Columbia Law at full sticker price? Forum

[rpupkin]

Let's further assume that you buy a $300,000 house (with a 30-year 4% fixed rate mortgage). That gives you $1,400 in additional mortgage debt each month.

I'm sorry, but where does a NYC big law associate (or a big law associate in any major market) buy a house for $300,000? It is absurd to assume that a major-market big-law associate will have housing expenses of only $1,400/month, regardless of whether the associate is buying or renting.

Why are we assuming NYC? $300,000 is well above the national average price for homes, and is an absolutely reasonable amount to expect to pay for a nice 2-3 br apartment in a nice neighborhood in Chicago.

We're assuming NYC because NYC big law is a reasonably likely outcome for a CLS grad. As soon as we start tweaking variables ("hey, if OP gets a market-paying big law job in Dallas, then he'll be able to pay off the debt quicker!"), we're moving away from likely outcomes for the OP.

In any event, $1,400 is absurdly low for a monthly housing expense estimate. If we're talking about NYC or SF, you probably should triple that figure. (Remember, we're talking about long-term here; it's not like a temporary situation where someone might be willing to live with a roommate in an undesirable neighborhood for a few months or a couple of years). DC isn't quite as bad as NYC/SF, and LA and Chicago are better still, but a typical professional is going to have monthly housing expenses of well in excess of $1,400 even in those markets.

[abl]

Let's further assume that you buy a $300,000 house (with a 30-year 4% fixed rate mortgage). That gives you $1,400 in additional mortgage debt each month.

I'm sorry, but where does a NYC big law associate (or a big law associate in any major market) buy a house for $300,000? It is absurd to assume that a major-market big-law associate will have housing expenses of only $1,400/month, regardless of whether the associate is buying or renting.

Why are we assuming NYC? $300,000 is well above the national average price for homes, and is an absolutely reasonable amount to expect to pay for a nice 2-3 br apartment in a nice neighborhood in Chicago.

We're assuming NYC because NYC big law is a reasonably likely outcome for a CLS grad. As soon as we start tweaking variables ("hey, if OP gets a market-paying big law job in Dallas, then he'll be able to pay off the debt quicker!"), we're moving away from likely outcomes for the OP.

In any event, $1,400 is absurdly low for a monthly housing expense estimate. If we're talking about NYC or SF, you probably should triple that figure. (Remember, we're talking about long-term here; it's not like a temporary situation where someone might be willing to live with a roommate in an undesirable neighborhood for a few months or a couple of years). DC isn't quite as bad as NYC/SF, and Chicago is better still, but a typical professional is going to have monthly housing expenses of well in excess of $1,400 even in those markets.

Fair point re NYC. Maybe the lesson here is that Columbia Law at full sticker price is not a great call for students (a) wanting to stay in NYC and (b) wanting to buy a home in NYC. That said, it's pretty easy to get to Chicago and other more affordable major markets from Columbia, right?

[Tiago Splitter]

On top of all that, CLS now costs quite a bit more than it did in 2012.

Since we are here, Professor, why is CLS' tuition $63k? I looked at their 509 reports and I see some clear trends that would suggest higher tuition. Their enrollment has declined at an annualized rate of -2.6% while their full time faculty has gone up by 7.6%. Looking at it like that, it is surprising that CLS' tuition hasn't gone up more than the annualized 3.5% it has gone up. Just doing some more back of the envelope calculations, it doesn't look like they are throwing off that much surplus revenue, which was very surprising to me considering what we've come to believe about greedy law schools. Do you know what percentage of revenues a school like CLS is expected to contribute to the central university?

Also, I was trying to think about CLS' sources of revenue, as I am almost certain the central university is not subsidizing them. There's obviously tuition revenue, endowment revenue (CLS' endowment is $280m), and I assume some ancillary revenue from conferences/facility rentals, etc. Is there any other way law schools make money?

I don't know what CLS's endowment is, but it's safe to say that it's a whole lot more than $280 million. The latter figure is from 2000, and Columbia University's total endowment has more than doubled since then, so I would imagine the law school's endowment is at least $600 million (this would throw off about $25 million per year in expendable income).

CLS has expanded its faculty massively in the last five years, from 124 to 178 between 2010 and 2015. Columbia also has an enormous LLM program. 294 students were enrolled in it in 2013, which is the latest year for which figures are available.

Law school financials are tricky, because universities charge law schools for "indirect expenses" (university expenses that aren't incurred directly by individual schools or colleges, such as central administration, health services, campus security etc.) Indirect expenses can be manipulated to be a kind of tax, that goes beyond the school's fair share of actual general university operating costs.

Many law schools used to be cash cows for their home universities, because they would be required to turn over surpluses beyond operating expenses that were greater than legit indirect expense surcharges. But law schools have spent so much money in recent years, justifying these expenditures because of rankings wars, that few if any law schools are actually producing surpluses for their home universities any more. In fact at present the large majority are being subsidized, because of the 30% decline in enrollment.

I doubt CLS is being subsidized though, despite a massive operating budget. But I haven't tried to crunch the numbers. Tuition next year will probably be $65,000, and it's hard to see how you could lose money charging that, though they certainly seem to be making their best efforts to do so.

FWIW the CLS administration will tell you with a straight face that tuition only covers 2/3 of the cost.

[Ohiobumpkin]

No.

[fliptrip]

FWIW the CLS administration will tell you with a straight face that tuition only covers 2/3 of the cost.

Oh tricky, tricky, tricky, they are. Accounting is the true liar's poker.

[jbagelboy]

Let's further assume that you buy a $300,000 house (with a 30-year 4% fixed rate mortgage). That gives you $1,400 in additional mortgage debt each month.

I'm sorry, but where does a NYC big law associate (or a big law associate in any major market) buy a house for $300,000? It is absurd to assume that a major-market big-law associate will have housing expenses of only $1,400/month, regardless of whether the associate is buying or renting.

Why are we assuming NYC? $300,000 is well above the national average price for homes, and is an absolutely reasonable amount to expect to pay for a nice 2-3 br apartment in a nice neighborhood in Chicago.

We're assuming NYC because NYC big law is a reasonably likely outcome for a CLS grad. As soon as we start tweaking variables ("hey, if OP gets a market-paying big law job in Dallas, then he'll be able to pay off the debt quicker!"), we're moving away from likely outcomes for the OP.

In any event, $1,400 is absurdly low for a monthly housing expense estimate. If we're talking about NYC or SF, you probably should triple that figure. (Remember, we're talking about long-term here; it's not like a temporary situation where someone might be willing to live with a roommate in an undesirable neighborhood for a few months or a couple of years). DC isn't quite as bad as NYC/SF, and Chicago is better still, but a typical professional is going to have monthly housing expenses of well in excess of $1,400 even in those markets.

Fair point re NYC. Maybe the lesson here is that Columbia Law at full sticker price is not a great call for students (a) wanting to stay in NYC and (b) wanting to buy a home in NYC. That said, it's pretty easy to get to Chicago and other more affordable major markets from Columbia, right?

Lol, no one can buy a "home" in NyC from any school, in any profession (except professional sports and movie stars), so this is a ridiculous hypothetical. Its not "easy" to get a market like chicago but you don't need good grades if you have the requisite ties for markets like chi, texas, california, boston, ect.

[GreenEggs]

In any event, $1,400 is absurdly low for a monthly housing expense estimate. If we're talking about NYC or SF, you probably should triple that figure. (Remember, we're talking about long-term here; it's not like a temporary situation where someone might be willing to live with a roommate in an undesirable neighborhood for a few months or a couple of years).

I agree with most of what you're saying, but I just don't think this is true. If you want a large apartment to yourself then yes it's low, otherwise $1400 gets you a bedroom in a 3-bedroom in Stuy-town. Not to mention the fact that if you're willing to live uptown you can get a walk up 2-bedroom thats bigger for $1400 (assuming a roommate). If you move-in with a partner, $2800-$3000 gets a comfortable 1 bedroom. I've seen some big law associates apartments and they're really amazing, but if you don't have a need to live like that you can live pretty comfortably in NYC on $1400 rent payments.

[rpupkin]

In any event, $1,400 is absurdly low for a monthly housing expense estimate. If we're talking about NYC or SF, you probably should triple that figure. (Remember, we're talking about long-term here; it's not like a temporary situation where someone might be willing to live with a roommate in an undesirable neighborhood for a few months or a couple of years).

I agree with most of what you're saying, but I just don't think this is true. If you want a large apartment to yourself then yes it's low, otherwise $1400 gets you a bedroom in a 3-bedroom in Stuy-town.

As I alluded to earlier, if you want to live the life of a transient student for 10 years, then, sure, you can keep your housing expenses relatively low. But most professionals in their 30s want something more than a room in a shared apartment. I mean, that's sort of the point, isn't it? If you take on massive debt, you compromise your quality of life AND potentially tie yourself to an undesirable job for years.

[GreenEggs]

In any event, $1,400 is absurdly low for a monthly housing expense estimate. If we're talking about NYC or SF, you probably should triple that figure. (Remember, we're talking about long-term here; it's not like a temporary situation where someone might be willing to live with a roommate in an undesirable neighborhood for a few months or a couple of years).

I agree with most of what you're saying, but I just don't think this is true. If you want a large apartment to yourself then yes it's low, otherwise $1400 gets you a bedroom in a 3-bedroom in Stuy-town.

As I alluded to earlier, if you want to live the life of a transient student for 10 years, then, sure, you can keep your housing expenses relatively low. But most professionals in their 30s want something more than a room in a shared apartment. I mean, that's sort of the point, isn't it? If you take on massive debt, you compromise your quality of life AND potentially tie yourself to an undesirable job for years.

I don't really think it's "transient student" life because plenty of professionals in NYC have a roommate or two, but my point was more that you could live like that for three years and throw an additional 36k towards loans (assuming the alternative of paying $2400 in rent). It's not going to pay for all your loans but it would make a significant dent.

[abl]

In any event, $1,400 is absurdly low for a monthly housing expense estimate. If we're talking about NYC or SF, you probably should triple that figure. (Remember, we're talking about long-term here; it's not like a temporary situation where someone might be willing to live with a roommate in an undesirable neighborhood for a few months or a couple of years).

I agree with most of what you're saying, but I just don't think this is true. If you want a large apartment to yourself then yes it's low, otherwise $1400 gets you a bedroom in a 3-bedroom in Stuy-town. Not to mention the fact that if you're willing to live uptown you can get a walk up 2-bedroom thats bigger for $1400 (assuming a roommate). If you move-in with a partner, $2800-$3000 gets a comfortable 1 bedroom. I've seen some big law associates apartments and they're really amazing, but if you don't have a need to live like that you can live pretty comfortably in NYC on $1400 rent payments.

Also, we're talking about debt burden vs. housing expenses -- these are not the same thing. So, for example, the amount that you owe on a mortgage is your debt burden from that mortgage. You are almost certainly going to have additional housing expenses as part of owning the house (HOA, taxes, maintenance, etc). DTI is a pretty rough metric and looks just at debt. So if you find yourself in a situation with substantially higher than average non-debt housing costs, your effective DTI is going to have to be lower to compensate.

The flipside is if you're using DTI to figure out what you can afford, and you're swapping out rent $ for mortgage $, you need to take the additional housing costs that DTI ignores for mortgages into account. So if DTI says you can afford to buy a house that requires $1,400/m mortgage payments, you can afford to pay monthly rent of >$1,400 (probably a fair bit higher).

[rpupkin]

In any event, $1,400 is absurdly low for a monthly housing expense estimate. If we're talking about NYC or SF, you probably should triple that figure. (Remember, we're talking about long-term here; it's not like a temporary situation where someone might be willing to live with a roommate in an undesirable neighborhood for a few months or a couple of years).

I agree with most of what you're saying, but I just don't think this is true. If you want a large apartment to yourself then yes it's low, otherwise $1400 gets you a bedroom in a 3-bedroom in Stuy-town.

As I alluded to earlier, if you want to live the life of a transient student for 10 years, then, sure, you can keep your housing expenses relatively low. But most professionals in their 30s want something more than a room in a shared apartment. I mean, that's sort of the point, isn't it? If you take on massive debt, you compromise your quality of life AND potentially tie yourself to an undesirable job for years.

I don't really think it's "transient student" life because plenty of professionals in NYC have a roommate or two, but my point was more that you could live like that for three years and throw an additional 36k towards loans (assuming the alternative of paying $2400 in rent). It's not going to pay for all your loans but it would make a significant dent.

Yes, I agree with you that it's not uncommon for associates to live with roommates in NYC (and other markets) for two or three years after law school. But recall the context here: I was responding to abl's estimates, which covered 15 years of post-grad living. I don't think it's typical for urban professionals to live with roommates into their early-to-mid 40s.

[GreenEggs]

In any event, $1,400 is absurdly low for a monthly housing expense estimate. If we're talking about NYC or SF, you probably should triple that figure. (Remember, we're talking about long-term here; it's not like a temporary situation where someone might be willing to live with a roommate in an undesirable neighborhood for a few months or a couple of years).

I agree with most of what you're saying, but I just don't think this is true. If you want a large apartment to yourself then yes it's low, otherwise $1400 gets you a bedroom in a 3-bedroom in Stuy-town.

As I alluded to earlier, if you want to live the life of a transient student for 10 years, then, sure, you can keep your housing expenses relatively low. But most professionals in their 30s want something more than a room in a shared apartment. I mean, that's sort of the point, isn't it? If you take on massive debt, you compromise your quality of life AND potentially tie yourself to an undesirable job for years.

I don't really think it's "transient student" life because plenty of professionals in NYC have a roommate or two, but my point was more that you could live like that for three years and throw an additional 36k towards loans (assuming the alternative of paying $2400 in rent). It's not going to pay for all your loans but it would make a significant dent.

Yes, I agree with you that it's not uncommon for associates to live with roommates in NYC (and other markets). But recall the context here: I was responding to abl's estimates, which covered 15 years of post-grad living. I don't think it's typical for urban professionals to live with roommates into their early-to-mid 40s.

Sorry didn't realize the context of it, yeah agreed on the 15 years thing.

[jbagelboy]

the weird thing is about HLS and CLS and other schools like that is, even some of the people I know who truly borrowed sticker and plunged themselves into like $300k debt still have parents that are doctors or successful business people or the like. So their parents still have money and they are probably like well, I'll try paying this off and if it doesn't work, welp, inheritance will take care of it later. The ones who don't have that are really feeling it.

If you're truly poor, like your family is structurally lower class and you are talking on massive loans, then you're just colossally fucked by the system and you should steer way clear.

[kingpin101]

Yeah I go to CLS currently and holy fuck, everyone here seems to have loaded parents. Seriously, a lot of people here paying sticker are totally not worried about their debt load.

[GreenEggs]

Yeah I go to CLS currently and holy fuck, everyone here seems to have loaded parents. Seriously, a lot of people here paying sticker are totally not worried about their debt load.

I think there's a solid mix between people paying sticker without any debt-finance and people paying sticker with some debt-finance.

I'm honestly pretty curious to know if more than a handful are 100% debt financing

[abl]

Yes, I agree with you that it's not uncommon for associates to live with roommates in NYC (and other markets) for two or three years after law school. But recall the context here: I was responding to abl's estimates, which covered 15 years of post-grad living. I don't think it's typical for urban professionals to live with roommates into their early-to-mid 40s.

My point was about buying a house, and not about housing costs more generally. You can't just sub in "rental cost" for "mortgage cost" when using DTI to calculate affordability.

Incidentally, unless I'm missing something, there do seem to be fair number of <$400,000 respectable looking homes in middle class or better neighborhoods in NYC: http://www.trulia.com/for_sale/New_York ... 000_price/. I'm sure that none of these are on the best blocks of the best neighborhoods, or have other minor-to-medium problems with them -- but assuming there's nothing cripplingly wrong, these would imply that my original numbers work for NYC.* (And trulia provides a super incomplete collection of the listings.)

*I'm not trying to argue that $300k debt from Columbia with a big mortgage is the bees knees. I'm just trying to point out that it's not a back-breaking financial proposition.

[rpupkin]

My point was about buying a house, and not about housing costs more generally. You can't just sub in "rental cost" for "mortgage cost" when using DTI to calculate affordability.

Incidentally, unless I'm missing something, there do seem to be fair number of <$400,000 respectable looking homes in middle class or better neighborhoods in NYC: http://www.trulia.com/for_sale/New_York ... 000_price/

Yeah, you're missing something: most of these are coop housing, or are the size of a walk-in closet (<300 sq. ft.), or are clearly dilapidated.

Look, you can't buy a decent house in NYC for $300,000. Or $500,000. You just can't.

[abl]

My point was about buying a house, and not about housing costs more generally. You can't just sub in "rental cost" for "mortgage cost" when using DTI to calculate affordability.

Incidentally, unless I'm missing something, there do seem to be fair number of <$400,000 respectable looking homes in middle class or better neighborhoods in NYC: http://www.trulia.com/for_sale/New_York ... 000_price/

Yeah, you're missing something: most of these are coop housing, or are the size of a walk-in closet (<300 sq. ft.), or are clearly dilapidated.

Look, you can't buy a decent house in NYC for $300,000. Or $500,000. You just can't.

Haha, ok, that's funny. 300 square feet, really?

(What's wrong with coop housing?)