How much is too much?

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Joeshan520
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How much is too much?

Postby Joeshan520 » Mon Sep 03, 2012 10:34 pm

Is it still worth taking the full sticker debt out for a T14 given the dismal employment prospects or would lower ranked nearly full funding be a better option?

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moonman157
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Re: How much is too much?

Postby moonman157 » Mon Sep 03, 2012 10:36 pm

Too many questions that need answering. Which T-14? What are your career goals? Where do you want to work/have ties to? Which lower-ranked school are we talking about?

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EvilClinton
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Re: How much is too much?

Postby EvilClinton » Mon Sep 03, 2012 10:42 pm

I wouldn't do full sticker at anything below HYS.

I have recently changed my opinion about this. I don't think people realize how much 250K of debt really is. Even with a big law job, 250K is really hard to pay off. In order to pay off 250K of debt in 10 years you have to pay 3K every single month. Most big law associates don't make it past year 4. There is no way that taking out sticker is ever a great idea. The best you can do it try to give yourself the best shot at big law possible and hope you have good exit options.

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presh
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Re: How much is too much?

Postby presh » Mon Sep 03, 2012 10:51 pm

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Last edited by presh on Tue Dec 29, 2015 11:16 pm, edited 1 time in total.

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pacifica
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Re: How much is too much?

Postby pacifica » Tue Sep 04, 2012 9:47 pm

agree with previous posts about the importance of context, but I think since OP was asking for general opinions, should at least give an IMO

Guesstimate 250K - 35K x 2 from summers still leaves you with 180K of debt. Unless your law school gives living expenses stipends, I think everyone takes on some form of debt. With a 7% interest rate, that debt over a 10 year repayment time frame doubles. So I suppose this is how I would do my calculus: (180K - [current savings] - [scholly offer]) x 2 is how much AFTER taxes income I'm willing to pay in loans.

I'm personally a VERY risk averse person, and don't want that number of crack above 6 digits unless it's HYS, but that's just me.

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fundamentallybroken
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Re: How much is too much?

Postby fundamentallybroken » Tue Sep 04, 2012 10:13 pm

pacifica wrote:agree with previous posts about the importance of context, but I think since OP was asking for general opinions, should at least give an IMO

Guesstimate 250K - 35K x 2 from summers still leaves you with 180K of debt. Unless your law school gives living expenses stipends, I think everyone takes on some form of debt. With a 7% interest rate, that debt over a 10 year repayment time frame doubles. So I suppose this is how I would do my calculus: (180K - [current savings] - [scholly offer]) x 2 is how much AFTER taxes income I'm willing to pay in loans.

I'm personally a VERY risk averse person, and don't want that number of crack above 6 digits unless it's HYS, but that's just me.


Doubles? Actual repayment of $180k at 7% over 10 years is roughly $250k. Doesn't double unless you push it out 20 years.

(Not saying massive amounts of debt are worth it for any school...)

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pacifica
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Re: How much is too much?

Postby pacifica » Tue Sep 04, 2012 10:20 pm

pacifica wrote:Doubles? Actual repayment of $180k at 7% over 10 years is roughly $250k. Doesn't double unless you push it out 20 years.


My fault, you're totally right. I was thinking interest rates as accruing wealth (72/rate), not paying back debt...

but nevertheless seems like overall sentiment is that everyone's a little risk averse given grim job market.

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helix23
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Re: How much is too much?

Postby helix23 » Tue Sep 04, 2012 11:20 pm

Has this ever been addressed before?

I think it's an important question...

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EvilClinton
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Re: How much is too much?

Postby EvilClinton » Wed Sep 05, 2012 1:10 am

pacifica wrote:agree with previous posts about the importance of context, but I think since OP was asking for general opinions, should at least give an IMO

Guesstimate 250K - 35K x 2 from summers still leaves you with 180K of debt. Unless your law school gives living expenses stipends, I think everyone takes on some form of debt. With a 7% interest rate, that debt over a 10 year repayment time frame doubles. So I suppose this is how I would do my calculus: (180K - [current savings] - [scholly offer]) x 2 is how much AFTER taxes income I'm willing to pay in loans.

I'm personally a VERY risk averse person, and don't want that number of crack above 6 digits unless it's HYS, but that's just me.

There is so much wrong with this.

The average person only makes 30k over one summer. The other summer is unpaid if you work for a judge or do anything related to public interest (which is what a majority of students do). And you really shouldn't even count that since the COA published by law school only gives you enough loan money to pay for an estimated 9 months. So you usually you need your summer money to live.

The interest rate will be closer to 7.5% since your stafford loans will be at 6.8% and your graduate plus loan 7.9%.

grassynome
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Re: How much is too much?

Postby grassynome » Wed Sep 05, 2012 1:12 am

Hypothetical situation, say you get a substantial scholarship offer to Arizona State University, and accepted to University of Texas at sticker price. Which would you do?

mr.hands
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Re: How much is too much?

Postby mr.hands » Wed Sep 05, 2012 8:24 am

grassynome wrote:Hypothetical situation, say you get a substantial scholarship offer to Arizona State University, and accepted to University of Texas at sticker price. Which would you do?


I'd decide where I want to practice.

If you don't want to be in AZ, drop ASU entirely. The jump in the ranking means nothing

grassynome
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Re: How much is too much?

Postby grassynome » Wed Sep 05, 2012 3:33 pm

mr.hands wrote:
grassynome wrote:Hypothetical situation, say you get a substantial scholarship offer to Arizona State University, and accepted to University of Texas at sticker price. Which would you do?


I'd decide where I want to practice.

If you don't want to be in AZ, drop ASU entirely. The jump in the ranking means nothing

Oh okay, When does the jump in rank truly make a difference?

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20130312
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Re: How much is too much?

Postby 20130312 » Wed Sep 05, 2012 3:35 pm

grassynome wrote:Oh okay, When does the jump in rank truly make a difference?


Never o'clock.

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Nova
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Re: How much is too much?

Postby Nova » Wed Sep 05, 2012 3:36 pm

grassynome wrote:Hypothetical situation, say you get a substantial scholarship offer to Arizona State University, and accepted to University of Texas at sticker price. Which would you do?


UT @ 50k per year? No way.

UT @ in state tution, 30k, yeah.

Joeshan520
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Re: How much is too much?

Postby Joeshan520 » Sun Sep 09, 2012 12:58 am

I was really speaking in generalities of course, I'm a 0L that works at a biglaw firm currently. I've gotten the impression from partners I've spoken to that it's REAL bad and seriously won't get much better given the saturation in the market. All of them have said the same thing, take money where you can get it. I just don't know how one would justify $180k + interest at lower T14s compared to significant schollys elsewhere. Sure it's T14 but hasn't this whole "T14" fetishization come and gone? Schools like Michigan, Cornell and Georgetown have 75%, 76.1% and 66.2% full time legal employment rates. It's clear that firms don't compete for T14 students like they used to, and while it appears necessary it definitely isn't sufficient to land a job to justify the loans at these places. That's what I'm troubled with in this whole decision.

Source: --LinkRemoved--

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bk1
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Re: How much is too much?

Postby bk1 » Sun Sep 09, 2012 1:07 am

Joeshan520 wrote:I was really speaking in generalities of course, I'm a 0L that works at a biglaw firm currently. I've gotten the impression from partners I've spoken to that it's REAL bad and seriously won't get much better given the saturation in the market. All of them have said the same thing, take money where you can get it. I just don't know how one would justify $180k + interest at lower T14s compared to significant schollys elsewhere. Sure it's T14 but hasn't this whole "T14" fetishization come and gone? Schools like Michigan, Cornell and Georgetown have 75%, 76.1% and 66.2% full time legal employment rates. It's clear that firms don't compete for T14 students like they used to, and while it appears necessary it definitely isn't sufficient to land a job to justify the loans at these places. That's what I'm troubled with in this whole decision.

Source: --LinkRemoved--


Partners don't necessarily understand overall biglaw hiring and might believe that lower ranked schools give students a better chance than they actually do.

If you want to work at in biglaw it doesn't make sense to go below T14. Schools below that general cutoff don't put even half of their students into biglaw/clerkships, meaning that you're more likely to end up outside those two categories than in them before you step foot into your first 1L class. I'm not saying that taking out a bunch of debt for a T14 makes sense over a substantial scholarship at a lower school, but the risk at a lower school is that your opportunities are significantly less (whereas at the higher school the risk is that you get debtpwned). It's two different kind of risks and, at least to me, it's not clear that one is better or worse than the other.




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