Advice on High Student Loans and Clerkships

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Advice on High Student Loans and Clerkships

Postby Anonymous User » Sat Feb 02, 2013 3:26 pm

So I'm a 2L at a lower T14 inside the top 10% of the class and on LR. I have a firm job lined up in non-NYC $160k paying market (they have a 99%+ summer offer rate). I'm looking at about $200k in debt when I graduate (I'm on a minimal scholarship at my T14). My school is starting to push clerkships fairly aggressively - I definitely have an interest in a federal clerkship (open to either district court or appellate level in a region of the country I have ties to) and putting money aside I'd like to try and clerk right after I graduate instead of working at a firm for a few years and then clerking.

When I express my hesitance about taking on a clerkship due to financial concerns, my schools clerkship advisors and faculty advisors have largely brushed it aside, saying long term the clerkship credential will be more beneficial to my career than worrying about the inability to start paying down my debt in year one post-school. I figure it will cost $14,000 just to pay my loan interest for a year, which on a clerk's salary (I think) is doable if I live frugally?

So my question for you all - are my career/faculty advisors right? Would it make sense to clerk straight out of law school if I get the opportunity? I genuinely enjoy the law, law school, and I think I would benefit from a clerkship. Thoughts?

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Re: Advice on High Student Loans and Clerkships

Postby Anonymous User » Sat Feb 02, 2013 3:43 pm

I'm in a similar position (2L about to apply with lots of debt) and have given this a decent bit of thought:

Clerking initially imposes additional costs that aren't even related to loan payments or foregone salary, especially if you are clerking some place that isn't where your firm is. As a law student, if you get interviews, you will be paying your own way in hotel/airfare to go interview several times over. After graduation, if you get a clerkship, you won't necessarily have your firm covering your moving costs or bar/barprep fees like you would if you were going to a firm right away (though they might still cover it if you accept their offer). You would likely have to move one more time than you would if you weren't clerking. It will be harder to get the initial things you may want when you move (e.g. wardrobe, furniture, car, etc) because you will be on a clerk's salary rather than an associate's salary. Granted you can scrimp on those, and you might have anyway, but it just makes things that much harder initially.

Financials aren't necessarily the only thing. Clerking right out of school is likely easier on your life in a non-financial sense. You won't have to interrupt your work at a firm than if you go firm-->clerk-->firm. Being younger, moving and living somewhere for 1-2 years is likely less of a big deal than it would be later on down the line where you might possible have a family or other responsibilities. You're also taking a large short term financial hit (around $50k in foregone salary after you factor in bonus). This might mean staying in biglaw longer than you otherwise would have to to pay off your debt (though, alternatively, you are essentially "making" around $100k your first year while working what likely amount to non-biglaw hours). Granted in the long run it isn't a lot of money overall, it does make your life harder in the short term.

It really is up to you. Don't let your school or anyone else pressure you into clerking if the financial and convenience factors aren't worth it to you. Your school advisers obviously has a conflict of interest on top of their own biases. Take a good hard look at how much it's going to cost you (not just financially), how that cost is going to affect your life, and decide for you whether the benefits you want out of a clerkship are worth those costs.

For me, I think it's worth it to try for it. If I were to get it right out fo school, my life wouldn't be as financially comfortable than if I didn't clerk but that is worth it to me. I'd also rather take the financial hit early than have to deal with the convenience hit later that would come with clerking after working when my personal/family life would likely be further progressed than it would be right after graduation.

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Re: Advice on High Student Loans and Clerkships

Postby Anonymous User » Sat Feb 02, 2013 3:45 pm

You will qualify for IBR in your clerkship. Any subsidized loans you have will continue to be subsidized (IE will not accrue interest) and you can pay considerably less than your interest due with no penalties (aside from the interest being recapitalized).

If your firm gives a $50k clerkship bonus, you are looking at max $50k lost earnings for 1 year of clerking. It's actually less than that considering the higher marginal tax rate you would be paying at your firm and the benefit of IBR for your clerkship year.

It's obviously a personal decision you have to make, but I tend to lean toward agreeing with your professors. Especially if you are interested in litigation, doubly so if you are interested in biggov or USAO; especially if you can land a clerkship in the region in which you will practice, and doubly so if it's a highfalutin COA clerkship. It will help your career down the line, and in the scheme of your lifetime $50k is small potatoes.




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