Reminder: Sticker debt at Columbia Law School is $325,000 Forum

[A. Nony Mouse]

Also doesn't account for the tax bomb.

Tax bomb? Plz explain.

If at the end of your 20 years paying under the PAYE program you have debt left, it's forgiven, but you have to pay the tax on whatever is forgiven as if that's an asset/capital gain/whatever - I don't know, I didn't take tax. (Only up to the limit of your solvency, I think?).

[banjo]

Also doesn't account for the tax bomb.

Tax bomb? Plz explain.

Here's a quick summary of PAYE:

Can someone explain this whole PAYE thing to people who know nothing about finance? Everyone keeps talking about how awesome it is, but I'd like to actually understand it (really understand it, not just read a basic summary on a website ).

Also, I've heard that it would be awesome for some people, but stupid for others (based on debt), so what level of debt makes PAYE tcr?

You can get on PAYE if your payment under PAYE is less than you'd pay if you were under a standard ten year plan. The PAYE payment is ten percent of your AGI minus the poverty level, so let's say you make 200K and the poverty level is 20K for your family then you'd have to pay 10% of (200-20) so 18K a year, or $1500 a month. This number gets adjusted every year but from what I understand once you get on PAYE they won't ever kick you off.

If at some point the amount you owe is more than what you'd owe under the ten year plan the interest gets capitalized, meaning it gets added to your original principal balance, but this is capped at 10% of your principal.

At the end of 20 years the government forgives all the remaining debt. As of right now all of this (meaning all of the principal and ALL of the interest, not just 10% of the principal) would be taxed as ordinary income.

I don't think there is a level that doesn't make PAYE tcr coming out of school unless you land some non legal job paying 400K a year. If you are eligible, just do PAYE and if you want to pay more you always can. DF's plan, which I agree with, is to make the PAYE minimum payments and then save aggressively into retirement and non-retirement vehicles. Then if you exit biglaw into something lower paying you will have a lot of savings built up, and if your salary remains high several years after law school you can either just pay off the debt or use the savings to buy a house. Of course, this strategy only works if you have the discipline to save your excess cash so maxing out the 401k, where the funds are more difficult to access, is credited.

The whole thread is a good read: http://www.top-law-schools.com/forums/v ... 5&t=209465

[fats provolone]

Jfc law students are done here.

WELL ACTUALLY it's only $312,029.76 at graduation *smirks jewishly* looks like you're the real idiot *commits financial suicide at 22*

[utahraptor]

Jfc law students are done here.

WELL ACTUALLY it's only $312,029.76 at graduation *smirks jewishly* looks like you're the real idiot *commits financial suicide at 22*

the urge to practice law is primal

[twenty]

Didn't DF refi into a 4.9% private loan or something? I thought I remembered hearing him change his mind on the whole sock away money in a retirement account scheme.

[Desert Fox]

Didn't DF refi into a 4.9% private loan or something? I thought I remembered hearing him change his mind on the whole sock away money in a retirement account scheme.

3.5 variable. But that was before Obama unilaterally expanded paye. Still not sure how that is legal.

I've only got 225k left and with bonuses being back I think I can pay it off by year 5 or 6. Or at least have a positive net worth.

The Obama budget plan is to limit paye to 55k forgiveness right? Since anyone considering this won't actually stop getting loans for three years I really really really won't bet on pay paying off 500k in your debt.

[Tiago Splitter]

The Obama budget plan is to limit paye to 55k forgiveness right? Since anyone considering this won't actually stop getting loans for three years I really really really won't bet on pay paying off 500k in your debt.

I thought that was just for PSLF. As long as the forgiveness gets taxed the government isn't really losing money on 20 year PAYE.

[Johann]

Every lawyer in here should get to count this as pro bono hours. I considered chiming in but then decided these clowns deserved the 470k debt repayment they had coming.

[jenesaislaw]

I didn't fact-check OP, but LST says it's $313K at repayment. Are you planning on paying off the interest during law school? You're right about how the origination fees are taken out, but they're still part of the cost.

LST hasn't updated their numbers yet. They're still using tuition estimates for current 1Ls.

Yup, can confirm. We'll update soon. Waiting on the ABA.

[iamgeorgebush]

No. That's sticker debt assuming you finance law school using only federal loans and do not pay back anything before graduating (which most CLS students can do, using 2L SA money---which, by my calculations, comes out to around $22,665 after taxes in NYC). Cost before interest is closer to $275k; the amount of debt upon graduation will be somewhere between $275,000 and $325,000, depending the interest rate on your loans and how much you pay back before graduating.

Your $470,000 figure, in addition to having the flaws mentioned above, also assumes no refinancing, which will be an option for many CLS grads (see https://www.sofi.com).

[Elston Gunn]

No. That's sticker debt assuming you finance law school using only federal loans and do not pay back anything before graduating (which most CLS students can do, using 2L SA money---which, by my calculations, comes out to around $22,665 after taxes in NYC). Cost before interest is closer to $275k; the amount of debt upon graduation will be somewhere between $275,000 and $325,000, depending the interest rate on your loans and how much you pay back before graduating.

Your $470,000 figure, in addition to having the flaws mentioned above, also assumes no refinancing, which will be an option for many CLS grads (see https://www.sofi.com).

LOL

[iamgeorgebush]

No. That's sticker debt assuming you finance law school using only federal loans and do not pay back anything before graduating (which most CLS students can do, using 2L SA money---which, by my calculations, comes out to around $22,665 after taxes in NYC). Cost before interest is closer to $275k; the amount of debt upon graduation will be somewhere between $275,000 and $325,000, depending the interest rate on your loans and how much you pay back before graduating.

Your $470,000 figure, in addition to having the flaws mentioned above, also assumes no refinancing, which will be an option for many CLS grads (see https://www.sofi.com).

LOL

Why LOL?

[Elston Gunn]

Yeah, dude, if you have $250K in savings and no living expenses over the summers or during your bar summer, it only costs $275K. LOL @ you, OP.

[Elston Gunn]

No. That's sticker debt assuming you finance law school using only federal loans and do not pay back anything before graduating (which most CLS students can do, using 2L SA money---which, by my calculations, comes out to around $22,665 after taxes in NYC). Cost before interest is closer to $275k; the amount of debt upon graduation will be somewhere between $275,000 and $325,000, depending the interest rate on your loans and how much you pay back before graduating.

Your $470,000 figure, in addition to having the flaws mentioned above, also assumes no refinancing, which will be an option for many CLS grads (see https://www.sofi.com).

LOL

Why LOL?

Because you're spectacularly missing the point.

[Mal Reynolds]

I wonder where I am george bush goes to school. And I wonder whether they are paying sticker.

[iamgeorgebush]

I understand the point. Columbia and other similar law schools are super expensive. And this is still true when the debt lies somewhere between $275,000 and $325,000.

I also think that we shouldn't toss around inaccurate figures.

[utahraptor]

also pro-tip (1) you should borrow less on the grad plus instead of "paying back" a portion of the older stuff and (2) even though CLS gives you more aid earlier on (which helps, given interest) you're probably going to spend more of your SA money than you expect, and you're probably going to borrow more 3L year once you start thinking about broker fees, having some amount of furniture when you move, &c.

[cotiger]

No. That's sticker debt assuming you finance law school using only federal loans and do not pay back anything before graduating (which most CLS students can do, using 2L SA money---which, by my calculations, comes out to around $22,665 after taxes in NYC). Cost before interest is closer to $275k; the amount of debt upon graduation will be somewhere between $275,000 and $325,000, depending the interest rate on your loans and how much you pay back before graduating.

Your $470,000 figure, in addition to having the flaws mentioned above, also assumes no refinancing, which will be an option for many CLS grads (see https://www.sofi.com).

Ok, considering SA, that's $22.6k after taxes, minus $7.1k** summer living expenses equals $15.5k less that you're paying interest on during your third year. A whopping $1,358 in savings. Granted, your total debt load will be decreased by that additional amount, but ultimately that's because you've already started to pay for school by heading down into the biglaw mines, not because it's any cheaper.

Missing the forest for the trees.

**Oh yeah, baked into the calculations is the expectation that you'll be living on $2366/month in Manhattan. Which can be possible on a monthly basis if you find the crappiest of apartments and almost never go out to eat. But hopefully you're not expecting to furnish your place or have any sort of emergencies or special occasions.

[Tiago Splitter]

**Oh yeah, baked into the calculations is the expectation that you'll be living on $2366/month in Manhattan. Which can be possible on a monthly basis if you find the crappiest of apartments and almost never go out to eat. But hopefully you're not expecting to furnish your place or have any sort of emergencies or special occasions.

yeah i mean how could you possibly live in the same subsidized housing you've already been living in?

FWIW I saved nothing from my SA. Pretty sure it was spent long before it was earned.

[cotiger]

**Oh yeah, baked into the calculations is the expectation that you'll be living on $2366/month in Manhattan. Which can be possible on a monthly basis if you find the crappiest of apartments and almost never go out to eat. But hopefully you're not expecting to furnish your place or have any sort of emergencies or special occasions.

yeah i mean how could you possibly live in the same subsidized housing you've already been living in?

FWIW I saved nothing from my SA. Pretty sure it was spent long before it was earned.

I meant overall. The total (3 year) cost is as low as it is due to that $2366/mo assumption. Idk exactly what stuff costs over there, but I'd guess a room probably starts around $1100? So like $275/wk for food, going out with friends, incidentals, etc. It's possible to stay inside that budget month to month if you don't do too much. But then there's the cost of buying furniture and clothes, going home for the holidays, friends weddings, etc that blow it up.

The point was that if someone wants to nitpick about SAs or loan fees or whatever, it's just as easy to do on the other end.

[Mack.Hambleton]

Like this post if u think law school should be free

[ilikebaseball]

Someone needs to explain to me why law school is so much though? I know a ton of responses would be "if it was cheap, everyone would do it just for the $$ and status" but law tuition is literally triple UG tuition. Is it similar for Med School? I don't think its that substantial for grad school in general. Law schools seem to make a killing. Theoretically, at a school like UT, it would take 3 in state UG students to equal the cost of tuition of one law school student. That just blows my mind.

[DoveBodyWash]

Someone needs to explain to me why law school is so much though? I know a ton of responses would be "if it was cheap, everyone would do it just for the $$ and status" but law tuition is literally triple UG tuition. Is it similar for Med School? I don't think its that substantial for grad school in general. Law schools seem to make a killing. Theoretically, at a school like UT, it would take 3 in state UG students to equal the cost of tuition of one law school student. That just blows my mind.

faculty salaries are the biggest overhead cost. Law schools are driven by prestige, which is largely determined by academic research of the faculty (this is basically the peer reputation metric that goes into U.S. News Ranking). So schools essentially get into bidding wars for the best academics. And law schools were traditionally cash cows for their parent universities, so law schools need to bring in more revenue to subsidize the other departments and programs.

Can't use med school to generate revenue since it's ridiculously expensive to train med students. Can't use any other program because the salaries of those professions don't justify high tuition and/or they're not popular enough to be a reliable stream of revenue. MBA and JD programs are the easiest to turn into cash cows because they remain relatively popular and because the starting salaries are relatively higher, which helps to justify the tuition as an "investment"

MBA programs probably don't have the debt issue to the extent that JD programs do though since most MBA candidates have worked for a few years (and thus have savings) and because it's a year shorter

[Johann]

Because people will pay it. If Columbia wasn't filling it's seats it would get cheaper. Not gonna change until people with sticker t14 admits start going to free regionals.

[ilikebaseball]

Someone needs to explain to me why law school is so much though? I know a ton of responses would be "if it was cheap, everyone would do it just for the $$ and status" but law tuition is literally triple UG tuition. Is it similar for Med School? I don't think its that substantial for grad school in general. Law schools seem to make a killing. Theoretically, at a school like UT, it would take 3 in state UG students to equal the cost of tuition of one law school student. That just blows my mind.

faculty salaries are the biggest overhead cost. Law schools are driven by prestige, which is largely determined by academic research of the faculty (this is the peer reputation metric that goes into U.S. News Ranking). So schools essentially get into bidding wars for the best academics. And law schools were traditionally cash cows for their parent universities, so law schools need to bring in more revenue to subsidize the other departments and programs

If law schools bring in so much money, then why wouldn't every UG establish one? Seems to be profitable pretty much everywhere