thestillpoint wrote:I did not factor that in when figuring out just the total amount I would owe, assuming I did not pay down any of the debt while in law school. However, I do plan to work at a firm for 2L summer, so I know that I could pay down some/most of the interest that was accruing while I was in school. Regardless, SFS confirmed that I would have accrued almost $50,000 in additional interest by graduation-- so it might be more like $20,000 if I put my 2L money towards that. That's on top of the projected $227,000 to cover tuition and living expenses.
However, I am also interested in a clerkship after graduation. It looks like clerkships *may* be LIPP eligible: "Graduates who intend to take a LIPP-qualifying position after the clerkship is completed are eligible for LIPP assistance under certain provisions." But this doesn't sound like a sure thing, especially since I don't think I'd be taking a LIPP eligible job directly afterwards-- so the 6 month grace period would run out during the clerkship, and I think I might have to save some of my money from 2L summer to ensure I could start making my loans payments while also covering the cost of living on a clerkship salary.
After multiple conversations with SFS, it looks like I'd owe between $3,000 - $3,500 a month for 10 years to pay off my loans. Even with a big law salary, that's an intimidating amount of money.
How are you arriving at the $50,000 figure? Economics/accounting is not my strong suit, but I'm struggling to understand how you could accrue that much interest in 3 years. Most loans have an annual interest rate of between 5-8% (HLS website says that Stafford is 6.8%, Perkins is 5%, and HLS loans are 7%). Stafford is unsubsidized, Perkins is subsidized, and HLS loans are a mixture, so not even all of these loans would generate interest while you were in school. Still, even if you assumed that all of your loans began accruing interest immediately, and they all had a rate of 8%, I don't see how ~75k a year in annual loans generates 50k in interest over a three year span.
I'm not suggesting that I'm right about this, given my limited understanding of the subject. I also haven't been able to apply for aid yet, so I don't have all the details laid out in front of me. I'd just be interested to know how you reached that number.
All of the loans I was offered were unsubsidized. Stafford loans have a 6.8% fixed interest rate, compounded quarterly, and I only received a small portion of my loans as Stafford Loans. I'm looking at taking out the vast majority as Federal DirectPLUS loans, which have a 7.9% interest rate, compounded annually. Not to mention that both of these types of loans have loan fees (the Stafford has a much lower fee though). Thus, half of the $75,000 to cover 1L year (this does presume taking out the full amount for living expenses, but also I cannot live on campus and Cambridge has a high COL) would start to accrue interest from this August when it is disbursed. The other half of the $75,000 would accrue interest starting from January when it is disbursed, and so on, until graduation.
When I did out the math for the amount of interest that would accrue before graduation, I was also very surprised at how high it is. Also, bear in mind, interest will continue to accrue during the "6 month grace period" after graduation before you enter the repayment period-- so it's really 3.5 years of accrued interest for some of those loans. I've spoken to two separate people in the SFS office, and both confirmed that this type of package generally accrues $40,000+ in interest by the time you begin repayment, assuming you do not pay your debt down while in school. Most students use income from their 2L summer to pay this down, but mostly that helps defray the cost of accrued interest rather than actually decreasing your loans.
I'm not sure whether you're in a similar situation, but feel free to PM me if so. I have the numbers I did out and went over with SFS. The second woman I spoke with (whose name I can give you) was particularly helpful -- and she said $380,000 to $400,000 is the ballpark total amount that would be paid back over 10 years if you only receive loans. I definitely encourage everyone to figure out the interest accruals you'll be looking at, I'm glad I took that advice they kept giving us at ASW!
ETA: Loan fees can definitely add up as well. According to SFS, it's a .05% loan fee on Stafford Loans and a 4% on the Direct GradPLUS loans. So if you need to borrow around $50,000 in GradPLUS loans each year -- that's an additional $1,000 for each disbursement, with $625 due at that time (so $3,750 total just for borrowing, since you will have loans disbursed six times while in school). Only 2.5% is due prior to disbursement, but ultimately you'll pay the full 4% fee on those loans if you decide to consolidate your debt or if you miss any of your payments in the first 12 months. So while my projected interest before repayment comes to around $41,000 -- I'm factoring in another $4,000 or so in loan fees as well.