Use stafford loans or retirement money? Forum

[organnie]

Hi folks, I'm an unusual case. I'm 52 and starting law school this fall. I've not been offered any scholarship money from the school I'll be attending (I do continue to pester, though).
I know there will be folks out there that want to suggest that law school is a bad idea for me. But I've thought it through, I'm definitely doing this, and that's not why I'm posting today.
I currently have $126K in 401K/IRA money which will all be turned over into IRAs once I quit my full-time job in August. Pulling money from an IRA for educational purposes spares me the 10% penalty that I would have otherwise incurred. I recognize that I'll have to pay income tax on the money I pull out but, trust me, I'll have made squat this year so it'll all come out in the wash come tax time (should get about 3K back next spring). I also will have about 20K in a savings account by August.
I make less than 24K a year in my job and have one dependent. Looks like I'm going to be offered $20,500 in Stafford loans for the upcoming school year (and presumably for my 2nd and 3rd years?). I will have other expenses that will come to about $1000 per month (rent, insurance, food, etc.). I also have to share my daughter's undergrad tuition expense with my ex. She's got two more years. That'll cost me about 20K total.
So...I guess my question is...(a financial guru I am not), at my age, do I use the loan money? Right now my retirement funds are earning more than 6% interest (the same interest charged on the Stafford loans). But do I really want to be 60K in debt when I pass the bar at 56 years of age? But then again, I have no other debt...nuthin'.
Who's got a creative angle for me? Thanks!!

[lukertin]

Three words:

Oh my god.

[sublime]

..

[NYstate]

Do not touch your retirement money. You are too old to not have money in the bank.

You should not be going to law school unless you can go for free.

What kind of job do you think you will be able to get? What salary?

Why not go part time and keep your job?

[IAFG]

Since you obviously hate financial solvency, I will assume you would make bad choices with your retirement money if you held onto it, so go ahead and take it out.

[NanaP]

This is a bad idea. What do you want to do once you graduate? You will most likely have to start your own firm, which will be difficult. Is part time an option??

[organnie]

I have several friends in the industry and am essentially guaranteed a job once I graduate making at least twice what I make now. I am healthy, come from hardy stock, and should be able to work through to a ripe-old age. I'm a secretary now in a miserable job, making peanuts.

But I'm not going to law school entirely for income-producing reasons. I've lived a hard, oppressive life and have not had the ability to realize or live up to my potential until now (long, sordid story). So it's a personal quest for me. Plus, I'm fascinated with the law and love learning.

I have a long-term, live-in, very emotionally supportive boyfriend that helps to support me financially as well. He makes a decent living and also has me covered financially if he were to pass.

The judgement calls compelled me to explain myself a little further although I wish I didn't have to. I'm elaborating further on my situation here to see if I can't elicit a little more sound advice.

But thanks for assuming that I'm an idiot and financially reckless.

[lukertin]

You're about to go to school full-time, preparing to take out like 150k in loans, when you could attend part-time or something.

We are right to assume you're being financially reckless. Nobody is calling you an idiot.

[IAFG]

But thanks for assuming that I'm an idiot and financially reckless.

Dude. Taking out $$$$ in loans for something that will definitely NOT pay off said $$$$ + interest prior to your retirement is, like, the definition of financially reckless. And double your current salary is still peanuts up against that debt, don't be dense.

That said, with IBR & PAYE, you will probably never actually pay back what you borrow, so you can either DEFINITELY squander your savings, or POSSIBLY pay it back.

[Total Litigator]

If you are truly guaranteed a job when you graduate, then you should go to the 'best' school that will let you get a JD for free.

However, because this idea has apparently not occurred to you yet, I am kind of doubting you actually will be looking at a guaranteed job upon graduation... Then we would be back to square one, i.e. the square where attending law school sounds like a really bad idea for you.

[sublime]

..

[IAFG]

If you are truly guaranteed a job when you graduate, then you should go to the 'best' school that will let you get a JD for free.

However, because this idea has apparently not occurred to you yet, I am kind of doubting you actually will be looking at a guaranteed job upon graduation... Then we would be back to square one, i.e. the square where attending law school sounds like a really bad idea for you.

No where is letting her go for free because her LSAT is not good.

[organnie]

It's important to me that I stay living in my current community. I have two children here and I'm helping to raise my two step-children. There are only two law schools in my region. I'm going to the least expensive one (and the more highly rated of the two).

[organnie]

And that's true. My LSAT wasn't stellar.

[sublime]

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[organnie]

Not worth a retake at this point. Thanks for the advice though. I've taken about a dozen practice tests (the most recently administered, official LSAC tests, under timed conditions) and can't seem to score above a certain level. I even took a PowerScore course. So I don't think I could ever score high enough to procure substantial funds for law school. The school I'm attending is out of money to hand out. And I definitely don't want to wait another year to start.

[sublime]

..

[NYstate]

I was giving sound advice. You should take a year and study and retake. Tou didnt study enough. At your age another year won't matter. Maybe wait two years until your kid is out of school. Also consider marrying your boyfriend so you dont get left with all these expenses and debt and no protection.
Have you created a budget based on your best case outcome like the other 0Ls do? What about worse case?

How much will you owe? Is it really 60,000 or is that just the stafford loans? What will the monthly payment be on this amount? 60,000 payment over 10 years is around $700 a month.
But you will probably be on IBR (25 years) or PAYE (20 years.)
My opinion is that schools running out of funds is a flame.

Do not touch the retirement savings. Even if you dont pay a penalty on taking them out for school. Do not touch that money for any reason other than an extreme health emergency. You will never replace it.

Also, going to law school because you love learning is extremely foolish and naive. The only reason to go to law school is to become a lawyer.

[jbagelboy]

I will say first that I think it is noble that you are so determined to go back to school at your age. It's not unheard of: I know a friend of my parents who started taking mol bio and org chem classes at 45 after being a failed professional photographer for 20 years, got into med school and is now graduating as an MD at around 51. they are now definitely making a lot more money than the photography.

That being said, this decision is not for everyone. Do you realize you will be competing against 20-somethings in rigorous coursework? You may have more life experience, but you literally will not be able to keep up with their hours and study lifestyle. I hope you've thought this through.

On the bright side debtwise, the federal government will relieve Stafford loans if you 1) die or 2) become disabled (with medical records to show). Since its not unlikely one of those two things will happen within the next 20 years given your age, you'll probably never have to pay off all the debt. Keep your retirement savings.

[IAFG]

That being said, this decision is not for everyone. Do you realize you will be competing against 20-somethings in rigorous coursework? You may have more life experience, but you literally will not be able to keep up with their hours and study lifestyle.

Both the women I know who went to LS ~OP's age did well in LS. And both had minor children living at home.

[organnie]

I appreciate the inspiring stories and the "you can do it" support.

As far as competing with the youngsters...I just finished my bachelor's while working full-time. I went to school part-time over the last six years. I graduated with a 3.94 GPA. So I am used to being in a study-mode frame of mind. I won't be working during LS, and I don't play beer-pong The ONLY thing I really have to do is my law studies. I'm confident I can do it.

[SFSpartan]

Would be helpful to know if your husband has any retirement money (or if that was included in the 126k figure. Also, you mentioned step kids, so I'm presuming you are married). If there is something to fall back on, take out the retirement money. If not, take out the loans, recognizing that law school is a particularly risky decision for you because of your age. Also, recognize that you don't have enough saved to retire on (FWIW, I don't think you are financially reckless, but I do think you've probably had a string of crappy, low paying jobs).

[jbagelboy]

That being said, this decision is not for everyone. Do you realize you will be competing against 20-somethings in rigorous coursework? You may have more life experience, but you literally will not be able to keep up with their hours and study lifestyle.

Both the women I know who went to LS ~OP's age did well in LS. And both had minor children living at home.

Fair enough. I'm not saying its not possible. Far from it - in some ways the emotionally stability at that age would be less distracting. Still, its not for everyone, and you have to think about what you're ready for.

[NYstate]

I appreciate the inspiring stories and the "you can do it" support.

As far as competing with the youngsters...I just finished my bachelor's while working full-time. I went to school part-time over the last six years. I graduated with a 3.94 GPA. So I am used to being in a study-mode frame of mind. I won't be working during LS, and I don't play beer-pong The ONLY thing I really have to do is my law studies. I'm confident I can do it.

Why are you wasting that GPA and not retaking?

Also, you can't compare law school to undergrad. Everyone will be working hard. You have one exam at the end that is graded on a curve. Law school is different. I'm not saying you can't do well. I'm saying that law school is different and to go because you love learning is foolish.

You still haven't said how much debt you will have when you graduate. You need to take loans instead of spending assets. You can pay back loans in small amounts if you have to but you can't replace savings.

I'm not judging you. I'm trying to give advice.

[IAFG]

A dozen PTs is not much studying. It's a good start.