have 4.29% origination fees on 250K-300K and 6.8% interest per year on those loans, that is not the case. [edit] Or (3) If you know, which you can't, that you will land an LRAP eligible job

The tax credit is capped at $2,500/yr. The origination fee alone on $300k is $12,900. Let's say you take out $80k for 1L. You'll have $5,440 in interest after the first year + $3440 in origination fees. In other words, just for 1L and not including interest accrued on this during 2L and 3L, you're paying $8,880 for an insurance policy against short-term unemployment. If you're such a nervous wreck that this seems like a good deal to you, I have some other insurance policies you might be interested in...

[Blueberrypie]

The reason you would be dumb to pay out of pocket is because you can't predict future and there are a lot of jobs that allow for forgiveness depending on the career route you go (and you can get interest deductions in this scenario too). If you end up going into biglaw, then have an agressive loan repayment once you start biglaw. Cash is flexible. Having $250k in cash and $250k in debt is better than $0 in cash and $0 in debt.

Question: why does having equal amount of debt and cash better than having no debt and no cash?

It's beneficial (1) if you're so nervous that you make your financial decisions based on relatively unlikely worst case outcomes, or (2) if interest rates are sufficiently low (0 to ~3%) that your cash can reasonably outperform the guaranteed interest and origination fees on your debt. When we have 4.29% origination fees on 250K-300K and 6.8% interest per year on those loans, that is not the case.

The tax credit is capped at $2,500/yr. The origination fee on $300k alone is $12,900. Let's say you take out $80k for 1L. You'll have $5,440 in interest after the first year + $3440 in origination fees. In other words, just for 1L and not including interest accrued on this during 2L and 3L, your paying $8,880 for an insurance policy against short-term unemployment. If you're such a nervous wreck that this seems like a good deal to you, I have some other insurance policies you might be interested in purchasing...

I'm sorry, but this sounds horrible. lol If you can't dumb it down further, I respect that, but I don't get how this would ever seem like a good deal.

[ChemEng1642]

The reason you would be dumb to pay out of pocket is because you can't predict future and there are a lot of jobs that allow for forgiveness depending on the career route you go (and you can get interest deductions in this scenario too). If you end up going into biglaw, then have an agressive loan repayment once you start biglaw. Cash is flexible. Having $250k in cash and $250k in debt is better than $0 in cash and $0 in debt.

Question: why does having equal amount of debt and cash better than having no debt and no cash?

It's beneficial (1) if you're so nervous that you make your financial decisions based on relatively unlikely worst case outcomes, or (2) if interest rates are sufficiently low (0 to ~3%) that your cash can reasonably outperform the guaranteed interest and origination fees on your debt. When we have 4.29% origination fees on 250K-300K and 6.8% interest per year on those loans, that is not the case.

The tax credit is capped at $2,500/yr. The origination fee on $300k alone is $12,900. Let's say you take out $80k for 1L. You'll have $5,440 in interest after the first year + $3440 in origination fees. In other words, just for 1L and not including interest accrued on this during 2L and 3L, your paying $8,880 for an insurance policy against short-term unemployment. If you're such a nervous wreck that this seems like a good deal to you, I have some other insurance policies you might be interested in purchasing...

I'm sorry, but this sounds horrible. lol If you can't dumb it down further, I respect that, but I don't get how this would ever seem like a good deal.

Haha he's saying it's a bad deal. As in you have to decide if the extra $9K year is worth it as "insurance" in case the market crashes and you have to take a low paying job that your school will pay tuition for. This also heavily depends on your school's loan repayment assistance program.

[Johann]

The reason you would be dumb to pay out of pocket is because you can't predict future and there are a lot of jobs that allow for forgiveness depending on the career route you go (and you can get interest deductions in this scenario too). If you end up going into biglaw, then have an agressive loan repayment once you start biglaw. Cash is flexible. Having $250k in cash and $250k in debt is better than $0 in cash and $0 in debt.

Question: why does having equal amount of debt and cash better than having no debt and no cash?

It's beneficial (1) if you're so nervous that you make your financial decisions based on relatively unlikely worst case outcomes, or (2) if interest rates are sufficiently low (0 to ~3%) that your cash can reasonably outperform the guaranteed interest and origination fees on your debt. When we have 4.29% origination fees on 250K-300K and 6.8% interest per year on those loans, that is not the case. [edit] Or (3) If you know, which you can't, that you will land an LRAP eligible job

The tax credit is capped at $2,500/yr. The origination fee alone on $300k is $12,900. Let's say you take out $80k for 1L. You'll have $5,440 in interest after the first year + $3440 in origination fees. In other words, just for 1L and not including interest accrued on this during 2L and 3L, you're paying $8,880 for an insurance policy against short-term unemployment. If you're such a nervous wreck that this seems like a good deal to you, I have some other insurance policies you might be interested in...

No... having cash is beneficial because you can use it to invest. Not having debt just means you don't have debt. If you are risk averse you should not pay for law school with cash until you know your job outcome so you don't fuck yourself out of 200k of loan forgiveness and free money. If you are risk loving you should not pay with cash to give you opportunities to make money with your cash instead of having to rebuild all your assets. Paying down debt is easier than building assets. Housing loan percentages at all time lows - get some investment properties going.

[pancakes3]

... the good thing about cash is that it's liquid and instead of using it to pay down 6% interest, you can invest it to make 3%? Fuck loans anyway because it's going to disappear in 10 years regardless?

[Clemenceau]

The reason you would be dumb to pay out of pocket is because you can't predict future and there are a lot of jobs that allow for forgiveness depending on the career route you go (and you can get interest deductions in this scenario too). If you end up going into biglaw, then have an agressive loan repayment once you start biglaw. Cash is flexible. Having $250k in cash and $250k in debt is better than $0 in cash and $0 in debt.

Question: why does having equal amount of debt and cash better than having no debt and no cash?

It's beneficial (1) if you're so nervous that you make your financial decisions based on relatively unlikely worst case outcomes, or (2) if interest rates are sufficiently low (0 to ~3%) that your cash can reasonably outperform the guaranteed interest and origination fees on your debt. When we have 4.29% origination fees on 250K-300K and 6.8% interest per year on those loans, that is not the case. [edit] Or (3) If you know, which you can't, that you will land an LRAP eligible job

The tax credit is capped at $2,500/yr. The origination fee alone on $300k is $12,900. Let's say you take out $80k for 1L. You'll have $5,440 in interest after the first year + $3440 in origination fees. In other words, just for 1L and not including interest accrued on this during 2L and 3L, you're paying $8,880 for an insurance policy against short-term unemployment. If you're such a nervous wreck that this seems like a good deal to you, I have some other insurance policies you might be interested in...

1. Ya its a good thing to be nervous about this much money in an uncertain legal industrial climate. Furthermore, this isn't only about worst case outcomes. Even in best case scenarios its a good strategy because your money in the bank will have generated returns and you'll end up building credit by paying down loans aggressively.

2a. Your interest rate does not have to be < 3% for paying with loans to be a good strategy. A conservative blue chip portfolio has been earning around 8-10% for the past few years.

2b. This is a stupid strawman argument. $300k in only grad plus loans? Its not even possible to take out that much in grad plus loan principle. You would take out $20.5k/yr in fed direct loans + maybe some fed subsidized or school subsidized loans, then the rest in plus loans. I agree grad plus loans suck and should be avoided, but stop talking out of your ass.

Johann- keep fighting the good fight

[albpert]

Holy crap, so much misinformation ITT...Granted the $300k figure I used was hyperbole, my b.

No... having cash is beneficial because you can use it to invest.

Why are you going to law school if you can "invest" money so well that you know you will get at least a 7% real return every year? Literally start a hedge fund.

Paying down debt is easier than building assets.

This is, by definition, false. It takes more than $1 to pay of $1 of debt principle, while it takes $1 to build $1 in assets. Not to mention compound interest works in your favor while accruing assets.

its a good strategy because your money in the bank will have generated returns...

A high yield savings account generates 1.05% interest per year, and you are a psychopath if you aggressively invest in equities while accruing hundreds of thousands of dollars in debt (see below).

...and you'll end up building credit by paying down loans aggressively.

You can also build great credit by paying the entirety of your credit card balance every month. Somehow people establish good credit without taking out massive loans for no reason. Don't be a sucker. For instance, I've never taken a single educational loan (lucky me), pay my balance every month on time for the past 3 years of my life, and have a 770 credit score. But by all means pay >$8,880 per year to "build credit"

A conservative blue chip portfolio has been earning around 8-10% for the past few years.

This quote alone is enough to make me weary of anything you say with regard to finances. Judging the future returns of a portfolio based on the past couple of years is asinine. Just ask the c/o 2008, which you are so terrified of ending up like. The 7% average returns of the market is an average. Some years it's down 20% some years it up 20%. How nice would it be to know that, beginning school you had enough to cover tuition, then a year later you have a 20% shortfall? Of course the opposite could happen, but then you might as well just take the tuition money and bet it all on black, or red for that matter.

stop talking out of your ass.

Says the person who said, or agrees with, the above quoted ass talk.