tetrahydrocannabinol wrote:Well I'm no rocket scientist (unlike you) but doesn't OP have to pay tax, which would be another $20K a year (about a 1/3 of his $60K salary)?
Also, it odd to say whatever OP spent for 1L is a sunk cost and just not consider it at all because you are arguing that post loans it would be like having a $40K a year job. But that's not true because even if it is a sunk cost OP still has to pay it (meaning his loans aren't just $20K a year, but more then that). The reason that should be considered is because if his loans are actually $24K /year and he is making $40K a year post-tax, then that leaves him with $16K a year to live off. That's poverty if you ask me.
1) OP has to pay taxes on his $40k/year job as well. I was being a bit fuzzy with my math, because I didn't want to bother calculating the exact tax. It looks like the break-even point is just about $70k/year. In NY, with a $40k/year job, your take-home is about $30k. With a $70k/year job, it's $50k. If you're paying $20k/year extra in loans in the second case, you're basically breaking even.
2) The reason the 1L loans don't matter is because OP has to pay them in either case. Payments on that debt are on both sides of the equation and thus cancel out. Say OP needs to pay $5k/year on his 1L debt, on top of any additional loans he takes out.
If he takes the $40k/year job, he has $30k/year take-home, minus $5k/year in loan payments, = $25k/year.
If he takes the $140k in debt and the $70k/year job, he has $50k/year take-home, minus $20k/year on the 2L/3L debt, minus $5k/year on the 1L debt, = $25k/year.
See how the two numbers are equal regardless of what the 1L debt happens to be? It doesn't matter when we're considering the incremental
economic benefit/cost of dropping out.