Even if you go to a school like Stanford...

(Please Ask Questions and Answer Questions)
poorperson
Posts: 4
Joined: Mon Sep 12, 2011 12:01 pm

Even if you go to a school like Stanford...

Postby poorperson » Mon Sep 12, 2011 12:13 pm

and get a biglaw job that pays $160,000 per year, how can you afford to pay off your student loans? Assuming you end up paying sticker price.

According to their website, Stanford's budget is about $75,000 per year (yikes).

According to http://www.finaid.org/calculators/loanpayments.phtml, assuming a 10-year repayment program, 6.8 percent interest, and devoting 10 percent of your monthly income to repaying student loans, you need an annual salary of $310,717 to be able to pay off a loan balance of $225,000 comfortably. If you devote 15 percent of your monthly income to loan repayment, you only need an annual salary of $207,000... But this is still a lot more than $160,000.

Obviously plenty of people graduate from Stanford and are able to comfortably repay their loans, so I know I am missing something here. But I would like someone to please explain it to me, since so many people say they would definitely go to Stanford at sticker price.

Are people able to finance their own living expenses? I definitely wouldn't be able to do that, since I'm poor. I would need to take out loans for EVERYTHING. Are people that go to Stanford (or Harvard, or Yale, or any top law school at sticker price) independently wealthy or something?

User avatar
fathergoose
Posts: 853
Joined: Fri Dec 11, 2009 3:36 pm

Re: Even if you go to a school like Stanford...

Postby fathergoose » Mon Sep 12, 2011 12:18 pm

10% seems like a ridiculously low amount. Even IBR is 15% I think.

I would think that something between 25-33% would be a more realistic amount to set as your floor.

poorperson
Posts: 4
Joined: Mon Sep 12, 2011 12:01 pm

Re: Even if you go to a school like Stanford...

Postby poorperson » Mon Sep 12, 2011 12:20 pm

That's what I thought too, but since this website seems to use 10 percent as the typical floor, I thought that's what most people did, since I really know nothing about any of this. But thanks. That obviously helps to answer my question.

User avatar
Bildungsroman
Posts: 5548
Joined: Sun Apr 11, 2010 2:42 pm

Re: Even if you go to a school like Stanford...

Postby Bildungsroman » Mon Sep 12, 2011 12:20 pm

poorperson wrote: devoting 10 percent of your monthly income to repaying student loans

Guess you need to devote more than 10% of your monthly income to repaying student loans.

DanInALionsDen
Posts: 296
Joined: Tue Oct 13, 2009 1:00 am

Re: Even if you go to a school like Stanford...

Postby DanInALionsDen » Mon Sep 12, 2011 12:21 pm

And if you devote 1% of your income to paying off your debt you'd need like... like... 1 gajillion dollars a year in annual income!!! The answer is you put in more of your income.

User avatar
fathergoose
Posts: 853
Joined: Fri Dec 11, 2009 3:36 pm

Re: Even if you go to a school like Stanford...

Postby fathergoose » Mon Sep 12, 2011 12:23 pm

I think 10% of a lower salary would be more realistic. I think the more relevant number would be the percentage of disposable income used on paying back your loans as opposed to percentage of total income.

User avatar
Hawkeye Pierce
Posts: 1261
Joined: Tue Sep 21, 2010 12:18 am

Re: Even if you go to a school like Stanford...

Postby Hawkeye Pierce » Mon Sep 12, 2011 12:26 pm

If I remember correctly, the number is something like 2500USD a month to payback sticker loans over 10 years. That's 30k, and take home income in, for example, NYC should be around 95-100k (don't remember the exact amount), which means roughly 1/3 of your take home income (70K remaining)

Assume something like 2k in rent a year for NYC: 70k-24k = 46k
Assume putting 16.5k into 401K and 5k into roth IRA: 46k-21.5k = 24.5k

I have no idea how much you'd be spending on food/other miscellaneous expenses a month. 1k max? 24.5k-12k = 12.5k disposable with a 160k salary.
Last edited by Hawkeye Pierce on Mon Sep 12, 2011 12:32 pm, edited 2 times in total.

lightbulb1986
Posts: 135
Joined: Fri Sep 11, 2009 2:29 pm

Re: Even if you go to a school like Stanford...

Postby lightbulb1986 » Mon Sep 12, 2011 12:27 pm

.
Last edited by lightbulb1986 on Sun Apr 24, 2016 1:47 am, edited 1 time in total.

User avatar
Bronte
Posts: 2128
Joined: Sun Jan 04, 2009 10:44 pm

Re: Even if you go to a school like Stanford...

Postby Bronte » Mon Sep 12, 2011 1:03 pm

On a Cravath scale salary (which increases from $160,000 to $230,000, plus bonuses, over the course of five years), you can pay off $200,000 in five years assuming a 9% interest rate. Your average after-tax (assuming a 40% tax rate), after-loan payment income will be over $77,000 a year.

User avatar
SarahKerrigan
Posts: 126
Joined: Sun Jul 31, 2011 5:02 pm

Re: Even if you go to a school like Stanford...

Postby SarahKerrigan » Mon Sep 12, 2011 3:34 pm

Are there any statistics for people that actually pay off their loans in 10 years? I'd assume that most people try to do the income based repayment or the extended repayment. But i guess you will end up paying a crap ton more if you don't do it in 10 years ><

dkt4
Posts: 316
Joined: Sat Feb 05, 2011 6:33 pm

Re: Even if you go to a school like Stanford...

Postby dkt4 » Tue Sep 13, 2011 3:59 am

this thread flabbergasts me.

TooOld4This
Posts: 638
Joined: Sat Jul 23, 2011 11:09 am

Re: Even if you go to a school like Stanford...

Postby TooOld4This » Wed Sep 14, 2011 9:03 am

That calculator is basically useless. It does not take into account the fact that necessary living expenses do not really increase as your income goes up. When you are making $160k/year, you have a lot of discretionary income. Put that income towards paying off loans rather than increasing your lifestyle expenses and your loans are quite manageable.

User avatar
Bronte
Posts: 2128
Joined: Sun Jan 04, 2009 10:44 pm

Re: Even if you go to a school like Stanford...

Postby Bronte » Wed Sep 14, 2011 12:49 pm

TooOld4This wrote:That calculator is basically useless. It does not take into account the fact that necessary living expenses do not really increase as your income goes up. When you are making $160k/year, you have a lot of discretionary income. Put that income towards paying off loans rather than increasing your lifestyle expenses and your loans are quite manageable.


Many major market firms also pay something like this:

First year – $160,000 + $7,500 bonus
Second year — $170,000 + $10,000 bonus
Third year — $185,000 + $15,000 bonus
Fourth year — $210,000 + $20,000 bonus
Fifth year — $230,000 + $25,000 bonus

It's very easy to set up a spreadsheet to this effect. Here's one I made: https://docs.google.com/spreadsheet/ccc ... n_US#gid=0. Feel free to critique.

User avatar
MartianManhunter
Posts: 133
Joined: Sat Mar 28, 2009 10:59 pm

Re: Even if you go to a school like Stanford...

Postby MartianManhunter » Wed Sep 14, 2011 1:08 pm

Assuming you didn't receive any type of grant aid from Stanford (and if you're as poor as you claim, you will and it will be substantial), why on earth would you take out the full estimated cost of attendance? You could easily make some living choices that could save you about 30-45k (cheaper housing and used books, for starters). If you made saving more than that a priority, your total bill could definitely be brought to 50k less than sticker.

User avatar
Patriot1208
Posts: 7044
Joined: Tue May 18, 2010 11:28 am

Re: Even if you go to a school like Stanford...

Postby Patriot1208 » Fri Sep 16, 2011 8:59 am

poorperson wrote:
According to http://www.finaid.org/calculators/loanpayments.phtml, assuming a 10-year repayment program, 6.8 percent interest, and devoting 10 percent of your monthly income to repaying student loans, you need an annual salary of $310,717 to be able to pay off a loan balance of $225,000 comfortably.

wut?

What is comfortably? In NYC, likely the highest taxed place you would live, you would have 96k on that 160 base after taxes. Now tell me how you can't pay off at least 1/8th of your principal with 96k after taxes and still live comfortably?

shoeshine
Posts: 1241
Joined: Wed May 04, 2011 10:58 pm

Re: Even if you go to a school like Stanford...

Postby shoeshine » Fri Sep 16, 2011 9:32 am

That calculator and its percentages are more helpful in lower income brackets.

User avatar
Mike12188
Posts: 792
Joined: Thu Apr 09, 2009 3:07 am

Re: Even if you go to a school like Stanford...

Postby Mike12188 » Fri Sep 16, 2011 9:37 am

This thread is dumb.




Return to “Law School FAQ”

Who is online

Users browsing this forum: No registered users and 2 guests