does it really take that many years to pay off the loans? Forum

MapleM · Post by **MapleM** » Tue Jul 13, 2010 2:53 pm

Hi, I will be a 1L in the fall and owe about 130K at the time of graduation. (all from Stafford & Grad PLUS)

After reading many threads and playing with the calculator on FinAid.com,
I wonder why it seems to take about 10 years to pay off all the student loans while assuming that you get an average paying job as a lawyer...
What kind of life style this calculation assumes??

Say if I get a job that pays me $75K per year(I am not planning on getting a biglaw job and I always want to brace myself for the worst case possible.)
I don't know exactly how much I will have to pay for tax,
but let's say I will bring roughly $6000 home every month.
I am used to living cheaply and I am so willing to continue my humble life-style even after I become a lawyer.

If I keep the kind of life style that I have right now after law school,
all I need for living cost is less than $3500 a month.
I could allot the rest of my income to pay off the loans and I am willing to do so.
In my own caluculation, it would only take me about 5 years or so to pay off all the debt.

But it does not seem popular to allot that much money to paying off your loans in the internet world.
Is there something that I am not aware of or fail to take into consideration in estimating how long it would take me to pay off all my loans??

*** Sorry, I thought I was on Financial Aid forum! Does anyone know how I can move my thread to FinAid forum??

ResolutePear · Post by **ResolutePear** » Tue Jul 13, 2010 2:57 pm

MapleM wrote:does it really take that many years to pay off the loans?

Yes. There's nothing "magical" about the loan... barring Obama.

toolshed · Post by **toolshed** » Tue Jul 13, 2010 2:58 pm

Well, for one thing, 75k puts you in about the 25% tax bracket for income, and god forbid you live in NYC with the state/county/city taxes. You'll be taking home significantly less than 6k a month. And somehow I don't think you are accounting for compound interest.

Razumikhin · Post by **Razumikhin** » Tue Jul 13, 2010 2:58 pm

People on TLS don't know how to manage their money. Pretty simple stuff

KibblesAndVick · Post by **KibblesAndVick** » Tue Jul 13, 2010 3:01 pm

Landing a job that pays you 75k starting isn't the worst case scenario. Also, if you're taking home 6k a month you're earning 72k a year. That means you're paying 3k in taxes on 75k in income. They're going to tax you more than 4%.

HAMBONE · Post by **HAMBONE** » Tue Jul 13, 2010 3:01 pm

MapleM wrote:Hi, I will be a 1L in the fall and owe about 130K at the time of graduation. (all from Stafford & Grad PLUS)

After reading many threads and playing with the calculator on FinAid.com,
I wonder why it seems to take about 10 years to pay off all the student loans while assuming that you get an average paying job as a lawyer...
What kind of life style this calculation assumes??

Say if I get a job that pays me $75K per year(I am not planning on getting a biglaw job and I always want to brace myself for the worst case possible.)
I don't know exactly how much I will have to pay for tax,
but let's say I will bring roughly $6000 home every month.
I am used to living cheaply and I am so willing to continue my humble life-style even after I become a lawyer.

If I keep the kind of life style that I have right now after law school,
all I need for living cost is less than $3500 a month.
I could allot the rest of my income to pay off the loans and I am willing to do so.
In my own caluculation, it would only take me about 5 years or so to pay off all the debt.

But it does not seem popular to allot that much money to paying off your loans in the internet world.
Is there something that I am not aware of or fail to take into consideration in estimating how long it would take me to pay off all my loans??

*** Sorry, I thought I was on Financial Aid forum! Does anyone know how I can move my thread to FinAid forum??

1) Thats far from the worst case possible.
2) 3k per year in income tax

1Levening2013 · Post by **1Levening2013** » Tue Jul 13, 2010 3:01 pm

bringing home 6k/mo......haaaaaaaaaaaaaaaaa

have you ever had a job

Grizz · Post by **Grizz** » Tue Jul 13, 2010 3:01 pm

$75k is not a worst case scenario. I bet there are T17 3Ls right now who would slit their classmates' throats and watch them bleed out for $75k.

KibblesAndVick · Post by **KibblesAndVick** » Tue Jul 13, 2010 3:04 pm

rad law wrote:$75k is not a worst case scenario. I bet there are T17 3Ls right now who would slit their classmates' throats and watch them bleed out for $75k.

And if we could just liberalize the criminal code the market would reach a nice equilibrium.

ResolutePear · Post by **ResolutePear** » Tue Jul 13, 2010 3:05 pm

rad law wrote:$75k is not a worst case scenario. I bet there are T17 3Ls right now who would slit their classmates' throats and watch them bleed out for $75k.

And probably laugh maniacally.

MapleM · Post by **MapleM** » Tue Jul 13, 2010 3:10 pm

1Levening2013 wrote:bringing home 6k/mo......haaaaaaaaaaaaaaaaa

have you ever had a job

apologize for my ignorance. I've never had a real salary job before so...

MartianManhunter · Post by **MartianManhunter** » Tue Jul 13, 2010 3:14 pm

MapleM wrote: I am used to living cheaply and I am so willing to continue my humble life-style even after I become a lawyer.

This is probably not true.

dominkay · Post by **dominkay** » Tue Jul 13, 2010 3:17 pm

MapleM wrote:Hi, I will be a 1L in the fall and owe about 130K at the time of graduation. (all from Stafford & Grad PLUS)

After reading many threads and playing with the calculator on FinAid.com,
I wonder why it seems to take about 10 years to pay off all the student loans while assuming that you get an average paying job as a lawyer...
What kind of life style this calculation assumes??

Say if I get a job that pays me $75K per year(I am not planning on getting a biglaw job and I always want to brace myself for the worst case possible.)
I don't know exactly how much I will have to pay for tax,
but let's say I will bring roughly $6000 home every month.
I am used to living cheaply and I am so willing to continue my humble life-style even after I become a lawyer.

If I keep the kind of life style that I have right now after law school,
all I need for living cost is less than $3500 a month.
I could allot the rest of my income to pay off the loans and I am willing to do so.
In my own caluculation, it would only take me about 5 years or so to pay off all the debt.

But it does not seem popular to allot that much money to paying off your loans in the internet world.
Is there something that I am not aware of or fail to take into consideration in estimating how long it would take me to pay off all my loans??

*** Sorry, I thought I was on Financial Aid forum! Does anyone know how I can move my thread to FinAid forum??

As several people have already stated, you're not taking home $6000/month on a $75k salary. You can do the calculation for your own state with this tool: http://www.mgcpa.com/calculators/payroll/aftertax.php

I'll use my state as an example. In New York, your take-home on $75k would be $46,659.38 or $3888.28/month. You would barely be able to afford your current "humble" lifestyle, much less your loan payments.

Also, $3500 is not really "living cheaply," unless you're including your loan payment in that.

Finally, good luck continuing in your "humble lifestyle" when you're working 80 hours a week. It's really not the kind of work environment that incentivizes frugality; you're going to want to pay other people to cook your food and clean your house, because you're going to be beat down tired much of the time.

Geist13 · Post by **Geist13** » Tue Jul 13, 2010 3:19 pm

Yeah, you're calculations are ignoring all sorts of information, as everyone else pointed out. You didn't account for insurance, tax, retirement social security etc. If you've ever worked you know these things add up and take a good chunk out of your check. Interest is also a big deal, it makes your loan significantly larger than the amount it originated at.

However, it's also true that a lot of people on here can't budget well or control their spending. I made 20k last year and still managed to pay make $550 a month loan payments (that's well over 6.6k out of my 20k total). I had a very tight budget, but it can be done. It seems like a lot of people on TLS think that anything more than 10 or 15% of your salary toward loans is almost unlivable which is certainly not true.

Razumikhin · Post by **Razumikhin** » Tue Jul 13, 2010 3:19 pm

Man, I cant believe OP referred to living off $3500/mon as 'humble lifestyle'

ResolutePear · Post by **ResolutePear** » Tue Jul 13, 2010 3:22 pm

MapleM wrote:
1Levening2013 wrote:bringing home 6k/mo......haaaaaaaaaaaaaaaaa

have you ever had a job
apologize for my ignorance. I've never had a real salary job before so...

Yeah, until you get a job offer - I wouldn't think about the numbers too much.

KibblesAndVick · Post by **KibblesAndVick** » Tue Jul 13, 2010 3:22 pm

You might want to look at a loan repayment calculator such as this one: http://www.finaid.org/calculators/scrip ... yments.cgi

Loan Balance: $130,000.00
Adjusted Loan Balance: $130,000.00
Loan Interest Rate: 6.80%
Loan Fees: 0.00%
Loan Term: 10 years
Minimum Payment: $50.00

Monthly Loan Payment: $1,496.04
Number of Payments: 120

Cumulative Payments: $179,525.54
Total Interest Paid: $49,525.54

The big thing that fucks you over is the interest payments. If we go with your calculation that you need about 3.5k a month to live a decent lifestyle then you're looking at about 5k a month after taxes in order to repay the loan in 10 years. So you're looking at 60k a year after taxes.

BeautifulSW · Post by **BeautifulSW** » Tue Jul 13, 2010 3:24 pm

Um. Not to be TOO catty about it but anybody capable of putting together a workable budget would be too well-informed ever to pay sticker at a private T2-T4 law school.

ResolutePear · Post by **ResolutePear** » Tue Jul 13, 2010 3:24 pm

Razumikhin wrote:Man, I cant believe OP referred to living off $3500/mon as 'humble lifestyle'

Well... it's humble to follow GQ fashion. And being a lawyer, it should be your first expense.

ResolutePear · Post by **ResolutePear** » Tue Jul 13, 2010 3:25 pm

BeautifulSW wrote:Um. Not to be TOO catty about it but anybody capable of putting together a workable budget would be too well-informed ever to pay sticker at a private T2-T4 law school.

Nah, some people just want to practice law enough that's it's worth that to them.

Geist13 · Post by **Geist13** » Tue Jul 13, 2010 3:26 pm

KibblesAndVick wrote:You might want to look at a loan repayment calculator such as this one: http://www.finaid.org/calculators/scrip ... yments.cgi

Loan Balance: $130,000.00
Adjusted Loan Balance: $130,000.00
Loan Interest Rate: 6.80%
Loan Fees: 0.00%
Loan Term: 10 years
Minimum Payment: $50.00

Monthly Loan Payment: $1,496.04
Number of Payments: 120

Cumulative Payments: $179,525.54
Total Interest Paid: $49,525.54
The big thing that fucks you over is the interest payments. If we go with your calculation that you need about 3.5k a month to live a decent lifestyle then you're looking at about 5k a month after taxes in order to repay the loan in 10 years. So you're looking at 60k a year after taxes.

Don't forget that more than half that loan is at 8.5% interest, not 6.8%! Stafford loans = 6.8% GRADPLUS = 8.5%

KibblesAndVick · Post by **KibblesAndVick** » Tue Jul 13, 2010 3:27 pm

Geist13 wrote:Don't forget that more than half that loan is at 8.5% interest, not 6.8%! Stafford loans = 6.8% GRADPLUS = 8.5%

oh oh credited, add about another two inches to whatever is proverbially fucking you over

let/them/eat/cake · Post by **let/them/eat/cake** » Tue Jul 13, 2010 3:29 pm

rad law wrote:$75k is not a worst case scenario. I bet there are T17 3Ls right now who would slit their classmates' throats and watch them bleed out for $75k.

i lolled hard in the lib at this one. nice.

Geist13 · Post by **Geist13** » Tue Jul 13, 2010 3:31 pm

KibblesAndVick wrote:
Geist13 wrote:Don't forget that more than half that loan is at 8.5% interest, not 6.8%! Stafford loans = 6.8% GRADPLUS = 8.5%
oh oh credited, add about another two inches to whatever is proverbially fucking you over

This level of debt combined with an inability to make accurate financial calculations probably means you are past the stage of proverbial fucking; you are literally getting fucked.

ResolutePear · Post by **ResolutePear** » Tue Jul 13, 2010 3:33 pm

let/them/eat/cake wrote:
rad law wrote:$75k is not a worst case scenario. I bet there are T17 3Ls right now who would slit their classmates' throats and watch them bleed out for $75k.
i lolled hard in the lib at this one. nice.

I thought I heard somebody laughing from across the lib. Probably a coincidence.

/Bigbrother

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