How best to finance law school

(Applications Advice, Letters of Recommendation . . . )
stoopkid13
Posts: 207
Joined: Sun Sep 07, 2014 5:31 am

Re: How best to finance law school

Postby stoopkid13 » Fri Feb 27, 2015 2:38 pm

Winston1984 wrote:If you have no money, wouldn't you get something in need based aid? I don't understand why you aren't applying for any.


It sounds like the parents have money, which is part of how need-based aid is calculated right?

User avatar
Winston1984
Posts: 1789
Joined: Sun Mar 17, 2013 12:02 pm

Re: How best to finance law school

Postby Winston1984 » Fri Feb 27, 2015 3:00 pm

stoopkid13 wrote:
Winston1984 wrote:If you have no money, wouldn't you get something in need based aid? I don't understand why you aren't applying for any.


It sounds like the parents have money, which is part of how need-based aid is calculated right?

I assume that's right, but I didn't think that meant you got no money? I mean, if you have well to do parents, but they aren't going to be helping in a significant way, I didn't think that would count against you.

User avatar
Auxilio
Posts: 582
Joined: Tue Jul 01, 2014 3:51 pm

Re: How best to finance law school

Postby Auxilio » Fri Feb 27, 2015 3:38 pm

Winston1984 wrote:
stoopkid13 wrote:
Winston1984 wrote:If you have no money, wouldn't you get something in need based aid? I don't understand why you aren't applying for any.


It sounds like the parents have money, which is part of how need-based aid is calculated right?

I assume that's right, but I didn't think that meant you got no money? I mean, if you have well to do parents, but they aren't going to be helping in a significant way, I didn't think that would count against you.



As far as I am aware well off parents = essentially no aid.

I am curious how they factor age of parents into it though. Someone with 40 year old parents should have their wealth considered harsher than someone who is approaching retirement in my mind.

User avatar
Winston1984
Posts: 1789
Joined: Sun Mar 17, 2013 12:02 pm

Re: How best to finance law school

Postby Winston1984 » Fri Feb 27, 2015 3:45 pm

Auxilio wrote:
Winston1984 wrote:
stoopkid13 wrote:
Winston1984 wrote:If you have no money, wouldn't you get something in need based aid? I don't understand why you aren't applying for any.


It sounds like the parents have money, which is part of how need-based aid is calculated right?

I assume that's right, but I didn't think that meant you got no money? I mean, if you have well to do parents, but they aren't going to be helping in a significant way, I didn't think that would count against you.



As far as I am aware well off parents = essentially no aid.

I am curious how they factor age of parents into it though. Someone with 40 year old parents should have their wealth considered harsher than someone who is approaching retirement in my mind.

Damn that sucks.. Totally agree with ya. But also, just because you have wealthy parents doesn't mean they are helping out (or that you may feel comfortable with them helping out). Obviously it should be a factor, but not completely determine whether you get aid or not.

stoopkid13
Posts: 207
Joined: Sun Sep 07, 2014 5:31 am

Re: How best to finance law school

Postby stoopkid13 » Fri Feb 27, 2015 4:20 pm

Winston1984 wrote:
Auxilio wrote:
I am curious how they factor age of parents into it though. Someone with 40 year old parents should have their wealth considered harsher than someone who is approaching retirement in my mind.

Damn that sucks.. Totally agree with ya. But also, just because you have wealthy parents doesn't mean they are helping out (or that you may feel comfortable with them helping out). Obviously it should be a factor, but not completely determine whether you get aid or not.


Wouldn't be surprised if law school aid works differently but I know that for undergraduate loans, parent income and wealth is a big factor, even if your parents refuse to pay. I think the rationale is that if parent willingness to pay were a factor, no parent would be "willing" to pay. Also @Auxilio, income is not the only factor. Age is considered (or rather age of the older parent), as are home equity, business values, the size of the family, and the number of children in school.

BigZuck
Posts: 10872
Joined: Tue Sep 04, 2012 9:53 am

Re: How best to finance law school

Postby BigZuck » Fri Feb 27, 2015 4:28 pm

Winston1984 wrote:
stoopkid13 wrote:
Winston1984 wrote:If you have no money, wouldn't you get something in need based aid? I don't understand why you aren't applying for any.


It sounds like the parents have money, which is part of how need-based aid is calculated right?

I assume that's right, but I didn't think that meant you got no money? I mean, if you have well to do parents, but they aren't going to be helping in a significant way, I didn't think that would count against you.

Rich parent says "Naw Harvard, I'm not paying a cent"

*wink, wink*

(kid gets 20K a year discount, parents give the kid tuition money anyway and save themselves 60K)

From the school's perspective, there isn't really any way to police it, so might as well require parental info across the board. I think you have to give parental info until you're 30 but that probably varies by school.

User avatar
Winston1984
Posts: 1789
Joined: Sun Mar 17, 2013 12:02 pm

Re: How best to finance law school

Postby Winston1984 » Fri Feb 27, 2015 5:17 pm

BigZuck wrote:
Winston1984 wrote:
stoopkid13 wrote:
Winston1984 wrote:If you have no money, wouldn't you get something in need based aid? I don't understand why you aren't applying for any.


It sounds like the parents have money, which is part of how need-based aid is calculated right?

I assume that's right, but I didn't think that meant you got no money? I mean, if you have well to do parents, but they aren't going to be helping in a significant way, I didn't think that would count against you.

Rich parent says "Naw Harvard, I'm not paying a cent"

*wink, wink*

(kid gets 20K a year discount, parents give the kid tuition money anyway and save themselves 60K)

From the school's perspective, there isn't really any way to police it, so might as well require parental info across the board. I think you have to give parental info until you're 30 but that probably varies by school.

I do see the problem here. I also think it is a little different for undergraduate students than graduate students. I guess I just assumed most law students are not having their legal education paid for by mom and dad.

User avatar
Winston1984
Posts: 1789
Joined: Sun Mar 17, 2013 12:02 pm

Re: How best to finance law school

Postby Winston1984 » Fri Feb 27, 2015 5:18 pm

I guess I also don't know what qualifies as being rich.

User avatar
Tiago Splitter
Posts: 15503
Joined: Tue Jun 28, 2011 1:20 am

Re: How best to finance law school

Postby Tiago Splitter » Fri Feb 27, 2015 5:19 pm

Paul Campos wrote:The debt is taxable to the extent the debtor is solvent after the debt forgiveness, not before.

Example: Suppose the debtor has $200,000 in net assets without regard to educational debt and $200,000 in educational debt. Before forgiveness the debtor's net worth is zero. ($200K in assets, $200K in debt). If the $200K in educational debt is forgiven, the debtor is treated is having a net worth of $200,000 for tax purposes, so it's all taxable. Now if the debtor has $100K in assets and $200K in educational debt, only $100K of the forgiven debt will be taxable, since before the forgiveness the debtor's net worth was negative $100K, and afterwards it was plus $100K, and the latter is what's taxed.

I used to think this too until I read Pub 4681, specifically Pages 5 and 6, and looked at the insolvency worksheet on Page 9.

http://www.irs.gov/pub/irs-pdf/p4681.pdf

"Do not include a canceled debt in income to the extent that you were insolvent immediately before the cancellation. You were insolvent immediately before the cancellation to the extent that the total of all of your liabilities was more than the FMV of all of your assets immediately before the cancellation."

Although looking at the examples this appears to be a distinction without a difference.
Last edited by Tiago Splitter on Fri Feb 27, 2015 5:26 pm, edited 1 time in total.

BigZuck
Posts: 10872
Joined: Tue Sep 04, 2012 9:53 am

Re: How best to finance law school

Postby BigZuck » Fri Feb 27, 2015 5:21 pm

Winston1984 wrote:I guess I just assumed most law students are not having their legal education paid for by mom and dad.

You'd be surprised. I don't even know if it's a huge percentage, but wouldn't surprise me if there aren't more parents doing so at the tippy top than at BIG STATE U cuz lolbootstraps and privilege and whatnot.

stt1
Posts: 33
Joined: Tue Jan 20, 2015 1:50 am

Re: How best to finance law school

Postby stt1 » Fri Feb 27, 2015 5:59 pm

Thanks to everyone for all the additional advice. Also, in particular I want to thank Tiago for the paye analysis for the slightly sub 200 level--I also went back and read all the threads I could find on paye here at tls, and in particular the paye vs refinancing at a 3.5 interest rate. It seems the analysis there supported it being worthwhile to give up paye for lower interest rates once you expect your income to hover around the high 200s, so somewhere around the low 200s should be around the tipping point for a 2 percent interest rate, unless I am missing something.

I'm not sure where my career ends up, but it seems given my current plans and career focus there is at least a 50% chance I end up making the sacrifices to achieve the higher end of that pay scale. Adding to that the uncertainties regarding ways congress might amend the law, I've decided going the parental loan route (coupled with the safeguards earlier discussed) is the best decision for my situation.

Thank you to everyone who offered information to aid in this decision.

One quick side comment: in the context of the current system, even as someone hurt by the parental wealth consideration, I do think it makes perfect sense to not consider actual parental aid given (for all the reasons argued above) and only consider ability to pay (and I feel in no way wronged by the fact that I won't get grant aid).

That having been said, financial aid for law school has always been a rather silly system in need of reform. Let's take two students who probably will both take the exact same 160k a year jobs after graduation and not give aid to one because her parents make 100k and saved up for retirement (actually, in effect charge her more tuition to provide a subsidy). It seems a much fairer situation would be to lower tuition slightly for everyone, and make sure to have in place strong loan forgiveness programs for those taking public interest jobs. It feels like they imported a financial aid system well suited to college and never really thought deeply if the mechanics still make sense for professional school. In the law school context, the starting salaries for the schools at the top (which are also the ones with the most significant aid programs) are high enough that post-graduation earnings is really more relevant than pre-graduation family wealth, and so I think it would be much better to convert entirely to the loan-forgiveness model.




Return to “Law School Admissions Forum”

Who is online

Users browsing this forum: bellaboo, bleakchimera2, curry1 and 6 guests