als2011 wrote:rickgrimes69 wrote:Wakelaw15 wrote:I would personally not attend a T14 unless I could do it for less than $100k in loans for all three years.
The rule of thumb is generally this: don't take on more debt then you plan to make your first year. So for those shooting for Biglaw, your ideal max debt load would be roughly $160k at graduation. If I had to put a number to it, that's about the most I'd personally feel comfortable with taking out ITE.
I'm inclined to agree with not attending unless I could do it for less than $100k. That was my original threshold in deciding whether or not to take a seat at a T14. The rule of thumb is to not take on more debt than what you plan to make the first year. However, 160k a year is an ideal outcome coming out of law school.
First, one simply has to look at NALP and ABA data to realize that, especially in recent years, only about half of a T14 class or so is going to receive a Biglaw salary (even Penn clocked in at 55% this year if I'm not mistaken). Second, not all T14 alums who got Biglaw got market salary when they graduated. And third, you must also consider your ability to sustain that income over the years. Attrition rates are high out of Biglaw and studies suggest that 4 out of 5 associates leave their initial firm by year 5. Even if you land an in-house job after leaving your firm (a good outcome), you are still going to experience a salary reduction which will inevitably impact your ability to repay your loans.
I would argue that you should not be calculating an acceptable level of debt based solely on an ideal outcome that a T14 law school may produce, but rather considering a range of possible outcomes going to school (including unemployment) and building a better risk model based on that.
My own thinking was, if all else failed, and I had to return to my prior job, what kind of debt load could I sustain on that sort of salary.
You are correct that 160k is an ideal outcome and one has to consider the risk involved. But at a certain point, a fuckton of debt is a fuckton of debt. You'll need Biglaw to pay off $90k just like you'll need it to pay off $100k or $160k. If I wasn't sure I had a decent shot at Biglaw, my ideal debt load would fall closer to the $60k mark - again, about what you'd expect to make your first year (in an ideal scenario).
Also keep in mind that while your point about retention rates in biglaw is completely correct and something to be considered, nobody's saying you have to be debt free by year 5 when you decide to exit out. Even 3 years of Biglaw can be enough to pay back a significant chunk. Consider the following conservative scenario:
You work Biglaw for 3 years in NYC making $160k each year (this is discounting raises and bonuses). That leaves you with just about $100k in disposable income after taxes. From my experience, 50-60k (depending on your preferences) is more than enough to live comfortably in NYC. You won't be living in luxury, but you won't be wanting of income. That leaves you with an extra $40-50k per year you can put towards your loans. If you plan to exit Biglaw after three years, you could potentially be nearly debt free by that point.
Not to mention, the exit options you have coming from a Biglaw gig will be much better than they would have been otherwise. You might not be making six figures, but you'll make enough to easily pay back the sub-$50k in loans you'll still owe. Basically, my point is this: if you still have soul-crushing debt after three to five years in Biglaw, you lived far beyond your means and did something wrong. Kids paying sticker might have a harder time with this plan but frankly, I think paying sticker at anywhere outside of HYS is pretty silly ITE.
