Which law schools are worth 160k debt?

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Tempo
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Which law schools are worth 160k debt?

Postby Tempo » Tue Mar 29, 2016 6:53 pm

I'm just wondering which schools people think are worth debt equalling the starting salary for NYC Biglaw associates.

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Capitol_Idea
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Re: Which law schools are worth 160k debt?

Postby Capitol_Idea » Tue Mar 29, 2016 7:00 pm

None.

Acceptable risk levels of getting the Biglaw salary in the first place puts you in the T10 and Cornell, maybe T14 if we're feeling very charitable.

At an extremely aggressive repayment schedule and frugal living, you're still looking at ~5 years to repayment. After taxes and living expenses at a major market where you'd get that 160K salary, you could ~maybe~ pay 50K a year. I would be surprised, though. With 6.8% interest rate (and yes, Gradplus and other loans come in at higher), that's 4 years. So 4-5 and probably more is likely what you're looking at.

That's 5 years of repayment in a job that you may burn out from, or hate, or get fired from. Even HYS isn't worth that.

If you get a unicorn outcome (prestigious clerkship or placement at a SUPER great firm that pays well above market), then maybe we're talking some real value, but the chances of that even at HYS are small.

AfrocentricAsian
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Re: Which law schools are worth 160k debt?

Postby AfrocentricAsian » Tue Mar 29, 2016 8:37 pm

So 160k debt isn't worth it if one forsure gets biglaw? Im assuming most lawyers who can work biglaw in the first place are super privileged so it's hard for me to assess the criticsm of it...

mvp99
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Re: Which law schools are worth 160k debt?

Postby mvp99 » Tue Mar 29, 2016 8:49 pm

AfrocentricAsian wrote:So 160k debt isn't worth it if one forsure gets biglaw? Im assuming most lawyers who can work biglaw in the first place are super privileged so it's hard for me to assess the criticsm of it...

Nah not worth it even if biglaw was a sure thing.

edit: do you know how much in interest you'll have to pay every month?

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fliptrip
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Re: Which law schools are worth 160k debt?

Postby fliptrip » Tue Mar 29, 2016 9:37 pm

"worth" is a vague term. People's inherent debt-aversion/tolerance will greatly inform their opinion of whether $160k in debt is worth it if you land biglaw in a place where market is $160k. If the idea of needing to make double payments (~$3,600/month) on your debt for 51 months in order to free yourself from debt makes you ill, then it's definitely not worth it. I think it's probably better to show you the reality of it and let you decide.

Give yourself a little Rorschach debt test.

If you finance $160k @ 6.64% (mix of Stafford and GradPlus) on a 10 year am:

Your monthly is ~$1,800/month
Over the course of the loan you will pay $59k in interest
Using the 43% method on your biglaw salary you'll be able to spend $3,867 on housing and other debt per month.
Let's step that down...if you make $125k, you'll have $2,704, if you make $100k, you'll have $2,083, and at $80k, you'll have $1067 to spend.
If you just straight service your loans and make it two years in biglaw you'll exit owing $136k.
If you somehow make it four years, you'll exit owing $108k.

Well, what do you think?

kaiser
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Re: Which law schools are worth 160k debt?

Postby kaiser » Tue Mar 29, 2016 9:49 pm

If I had gotten into Harvard, I may have been tempted to go into 160K of debt. But aside from that, I had no intention of taking out that much and don't think any school is worth doing so. Debt sucks, and I had no intention to get into the 6 figures. I'm 3 years into practice and thank my lucky stars that I only took out 80K for law school. Some of my friends took out so much more and it really takes its toll and makes life so much more difficult, even on a biglaw salary.
Last edited by kaiser on Tue Mar 29, 2016 9:53 pm, edited 1 time in total.

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Capitol_Idea
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Re: Which law schools are worth 160k debt?

Postby Capitol_Idea » Tue Mar 29, 2016 9:52 pm

Yeah I'm going into Biglaw with half that amount of debt and a working spouse to boot, and I think I barely make the cutoff of 'worth it'

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Johann
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Re: Which law schools are worth 160k debt?

Postby Johann » Tue Mar 29, 2016 9:53 pm

depends on your views of debt. if you are trying to aggressively pay it down, i guess the T6 is fine. if debt doesn't bother you and you think of it as monopoly money, yolo. Also depends on your other options. Someone that can make 75k out of undergrad with upward mobility would be a fool to go into 160k of debt even for HYS unless they viewed their life as a complete failure without a law degree.

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Tempo
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Re: Which law schools are worth 160k debt?

Postby Tempo » Tue Mar 29, 2016 9:56 pm

fliptrip wrote:"worth" is a vague term. People's inherent debt-aversion/tolerance will greatly inform their opinion of whether $160k in debt is worth it if you land biglaw in a place where market is $160k. If the idea of needing to make double payments (~$3,600/month) on your debt for 51 months in order to free yourself from debt makes you ill, then it's definitely not worth it. I think it's probably better to show you the reality of it and let you decide.

Give yourself a little Rorschach debt test.

If you finance $160k @ 6.64% (mix of Stafford and GradPlus) on a 10 year am:

Your monthly is ~$1,800/month
Over the course of the loan you will pay $59k in interest
Using the 43% method on your biglaw salary you'll be able to spend $3,867 on housing and other debt per month.
Let's step that down...if you make $125k, you'll have $2,704, if you make $100k, you'll have $2,083, and at $80k, you'll have $1067 to spend.
If you just straight service your loans and make it two years in biglaw you'll exit owing $136k.
If you somehow make it four years, you'll exit owing $108k.

Well, what do you think?


I don't know all the technical stuff about that (like what the 43% method is), so what would this look like without any interest rate? That is, with a private no-interest loan.

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Capitol_Idea
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Re: Which law schools are worth 160k debt?

Postby Capitol_Idea » Tue Mar 29, 2016 9:59 pm

If you have a private no-interest loan are you talking about Daddy's money? Because where the hell else are you getting that kind of loan from

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fliptrip
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Re: Which law schools are worth 160k debt?

Postby fliptrip » Tue Mar 29, 2016 10:01 pm

43% method is an underwriting tool used in the mortgage industry, basically they determine your ability to service a mortage without defaulting by ensuring that your housing + your other debt service is equal to less than 43% of your pre-tax income. This is a more aggressive figure, some underwriters use 36%. It's a great proxy for affordability of debt.

Without interest your monthly is $1,333/month. If you just pay the difference between the interest bearing payment and the no-interest payment additionally each month, you'll pay it off 31 months sooner, so almost 3 years sooner.

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Tempo
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Re: Which law schools are worth 160k debt?

Postby Tempo » Tue Mar 29, 2016 10:12 pm

Capitol_Idea wrote:If you have a private no-interest loan are you talking about Daddy's money? Because where the hell else are you getting that kind of loan from


My dear ol grandaddy.

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Tempo
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Re: Which law schools are worth 160k debt?

Postby Tempo » Tue Mar 29, 2016 10:12 pm

fliptrip wrote:43% method is an underwriting tool used in the mortgage industry, basically they determine your ability to service a mortage without defaulting by ensuring that your housing + your other debt service is equal to less than 43% of your pre-tax income. This is a more aggressive figure, some underwriters use 36%. It's a great proxy for affordability of debt.

Without interest your monthly is $1,333/month. If you just pay the difference between the interest bearing payment and the no-interest payment additionally each month, you'll pay it off 31 months sooner, so almost 3 years sooner.


Ah, interesting. A philosophy major has been pretty impractical for stuff like this.

That's good to know though, thanks.

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Capitol_Idea
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Re: Which law schools are worth 160k debt?

Postby Capitol_Idea » Tue Mar 29, 2016 10:13 pm

Tempo wrote:
Capitol_Idea wrote:If you have a private no-interest loan are you talking about Daddy's money? Because where the hell else are you getting that kind of loan from


My dear ol grandaddy.

Oh in which case go nuts. Interest free and I assume pay back as you can? Knock yourself the fuck out but maybe stick within the T14 to actually help ensure you get dat Biglaw salary in the first place

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Tempo
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Re: Which law schools are worth 160k debt?

Postby Tempo » Tue Mar 29, 2016 10:21 pm

Capitol_Idea wrote:
Tempo wrote:
Capitol_Idea wrote:If you have a private no-interest loan are you talking about Daddy's money? Because where the hell else are you getting that kind of loan from


My dear ol grandaddy.

Oh in which case go nuts. Interest free and I assume pay back as you can? Knock yourself the fuck out but maybe stick within the T14 to actually help ensure you get dat Biglaw salary in the first place


I posted a poll a few days ago so I'm still deciding for myself what to do, but I'm also just curious what people think in general as far as sticker-worth it schools.

ChinaCat
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Re: Which law schools are worth 160k debt?

Postby ChinaCat » Tue Mar 29, 2016 10:36 pm

So most people in this thread think that going to Chicago or Columbia with a half-tuition scholarship would be a poor choice? That would probably result in more than $160k in debt once interest is taken into account.

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Tiago Splitter
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Re: Which law schools are worth 160k debt?

Postby Tiago Splitter » Wed Mar 30, 2016 12:50 am

ChinaCat wrote:So most people in this thread think that going to Chicago or Columbia with a half-tuition scholarship would be a poor choice? That would probably result in more than $160k in debt once interest is taken into account.

They're generally a poor choice because the type of person who can get a half scholarship at Columbia or Chicago can get much more at a school ranked a little lower.

kaiser
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Re: Which law schools are worth 160k debt?

Postby kaiser » Wed Mar 30, 2016 11:33 am

ChinaCat wrote:So most people in this thread think that going to Chicago or Columbia with a half-tuition scholarship would be a poor choice? That would probably result in more than $160k in debt once interest is taken into account.


If I had Chicago/Columbia at half tuition scholarship, that likely means I would have some near-full scholarship offers at lower T14 schools. So thats likely what I would be most focused on.

abl
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Re: Which law schools are worth 160k debt?

Postby abl » Wed Mar 30, 2016 12:07 pm

This forum gets more inane by the day. No investment is risk-free. If the metric for what sort of career investment is "worth it" is "are you literally guaranteed to have a job for the next five years that makes paying it off in that time frame easy" then you're probably not going to make any investments in your career. It seems obviously to me that a career investment that you are likely going to be able to fully pay off within five years is far from unacceptable--it's pretty excellent (given that careers generally last for 30+ years).

There are tons of problems with law as a career, but I don't think that earnings potential (at least for a T14 grad) is one of them. Of course the career path that entails ~3 years of biglaw followed by a midlaw or in-house position isn't as lucrative as if you simply just stayed in biglaw. But it's still pretty darn lucrative in the scheme of things -- that's generally going to constitute three years of earning close to $200k/year followed by 30 years of making $100-150k/year. With $160k in debt, that means that you'll spend basically your entire career living some version of the upper middle class life (or upper class if you're in a two-earner household).

Look, this is going to be a completely individualized decision. What's "worth it" is going to depend on your access to other sources of income (via your own hypothetical alternative careers or via your family's largess), your debt tolerance, and your career preferences (because it is certainly going to be "worth it" for some students to pay more for law than they would for other comparable careers). It is obviously "worth it" for some students to go $160k in debt to attend some law schools. The trickier question comes when we start generalizing -- when is it "worth it" for the average student, for example. But I'm not really sure if that sort of generalization is helpful or even possible.

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Re: Which law schools are worth 160k debt?

Postby GFox345 » Wed Mar 30, 2016 1:54 pm

I think that there is absolutely no question that $160k for a T-14 law degree is with it for anyone who makes BigLaw and stays in for at least a few years in the long run. If you opt for a 10-year repayment plan (which I think is sort of aggressive given the investment), then of course you will be paying a lot a month. That said, an $1800 payment per month is extremely manageable if you are making 160k/year with the possibility of making a sizeable bonus as well.

Consider this. You graduate from Undergrad and make 50k (this was roughly the average outcome at my T5 undergrad). Your take home is around 3k/month. Assume that you get a 5% raise every year (this is generous). At the time that you would graduate law school, that might put you at 60k. Hell, let's even say 70k for the sake of argument.

Undergrad route: 50k (1st) + 57k (2nd) + 63k (3rd) + 70k (4th) + 77k (5th) + 84k (6th) = 331k

Law School Route 175k (1st + below-market bonus) + 190k (2nd + below-market bonus) + 205k (3rd + below market bonus) = 570k - 185k (160 + 3 years interest) = 285k

As you can see, if you actually get and stay in Big Law (which is itself an assumption), it is unquestionably worth it to go to law school even if you take out 160k in debt. At 3 years post-graduation, the Big Law Route has already almost caught up to the Undergrad route even subtracting the entire amount of debt (you will not have paid this much at the 3-year mark). It will surely pass it in the next year. Keep in mind that bonuses vary. Some associates receive much more than what I assumed and some considerably less.

If you can actually get Big Law, keep it, and you don't hate the lifestyle, it is absolutely asinine to suggest that a T-14 Degree at a $160k price tag is not worth it. At the rate that you will be earning, this is a better ROI than almost any investment that you could possibly make.

Disclaimer: I realize that some people make more/less than the undergrad figures that I use. I think that, if anything, my projections were rather optimistic. Of course, there is also a chance that OP won't get biglaw, but if he does, it far surpasses the earning power of the undergrad route even on an optimistic estimate.

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asdfdfdfadfas
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Re: Which law schools are worth 160k debt?

Postby asdfdfdfadfas » Wed Mar 30, 2016 2:17 pm

GFox345 wrote:I think that there is absolutely no question that $160k for a T-14 law degree is with it for anyone who makes BigLaw and stays in for at least a few years in the long run. If you opt for a 10-year repayment plan (which I think is sort of aggressive given the investment), then of course you will be paying a lot a month. That said, an $1800 payment per month is extremely manageable if you are making 160k/year with the possibility of making a sizeable bonus as well.

Consider this. You graduate from Undergrad and make 50k (this was roughly the average outcome at my T5 undergrad). Your take home is around 3k/month. Assume that you get a 5% raise every year (this is generous). At the time that you would graduate law school, that might put you at 60k. Hell, let's even say 70k for the sake of argument.

Undergrad route: 50k (1st) + 57k (2nd) + 63k (3rd) + 70k (4th) + 77k (5th) + 84k (6th) = 331k

Law School Route 175k (1st + below-market bonus) + 190k (2nd + below-market bonus) + 205k (3rd + below market bonus) = 570k - 185k (160 + 3 years interest) = 285k

As you can see, if you actually get and stay in Big Law (which is itself an assumption), it is unquestionably worth it to go to law school even if you take out 160k in debt. At 3 years post-graduation, the Big Law Route has already almost caught up to the Undergrad route even subtracting the entire amount of debt (you will not have paid this much at the 3-year mark). It will surely pass it in the next year. Keep in mind that bonuses vary. Some associates receive much more than what I assumed and some considerably less.

If you can actually get Big Law, keep it, and you don't hate the lifestyle, it is absolutely asinine to suggest that a T-14 Degree at a $160k price tag is not worth it. At the rate that you will be earning, this is a better ROI than almost any investment that you could possibly make.

Disclaimer: I realize that some people make more/less than the undergrad figures that I use. I think that, if anything, my projections were rather optimistic. Of course, there is also a chance that OP won't get biglaw, but if he does, it far surpasses the earning power of the undergrad route even on an optimistic estimate.


If both of those scenarios play out exactly as you stated then yeah. However, that isn't how the real world works. You aren't guaranteed a job because of x degree. The law school route is a considerably larger risk given the debt. If big law doesn't work out you have 160k hanging over your head. That is going to be close to half the class at t-14. So it goes if you make it into a t-14, then if you graduate in the top half, you will have the opportunity to make 150K+ a year by working 100 hour weeks doing what most people on this site say is utter misery. . The average person stays in big law, from what I have read on here for 2 to 3 years. So the law school route, is at best, going to maybe get you back to debt free after years of work?

I decided against it and decided to take the 24 hours I needed to sit for the CPA after having a few years of experience while working 40 hours a week doing general Accounting work. Just my thoughts after lurking this site for multiple years.

kaiser
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Re: Which law schools are worth 160k debt?

Postby kaiser » Wed Mar 30, 2016 2:21 pm

People need to keep in mind that the average biglaw tenure is about 3 years. For the vast majority of people, its simply not sustainable. You can't just assume that you will always have that option, or that the option will remain continually viable. So the amount of debt you take out should never be premised on the assumption that you can just do biglaw as long as you need to pay off the debt.

abl
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Re: Which law schools are worth 160k debt?

Postby abl » Wed Mar 30, 2016 2:26 pm

fliptrip wrote:"worth" is a vague term. People's inherent debt-aversion/tolerance will greatly inform their opinion of whether $160k in debt is worth it if you land biglaw in a place where market is $160k. If the idea of needing to make double payments (~$3,600/month) on your debt for 51 months in order to free yourself from debt makes you ill, then it's definitely not worth it. I think it's probably better to show you the reality of it and let you decide.

Give yourself a little Rorschach debt test.

If you finance $160k @ 6.64% (mix of Stafford and GradPlus) on a 10 year am:

Your monthly is ~$1,800/month
Over the course of the loan you will pay $59k in interest
Using the 43% method on your biglaw salary you'll be able to spend $3,867 on housing and other debt per month.
Let's step that down...if you make $125k, you'll have $2,704, if you make $100k, you'll have $2,083, and at $80k, you'll have $1067 to spend.
If you just straight service your loans and make it two years in biglaw you'll exit owing $136k.
If you somehow make it four years, you'll exit owing $108k.

Well, what do you think?


To add to that, $2,704/m in debt payments ($125k salary) is roughly the equivalent to a mortgage on a $600,000 house.

$2,083 ($100k salary) is the mortgage payment on a $475,000 house.

And $1,067 ($80k salary) is the mortgage payment on a $250,000 house.

So, if you leave biglaw at any point and make $[125k, 100k, or 80k]/year and have no debt besides law school and your mortgage, those are the max respective houses you can afford on your post-biglaw salary (assuming a 10% house downpayment and that you don't pay down any extra debt while in biglaw).

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pancakes3
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Re: Which law schools are worth 160k debt?

Postby pancakes3 » Wed Mar 30, 2016 2:30 pm

buttsy DINK

buttsy buttsy 30 yr mortgages are for proles

TheGoat18
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Re: Which law schools are worth 160k debt?

Postby TheGoat18 » Wed Mar 30, 2016 2:48 pm

I find it ridiculously bordering on insane to suggest that no law school is worth 160k ever. Unlike many folks on this forum with Ivy undergrad degrees in economics and bulge bracket experience - who are probably idiots for taking out six figure debt for a law degree - quite a few people who take out this debt are making an at least defensible, probably shrewd decision. This is assuming a T14 degree of course.

Some of us graduated from state schools with shit GPA's in useless degrees with no sort of experience besides nonprofessional jobs to keep the lights on in college. I've never worked in an office in my life and now I have a 1L SA lined up that will pay me more money in one summer than some of my friends with equally useless degrees make in an entire year. Certainly more than most of my old work buddies from the service industry make.

Thanks to my unexpected 1L SA I will owe about 120k at repayment according to the LST calculator. You cannot tell me that I, or the many law students like me would be better off as far as lifetime earnings and overall financial security go if we would have pursued low paying entry level office jobs with our liberal arts degrees.

As far as happiness and life enjoyment, well maybe I would have been better off sticking with working in restaurants. But I find it almost impossible to believe that 160k in debt for a T14 degree is not a shrewd investment if you have no other opportunities to break into a high earning field.




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