How long to pay back 150G? Forum

[Aberzombie1892]

This may be a bad question, but I'm wondering how long it would take to pay back $150,000 in loans. With biglaw or midlaw job.

I'm just wondering about the rough estimates.

It depends on
1. How much you make
2. What your federal income taxes are
3. What your state income taxes are
4. What expenses will you have during the repayment period? (children/mortgage/rent/car loan/bar exam related loans/etc.)
5. What percentage of your leftover income you want to use toward the debt
6. Are your loans federal or private? (this is important for consolidation/interest rates; also, this would affect if you could pay more than your suggested monthly payment without penalty/etc.)
7. Any other undergraduate loans? (they may be consolidated or they might not)

As a result, two people with the same salary and same debt could take dramatically different amounts of time to repay their loans.

WORST CASE SCENARIO ASSUMING NO DEFAULT: 25 years (and not by choice)
BEST CASE SCENARIO ASSUMING YOU DON'T WIN THE LOTTERY/WACHTEL/EQUIVALENT: 4-8 years

[CanadianWolf]

Catch-22 should be the title of the Ohio Supreme Court ruling.

[r6_philly]

If you can put $4,000 per month toward paying off your loan, you can pay off a 150K loan in about 3.5 years at 7.5%. So... almost $50k per year. I won't be taking this route, but just saying that 3.5 years seems like it would be about the fastest possible IMO.

Yeah, that would require some serious discipline.

That biglaw paycheck only works out to about 6.8k a month after taxes/health insurance/401k (not even maxed out). But wait, you probably took the 10k salary advance. How else are you going to pay living expenses for 4 months before you start? That's almost a grand out of your paycheck per pay period. So it's really only 6k a month for a first year. If you were paying 4k a month, that would leave only 2k for living expenses. My rent is 2k by itself.

Get married and have a couple of kids. It may actually work out to be cheaper if she makes modest income.

[nealric]

Get married and have a couple of kids.

I am married. But my spouse is going to attending law school next year.

No way the kids help the situation. Kids are phenomenally expensive.

[r6_philly]

Get married and have a couple of kids.

I am married. But my spouse is going to attending law school next year.

No way the kids help the situation. Kids are phenomenally expensive.

So how do you end up bring home 6.5k a month?

Kids are not bad, if you don't live in the city.

[bigben]

http://cgi.money.cnn.com/tools/studentl ... tloan.html

[JG Hall]

If you can put $4,000 per month toward paying off your loan, you can pay off a 150K loan in about 3.5 years at 7.5%. So... almost $50k per year. I won't be taking this route, but just saying that 3.5 years seems like it would be about the fastest possible IMO.

Yeah, that would require some serious discipline.

That biglaw paycheck only works out to about 6.8k a month after taxes/health insurance/401k (not even maxed out). But wait, you probably took the 10k salary advance. How else are you going to pay living expenses for 4 months before you start? That's almost a grand out of your paycheck per pay period. So it's really only 6k a month for a first year. If you were paying 4k a month, that would leave only 2k for living expenses. My rent is 2k by itself.

1) a lot of firms give bar stipends, not advances, so you can get back that 10k
2) find a cheaper apartment
3) put less in you first year (~3k a month) then put in all of your bonus for three years.
still doable.

[rundoxierun]

If you can put $4,000 per month toward paying off your loan, you can pay off a 150K loan in about 3.5 years at 7.5%. So... almost $50k per year. I won't be taking this route, but just saying that 3.5 years seems like it would be about the fastest possible IMO.

Yeah, that would require some serious discipline.

That biglaw paycheck only works out to about 6.8k a month after taxes/health insurance/401k (not even maxed out). But wait, you probably took the 10k salary advance. How else are you going to pay living expenses for 4 months before you start? That's almost a grand out of your paycheck per pay period. So it's really only 6k a month for a first year. If you were paying 4k a month, that would leave only 2k for living expenses. My rent is 2k by itself.

1) a lot of firms give bar stipends, not advances, so you can get back that 10k
2) find a cheaper apartment
3) put less in you first year (~3k a month) then put in all of your bonus for three years.
still doable.

This. My debt at graduation should be either ~65-80k or ~155-165k depending on which school I end up attending. Either way, if I were to get biglaw or the equivalent in a cheap secondary market paying 3k/month still allows you ~60k post tax and loan payments. That is a pretty reasonable income (the equivalent of an 80-90k) salary and someone in my circumstances (26 with (hopefully) no children) should be able to be comfortable with that.

[BruceWayne]

This. My debt at graduation should be either ~65-80k or ~155-165k depending on which school I end up attending. Either way, if I were to get biglaw or the equivalent in a cheap secondary market paying 3k/month still allows you ~60k post tax and loan payments. That is a pretty reasonable income (the equivalent of an 80-90k) salary and someone in my circumstances (26 with (hopefully) no children) should be able to be comfortable with that

LMAO! No self control, or at least birth control, Tk?!

[rundoxierun]

This. My debt at graduation should be either ~65-80k or ~155-165k depending on which school I end up attending. Either way, if I were to get biglaw or the equivalent in a cheap secondary market paying 3k/month still allows you ~60k post tax and loan payments. That is a pretty reasonable income (the equivalent of an 80-90k) salary and someone in my circumstances (26 with (hopefully) no children) should be able to be comfortable with that

LMAO! No self control, or at least birth control, Tk?!

Ehh its 99.x% percent effective if you use it perfectly and I have a history of somewhat bad luck.

[rose711]

Either way, if I were to get biglaw or the equivalent in a cheap secondary market paying 3k/month still allows you ~60k post tax and loan payments.

emphasis added

I'm not sure this is reasonable, I think that paying out that much money in loans is going to hurt. Still, I do understand that it is doable. But, even it is reasonable, what is your calculation should you not get a job with that income? How will you pay back your loans then?

Is it possible you could call up some recent grads in your area and take them out to lunch or for a drink to discuss their work situations? I think that would be a good investment of time and money.

I just think you have to honestly assess all the possible scenarios, or at least the probable ones.

One aspect that I haven't seen mentioned in this thread is the psychological toll of owing so much money with the compounded fears of losing one's job. If you owe a significant amount of debt, and lose your prospects of paying it back it can take over your life. I think everyone knows someone or has a relative or a friend who has lost their job ITE, due to no fault of their own, and are terrified of losing their homes. And at least, however painful it is, they can walk away from that loan payment. If you add the burden of debt to carry with you in everyday life, the psychological toll is huge.

I don't want to discourage anyone. Borrowing a huge amount of money that you aren't sure you can pay back is very risky.

Good luck!

[nealric]

1) a lot of firms give bar stipends, not advances, so you can get back that 10k
2) find a cheaper apartment
3) put less in you first year (~3k a month) then put in all of your bonus for three years.
still doable.

1) The vast majority of NY firms give advances, not stipends.
2) Going down a few hundred bucks wouldn't really change the equation. An apartment less than 1.5k would either be over an hour commute, in a bad part of town, or closet-sized.
3) Can't count on bonuses.

So how do you end up bring home 6.5k a month?

Taxes, health insurance, 401k. It all adds up.

[rundoxierun]

Either way, if I were to get biglaw or the equivalent in a cheap secondary market paying 3k/month still allows you ~60k post tax and loan payments.

emphasis added

I'm not sure this is reasonable, I think that paying out that much money in loans is going to hurt. Still, I do understand that it is doable. But, even it is reasonable, what is your calculation should you not get a job with that income? How will you pay back your loans then?

Is it possible you could call up some recent grads in your area and take them out to lunch or for a drink to discuss their work situations? I think that would be a good investment of time and money.

I just think you have to honestly assess all the possible scenarios, or at least the probable ones.

One aspect that I haven't seen mentioned in this thread is the psychological toll of owing so much money with the compounded fears of losing one's job. If you owe a significant amount of debt, and lose your prospects of paying it back it can take over your life. I think everyone knows someone or has a relative or a friend who has lost their job ITE, due to no fault of their own, and are terrified of losing their homes. If you add the burden of debt, the psychological toll is huge.

I don't want to discourage anyone. Borrowing a huge amount of money that you aren't sure you can pay back is very risky.

Good luck!

Definite good points and I understand how this stuff could be a good concern. Fortunately I am in a position where my choice of school will end up being either one of HYS(which have nice LRAP programs) w/ a large grant or a T-10 school with a full tuition scholarship. In addition, I am a URM and, as far as GPA/LSAT are predictive, it is mathematically likely that I will do well enough to be in the top 2/3 of the class. Obviously there is still risk and GPA/LSAT may not be super-strongly predictive but, honestly, it just doesnt get much safer than that in any field.

In my situation, if I were to suddenly lose my job I could go the public interest or small law route and rely on LRAP if I went to one of HYS and graduated with the 150k debt. If I lost my job after graduating from the T-10 w/ 50-65k debt my debt would be pretty small (assuming I didnt lose my job within the first year) and I would have a lot of flexibility. This really allays a lot of the fear and lessens the psychological impact. I dont plan on buying a home while I still have massive student loan debt so that isnt an issue.

As far as paying 3k/month and living on ~60k post tax/salary goes.. that doesnt seem extremely unreasonable. Like I said, that is the equivalent of a 80-90k pre-tax salary and I will be 26 and w/o children. That salary is higher than my entire family income has been my whole life. It is definitely possible that I wont stick to it but it definitely wont be because that is an unreasonable expectation.

Education, like any investment, brings with it an inherent risk but to get ahead in life you have to take risks at some point. There is definitely a chance you might end up in a bad situation but as long as you manage/minimize your exposure you are being as responsible as you can be.

[r6_philly]

Taxes, health insurance, 401k. It all adds up.

I would take home much more than that if we start at the same base salary, and living expenses are much less. So it doesn't quite pay to do biglaw in the city, as suspected.

[09042014]

If you are going to make 80-100k mid-law (although TLS argue this doesn't really exist) you can probably save 30-40k a year to pay back.

It's not that jobs like that don't exist, it's just that they exist in such limited numbers compared to true biglaw jobs. Where a biglaw firm might hire anywhere from 10-200 first years, most midlaw firms are hiring, 1-5 if that.

Most midlaw firms I've run across are just teh big law in their smaller markets, and they probably hire good students from local schools

[BrownBears09]

If you can put $4,000 per month toward paying off your loan, you can pay off a 150K loan in about 3.5 years at 7.5%. So... almost $50k per year. I won't be taking this route, but just saying that 3.5 years seems like it would be about the fastest possible IMO.

Yeah, that would require some serious discipline.

That biglaw paycheck only works out to about 6.8k a month after taxes/health insurance/401k (not even maxed out). But wait, you probably took the 10k salary advance. How else are you going to pay living expenses for 4 months before you start? That's almost a grand out of your paycheck per pay period. So it's really only 6k a month for a first year. If you were paying 4k a month, that would leave only 2k for living expenses. My rent is 2k by itself.

Unless I'm mistaken, at 100k after taxes my estimates have you receiving $8,333/month.

100k/12 months = $8,333.33

I'm not sure what health/401k plan pulls out $1,500/month, but you should probably drop them.

Edit: Math simplification fail.

[nealric]

Since people seem incredulous about the take home pay of a biglaw associate:

Bi-weekly Gross Pay: $6,153.85
Federal Withholding: $1,059.60
Social Security: $258.46
Medicare: $89.23
New York: $409.25
NY SDI: $1.20
City Tax: $223.12
401k: $430.77
Health Insurance: $370.00

Net Pay: $3,312.22
That goes to $2.5k if you include the bar advance repayment.

Note that I chose the cheapest health plan and did not elect dental or vision insurance.

This is what it looks like if you are single:

Bi-weekly Gross Pay: $6,153.85
Federal Withholding: $1,415.12
Social Security: $258.46
Medicare: $89.23
New York: $416.32
NY SDI: $1.20
City Tax: $226.96
401k: $430.77
Health Insurance: $370.00

Net Pay: $2,945.7

EDIT: I have a small retraction. Add $185 the married category. I accidentally double-counted my health insurance. For the single, add $310 (I was quoting health insurance covering a spouse).

[rundoxierun]

Since people seem incredulous about the take home pay of a biglaw associate:

Bi-weekly Gross Pay: $6,153.85
Federal Withholding: $1,059.60
Social Security: $258.46
Medicare: $89.23
New York: $409.25
NY SDI: $1.20
City Tax: $223.12
401k: $430.77
Health Insurance: $370.00

Net Pay: $3,312.22
That goes to $2.5k if you include the bar advance repayment.

Note that I chose the cheapest health plan and did not elect dental or vision insurance.

This is what it looks like if you are single:

Bi-weekly Gross Pay: $6,153.85
Federal Withholding: $1,415.12
Social Security: $258.46
Medicare: $89.23
New York: $416.32
NY SDI: $1.20
City Tax: $226.96
401k: $430.77
Health Insurance: $370.00

Net Pay: $2,945.7

Yep.. but TBF, a 401k should NOT be considered an expense.

[BrownBears09]

Boom. Roasted.

[nealric]

Yep.. but TBF, a 401k should NOT be considered an expense.

Sure, but you would be pretty crazy not to contribute to it being that the money is subject to such high taxes otherwise. Contributing to your 401k limits your ability to pay back student loans, which was the original subject of this thread.

[LurkerNoMore]

Since people seem incredulous about the take home pay of a biglaw associate:

Bi-weekly Gross Pay: $6,153.85
Federal Withholding: $1,059.60
Social Security: $258.46
Medicare: $89.23
New York: $409.25
NY SDI: $1.20
City Tax: $223.12
401k: $430.77
Health Insurance: $370.00

Net Pay: $3,312.22
That goes to $2.5k if you include the bar advance repayment.

Note that I chose the cheapest health plan and did not elect dental or vision insurance.

Minor quibbles, but that is bi weekly pay, not semi monthly. You'll get two "extra" checks during the year. Also you will stop paying Social Security around September. That's about $8-10k that you can put right to loans if you are working off the above budget.

But I agree -- people are overly optimistic about how easy it is to pay off loans. It takes a good deal of discipline to pay them down fast. For some people it's worth it, for others it works better to live with them longer.

[r6_philly]

Yep.. but TBF, a 401k should NOT be considered an expense.

Sure, but you would be pretty crazy not to contribute to it being that the money is subject to such high taxes otherwise. Contributing to your 401k limits your ability to pay back student loans, which was the original subject of this thread.

Is the value of your tax deferment + earned interests better than the interest expense on the student loan debt? If not you should pay off the loan first.

Also PA tax on the same gross income would be $188. Your NY rate is very high.

Also for $2000 you can buy a way above median home around here. Buying means most of your payment (interest + real estate taxes) is deductible which makes your Fed withholding quite a bit lower. I suppose if you can get that salary outside of NYC you should be able to take home another $1000-1500 or so a month, it would be the debt service payment on the student loan. And you would live better. I guess that's why I don't want to be in New York.

Thanks for sharing!

[rundoxierun]

Yep.. but TBF, a 401k should NOT be considered an expense.

Sure, but you would be pretty crazy not to contribute to it being that the money is subject to such high taxes otherwise. Contributing to your 401k limits your ability to pay back student loans, which was the original subject of this thread.

Definitely.. just a pet peeve of mine. I hate when people count savings as expenses. I agree that 4k/month is out of range. I still think that 3k/month is feasible.

Post taxes that leaves something like 96-98k in income.
adding in the additional requirements(roughly):
401k: 431 x 26= 11200
Health: 370 x 26= 9620
Rent: 1500 x 12= 18000(obviously could be more if you want)
Loans: 3000 x 12= 36000

Still leaves ~21200-22500 after major expenses for ~1750-1850/month. Not a huge amount but definitely liveable

[nealric]

Is the value of your tax deferment + earned interests better than the interest expense on the student loan debt? If not you should pay off the loan first.

Also PA tax on the same gross income would be $188. Your NY rate is very high.

Also for $2000 you can buy a way above median home around here. Buying means most of your payment (interest + real estate taxes) is deductible which makes your Fed withholding quite a bit lower. I suppose if you can get that salary outside of NYC you should be able to take home another $1000-1500 or so a month, it would be the debt service payment on the student loan. And you would live better. I guess that's why I don't want to be in New York.

The value of a 40+ year tax deferment is pretty darn high.

I recognize that NY taxes + real estate is quite expensive compared to the rest of the country. But a huge percentage of biglaw jobs are in NYC.

Also, don't forget that you will pay property taxes if you buy a home.

Still leaves ~21200-22500 after major expenses for ~1750-1850/month. Not a huge amount but definitely liveable

Don't forget that you need a reasonable amount of current savings to set aside. While savings are not an "expense" per-se, you would be tremendously foolish to live paycheck to paycheck when your fixed costs are as high as they are in NYC. Like I pointed out before, the purpose of the thread is to ask how long it will take to pay back 150k of loans. While it may be possible to pay 4k a month (the number someone was throwing out before), I'm trying to say that such quick repayment is not very realistic.

[rose711]

NYC has the highest taxes in the country. I would definitely say you have to put money in your 401(k) as a single person that is your only real tax saving option. And buying an apartment on a salary like that with huge student loan payments is not going to happen unless you have other sources of income/savings. Sorry to say, no co-op board is likely to approve you on these numbers. And the property taxes are high too. There may be apartments in NYC for $1500 a month. I don't know, I moved from the last building I lived in NYC when the rent was going up to $4,000 for a one-bedroom with a dining room and a balcony (on York Avenue next to the East River). I am moving back in a year or two but until then I don't have a handle on the rent numbers

I really think that numbers are essential in figuring out the OPs question of how long it will take to pay back $150,000. I know that $160,000 is a lot of money to earn, but it doesn't mean you can quite easily pay off your loans in a few years. Few people are going to be able to earn that much, so it will take them even longer.