Is T-14 worth the debt?

(Please Ask Questions and Answer Questions)
Nomo
Posts: 700
Joined: Thu Feb 27, 2014 2:06 am

Re: Is T-14 worth the debt?

Postby Nomo » Thu Jan 22, 2015 1:44 pm

Lieut Kaffee wrote:
Nomo wrote:I'm going to assume you're talking about paying with debt (the numbers are a little better if you can pay in cash).

Georgetown at sticker puts you at 293k debt at repayment. The interest rates on that debt are absurd. On a 10 year repayment plan you're looking at $3,400 per month. That's approximately 40% of your take home pay as a first-year biglaw associate. Even on a 25 year plan you're paying over 2k a month.

The only way you pay off that kind of loan at that kind of interest rate is if you get into biglaw, stay for 5 or 6 years, exit into a high paying job, and stay in that job 10+ years. Borrowing that kind of money you are literally trapping yourself in a workplace, culture, and lifestyle that most people dislike. You aren't going to get out of debt until your mid 40's, and even then you're just going to be another person with a ton of debt and no assets. I don't think anyone should borrow that kind of money for Georgetown (which doesn't give you a great shot at biglaw). I don't think you should borrow it for Chicago, which does give you a good shot at biglaw - because you're still trapped. Maybe its worth it at a school with a really good LRAP plan, that's not tied to IBR/PAYE/PSLF, but even then I don't know that anyone wants that kind of debt hanging over their head. Better pray that the LRAP doesn't change or go away.


How did you arrive at the bolded figure?


Assumed this person is entering repayment at age 28. Assumed the first 5 years on a 10 year repayment plan. Assumed this person would be able to refinance into a new 10 year repayment plan at about 4% interest once the principal had decreased. And would take the full 10 years to pay it off. Putting the person at 43 when the debt is fully repaid.

I realize that this is a pretty ambitious plan. But I think it can be done if you can last 5 years in biglaw and then lateral into something that minimizes your paycut. If you're 3 years in biglaw and then lateral into a 100k/yr. w/ an average of 6% pay increases per year (which isn't a terrible outcome) its a very different ball game.

User avatar
Lieut Kaffee
Posts: 774
Joined: Wed Nov 11, 2009 2:01 am

Re: Is T-14 worth the debt?

Postby Lieut Kaffee » Thu Jan 22, 2015 1:48 pm

Nomo wrote:
Lieut Kaffee wrote:
Nomo wrote:I'm going to assume you're talking about paying with debt (the numbers are a little better if you can pay in cash).

Georgetown at sticker puts you at 293k debt at repayment. The interest rates on that debt are absurd. On a 10 year repayment plan you're looking at $3,400 per month. That's approximately 40% of your take home pay as a first-year biglaw associate. Even on a 25 year plan you're paying over 2k a month.

The only way you pay off that kind of loan at that kind of interest rate is if you get into biglaw, stay for 5 or 6 years, exit into a high paying job, and stay in that job 10+ years. Borrowing that kind of money you are literally trapping yourself in a workplace, culture, and lifestyle that most people dislike. You aren't going to get out of debt until your mid 40's, and even then you're just going to be another person with a ton of debt and no assets. I don't think anyone should borrow that kind of money for Georgetown (which doesn't give you a great shot at biglaw). I don't think you should borrow it for Chicago, which does give you a good shot at biglaw - because you're still trapped. Maybe its worth it at a school with a really good LRAP plan, that's not tied to IBR/PAYE/PSLF, but even then I don't know that anyone wants that kind of debt hanging over their head. Better pray that the LRAP doesn't change or go away.


How did you arrive at the bolded figure?


Assumed this person is entering repayment at age 28. Assumed the first 5 years on a 10 year repayment plan. Assumed this person would be able to refinance into a new 10 year repayment plan at about 4% interest once the principal had decreased. And would take the full 10 years to pay it off. Putting the person at 43 when the debt is fully repaid.

I realize that this is a pretty ambitious plan. But I think it can be done if you can last 5 years in biglaw and then lateral into something that minimizes your paycut. If you're 3 years in biglaw and then lateral into a 100k/yr. w/ an average of 6% pay increases per year (which isn't a terrible outcome) its a very different ball game.

I was thinking it was the opposite of ambitious. I will have my debt (amount in the same ballpark you used) paid off by my mid-30s.

Nomo
Posts: 700
Joined: Thu Feb 27, 2014 2:06 am

Re: Is T-14 worth the debt?

Postby Nomo » Thu Jan 22, 2015 3:12 pm

Lieut Kaffee wrote:
Nomo wrote:
Lieut Kaffee wrote:
Nomo wrote:I'm going to assume you're talking about paying with debt (the numbers are a little better if you can pay in cash).

Georgetown at sticker puts you at 293k debt at repayment. The interest rates on that debt are absurd. On a 10 year repayment plan you're looking at $3,400 per month. That's approximately 40% of your take home pay as a first-year biglaw associate. Even on a 25 year plan you're paying over 2k a month.

The only way you pay off that kind of loan at that kind of interest rate is if you get into biglaw, stay for 5 or 6 years, exit into a high paying job, and stay in that job 10+ years. Borrowing that kind of money you are literally trapping yourself in a workplace, culture, and lifestyle that most people dislike. You aren't going to get out of debt until your mid 40's, and even then you're just going to be another person with a ton of debt and no assets. I don't think anyone should borrow that kind of money for Georgetown (which doesn't give you a great shot at biglaw). I don't think you should borrow it for Chicago, which does give you a good shot at biglaw - because you're still trapped. Maybe its worth it at a school with a really good LRAP plan, that's not tied to IBR/PAYE/PSLF, but even then I don't know that anyone wants that kind of debt hanging over their head. Better pray that the LRAP doesn't change or go away.


How did you arrive at the bolded figure?


Assumed this person is entering repayment at age 28. Assumed the first 5 years on a 10 year repayment plan. Assumed this person would be able to refinance into a new 10 year repayment plan at about 4% interest once the principal had decreased. And would take the full 10 years to pay it off. Putting the person at 43 when the debt is fully repaid.

I realize that this is a pretty ambitious plan. But I think it can be done if you can last 5 years in biglaw and then lateral into something that minimizes your paycut. If you're 3 years in biglaw and then lateral into a 100k/yr. w/ an average of 6% pay increases per year (which isn't a terrible outcome) its a very different ball game.

I was thinking it was the opposite of ambitious. I will have my debt (amount in the same ballpark you used) paid off by my mid-30s.


That's great. How many years have you been making payments? And how much of a dent have you made into the principal so far?

Also, isn't it a little hard to say that you "will" have it paid off by your mid-30's if you aren't already really close to your mid-30's? (Your salary could get much larger or much smaller over time)

Finally, I find it hard to imagine your debt was around 293k, because that's based on current tuition plus tuition increases over the next few years. I guess you could have law school and undergrad debt. But if that's the case, then the undergrad debt probably wasn't borrowed at 8% interest. Am I wrong about that?

User avatar
bjsesq
TLS Poet Laureate
Posts: 13383
Joined: Fri Nov 19, 2010 3:02 am

Re: Is T-14 worth the debt?

Postby bjsesq » Thu Jan 22, 2015 3:17 pm

Nomo wrote:Finally, I find it hard to imagine your debt was around 293k, because that's based on current tuition plus tuition increases over the next few years. I guess you could have law school and undergrad debt. But if that's the case, then the undergrad debt probably wasn't borrowed at 8% interest. Am I wrong about that?


Yes, you are wrong. I had a 60k scholly to a T14, 5k in UG debt, and graduated with 215k in the hole waiting.

User avatar
Lieut Kaffee
Posts: 774
Joined: Wed Nov 11, 2009 2:01 am

Re: Is T-14 worth the debt?

Postby Lieut Kaffee » Thu Jan 22, 2015 3:31 pm

Nomo wrote:
Lieut Kaffee wrote:
Nomo wrote:Assumed this person is entering repayment at age 28. Assumed the first 5 years on a 10 year repayment plan. Assumed this person would be able to refinance into a new 10 year repayment plan at about 4% interest once the principal had decreased. And would take the full 10 years to pay it off. Putting the person at 43 when the debt is fully repaid.

I realize that this is a pretty ambitious plan. But I think it can be done if you can last 5 years in biglaw and then lateral into something that minimizes your paycut. If you're 3 years in biglaw and then lateral into a 100k/yr. w/ an average of 6% pay increases per year (which isn't a terrible outcome) its a very different ball game.

I was thinking it was the opposite of ambitious. I will have my debt (amount in the same ballpark you used) paid off by my mid-30s.


That's great. How many years have you been making payments? And how much of a dent have you made into the principal so far?

Also, isn't it a little hard to say that you "will" have it paid off by your mid-30's if you aren't already really close to your mid-30's? (Your salary could get much larger or much smaller over time)

Finally, I find it hard to imagine your debt was around 293k, because that's based on current tuition plus tuition increases over the next few years. I guess you could have law school and undergrad debt. But if that's the case, then the undergrad debt probably wasn't borrowed at 8% interest. Am I wrong about that?

Are we talking about different career paths? I thought it was pretty common knowledge that paying a full debt load inside of 10 years is feasible if you land Big Law. The salary only goes one way: up.

Nomo
Posts: 700
Joined: Thu Feb 27, 2014 2:06 am

Re: Is T-14 worth the debt?

Postby Nomo » Thu Jan 22, 2015 6:43 pm

Lieut Kaffee wrote:
Nomo wrote:
Lieut Kaffee wrote:
Nomo wrote:Assumed this person is entering repayment at age 28. Assumed the first 5 years on a 10 year repayment plan. Assumed this person would be able to refinance into a new 10 year repayment plan at about 4% interest once the principal had decreased. And would take the full 10 years to pay it off. Putting the person at 43 when the debt is fully repaid.

I realize that this is a pretty ambitious plan. But I think it can be done if you can last 5 years in biglaw and then lateral into something that minimizes your paycut. If you're 3 years in biglaw and then lateral into a 100k/yr. w/ an average of 6% pay increases per year (which isn't a terrible outcome) its a very different ball game.

I was thinking it was the opposite of ambitious. I will have my debt (amount in the same ballpark you used) paid off by my mid-30s.


That's great. How many years have you been making payments? And how much of a dent have you made into the principal so far?

Also, isn't it a little hard to say that you "will" have it paid off by your mid-30's if you aren't already really close to your mid-30's? (Your salary could get much larger or much smaller over time)

Finally, I find it hard to imagine your debt was around 293k, because that's based on current tuition plus tuition increases over the next few years. I guess you could have law school and undergrad debt. But if that's the case, then the undergrad debt probably wasn't borrowed at 8% interest. Am I wrong about that?

Are we talking about different career paths? I thought it was pretty common knowledge that paying a full debt load inside of 10 years is feasible if you land Big Law. The salary only goes one way: up.


The vast majority of people take a paycut when they leave. And people start leaving before the end of year 1. Though most people last 3-5 years. Going 10 years means you've probably made partner (to the extent that non-equity partners really count as partners) and we all know that very few incoming associates will become partners.

Nomo
Posts: 700
Joined: Thu Feb 27, 2014 2:06 am

Re: Is T-14 worth the debt?

Postby Nomo » Thu Jan 22, 2015 6:48 pm

bjsesq wrote:
Nomo wrote:Finally, I find it hard to imagine your debt was around 293k, because that's based on current tuition plus tuition increases over the next few years. I guess you could have law school and undergrad debt. But if that's the case, then the undergrad debt probably wasn't borrowed at 8% interest. Am I wrong about that?


Yes, you are wrong. I had a 60k scholly to a T14, 5k in UG debt, and graduated with 215k in the hole waiting.


AT 8% interest 215k is a lot less than 293k. On a 10 year repayment scale its about $900 less per month.

User avatar
Lieut Kaffee
Posts: 774
Joined: Wed Nov 11, 2009 2:01 am

Re: Is T-14 worth the debt?

Postby Lieut Kaffee » Fri Jan 23, 2015 5:30 am

Nomo wrote:The vast majority of people take a paycut when they leave. And people start leaving before the end of year 1. Though most people last 3-5 years. Going 10 years means you've probably made partner (to the extent that non-equity partners really count as partners) and we all know that very few incoming associates will become partners.

People start leaving after year 1 if they have $250k-$300k in debt?? Seems like a pretty unsound decision. Me? I anticipate no problem paying off my balance before I'm pressed into any "partnership or leave" kind of decisions, which would occur around year 8.

Nomo
Posts: 700
Joined: Thu Feb 27, 2014 2:06 am

Re: Is T-14 worth the debt?

Postby Nomo » Fri Jan 23, 2015 3:30 pm

Lieut Kaffee wrote:
Nomo wrote:The vast majority of people take a paycut when they leave. And people start leaving before the end of year 1. Though most people last 3-5 years. Going 10 years means you've probably made partner (to the extent that non-equity partners really count as partners) and we all know that very few incoming associates will become partners.

People start leaving after year 1 if they have $250k-$300k in debt?? Seems like a pretty unsound decision. Me? I anticipate no problem paying off my balance before I'm pressed into any "partnership or leave" kind of decisions, which would occur around year 8.


Its an unsound financial decision. But some people just can't take it psychologically. Some people are totally miserable. Some people want to see their kids before they go to sleep at night. There are a million reasons why people leave.

And some people are forced out. Occasionally firms implode. Layoffs do happen. Stealth layoffs occur in slow practice groups somewhat regularly.

But the bigger problem is that with 300k debt at 8 percent interest, even if you go 5 years making $3,400 per month payments, you still have the kind of debt that is normally associated with new home purchase in most of the country. That's absolutely crazy.

User avatar
fats provolone
Posts: 7125
Joined: Thu Oct 30, 2014 4:44 pm

Re: Is T-14 worth the debt?

Postby fats provolone » Fri Jan 23, 2015 3:32 pm

kaffee didn't you graduate a while ago? you haven't noticed that like 80% of your class is gone? i think there are like 2 sixth years at my firm

User avatar
bjsesq
TLS Poet Laureate
Posts: 13383
Joined: Fri Nov 19, 2010 3:02 am

Re: Is T-14 worth the debt?

Postby bjsesq » Fri Jan 23, 2015 3:42 pm

fats provolone wrote:kaffee didn't you graduate a while ago? you haven't noticed that like 80% of your class is gone? i think there are like 2 sixth years at my firm

He was in my class.

User avatar
Lieut Kaffee
Posts: 774
Joined: Wed Nov 11, 2009 2:01 am

Re: Is T-14 worth the debt?

Postby Lieut Kaffee » Fri Jan 23, 2015 5:12 pm

Nomo wrote:That's absolutely crazy.

You're right about this. This kind of debt is absolutely crazy. But then again so is making a $170,000 salary as a 28 year old with minimal skills, lol. I feel blessed and fortunate, to be honest. Law school at cost is a horrible decision for most people, which is the point you're making, but the point you're missing is that it actually does work out for a few people. If you are able to get Big Law and you find yourself in a place with people you like, getting out of the debt doesn't seem so daunting.
Last edited by Lieut Kaffee on Fri Jan 23, 2015 5:17 pm, edited 1 time in total.

User avatar
Lieut Kaffee
Posts: 774
Joined: Wed Nov 11, 2009 2:01 am

Re: Is T-14 worth the debt?

Postby Lieut Kaffee » Fri Jan 23, 2015 5:14 pm

fats provolone wrote:kaffee didn't you graduate a while ago? you haven't noticed that like 80% of your class is gone? i think there are like 2 sixth years at my firm

No one in my 35-person class has left, save for one clerk who had the gig lined up before she even started at the firm. We also have dozens of 4-6th years. I am close socially with one 5th year and two 8th years, all very happy.

User avatar
fats provolone
Posts: 7125
Joined: Thu Oct 30, 2014 4:44 pm

Re: Is T-14 worth the debt?

Postby fats provolone » Fri Jan 23, 2015 5:25 pm

happy for you bro well done

User avatar
Lieut Kaffee
Posts: 774
Joined: Wed Nov 11, 2009 2:01 am

Re: Is T-14 worth the debt?

Postby Lieut Kaffee » Fri Jan 23, 2015 5:26 pm

bjsesq wrote:
fats provolone wrote:kaffee didn't you graduate a while ago? you haven't noticed that like 80% of your class is gone? i think there are like 2 sixth years at my firm

He was in my class.

classES. I was in your classES. Ah, nostalgia.

User avatar
bjsesq
TLS Poet Laureate
Posts: 13383
Joined: Fri Nov 19, 2010 3:02 am

Re: Is T-14 worth the debt?

Postby bjsesq » Fri Jan 23, 2015 5:28 pm

Lieut Kaffee wrote:
bjsesq wrote:
fats provolone wrote:kaffee didn't you graduate a while ago? you haven't noticed that like 80% of your class is gone? i think there are like 2 sixth years at my firm

He was in my class.

classES. I was in your classES. Ah, nostalgia.

Did I ever openly harass you in class? I know I did a shitload of people, but I'm not sure if you were ever one of them.

User avatar
Lieut Kaffee
Posts: 774
Joined: Wed Nov 11, 2009 2:01 am

Re: Is T-14 worth the debt?

Postby Lieut Kaffee » Fri Jan 23, 2015 5:32 pm

bjsesq wrote:
Lieut Kaffee wrote:
bjsesq wrote:
fats provolone wrote:kaffee didn't you graduate a while ago? you haven't noticed that like 80% of your class is gone? i think there are like 2 sixth years at my firm

He was in my class.

classES. I was in your classES. Ah, nostalgia.

Did I ever openly harass you in class? I know I did a shitload of people, but I'm not sure if you were ever one of them.

You almost always waited until after class for that.




Return to “Law School FAQ”

Who is online

Users browsing this forum: No registered users and 2 guests