CE2JD wrote:I've actually been thinking seriously about deferring for one year to earn enough money to pay for at least my first year out-of-pocket.
The logic there seems questionable... I don't want to ask how much you currently make, and you certainly can't be sure of your aspirations/job prospects in 3 years, but the combination of the two should make it fairly clear what the best choice going forward would be in terms of total expenditure.
It reminds me of when I was researching MD/PhD programs - they were very long, but worked out to either be free or to be giving you money compared to just an MD which was short but costly. In the end though, getting the MD sooner and putting it to work was much smarter from a long term financial stand point. Riskier, to be sure, but only by so much.
Anyway, I'm a dork, so let's do some algebra!
UVA cost/year: 61,000. 19.2 in expenses, 41.8 in tuition. Let's increase tuition (41,800) by 9% per year (see: --LinkRemoved--)
Let's say you're financing your entire education on federal grants. 8,500 federally subsidized @ 6.8%, 12,000 at 6.8%, and the remainder in grad-plus loands (8.5% fixed).
Year 1: 8,500 subsidized stafford loan, 12,000 unsub stafford loan, 40,500 grad plus loan.
End of year one: 8,500 + 12,816 + 43,942.5 in loans
Year 2: (8,500 + 8500) + (12,816 + 12000) * 1.068 + (43,942.5 + 42,590) * 1.085
Let's say you're gunning for big law, and you pull in a sweet summer gig. After living expenses and taxes, let's say you can afford to toss 10,000 (give or take) at your loan.
Year 3: (-10,000) + (8,500 + 8,500 + 8,500) + (14,969 + 12000) * 1.068 + (93,887.22 + 44,785) * 1.085
Total debt upon graduation: (-10,000) + 25,500 + 28,802.892 + 150,459 = 194,762 in debt with interest rates between 6.8% and 8.5%. Broken down, that would be 54,302 @ 6.8% and 140,459 @ 8.5%
To repay these loans in 10 years, your payments would be:
$624.91 for the smaller loan
$1,741.49 for the larger loan
making a 2,366.4 monthly loan payment or $28,396.8 per year lost in loan payments. Could you do that? No problem on a big law salary. All the better if you do as many suggest and throw your bonus at it each year, to reduce payments and/or pay it off faster.
So the real question is: Would you rather have that loan burden and then a year of salary (and either LRAP or BigLaw), or would you rather have a smaller loan burden but also be one year behind in terms of tuition prices and on getting a job. I can't answer that, but it probably depends heavily on how much you can earn now and what you want to do with the degree.
Also, can anybody confirm (at least ballpark) that my math was right on all of that?