Students loan screw-job in debt deal Forum

[areyouinsane]

No biggie, just another small screw-job to add to the list, courtesy of the US Congress:

http://money.cnn.com/2011/08/01/news/ec ... hpt=hp_bn3


Pretty funny how those British students a few months ago stopped just short of physically assaulting their royalty, trashing the public square, etc. when the gov't raised tution.

No country screws over students like the US, because it's so damn easy. Not a peep when student loans were exempted from bankruptcy- hell, not a peep when PRIVATE student loans were made non-dischargable in 2005.

[HWS08]

This is America, why would we raise taxes or close loopholes for people making six figures a year when we can do something that screws with the middle class instead?

[Grizz]

Daytukurjerbs!

[robotclubmember]

whoops lol!

[scammedhard]

This is TLS, and TLSers are far more interested in "Predict where poster above you is going to school!" than real, important issues like the ABA policies, student loans, the price of law school, or where our tuition dollars will be going. I guess we will have no one to blame but ourselves when we face the harsh, cold reality of the labor market for lawyers in about 3 years with a huge debt load on our backs.

[albusdumbledore]

Not to mention this elimnnates the ability for students to take out Federal Stafford Loans. With those two things together, for someone taking out $50,000 in loans each year (and let's face it that's a ton of people on TLS), this new debt deal means you will graduate with over an extra $20,000 in debt from interest (assuming the 6.8% rate doesn't change).

Guess I need to rework my ROI spreadsheets. Overnight the decision to go to law school just ended up costing way more money.

Way to cave to the top 1%. Glad they could keep their tax breaks.

I'm being serious. RCM boldfont activate:

IF YOU ARE PLANNING TO TAKE OUT $150K IN DEBT, THIS LEGISLATION GUARANTEES YOU WILL INCUR AN ADDITIONAL $20,000 IN DEBT BY THE TIME YOU GRADUATE. ASSUMING THAT INTEREST IS NOT CAPITALIZED INTO PRINCIPAL, YOUR TUITION JUST INCREASED BY 13.8% EFFECTIVELY.

13.8% TUITION HIKES FOR ALL!

This is wrong. I don't know how on earth you got an extra 20k, but it's way wrong.

[beach_terror]

This is TLS, and TLSers are far more interested in "Predict where poster above you is going to school!" than real, important issues like the ABA policies, student loans, the price of law school, or where our tuition dollars will be going. I guess we will have no one to blame but ourselves when we face the harsh, cold reality of the labor market for lawyers in about 3 years with a huge debt load on our backs.

It's the internet bro, take a chill pill.

[robotclubmember]

Not to mention this elimnnates the ability for students to take out Federal Stafford Loans. With those two things together, for someone taking out $50,000 in loans each year (and let's face it that's a ton of people on TLS), this new debt deal means you will graduate with over an extra $20,000 in debt from interest (assuming the 6.8% rate doesn't change).

Guess I need to rework my ROI spreadsheets. Overnight the decision to go to law school just ended up costing way more money.

Way to cave to the top 1%. Glad they could keep their tax breaks.

I'm being serious. RCM boldfont activate:

IF YOU ARE PLANNING TO TAKE OUT $150K IN DEBT, THIS LEGISLATION GUARANTEES YOU WILL INCUR AN ADDITIONAL $20,000 IN DEBT BY THE TIME YOU GRADUATE. ASSUMING THAT INTEREST IS NOT CAPITALIZED INTO PRINCIPAL, YOUR TUITION JUST INCREASED BY 13.8% EFFECTIVELY.

13.8% TUITION HIKES FOR ALL!

This is wrong. I don't know how on earth you got an extra 20k, but it's way wrong.

(debt principal at beginning of year x interest rate = interest accrued during year)
year 1 - 50000 x 6.8% = 3400
year 2 - 100000 x 6.8% = 6800
year 3 - 150000 x 6.8% = 10200

3400 + 6800 + 10200 = 20400

That's how I got it.

[scammedhard]

This is wrong. I don't know how on earth you got an extra 20k, but it's way wrong.

Then shows us your math. In the meantime, I trust the Robot--a CPA with years of professional experience.

[robotclubmember]

This is TLS, and TLSers are far more interested in "Predict where poster above you is going to school!" than real, important issues like the ABA policies, student loans, the price of law school, or where our tuition dollars will be going. I guess we will have no one to blame but ourselves when we face the harsh, cold reality of the labor market for lawyers in about 3 years with a huge debt load on our backs.

It's the internet bro, take a chill pill.

The cost of your legal education just went up 13.6% overnight if you are enrolling this year. No biggie. Take a chill pill dude.

[Patriot1208]

Not to mention this elimnnates the ability for students to take out Federal Stafford Loans. With those two things together, for someone taking out $50,000 in loans each year (and let's face it that's a ton of people on TLS), this new debt deal means you will graduate with over an extra $20,000 in debt from interest (assuming the 6.8% rate doesn't change).

Guess I need to rework my ROI spreadsheets. Overnight the decision to go to law school just ended up costing way more money.

Way to cave to the top 1%. Glad they could keep their tax breaks.

I'm being serious. RCM boldfont activate:

IF YOU ARE PLANNING TO TAKE OUT $150K IN DEBT, THIS LEGISLATION GUARANTEES YOU WILL INCUR AN ADDITIONAL $20,000 IN DEBT BY THE TIME YOU GRADUATE. ASSUMING THAT INTEREST IS NOT CAPITALIZED INTO PRINCIPAL, YOUR TUITION JUST INCREASED BY 13.8% EFFECTIVELY.

13.8% TUITION HIKES FOR ALL!

This is wrong. I don't know how on earth you got an extra 20k, but it's way wrong.

(debt principal at beginning of year x interest rate = interest accrued during year)
year 1 - 50000 x 6.8% = 3400
year 2 - 100000 x 6.8% = 6800
year 3 - 150000 x 6.8% = 10200

3400 + 6800 + 10200 = 20400

That's how I got it.

Not all of that money is subsidized now. You can only take out a maximum of 8,500 in subsidized loans per year.

http://studentaid.ed.gov/PORTALSWebApp/ ... tloans.jsp

[albusdumbledore]

(debt principal at beginning of year x interest rate = interest accrued during year)
year 1 - 50000 x 6.8% = 3400
year 2 - 100000 x 6.8% = 6800
year 3 - 150000 x 6.8% = 10200

3400 + 6800 + 10200 = 20400

That's how I got it.

The max you can take out in subsidized loans per year is 8.5k, which means at most 25.5k of your loans will be affected. You weren't getting 50k a year in subsidized loans previously.

[maxm2764]

The cost of your legal education just went up 13.6% overnight if you are enrolling this next year. No biggie. Take a chill pill dude.

FTFY. Changes go into place July 1, 2012.

[brose]

(debt principal at beginning of year x interest rate = interest accrued during year)
year 1 - 50000 x 6.8% = 3400
year 2 - 100000 x 6.8% = 6800
year 3 - 150000 x 6.8% = 10200

3400 + 6800 + 10200 = 20400

That's how I got it.

This doesn't account for gradplus... isn't anything over 20.5k going to be at 7.9%?

[schooner]

(debt principal at beginning of year x interest rate = interest accrued during year)
year 1 - 50000 x 6.8% = 3400
year 2 - 100000 x 6.8% = 6800
year 3 - 150000 x 6.8% = 10200

3400 + 6800 + 10200 = 20400

That's how I got it.

First, the debt deal affects subsidized Stafford loans only. (Maybe Perkins too, but let's set that aside for now since most law students don't get those.) Second, there is an annual limit on the amount of Stafford loans you can take out each year. Third, you have to account for the fact that the loans you take out this year, if you're an 1L, are grandfathered in. Fourth, and most importantly, you have to compare the extra costs of the debt deal in addition to the interest you would have paid anyway if there had been no changes. That is why the above calculations are flawed.

Here is the math I wrote out in another thread. (I'm not good at math and I'm not 100% sure about my assumptions so folks should look at it over.)

Scenario for a rising 1L under the debt ceiling deal, if he's planning to take out $8500 each year:

end of 1L: 8500 w/ no interest due from you

<the federal govt stops issuing subsidized Stafford loans, but continues to pay the interest on the subsidized Stafford loan you took out in 1L>

end of 2L: no interest due from 8500 carried over from 1L + 8500 x 6.8% = $578 interest on $17,000 principal

end of 3L: no interest due from 8500 + (8500+578) x 6.8% + (8500 x 6.8%) = $1195 interest on $26,078 principal; if this interest is capitalized, the outstanding principal becomes $27,273 upon graduation.

6 months after graduation: $27,273 principal x 6.8%/2 = $927 interest; if this interest is capitalized, the outstanding principal becomes $28,200.

-------------
vs. if the subsidized Stafford program had been in effect all 3.5 years, none of the interest would have been capitalized to the principal, and the total amount outstanding would have been $25,500

Therefore, the debt ceiling deal's elimination of new subsidized Stafford loans (after July 1, 2012) will cost an 1L starting this year $2,700 (28,200 - 25,500).

*By the way, the 6.8% interest rate is in effect only (by law) through 2012-2013 school year. It will probably go up after that.

[beach_terror]

This is TLS, and TLSers are far more interested in "Predict where poster above you is going to school!" than real, important issues like the ABA policies, student loans, the price of law school, or where our tuition dollars will be going. I guess we will have no one to blame but ourselves when we face the harsh, cold reality of the labor market for lawyers in about 3 years with a huge debt load on our backs.

It's the internet bro, take a chill pill.

The cost of your legal education just went up 13.6% overnight if you are enrolling this year. No biggie. Take a chill pill dude.

Good job not understanding context. If people want to give a shit about this stuff then they can, but ultimately TLS is an internet forum where people come to kill time and blow off steam. This isn't the floor of the House. Taking a shot at people who have fun on the boards is fucking stupid, and if you disagree then the same applies to you.

[ToTransferOrNot]

This is a new and original thread on an issue that has not been discussed before.

[luthersloan]

No, it did not. The legislation only effects the Stafford subsidized, which are capped at 8500 per year, so the most your legal education bill increased was

8500 x .068 = 578
17000 x .068 = 1156
25500 x .068 = 1734

total= 3468

[robotclubmember]

(debt principal at beginning of year x interest rate = interest accrued during year)
year 1 - 50000 x 6.8% = 3400
year 2 - 100000 x 6.8% = 6800
year 3 - 150000 x 6.8% = 10200

3400 + 6800 + 10200 = 20400

That's how I got it.

First, the debt deal affects subsidized Stafford loans only. (Maybe Perkins too, but let's set that aside for now since most law students don't get those.) Second, there is an annual limit on the amount of Stafford loans you can take out each year. Third, you have to account for the fact that the loans you take out this year, if you're an 1L, are grandfathered in. Fourth, and most importantly, you have to compare the extra costs of the debt deal in addition to the interest you would have paid anyway if there had been no changes. That is why the above calculations are flawed.

Here is the math I wrote out in another thread. (I'm not good at math and I'm not 100% sure about my assumptions so folks should look at it over.)

Scenario for a rising 1L under the debt ceiling deal, if he's planning to take out $8500 each year:

end of 1L: 8500 w/ no interest due from you

<the federal govt stops issuing subsidized Stafford loans, but continues to pay the interest on the subsidized Stafford loan you took out in 1L>

end of 2L: no interest due from 8500 carried over from 1L + 8500 x 6.8% = $578 interest on $17,000 principal

end of 3L: no interest due from 8500 + (8500+578) x 6.8% + (8500 x 6.8%) = $1195 interest on $26,078 principal; if this interest is capitalized, the outstanding principal becomes $27,273 upon graduation.

6 months after graduation: $27,273 principal x 6.8%/2 = $927 interest; if this interest is capitalized, the outstanding principal becomes $28,200.

-------------
vs. if the subsidized Stafford program had been in effect all 3.5 years, none of the interest would have been capitalized to the principal, and the total amount outstanding would have been $25,500

Therefore, the debt ceiling deal's elimination of new subsidized Stafford loans (after July 1, 2012) will cost an 1L starting this year $2,700 (28,200 - 25,500).

*By the way, the 6.8% interest rate is in effect only (by law) through 2012-2013 school year. It will probably go up after that.

Thank you, and apologies for the miscalculation. To be fair, I drank half a bottle of gin last night so it made total sense to me until I realized I was totally wrong lol (not on the basis of math but because I had the subsidized loans mixed up).

Where is rayiner to tell you to stop being bad at life when you need him?

[schooner]

This is TLS, and TLSers are far more interested in "Predict where poster above you is going to school!" than real, important issues like the ABA policies, student loans, the price of law school, or where our tuition dollars will be going. I guess we will have no one to blame but ourselves when we face the harsh, cold reality of the labor market for lawyers in about 3 years with a huge debt load on our backs.

I don't think this is true. Look around in the forums - there are plenty of people intensely debating all those issues. Also, the media coverage of the debt deal negotiations made it really hard to know that students are getting screwed, unless you were already savvy enough to pick up the policy details. (Most people aren't.)

Students got screwed because we're not organized and we don't fight back, compared to, oh let's say, seniors and Wall Street lobbyists.

[ahduth]

I have a question - how often is interest capitalized on these loans? I looked all over the Dept of Education website and I couldn't find anything. Are you guys just assuming annually? Without any additional information I'd assume it would be based on the disbursement pattern - so either quarterly or "semesterly." But like I said, I couldn't find anything about that.

At any rate, if you don't know how frequently it's being capitalized, there is no way to calculate the true impact of the loss of this subsidy.

[vanwinkle]

This is a new and original thread on an issue that has not been discussed before.

Indeed.

EDIT: http://www.top-law-schools.com/forums/v ... 5&t=162177