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Okay, so what if instead of slamming as much as possible into loans during biglaw you sock money away into investments for 3 years, pay the minimum (IBR/ICR), and then do 10 years of public service to get forgiveness?

Is this, net, a better deal than just paying down loans as quickly as possible? what's the downside to this?

pasteurizedmilk wrote:Okay, so what if instead of slamming as much as possible into loans during biglaw you sock money away into investments for 3 years, pay the minimum (IBR/ICR), and then do 10 years of public service to get forgiveness?

Is this, net, a better deal than just paying down loans as quickly as possible? what's the downside to this?

The minimum is going to be barely above a normal 10-year repayment schedule, unless you're married with kids and have full-boat plus significant UG-level loans.

Also, the downside is that it takes you 13 years to get out from under the loans, and if you don't end up getting a PSLF-eligible job, you're completely fucked.

ToTransferOrNot wrote:

pasteurizedmilk wrote:Okay, so what if instead of slamming as much as possible into loans during biglaw you sock money away into investments for 3 years, pay the minimum (IBR/ICR), and then do 10 years of public service to get forgiveness?

Is this, net, a better deal than just paying down loans as quickly as possible? what's the downside to this?

The minimum is going to be barely above a normal 10-year repayment schedule, unless you're married with kids and have full-boat plus significant UG-level loans.

Yeah, but I'm talking about the difference between:

$4000 a month toward student loans (trying to pay down as quickly as possible)

OR

$~1800 a month toward student loans (the minimum under IBR) and kicking in the rest to 401(k)/other investments.

Also, the downside is that it takes you 13 years to get out from under the loans, and if you don't end up getting a PSLF-eligible job, you're completely fucked.

I'm pretty confident I could find such a job with my credentials (T14, honors, V10). Maybe I'm wrong?

How substantial would the financial benefit be if I'm right?

Isn't there an adjustment or penalty during loan forgiveness for the cash you made in biglaw?

pasteurizedmilk wrote:

ToTransferOrNot wrote:

pasteurizedmilk wrote:Okay, so what if instead of slamming as much as possible into loans during biglaw you sock money away into investments for 3 years, pay the minimum (IBR/ICR), and then do 10 years of public service to get forgiveness?

Is this, net, a better deal than just paying down loans as quickly as possible? what's the downside to this?

The minimum is going to be barely above a normal 10-year repayment schedule, unless you're married with kids and have full-boat plus significant UG-level loans.

Yeah, but I'm talking about the difference between:

$4000 a month toward student loans (trying to pay down as quickly as possible)

OR

$~1800 a month toward student loans (the minimum under IBR) and kicking in the rest to 401(k)/other investments.

Also, the downside is that it takes you 13 years to get out from under the loans, and if you don't end up getting a PSLF-eligible job, you're completely fucked.

I'm pretty confident I could find such a job with my credentials (T14, honors, V10). Maybe I'm wrong?

How substantial would the financial benefit be if I'm right?

Never a good idea to assume anything re your ability to find a job down the line. Your credentials won't matter as much as you think they will for trying to lateral into a PSLF position, especially if you lack the backgrund PI "chops". In the 3 years, you're not going to get significant litigation experience at a firm, so why would a litigation-focused PI job want you, for example?

As for the numbers, you're basically throwing away all of the payments you make in the first 3 years. I don't know how the numbers stack up there, but it doesn't seem like they would stack up well.

this sounds like an idiotic plan to me, esp since it sounds like you really have no interest in PI work

Hmm. Well I have about 240K from UG and law school.

So if I put away ~1500 / month to investments instead of student loans:

1500 x 36 = 54000 saved instead of spent on loans.

Then a substantially lower IBR monthly payment (say, conservatively, 800) at a PI job for 10 years, so that's about 96000.

Plus the 2000 per month for 3 years, so 72000 paid while in biglaw.

So total paid for student loans: 168,000, as opposed to like 300K if I tried to pay it all off.

Seems pretty beneficial to me. what am I missing?

dr123 wrote:this sounds like an idiotic plan to me, esp since it sounds like you really have no interest in PI work

let's say I am interested in PI. is it still idiotic and, if so, why?

pasteurizedmilk wrote:Hmm. Well I have about 240K from UG and law school.

So if I put away ~2300 / month to investments instead of student loans:

2300 x 36 = 83000 saved instead of spent on loans.

Then a substantially lower IBR monthly payment (say, conservatively, 800) at a PI job for 10 years, so that's about 96000.

Plus the 2000 per month for 3 years, so 72000 paid while in biglaw.

So total paid for student loans: 168,000, as opposed to like 300K if I tried to pay it all off.

Seems pretty beneficial to me. what am I missing?

Or you could just start in the PSLF gig and skip the "paying the $73k while in biglaw" part. That's the thing I don't get about your plan: You're throwing that $72k away in return for $83k investment savings; your net is $11k, which isn't great. Doesn't seem worth the three extra years before you're loan-free, especially given the risk that you don't find an eligible job (or that you get laid off from said job, etc.). If you're going to do PSLF, just do it right away--it doesn't make sense to plan on making the switch down the road.

ETA: That said, for someone who: isn't sure that they're going to stay in biglaw for very long, think PSLF-eligible jobs are a real possibility in 2-3 years, and won't make a significant dent in the loans in that 2-3 year period, paying the IBR amount and favoring investment in the meantime could make some sense.

I've given some thought to that situation myself... if I end up with the US trustee or something in a few years, I'll feel like a fool for paying off my loans in a 3-year timeframe. That said, I'm following "the bird in the hand vs birds in the bush thinking", my loan situation is significantly different, and, most importantly I think, I'm not planning now to go the PSLF route in 3 years.

Yeah good point. But what if I switched to a 30-year repayment while in biglaw?

Then I could put away way more into savings. e.g., via 30-year I think I could pay roughly 1000 a month.

So, let's say I could put away 2500/month into savings, and pay 1000 a month for 3 years to loans, then 800 a month for 10 years after that at a PI eligible job.

3 years in biglaw:

90000 saved.
36000 paid.

10 years in PSLF.

120 x ~850 = 102000.

138,000 Paid instead of roughly 300,000, plus I get the 90K invested from the 3 years.

That seems a pretty decent deal honestly.

ETA: That said, for someone who: isn't sure that they're going to stay in biglaw for very long, think PSLF-eligible jobs are a real possibility in 2-3 years, and won't make a significant dent in the loans in that 2-3 year period, paying the IBR amount and favoring investment in the meantime could make some sense.

I've given some thought to that situation myself... if I end up with the US trustee or something in a few years, I'll feel like a fool for paying off my loans in a 3-year timeframe. That said, I'm following "the bird in the hand vs birds in the bush thinking", my loan situation is significantly different, and, most importantly I think, I'm not planning now to go the PSLF route in 3 years.

That's my main concern--the uncertainty of relying on X set of events to happen between 4 and 14 years down the road. That's a lot to count on, and (while I don't plan on kids, buying a house, etc) this option would would essentially foreclose buying a home and make having kids very very difficult.

But I just know I"ll be kicking myself if I scrape and save to pay down loans now and end up doing PI anyway since that's kinda what I'm drawn to.

damn this is a hard decision.

pasteurizedmilk wrote:Yeah good point. But what if I switched to a 30-year repayment while in biglaw?

Then I could put away way more into savings. e.g., via 30-year I think I could pay roughly 1000 a month.

So, let's say I could put away 2500/month into savings, and pay 1000 a month for 3 years to loans, then 800 a month for 10 years after that at a PI eligible job.

3 years in biglaw:

90000 saved.
36000 paid.

10 years in PSLF.

120 x ~850 = 102000.

138,000 Paid instead of roughly 300,000, plus I get the 90K invested from the 3 years.

That seems a pretty decent deal honestly.

Would have to thoroughly consider the numbers, but this makes more sense. It also increases the "PSLF risk" though: if you don't get the forgiveness--for whatever reason--you've really fucked yourself.

I would be COMPLETELY fucked if I didn't get PSLF.

it seems quite a risk doesn't it? really though, i'm geographically flexible, have PI stuff on my resume. i'm not sure it would be THAT hard to get a PI gig somewhere.

pasteurizedmilk wrote:Hmm. Well I have about 240K from UG and law school.

So if I put away ~1500 / month to investments instead of student loans:

1500 x 36 = 54000 saved instead of spent on loans.

Then a substantially lower IBR monthly payment (say, conservatively, 800) at a PI job for 10 years, so that's about 96000.

Plus the 2000 per month for 3 years, so 72000 paid while in biglaw.

So total paid for student loans: 168,000, as opposed to like 300K if I tried to pay it all off.

Seems pretty beneficial to me. what am I missing?

The lost income from having a PI job. 5th years make 230K dollars + 25K in bonus. You'd make what? 60K in PI? Maybe 90K-120 in gov? But then your IBR payments are still high. More like 1K a month.

If you are going to do PI no matter what, this works. But your schools LRAP likely makes PI student debt totally free anyway.

pasteurizedmilk wrote:

dr123 wrote:this sounds like an idiotic plan to me, esp since it sounds like you really have no interest in PI work

let's say I am interested in PI. is it still idiotic and, if so, why?

I suppose the question is then why go into BigLaw at all? If your interest is PI, why are you going to go through three years of firm life? If it's a strictly monetary thing, that $54,000 you project saving up does not seem like a good trade for having your loans forgiven three years later.

But if that's what you really want to do, I cannot find a flaw in your reasoning. Paying the bare minimum will only add to balance that is forgiven at the end of your 10 years.

Oh, and if you are doing PI no matter what, put your loans in forbearance if you can. Pay zero. IF you can't do that, put it on the 30 year repayment plan that rises over the 30 years. You'll pay almost nothing.

pasteurizedmilk wrote:I would be COMPLETELY fucked if I didn't get PSLF.

it seems quite a risk doesn't it? really though, i'm geographically flexible, have PI stuff on my resume. i'm not sure it would be THAT hard to get a PI gig somewhere.

But would it be a PI gig that you would be comfortable leaving biglaw for and building a career out of? I just don't get the risk-taking here: If you want to do PI, then do PI now. If you are thinking of this approach because you can't do PI now for whatever reason (didn't apply, etc.), then ok--but acknowledge that this is a heck of a risk.

Just as an aside, can I ask what market you're thinking of doing the first few years of biglaw in? I only ask because my budget in Chicago allows for $4k/mo to student loans as well as maxing out 401(k) and HSA contributions--it's not like you can't take advantage of tax-advantaged space while also hitting the loans. I imagine that wouldn't be possible--at least not while maintaining a reasonable QOL--in NYC, though.

totally depends on what type of PI. I know a guy on the hiring committee at a PD office I worked at who said that if you weren't doing criminal practice before your resume gets thrown away no matter how into it you were in law school. They just don't have the time or resources to train/re-train folks. Also it could be hard to stay geographically flexible after 3 years.

Another thing I wonder is if you plug in the long hours and relatively low QOL that biglaw is notorious for, if that 11k or whatever savings looks better than just going straight into PI.

Desert Fox wrote:Oh, and if you are doing PI no matter what, put your loans in forbearance if you can. Pay zero. IF you can't do that, put it on the 30 year repayment plan that rises over the 30 years. You'll pay almost nothing.

yeah that's what I was looking it. the 30 year one is like 900 a month or something. pretty low.

is htere anybody else who plans on doing this?

One other thing--yeah, this is a huge risk. But with the mediocre private sector exit ops is it that much less of a risk to rely on finding a relatively high paying private sector job after i get forced out in 30-36 months? a job that pays enough for me to manage the 140K or so that would remain on my student loans even were I pouring every spare dollar into them?

i hate the crazy price tag for law school, btw.

Desert Fox wrote:

pasteurizedmilk wrote:Hmm. Well I have about 240K from UG and law school.

So if I put away ~1500 / month to investments instead of student loans:

1500 x 36 = 54000 saved instead of spent on loans.

Then a substantially lower IBR monthly payment (say, conservatively, 800) at a PI job for 10 years, so that's about 96000.

Plus the 2000 per month for 3 years, so 72000 paid while in biglaw.

So total paid for student loans: 168,000, as opposed to like 300K if I tried to pay it all off.

Seems pretty beneficial to me. what am I missing?

The lost income from having a PI job. 5th years make 230K dollars + 25K in bonus. You'd make what? 60K in PI? Maybe 90K-120 in gov? But then your IBR payments are still high. More like 1K a month.

If you are going to do PI no matter what, this works. But your schools LRAP likely makes PI student debt totally free anyway.

5th year for a lot of PI gigs gets close to if not over 100k. Pretty cool to know that for working half the hours you make close to half the money. Not to mention getting to do what you want to do. BUT depending on the experience you get at the firm I'd say there's a strong chance of you not getting treated like you had 5 years under your belt at a PI org.

pasteurizedmilk wrote:One other thing--yeah, this is a huge risk. But with the mediocre private sector exit ops is it that much less of a risk to rely on finding a relatively high paying private sector job after i get forced out in 30-36 months? a job that pays enough for me to manage the 140K or so that would remain on my student loans even were I pouring every spare dollar into them?

i hate the crazy price tag for law school, btw.

I feel like you're either overestimating the PI lifestyle or you're underestimating the exit options for a V10 associate.
Consider that under your scheme you're already resigned to paying something like ~10% of your gross pay from PI into IBR for 10 years.
Do you really think you'll have much more disposable income in that situation than whatever private sector job you lateral out of your V10 to making payments to be loan free in 10 years?

How much more money would you have to make a year to make up for the difference? I'm willing to bet it's less than 10-15k a year. IBR is great but it's not like you'll be living a lush life on a PI salary.

Anonymous User wrote:

Desert Fox wrote:
The lost income from having a PI job. 5th years make 230K dollars + 25K in bonus. You'd make what? 60K in PI? Maybe 90K-120 in gov? But then your IBR payments are still high. More like 1K a month.

If you are going to do PI no matter what, this works. But your schools LRAP likely makes PI student debt totally free anyway.

5th year for a lot of PI gigs gets close to if not over 100k. Pretty cool to know that for working half the hours you make close to half the money. Not to mention getting to do what you want to do. BUT depending on the experience you get at the firm I'd say there's a strong chance of you not getting treated like you had 5 years under your belt at a PI org.

Well, first of all, I don't think 100k is really "close to" half of 255k?
But more to the point, there are many jobs in PI where you will work more than 40 hours a week. Also, despite what you hear around here, very few people work anything approaching 80 hours a week at big firms aside from the occasional fire drill here and there.

ToTransferOrNot wrote:

pasteurizedmilk wrote:Okay, so what if instead of slamming as much as possible into loans during biglaw you sock money away into investments for 3 years, pay the minimum (IBR/ICR), and then do 10 years of public service to get forgiveness?

Is this, net, a better deal than just paying down loans as quickly as possible? what's the downside to this?

The minimum is going to be barely above a normal 10-year repayment schedule, unless you're married with kids and have full-boat plus significant UG-level loans.

Also, the downside is that it takes you 13 years to get out from under the loans, and if you don't end up getting a PSLF-eligible job, you're completely fucked.

You're not completely fucked if you save that money you would've put towards loans.

I'm calling flame on PI making six figs as a 5th year attorney.

rayiner wrote:

ToTransferOrNot wrote:

pasteurizedmilk wrote:Okay, so what if instead of slamming as much as possible into loans during biglaw you sock money away into investments for 3 years, pay the minimum (IBR/ICR), and then do 10 years of public service to get forgiveness?

Is this, net, a better deal than just paying down loans as quickly as possible? what's the downside to this?

The minimum is going to be barely above a normal 10-year repayment schedule, unless you're married with kids and have full-boat plus significant UG-level loans.

Also, the downside is that it takes you 13 years to get out from under the loans, and if you don't end up getting a PSLF-eligible job, you're completely fucked.

You're not completely fucked if you save that money you would've put towards loans.

What do you think of the above-proposed plan?