Take less loans than you need? Forum

[mcs268]

First, I realize this should go more into the financial aid section, but this is a lot more active and will probably be a lot more helpful for a rising 1L.

I am taking a maximum of 189,000 in loans for my school (USC) with my little scholarship. Go ahead and tell me how stupid I am, that's fine, as long as you provide an answer to my following question too

Luckily, I was able to find a good place for relatively cheap (720 per month with utilities). And I spend about $50 a week max in food for myself. On that alone, based on the COL estimates, I am saving at least ~$5000 a semester.

There are some other ways I can cut costs. The only for sure thing is that I can save $15,000 for $174,000 total debt instead of the $189,000. However, is that even worth it or should I take out more money than I actually need? I'm not sure if $15,000 is really going to make a huge deal. If by G-d's grace I get a big law job, it's not going to amount to much. If I get a pubic interest job and have to pay that over 20 years, it's not going to add that much to my monthly payment is it for it to matter?

So, am i better off taking more money out than I need so I have more wiggle room after I graduate (I will probably have about 10K to my name after graduation of non-loan money, taking out more money would mean I will have that amount left over if I budget right), or should I just borrow the amount I need and hope that 10K will sustain me for a few months if I don't get a job before graduation?

Thanks, so confuzzled here haha.

[Lubberlubber]

Are you really, really committed to living like shit for 3 years? $50/week for food means you'll NEVER have a nice dinner out, NEVER set foot in a nice bar, NEVER have brunch with friends on the weekends, and basically NEVER eat anything decent at all for THREE YEARS.

If you can swing that, kudos. What I would do is wait to see how your grades are after 1L, and see if you get a job. If so, you should adjust your living standards upwards. If you don't get a job after 1L, you should drop out anyway, so it doesn't matter.

What I'm saying is that it doesn't make sense to plan for 3 years right now. You can always take out more for 2L/3L.

If you want a straight answer to your question, I personally could not live so frugally, so I would just take out the maximum. But be warned that USC isn't that great a school, and there's a really good chance you could strike out.

[mcs268]

Are you really, really committed to living like shit for 3 years? $50/week for food means you'll NEVER have a nice dinner out, NEVER set foot in a nice bar, NEVER have brunch with friends on the weekends, and basically NEVER eat anything decent at all for THREE YEARS.

If you can swing that, kudos. What I would do is wait to see how your grades are after 1L, and see if you get a job. If so, you should adjust your living standards upwards. If you don't get a job after 1L, you should drop out anyway, so it doesn't matter.

What I'm saying is that it doesn't make sense to plan for 3 years right now. You can always take out more for 2L/3L.

If you want a straight answer to your question, I personally could not live so frugally, so I would just take out the maximum. But be warned that USC isn't that great a school, and there's a really good chance you could strike out.

There's a personal budget in there too. That's just for like cooking food. I only eat out like once or twice a week. That's how I saved money in undergrad, don't see any need to change for law school.

Yeah I plan ahead too much lol. I guess I could probably wait until my 1L/2L summer options come through.

[A. Nony Mouse]

The amount schools list for COL is just an estimate/average. You certainly aren't required to spend it all. Also, IIRC, you get your loans disbursed each semester, so if after your first semester you have more money than you expected and don't need as much money as you thought you would, you don't have to take out the maximum for second semester. (You can also pay back extra in the semester you took it out, but I think that's more complicated and involves a fee, so it seems more sensible to me to just take out less the next semester.)

But basically, you don't have to decide this now.

[echooo23]

I did this my 1L year and would advise against it. For me, anyway, $50 a week for food was not possible. Even making my own meals 3 times a day cost somewhere around $15 a day, and that's only if the meals were light on meat. Also, things come up. Lose your bus pass, get a parking ticket, get a cavity, etc. It's also important to budget for buying supplements, a couple new suits for interviews, etc. Luckily for me I have a significant other so she supplemented my life significantly. But if you're on your own and don't have savings or parents to lean on, it might be better to have a little leeway. I won't be as chincy next year for sure.

Edited to add: Also, don't forget to budget for job hunting materials (paper, toner, envelopes, stamps, etc.) and a ticket home during winter break, if you need to travel home. Like I said, little things here and there that you don't think about now will cut into your budget significantly. And don't forget that your money needs to last until next fall, unless you get a paid 1L summer gig or take summer classes and get a summer loan.

[mcs268]

I did this my 1L year and would advise against it. For me, anyway, $50 a week for food was not possible. Even making my own meals 3 times a day cost somewhere around $15 a day, and that's only if the meals were light on meat. Also, things come up. Lose your bus pass, get a parking ticket, get a cavity, etc. It's also important to budget for buying supplements, a couple new suits for interviews, etc. Luckily for me I have a significant other so she supplemented my life significantly. But if you're on your own and don't have savings or parents to lean on, it might be better to have a little leeway. I won't be as chincy next year for sure.

Edited to add: Also, don't forget to budget for job hunting materials (paper, toner, envelopes, stamps, etc.) and a ticket home during winter break, if you need to travel home. Like I said, little things here and there that you don't think about now will cut into your budget significantly. And don't forget that your money needs to last until next fall, unless you get a paid 1L summer gig or take summer classes and get a summer loan.

Thank you for letting me know of your experience. Maybe it comes down to personal preferences, but last year I was able to get by with $50 a week fine (bagel for breakfast, sandwhich for lunch, more filling dinner meals like pasta). I also don't eat that much so that probably helps haha, fast metabolism. Already budgeted for trip back home. The suits I did have in the back of my mind, although I didn't consider them in the budgeting. I guess the moral of the story is there is really no telling what I will spend, so I need to account for that.

But I still don't really know the main answer to my question. Is there even any point of borrowing less when it will only amount to ~15,000 less max in total loans?

[echooo23]

No one can answer that. Who can predict now what job you'll get, how much it'll pay, and how long it'll take you to find it?

[BigZuck]

Reverse splitter I take it? Just retake so that money won't be an issue.

[maximator]

But I still don't really know the main answer to my question. Is there even any point of borrowing less when it will only amount to ~15,000 less max in total loans?

Yes. Presumably you are taking both Grad Plus and Stafford loans. Both of those accrue interest while you are in school. If you take out fewer loans initially, you will have a smaller principal and those loans will accrue less interest while you are in school. If you take out the full CoL you will end up racking up more interest.

So you will end up saving more than the 15k because you will also save on the interest that 15k would accrue while you are in school. But other posters have pointed out several reasons why it is important to have a safety net. If something unexpected ends up happening you might end up having to use a credit card or some other high interest loan.

FWIW I never took out full cost of living loans and found it pretty easy to still have money to go out to eat, to bars etc. But a big part of that was that I had roommates.

[mcs268]

Thank you, that was very helpful. I also need to take out more because origination fees, correct?

[BaiAilian2013]

If it matters to you, living frugally is probably more likely to affect your social life in law school than it would have in undergrad. In my experience, law students have a different idea of a fun dinner out than anyone I knew before law school.