Is Columbia Sticker worth if I can get an interest-free loan from family?

Discuss various money matters here. Loans (federal and private), scholarships, lottery winnings, or other school finance related information and queries.
Tunku

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Is Columbia Sticker worth if I can get an interest-free loan from family?

Postby Tunku » Sun Jul 08, 2018 6:34 pm

One of the big issues that people raise about paying sticker is the interest payments. A distant and extremely wealthy relative offered to lend me money for law school interest-free. In this case, is Columbia at sticker worth it?

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totesTheGoat

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Re: Is Columbia Sticker worth if I can get an interest-free loan from family?

Postby totesTheGoat » Sun Jul 08, 2018 8:05 pm

IMO, no. Interest or no, that's a hell of a lot of money for law school.it just ain't worth it, even if the interest is shaved off the top.

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Re: Is Columbia Sticker worth if I can get an interest-free loan from family?

Postby Wubbles » Sun Jul 08, 2018 8:20 pm

if you want biglaw and you have more financially sound options lower in the t13, then no.

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Re: Is Columbia Sticker worth if I can get an interest-free loan from family?

Postby Hutz_and_Goodman » Sun Jul 08, 2018 9:58 pm

No.

dabigchina

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Re: Is Columbia Sticker worth if I can get an interest-free loan from family?

Postby dabigchina » Mon Jul 09, 2018 12:25 am

nah

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GFox345

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Re: Is Columbia Sticker worth if I can get an interest-free loan from family?

Postby GFox345 » Mon Jul 09, 2018 10:23 am

No.

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Re: Is Columbia Sticker worth if I can get an interest-free loan from family?

Postby Bach-City » Mon Jul 09, 2018 11:24 am

Tunku wrote:One of the big issues that people raise about paying sticker is the interest payments. A distant and extremely wealthy relative offered to lend me money for law school interest-free. In this case, is Columbia at sticker worth it?


We can't answer this without knowing your career trajectory, but if you're currently making 50-60k, then the long term benefits of moving to a starting salary of 190k+15k bonus, followed by, say, 4 years of BigLaw salary increases, then moving in-house as a 5th year to 180k plus benefits (a typical Columbia path) is almost certainly an improvement on that career trajectory at the cost of 300k plus 3 years of forgone wages..

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Re: Is Columbia Sticker worth if I can get an interest-free loan from family?

Postby Bach-City » Mon Jul 09, 2018 11:27 am

Bach-City wrote:
Tunku wrote:One of the big issues that people raise about paying sticker is the interest payments. A distant and extremely wealthy relative offered to lend me money for law school interest-free. In this case, is Columbia at sticker worth it?


We can't answer this without knowing your career trajectory, but if you're currently making 50-60k, then the long term benefits of moving to a starting salary of 190k+15k bonus, followed by, say, 4 years of BigLaw salary increases, then moving in-house as a 5th year to 180k plus benefits (a typical Columbia path) is almost certainly an improvement on that career trajectory at the cost of 300k plus 3 years of forgone wages..


Plus your distant and extremely wealthy relative may just forgive the debt. That seems to happen to my bizarrely wealthy friends.

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totesTheGoat

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Re: Is Columbia Sticker worth if I can get an interest-free loan from family?

Postby totesTheGoat » Mon Jul 09, 2018 12:03 pm

Bach-City wrote:
Tunku wrote:One of the big issues that people raise about paying sticker is the interest payments. A distant and extremely wealthy relative offered to lend me money for law school interest-free. In this case, is Columbia at sticker worth it?


We can't answer this without knowing your career trajectory, but if you're currently making 50-60k, then the long term benefits of moving to a starting salary of 190k+15k bonus, followed by, say, 4 years of BigLaw salary increases, then moving in-house as a 5th year to 180k plus benefits (a typical Columbia path) is almost certainly an improvement on that career trajectory at the cost of 300k plus 3 years of forgone wages..


A more apt comparison may include other options, such as going to a lower T14/T1 school with a scholarship and racking up less than $100k in loans.

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Re: Is Columbia Sticker worth if I can get an interest-free loan from family?

Postby Bach-City » Mon Jul 09, 2018 12:17 pm

totesTheGoat wrote:
Bach-City wrote:
Tunku wrote:One of the big issues that people raise about paying sticker is the interest payments. A distant and extremely wealthy relative offered to lend me money for law school interest-free. In this case, is Columbia at sticker worth it?


We can't answer this without knowing your career trajectory, but if you're currently making 50-60k, then the long term benefits of moving to a starting salary of 190k+15k bonus, followed by, say, 4 years of BigLaw salary increases, then moving in-house as a 5th year to 180k plus benefits (a typical Columbia path) is almost certainly an improvement on that career trajectory at the cost of 300k plus 3 years of forgone wages..


A more apt comparison may include other options, such as going to a lower T14/T1 school with a scholarship and racking up less than $100k in loans.


That's fair, although I'm pretty risk averse and would rather go to a place that places well still in a recession. That brings us to another factor is him going now compared to say, 2014 when we were more clearly on an upswing.

However, if a recession happens and he can't get BigLaw I'll go on a limb and say his relative won't be sending the repo-man.

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totesTheGoat

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Re: Is Columbia Sticker worth if I can get an interest-free loan from family?

Postby totesTheGoat » Mon Jul 09, 2018 12:22 pm

Bach-City wrote:That's fair, although I'm pretty risk averse and would rather go to a place that places well still in a recession.


I get what you're trying to say, but going $300k in debt for a law degree isn't risk averse by any stretch of the term.

Also, we haven't been in a recession in 10 years, the economy is doing pretty dang well right now. Not to say that we aren't about to get smacked by a recession tomorrow, but business is booming at the moment.

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Re: Is Columbia Sticker worth if I can get an interest-free loan from family?

Postby jbagelboy » Tue Jul 10, 2018 8:36 am

If rich family, sure why not

If arms-length, non-familial transaction, no, not worth it (for any school)

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hoos89

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Re: Is Columbia Sticker worth if I can get an interest-free loan from family?

Postby hoos89 » Tue Jul 10, 2018 12:46 pm

Bach-City wrote:
Tunku wrote:One of the big issues that people raise about paying sticker is the interest payments. A distant and extremely wealthy relative offered to lend me money for law school interest-free. In this case, is Columbia at sticker worth it?


We can't answer this without knowing your career trajectory, but if you're currently making 50-60k, then the long term benefits of moving to a starting salary of 190k+15k bonus, followed by, say, 4 years of BigLaw salary increases, then moving in-house as a 5th year to 180k plus benefits (a typical Columbia path) is almost certainly an improvement on that career trajectory at the cost of 300k plus 3 years of forgone wages..


Yeah but those aren't the only two alternatives. Someone who can get into Columbia can probably also get a significant scholarship at Cornell and probably a full ride somewhere in the next tier, for instance.

Bach-City wrote:
That's fair, although I'm pretty risk averse and would rather go to a place that places well still in a recession. That brings us to another factor is him going now compared to say, 2014 when we were more clearly on an upswing.

However, if a recession happens and he can't get BigLaw I'll go on a limb and say his relative won't be sending the repo-man.


The risk averse thing to do is to not pay sticker for law school.

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Re: Is Columbia Sticker worth if I can get an interest-free loan from family?

Postby dabigchina » Tue Jul 10, 2018 1:51 pm

hoos89 wrote:
Yeah but those aren't the only two alternatives. Someone who can get into Columbia can probably also get a significant scholarship at Cornell and probably a full ride somewhere in the next tier, for instance.



I agree with the sentiment, but I'm not sure how true this is tbh. Columbia loves to admit splitters @ sticker who would otherwise get pretty marginal scholarships from the lower T14. Hell, I didn't even get into Cornell.

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Re: Is Columbia Sticker worth if I can get an interest-free loan from family?

Postby Synapse2018 » Tue Jul 10, 2018 2:20 pm

Unless you're confined to NYC for family reasons or something similar, apply to other T14 and see what scholarships come your way. You can always use those offers to bargain with Columbia.

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Re: Is Columbia Sticker worth if I can get an interest-free loan from family?

Postby sprintin23 » Wed Jul 11, 2018 7:36 pm

How long have you known this relative? What is the catch for him loaning you the money? Will you be working out payments? If so, how long? Will he send some goons to your house if you don't pay? Don't get me wrong, it is awesome not take out any student loans, it just seems rather odd. Make sure you meet with him and get all the terms up front before he loans you a single dime. Also, I would check if you can find any full-rides elsewhere just in case. Overall, good problem to have. Just make sure it's legit.

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Re: Is Columbia Sticker worth if I can get an interest-free loan from family?

Postby Npret » Wed Jul 11, 2018 7:39 pm

That’s like $300,000. I wouldn’t borrow that lightly. The one benefit of government loans is the payment program if things go badly.

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totesTheGoat

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Re: Is Columbia Sticker worth if I can get an interest-free loan from family?

Postby totesTheGoat » Thu Jul 12, 2018 9:56 am

sprintin23 wrote: it is awesome not take out any student loans


A loan from your second cousin is still a loan.

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Re: Is Columbia Sticker worth if I can get an interest-free loan from family?

Postby Tunku » Thu Jul 12, 2018 5:38 pm

To respond to some of the comments:

1) I am specifically thinking of Columbia because I want biglaw. I'm also Canadian and I know that because of visa issues, it's harder to get biglaw so I want a degree that's portable (In case I need to go back to Canada). I think I would have slim chances at HYS with my current stats. My GPA is 4.0+, LSAT - 169. I plan to re-write though.

2) The loan would be interest free and 300k to this relative is a drop in the bucket, so I'm sure that they wouldn't mind when I pay it back. But since it's family, I intend to pay all of it back, but to do this I need to land biglaw.

3) I have an accounting job (Big 4) lined up just in case my re-write doesn't go well/ I decide against law school.

Thanks for all the input guys! :)

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hoos89

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Re: Is Columbia Sticker worth if I can get an interest-free loan from family?

Postby hoos89 » Thu Jul 12, 2018 7:17 pm

Tunku wrote:To respond to some of the comments:

1) I am specifically thinking of Columbia because I want biglaw. I'm also Canadian and I know that because of visa issues, it's harder to get biglaw so I want a degree that's portable (In case I need to go back to Canada). I think I would have slim chances at HYS with my current stats. My GPA is 4.0+, LSAT - 169. I plan to re-write though.

2) The loan would be interest free and 300k to this relative is a drop in the bucket, so I'm sure that they wouldn't mind when I pay it back. But since it's family, I intend to pay all of it back, but to do this I need to land biglaw.

3) I have an accounting job (Big 4) lined up just in case my re-write doesn't go well/ I decide against law school.

Thanks for all the input guys! :)


It's not like you have much worse of a chance at biglaw from a number of other schools that might give you a scholarship. Columbia had Big Law + Fed Clerkship of 83.3% for c/o 2017. UVA had 78.7%, Penn 78.5%, Duke 81.3%, Cornell 76.7%. Now is that extra few percentage points at Columbia really worth paying sticker if you get a $100k+ scholarship at one of those other schools (not to mention lower CoL outside of NYC)? Is a degree from Columbia really that much more portable internationally than one from Penn, Duke or Cornell in particular? Honestly I'd guess only an HYS degree would make a noticeable difference in that regard. Also frankly...it's probably a moot point unless you do better on the LSAT, as 169/4.0 probably is out at Columbia. You need to get a 170...seriously that 1 extra point will make a huge difference for you and might put Harvard on the table.

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kgm1990

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Re: Is Columbia Sticker worth if I can get an interest-free loan from family?

Postby kgm1990 » Sat Jul 14, 2018 8:02 pm

Just a heads up, there's no such thing as a 'no interest loan'... the IRS will require that you give some sort of interest on top of that principle amount. You know... unless you plan on lying about it being a loan on your taxes (or he does too). :shock:

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Re: Is Columbia Sticker worth if I can get an interest-free loan from family?

Postby QContinuum » Mon Aug 13, 2018 5:54 pm

kgm1990 wrote:Just a heads up, there's no such thing as a 'no interest loan'... the IRS will require that you give some sort of interest on top of that principle amount. You know... unless you plan on lying about it being a loan on your taxes (or he does too). :shock:


The IRS cannot (and does not) prohibit folks from extending interest-free loans, and cannot (and does not) require folks to pay interest.

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Re: Is Columbia Sticker worth if I can get an interest-free loan from family?

Postby 4LTsPointingNorth » Mon Aug 13, 2018 6:13 pm

QContinuum wrote:
kgm1990 wrote:Just a heads up, there's no such thing as a 'no interest loan'... the IRS will require that you give some sort of interest on top of that principle amount. You know... unless you plan on lying about it being a loan on your taxes (or he does too). :shock:


The IRS cannot (and does not) prohibit folks from extending interest-free loans, and cannot (and does not) require folks to pay interest.


Abstracting this for a moment, what would the most likely taxable events be here? Assuming the relative pays the law school its tuition fees directly, and assuming later that OP then sets up a monthly auto-pay to the relative after law school ends? The repayments would then be taxable income for the relative? Or would it just be that the direct tuition payments are taxable events for OP?

This article from 2016 https://www.businessinsider.com/charge-interest-on-loans-to-family-2016-11 suggests that a 1.33% interest rate for a 3-9 year loan is enough to avoid any potential IRS consequences, assuming any attach at all.

Anyway, interesting tax hypo aside: OP if you take a loan for 300,000, even from a relative with zero or minimal interest, you will still be on the hook for monthly payments of around $2800 a month for 9 years (assuming your relative is willing to wait this long to get his money repaid). That may seem more manageable during your first 2-3 years of post-law school employment when you land BigLaw from Columbia. But it will then continue to severely limit your ability to make major life decisions (like leaving BigLaw, self-funding a wedding, or purchasing real estate) for almost a decade of your life, in addition to the amounts of retirement savings it will prevent you from accruing.

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Re: Is Columbia Sticker worth if I can get an interest-free loan from family?

Postby QContinuum » Mon Aug 13, 2018 6:18 pm

dabigchina wrote:
hoos89 wrote:
Yeah but those aren't the only two alternatives. Someone who can get into Columbia can probably also get a significant scholarship at Cornell and probably a full ride somewhere in the next tier, for instance.


I agree with the sentiment, but I'm not sure how true this is tbh. Columbia loves to admit splitters @ sticker who would otherwise get pretty marginal scholarships from the lower T14. Hell, I didn't even get into Cornell.


Seconding (thirding?) this. Sure, if OP can get a full ride or substantial $ at a lower T14, that'd be TCR over CLS at sticker. But if OP's a splitter, s/he may very well be able to get into CLS without getting much merit aid at the lower T14. And IMO CLS at sticker is worth it over attending a non-T14.

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hoos89

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Re: Is Columbia Sticker worth if I can get an interest-free loan from family?

Postby hoos89 » Tue Aug 14, 2018 12:16 am

QContinuum wrote:
kgm1990 wrote:Just a heads up, there's no such thing as a 'no interest loan'... the IRS will require that you give some sort of interest on top of that principle amount. You know... unless you plan on lying about it being a loan on your taxes (or he does too). :shock:


The IRS cannot (and does not) prohibit folks from extending interest-free loans, and cannot (and does not) require folks to pay interest.


https://investinganswers.com/financial- ... terest-530



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