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Law School debt vs. Cumulative debt
Posted: Thu Jul 05, 2012 3:24 pm
by Philipsssssss
The more I read posts about law school debt, the more I wonder what happened to the cumulative debt ... do people simply ignore the debt they carry with them from previous years (undergrad and grad) in addition to law school debt. A lot of posts about School A vs. School B focus on which one is better in terms of ranking/scholly/debt. But I never see people aggregate the full amount of their loans to make a decision. Its like people choose to ignore these 'other loans' in their selection...
Thoughts?
Re: Law School debt vs. Cumulative debt
Posted: Thu Jul 05, 2012 3:27 pm
by nonprofit-prophet
Philipsssssss wrote:The more I read posts about law school debt, the more I wonder what happened to the cumulative debt ... do people simply ignore the debt they carry with them from previous years (undergrad and grad) in addition to law school debt. A lot of posts about School A vs. School B focus on which one is better in terms of ranking/scholly/debt. But I never see people aggregate the full amount of their loans to make a decision. Its like people choose to ignore these 'other loans' in their selection...
Thoughts?
How do previous loans affect their decision when picking between schools? I get how it factors into a "should i got to LS" inquiry. But when you're comparing scholly offers from two schools, your previous debt is irrelevant. The gap between the offers is consistent regardless of whether you factor in UG debt.
Edit for clarity: School A has a COA of 50k. School B has a COA of 75k. Saying total debt at A equals 100 and total debt at B equals 125 doesn't change the calculation (assuming 50k UG debt). The divide still exists.
Re: Law School debt vs. Cumulative debt
Posted: Thu Jul 05, 2012 3:32 pm
by Philipsssssss
nonprofit-prophet wrote:Philipsssssss wrote:The more I read posts about law school debt, the more I wonder what happened to the cumulative debt ... do people simply ignore the debt they carry with them from previous years (undergrad and grad) in addition to law school debt. A lot of posts about School A vs. School B focus on which one is better in terms of ranking/scholly/debt. But I never see people aggregate the full amount of their loans to make a decision. Its like people choose to ignore these 'other loans' in their selection...
Thoughts?
How do previous loans affect their decision when picking between schools? I get how it factors into a "should i got to LS" inquiry. But when you're comparing scholly offers from two schools, your previous debt is irrelevant. The gap between the offers is consistent regardless of whether you factor in UG debt.
Edit for clarity: School A has a COA of 50k. School B has a COA of 75k. Saying total debt at A equals 100 and total debt at B equals 125 doesn't change the calculation (assuming 50k UG debt). The divide still exists.
Agreed. But I guess I am not looking at it in terms of the gap. Having 50k UG debt vs. having 10k is a big difference when you add it to the total...
Re: Law School debt vs. Cumulative debt
Posted: Thu Jul 05, 2012 3:48 pm
by rayiner
Philipsssssss wrote:The more I read posts about law school debt, the more I wonder what happened to the cumulative debt ... do people simply ignore the debt they carry with them from previous years (undergrad and grad) in addition to law school debt. A lot of posts about School A vs. School B focus on which one is better in terms of ranking/scholly/debt. But I never see people aggregate the full amount of their loans to make a decision. Its like people choose to ignore these 'other loans' in their selection...
Thoughts?
http://en.wikipedia.org/wiki/Sunk_costs
Re: Law School debt vs. Cumulative debt
Posted: Thu Jul 05, 2012 3:52 pm
by nonprofit-prophet
Philipsssssss wrote:nonprofit-prophet wrote:Philipsssssss wrote:The more I read posts about law school debt, the more I wonder what happened to the cumulative debt ... do people simply ignore the debt they carry with them from previous years (undergrad and grad) in addition to law school debt. A lot of posts about School A vs. School B focus on which one is better in terms of ranking/scholly/debt. But I never see people aggregate the full amount of their loans to make a decision. Its like people choose to ignore these 'other loans' in their selection...
Thoughts?
How do previous loans affect their decision when picking between schools? I get how it factors into a "should i got to LS" inquiry. But when you're comparing scholly offers from two schools, your previous debt is irrelevant. The gap between the offers is consistent regardless of whether you factor in UG debt.
Edit for clarity: School A has a COA of 50k. School B has a COA of 75k. Saying total debt at A equals 100 and total debt at B equals 125 doesn't change the calculation (assuming 50k UG debt). The divide still exists.
Agreed. But I guess I am not looking at it in terms of the gap. Having 50k UG debt vs. having 10k is a big difference when you add it to the total...
Again, that's only relevant if you're deciding whether to go to law school in the first place. You have to take UG debt into account. But I don't see how it makes you more likely to pick school A over school B. you'll have the UG debt in both scenarios.
Re: Law School debt vs. Cumulative debt
Posted: Sat Jul 07, 2012 9:15 pm
by cedarseoul
I don't think there's some bright line to determine how much educational debt a person should have. Maybe there's an extreme upper limit, but for the majority of us, it's an individual decision--how much am I willing to carry? How much do I think I can reasonably pay off? What other assets or factors might come into play to influence my financial situation?
Consider this: if you have 50K of undergrad debt (vs. 10K, say), you have a much greater need to obtain a high salary. So it might actually be in your interest to pay a little more for law school IF in so doing you have a chance at a better job / better pay.
Re: Law School debt vs. Cumulative debt
Posted: Sat Jul 07, 2012 10:49 pm
by bk1
Philipsssssss wrote:The more I read posts about law school debt, the more I wonder what happened to the cumulative debt ... do people simply ignore the debt they carry with them from previous years (undergrad and grad) in addition to law school debt. A lot of posts about School A vs. School B focus on which one is better in terms of ranking/scholly/debt. But I never see people aggregate the full amount of their loans to make a decision. Its like people choose to ignore these 'other loans' in their selection...
Thoughts?
While the sunk costs argument makes sense (though I have some gripes with it), I think the real reason that a lot of people don't factor it in on TLS is because on average people on TLS don't have UG debt (or much of it). That's just a guess, but my gut feeling is that your average TLSer had their UG paid for by their parents.
Re: Law School debt vs. Cumulative debt
Posted: Sat Jul 07, 2012 10:50 pm
by PaulKriske
bk187 wrote:Philipsssssss wrote:The more I read posts about law school debt, the more I wonder what happened to the cumulative debt ... do people simply ignore the debt they carry with them from previous years (undergrad and grad) in addition to law school debt. A lot of posts about School A vs. School B focus on which one is better in terms of ranking/scholly/debt. But I never see people aggregate the full amount of their loans to make a decision. Its like people choose to ignore these 'other loans' in their selection...
Thoughts?
While the sunk costs argument makes sense (though I have some gripes with it), I think the real reason that a lot of people don't factor it in on TLS is because on average people on TLS don't have UG debt (or much of it). That's just a guess, but my gut feeling is that your average TLSer had their UG paid for by their parents and scholarships.
Re: Law School debt vs. Cumulative debt
Posted: Sat Jul 07, 2012 11:02 pm
by sawwaverunner
Philipsssssss wrote:The more I read posts about law school debt, the more I wonder what happened to the cumulative debt ... do people simply ignore the debt they carry with them from previous years (undergrad and grad) in addition to law school debt. A lot of posts about School A vs. School B focus on which one is better in terms of ranking/scholly/debt. But I never see people aggregate the full amount of their loans to make a decision. Its like people choose to ignore these 'other loans' in their selection...
Thoughts?
No one here considers interest accrued throughout law school either. Direct loans from the government are now going to be fully unsubsidized. That will at least add a couple thousand for the three years of school. Other undergraduate loans should accumulate interest throughout law school too. With the economy the way it is, I would think people with 50k or greater in undergrad loans are taking full scholarships at tier 3's rather than full price at tier 1s.
Re: Law School debt vs. Cumulative debt
Posted: Sun Jul 08, 2012 8:28 am
by dingbat
sawwaverunner wrote:No one here considers interest accrued throughout law school either. Direct loans from the government are now going to be fully unsubsidized. That will at least add a couple thousand for the three years of school. Other undergraduate loans should accumulate interest throughout law school too. With the economy the way it is, I would think people with 50k or greater in undergrad loans are taking full scholarships at tier 3's rather than full price at tier 1s.
Actually, I see just as many calculations that include interest as don't include interest.
To answer OP's question, when choosing between two law schools, it generally doesn't make a difference in determining which makes more financial sense. What matters is the difference in cost between School A and School B.
One must separately look into whether the schools are worth it. For example, School A might be worth $80k more than School B, but might not be worth $300k of debt (including UG loans). Generally speaking, in this case, School B would not be worth $220k debt either.
However, this is a little bit different at the extremes. It can be argued that Harvard might be worth $300k debt, whereas Michigan isn't worth $200k debt, even when that same person might argue that Harvard isn't worth $100k more than Michigan
The same is true in a situation where minimizing debt might be the most important strategy, where choosing between a full ride plus stipend at a TTT over $50k new debt at a lower T1/T2 might make sense, if there's already significant UG debt
Re: Law School debt vs. Cumulative debt
Posted: Sun Jul 08, 2012 8:46 am
by CreativityKing
bk187 wrote:Philipsssssss wrote:The more I read posts about law school debt, the more I wonder what happened to the cumulative debt ... do people simply ignore the debt they carry with them from previous years (undergrad and grad) in addition to law school debt. A lot of posts about School A vs. School B focus on which one is better in terms of ranking/scholly/debt. But I never see people aggregate the full amount of their loans to make a decision. Its like people choose to ignore these 'other loans' in their selection...
Thoughts?
While the sunk costs argument makes sense (though I have some gripes with it), I think the real reason that a lot of people don't factor it in on TLS is because on average people on TLS don't have UG debt (or much of it). That's just a guess, but my gut feeling is that your average TLSer had their UG paid for by their parents.
Or had a full ride.