Loan Repayment Estimations

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Octavius
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Loan Repayment Estimations

Postby Octavius » Wed Apr 29, 2015 10:05 pm

0L here, attending UMich this fall. Will be financing through a combination of loans and savings.

My total COA will be ~165k.

Assuming aggressive repayment and private sector market salary (I know, just humor me here) approximately how long will repayment take?

Would love to hear any insight from current/former law students who are in a similar situation.

I've tried using several of the loan repayment calculators, but got vastly different estimates depending on which I used.

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twenty
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Re: Loan Repayment Estimations

Postby twenty » Wed Apr 29, 2015 10:32 pm

"Aggressive" is kind of vague. If you moved back in with your parents/your SO was paying for your housing, you got biglaw at 160k first year, you eat top ramen and brew your own coffee in the mornings, you could probably pay it off in three or so years. But part of the feeling is that you want to be making a biglaw salary so you can actually enjoy it, not flush it down the toilet in student loans. Comfortably, 4-5 years.

blsingindisguise
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Re: Loan Repayment Estimations

Postby blsingindisguise » Wed Apr 29, 2015 10:56 pm

Impossible to answer, too many variables. Let's say you get NYC Biglaw though -- I'd guess that in order to pay off the balance in 4-5 years you'd have to make monthly payments of something like $3500-4000/month.

Your biglaw salary in year 1 would be about 160k, which I'd guess is something like 9000/month takehome in NYC, maybe less after health insurance. So in order to repay in five years, you have to (1) survive five years in biglaw and (2) live in a way that allows you to spend 35%-45% of your income (first year, with percent gradually declining over the following four years) on loan payments.

9000 - 4000 still leaves you 5k/month to live on, still the takehome pay equivalent of a pretty good job for a young single person. If you're willing to live with roommates, you can easily keep your rent to like $1200-1400 month and still live in a nice area with a good commute. Then you just have to not go crazy with the bar-hopping and restaurants and travel and high lifestyle expenses. So it's possible. In that scenario I'd probably even up the payments every subsequent year, because I'd be afraid to wash out of biglaw too soon.

blsingindisguise
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Re: Loan Repayment Estimations

Postby blsingindisguise » Wed Apr 29, 2015 10:58 pm

I would also just keep in mind that you're committing to never living that baller lifestyle that biglaw might make you feel entitled to. Because after those 3-5 years in biglaw, you're going to land somewhere that pays less.

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JohannDeMann
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Re: Loan Repayment Estimations

Postby JohannDeMann » Thu Apr 30, 2015 1:59 am

an education is a lifetime investment. youll live better and breathe easier if you just prepare to have debt for 20 years.

blsingindisguise
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Re: Loan Repayment Estimations

Postby blsingindisguise » Thu Apr 30, 2015 10:17 am

JohannDeMann wrote:an education is a lifetime investment. youll live better and breathe easier if you just prepare to have debt for 20 years.


I love the creative and freewheeling use of the word "investment" here. Most investments involve an analysis of the costs and returns.

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Octavius
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Re: Loan Repayment Estimations

Postby Octavius » Thu Apr 30, 2015 1:29 pm

Thanks so much for the replies guys! Yeah, I know a lot of things are circumstantial and there are many variables to consider. I just want to make sure that a) this isn't batshit crazy and b) I won't be a debt slave for my entire life. I'm a fairly frugal person, as in the things I like doing aren't really that pricey. No debt from undergrad too, which is a blessing.

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LA Spring
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Re: Loan Repayment Estimations

Postby LA Spring » Thu Apr 30, 2015 2:06 pm

$160k (plus living expenses) is an incredible huge nut for a school that only places 40% in large firms (according to LST). Bigger firms are generally in expensive large metros where a $4 burger costs $12, a $150k house runs $500k and on it goes. Making Seven years of $2.5k payments isn’t as effortless as it appears.

blsingindisguise
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Re: Loan Repayment Estimations

Postby blsingindisguise » Thu Apr 30, 2015 2:50 pm

I don't think it's "batshit crazy" but it's not a decision to make lightly either, that kind of debt load will have a measurable and marked impact on your life. What if you don't get biglaw and wind up working in some smaller market shop at like $85K? What if you wind up in govt? Do you want to buy a house within a couple years of starting work? Are you planning to start a family?

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nealric
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Re: Loan Repayment Estimations

Postby nealric » Thu Apr 30, 2015 3:40 pm

For what it's worth, it took me just under 5 years to pay off $70k of debt on a biglaw salary. I didn't eat ramen, but I didn't ball out of control either. I'm still driving my paid-for 13 year old car. Now, I had significant other expenses (spouse's tuition, bought a house, etc.), but the point is that it's tough to predict. I thought my debt would be gone in 18 months when I was a 0L.

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Desert Fox
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Re: Loan Repayment Estimations

Postby Desert Fox » Thu Apr 30, 2015 3:48 pm

160k? Are you factoring in interest from day 1? Are you factoring in rising tuition?

My first year was about 69k, but by the time I started paying those loans back I had 250k.




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