Experiences with paying sticker for lower-half of T14? Forum

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BmoreOrLess

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Re: Experiences with paying sticker for lower-half of T14?

Post by BmoreOrLess » Thu Feb 27, 2014 1:48 pm

jn7 wrote:Without attempting to derail this thread as it is really insightful, doesn't the math favor income based repayment even if you successfully land a great salary?
When I get more bored at work I'm going to try to figure this out precisely, but it shouldn't be too difficult. I definitely think there is an optimal point where some combination of PAYE and extra payments works better than any other way to repay, and I imagine anyone who is good at programming (I'm just a basic excel jockey) can figure this out pretty quickly.

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Re: Experiences with paying sticker for lower-half of T14?

Post by anyriotgirl » Thu Feb 27, 2014 1:55 pm

BmoreOrLess wrote:
jn7 wrote:Without attempting to derail this thread as it is really insightful, doesn't the math favor income based repayment even if you successfully land a great salary?
When I get more bored at work I'm going to try to figure this out precisely, but it shouldn't be too difficult. I definitely think there is an optimal point where some combination of PAYE and extra payments works better than any other way to repay, and I imagine anyone who is good at programming (I'm just a basic excel jockey) can figure this out pretty quickly.
Piggybacking--- if anyone is interested in figuring this out within the context of Michigan's LRAP, I would... okay I don't have anything to offer you besides unending gratitude.

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Re: Experiences with paying sticker for lower-half of T14?

Post by BmoreOrLess » Thu Feb 27, 2014 1:58 pm

anyriotgirl wrote:
BmoreOrLess wrote:
jn7 wrote:Without attempting to derail this thread as it is really insightful, doesn't the math favor income based repayment even if you successfully land a great salary?
When I get more bored at work I'm going to try to figure this out precisely, but it shouldn't be too difficult. I definitely think there is an optimal point where some combination of PAYE and extra payments works better than any other way to repay, and I imagine anyone who is good at programming (I'm just a basic excel jockey) can figure this out pretty quickly.
Piggybacking--- if anyone is interested in figuring this out within the context of Michigan's LRAP, I would... okay I don't have anything to offer you besides unending gratitude.
Have you messed around with Georgetown's LRAP calculator? I'd imagine you can get decent estimates from that.

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Re: Experiences with paying sticker for lower-half of T14?

Post by jn7 » Thu Feb 27, 2014 2:03 pm

I'm pretty sure there is a fantastic thread that did the calculation, but I have a cold and can't muster the energy to search for it :D :D

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Re: Experiences with paying sticker for lower-half of T14?

Post by anyriotgirl » Thu Feb 27, 2014 2:05 pm

BmoreOrLess wrote:
Have you messed around with Georgetown's LRAP calculator? I'd imagine you can get decent estimates from that.
I didn't know they had a good one, thanks. I can't stand DC so I didn't even consider applying to Georgetown.

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Re: Experiences with paying sticker for lower-half of T14?

Post by Law Sauce » Thu Feb 27, 2014 3:56 pm

BruceWayne wrote:
Law Sauce wrote:As with any highly leveraged investment, there is very little room for error. Here, however, the stakes are very high because of opportunity costs and the non-dischargable nature of student loans. Still for many with no other great options, it is the only way to break into any high-paying career, and this can be lucrative for a high percentage over a longer time horizon, say 15 years. That being said, your mortgaging the next 5-8+ years of your life for sure.

Also, a higher percentage of people go at sticker than people seem to be suggesting ITT; its not like it is uncommon at all.
This is a big problem with this website. The chances of it "paying off"--in other words landing a biglaw job are at BEST 50/50. That is not a high percentage of people. The truth is that the majority of people going to top 14 schools are no longer landing big firm jobs. A plurality of them are; but that's not enough to gamble 250K + in non-dischargeable debt on.
This is a fair point, and a valuable perspective to consider. It is certainly true that less than half of some t14 classes start off at big firms. However, the chances of the investment being positive on a 15 year horizon are higher than 50/50.

First, the AIII clerkship + nlj250 numbers were around or above 50/50 for most of the t14 for the class of 2103 (OCI in 2011), in fact with clerkships, from just quickly looking, it looks like G (and maybe M and C) was approx. at or below 50% (the rest seem to be 50%+).

Second, the numbers should have gotten at least a little better, at least the vibe has been better, since 2011 OCI.

Third, there are a lot of other paths that lead to a positive investment scenario on such a long horizon as 15 years. This may include, those using LRAP for all sorts of employment, federal government jobs (yes these are hard to get), non-AIII clerkships, and even slow starters who eventually start making money using their law degree (yes, sometimes first job is everything, other times, people beat the odds).

It is true that both: 1) there is a significant chance of falling into the % of people who do not end up having a positive investment even if you are hardworking and bright, and 2) even if you have the best possible outcome, there is significant pain in repaying the loan over the life of the debt. It is not true, however, that the chance of "it paying off" i.e. having a positive investment are merely a massive vegas coin flip. At least, I think that this is fair to say. Still, this is not that rosy of a picture either, i do realize this.

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Re: Experiences with paying sticker for lower-half of T14?

Post by chem » Thu Feb 27, 2014 4:18 pm

BmoreOrLess wrote:
anyriotgirl wrote:This is basically true, but it also assumes that a lot of things go your way, which isn't necessarily a good assumption. In particular, I mean having the $2000 a month to sock away, the 5% return working out, and holding a job that pays that much for 20 years. Most people only last in big law for a couple of years, so if your salary drops or the market tanks again, or you or a family member develops an expensive medical condition, etc, you could end up very much off track.
Obviously things can go wrong with any plan, and I'm probably as risk-averse as you (and will likely be turning down law school for a second cycle due to these fears). I do think though that the $1000 a month plan can be a safe plan if* you hit biglaw or land a $70kish job that can afford $12k a year in payments.

*Obviously this is a giant if, and the size of it will vary by school/situation
Yeah, but with 70k your loan payment drops to like 500/mo, if that. Sure, youll have loans and debt for a long time, but your standard of living will be comfortable+

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Re: Experiences with paying sticker for lower-half of T14?

Post by anyriotgirl » Thu Feb 27, 2014 4:23 pm

chem wrote:
BmoreOrLess wrote:
anyriotgirl wrote:This is basically true, but it also assumes that a lot of things go your way, which isn't necessarily a good assumption. In particular, I mean having the $2000 a month to sock away, the 5% return working out, and holding a job that pays that much for 20 years. Most people only last in big law for a couple of years, so if your salary drops or the market tanks again, or you or a family member develops an expensive medical condition, etc, you could end up very much off track.
Obviously things can go wrong with any plan, and I'm probably as risk-averse as you (and will likely be turning down law school for a second cycle due to these fears). I do think though that the $1000 a month plan can be a safe plan if* you hit biglaw or land a $70kish job that can afford $12k a year in payments.

*Obviously this is a giant if, and the size of it will vary by school/situation
Yeah, but with 70k your loan payment drops to like 500/mo, if that. Sure, youll have loans and debt for a long time, but your standard of living will be comfortable+
Right, but my point is if you end up taking out say $200k in loans originally, do PAYE paying $300-$500 a month for 20 years, by the time you get to the forgiveness, your tax bill is back to the original $200k and then you end up on a payment plan with the IRS with much higher payments and way fewer options for deferment, forbearance or reduced payments. But I guess at that point there's always bankruptcy. :|

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Re: Experiences with paying sticker for lower-half of T14?

Post by patogordo » Thu Feb 27, 2014 4:30 pm

anyriotgirl wrote:Right, but my point is if you end up taking out say $200k in loans originally, do PAYE paying $300-$500 a month for 20 years, by the time you get to the forgiveness, your tax bill is back to the original $200k and then you end up on a payment plan with the IRS with much higher payments and way fewer options for deferment, forbearance or reduced payments. But I guess at that point there's always bankruptcy. :|
that's 20 years from now, though. the pv of that tax bill isn't anywhere near $200k.

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BmoreOrLess

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Re: Experiences with paying sticker for lower-half of T14?

Post by BmoreOrLess » Thu Feb 27, 2014 4:36 pm

anyriotgirl wrote:Right, but my point is if you end up taking out say $200k in loans originally, do PAYE paying $300-$500 a month for 20 years, by the time you get to the forgiveness, your tax bill is back to the original $200k and then you end up on a payment plan with the IRS with much higher payments and way fewer options for deferment, forbearance or reduced payments. But I guess at that point there's always bankruptcy. :|
Ya, I mean if you wind up boned with a $40k non-pslf job for all 20 years, you're probably fucked.

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Re: Experiences with paying sticker for lower-half of T14?

Post by anyriotgirl » Thu Feb 27, 2014 4:37 pm

BmoreOrLess wrote:
anyriotgirl wrote:Right, but my point is if you end up taking out say $200k in loans originally, do PAYE paying $300-$500 a month for 20 years, by the time you get to the forgiveness, your tax bill is back to the original $200k and then you end up on a payment plan with the IRS with much higher payments and way fewer options for deferment, forbearance or reduced payments. But I guess at that point there's always bankruptcy. :|
Ya, I mean if you wind up boned with a $40k non-pslf job for all 20 years, you're probably fucked.
I'm really big on worst case scenarios.

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Re: Experiences with paying sticker for lower-half of T14?

Post by jbagelboy » Thu Feb 27, 2014 9:37 pm

At a higher ranked school, with significantly less than sticker debt. Still keeps me up at night. Don't fuck with sticker in loans. There are better, safer, happier, more lucrative, more attainable ways to make a living.. At least better, safer, and happier ones.

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Re: Experiences with paying sticker for lower-half of T14?

Post by lgleye » Wed Mar 05, 2014 3:48 pm

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Re: Experiences with paying sticker for lower-half of T14?

Post by NYC-WVU » Thu Mar 06, 2014 5:50 pm

lgleye wrote:This is a very simplistic guage based upon the presumption that being able to pay off sticker-debt requires either Biglaw or Federal Clerkship (which will ultatedly lead to Biglaw)

Raw numbers tabulated from LST for 2012 graduates, the percentages of those that ended up at Biglaw or Fedl Clerkships:

Columbia 72% of 469 = 338
Chicago 70.7% of 215 = 152
NYU 65% of 482 = 313
UPenn 77% of 270 = 208
UVA 62% of 364 = 226
Berkeley 60.5 of 312 = 189
Michigan 51.8% of 388 = 198
Duke 64% of 224 = 143
Northwestern 55.6% OF 295= 164
Cornell 64.2% of 190 = 122
GULC 43% of 626 = 269

T4-14: 3835 2322 60.5%
T11-14: 1335 698 53%

Meaning that of the 3835 T4-14 grads , 2322 (60.5%) got Biglaw or Fed Clerkships.
Of the 1335 T11-14 grads, 698 (53%) got Bilglaw or Fed Clerkships.

It also means that you’ve got to be in the upper half to have a shot, upper third to have a decent shot. Now here’s the hard part…….self assessment of your ability in law school….can you outperform most of your classmates?

Remember that going in at or close to sticker means that, at least from the standpoint of the school, you’re less qualified than most of the class (which received some scholly).

Conclusion is that the numbers are stacked against you…..the only way to beat the odds is to outperform your former self in law school. Few people do.

Hope this helps.
That is such a great point. But it's so hard for 0Ls to admit to themselves. Most the people that even have a choice to make regarding T14 at sticker are used to being (i) the best student in the class, (ii) the smartest person in the room, or (iii) both. Acknowledging that this won't still be true at law school is really hard to do.

Lucky for me, I knew I didn't want to work hard enough for the next 20 years to keep pace with all those HLS graduates, but I also didn't want to end up being the obvious dissappointment at reunions. So despite the fact that I would obviously run circles around my classmates at HLS because I'm so damn smart (despite what my comparably average LSAT score says), I knew it wouldn't be worth it to go there.

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Re: Experiences with paying sticker for lower-half of T14?

Post by Tiago Splitter » Thu Mar 06, 2014 5:55 pm

Ignoring that those numbers are really conservative, I don't see how you can use them to conclude that one needs to be in the upper third to have a decent shot.

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Re: Experiences with paying sticker for lower-half of T14?

Post by NYC-WVU » Thu Mar 06, 2014 6:04 pm

Tiago Splitter wrote:Ignoring that those numbers are really conservative, I don't see how you can use them to conclude that one needs to be in the upper third to have a decent shot.
Yeah, that part of it is a little suspect. It seems that, even if ~50% get the jobs we're talking about, that would mean more like 2/3 have a shot, 1/3 has a very good shot.

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Re: Experiences with paying sticker for lower-half of T14?

Post by MnM22 » Thu Mar 06, 2014 8:51 pm

So, for the people facing a lot of debt: Was that undergrad debt too? Does undergrad debt seem to be a concern for any one on top of the LS debt?

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Re: Experiences with paying sticker for lower-half of T14?

Post by lgleye » Thu Mar 06, 2014 9:51 pm

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Re: Experiences with paying sticker for lower-half of T14?

Post by billables247 » Thu Mar 06, 2014 11:58 pm

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Re: Experiences with paying sticker for lower-half of T14?

Post by DebtMuch » Fri Mar 07, 2014 12:01 am

This worst case scenario tax bomb at 40K / year possibility is very pointless. Unless you want to be a manager of McDonald's with your T-14 law degree for 20 years on PAYE it will never happen. ANY, and I mean ANY public or tax exempt employment gets you a full forgiveness with no tax bomb after 120 payments. The job you have doesn't even matter. You can be a teacher, school janitor, create a 501C3, hire a few buddies, and run around saving the world, you can even join the Peace Corps.

What I'm trying to say, this worst case scenario of private employment for 20 years at 40K and a huge tax bomb is really a silly point to ever make.

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Re: Experiences with paying sticker for lower-half of T14?

Post by cron1834 » Fri Mar 07, 2014 1:58 am

DebtMuch wrote:This worst case scenario tax bomb at 40K / year possibility is very pointless. Unless you want to be a manager of McDonald's with your T-14 law degree for 20 years on PAYE it will never happen. ANY, and I mean ANY public or tax exempt employment gets you a full forgiveness with no tax bomb after 120 payments. The job you have doesn't even matter. You can be a teacher, school janitor, create a 501C3, hire a few buddies, and run around saving the world, you can even join the Peace Corps.

What I'm trying to say, this worst case scenario of private employment for 20 years at 40K and a huge tax bomb is really a silly point to ever make.
Umm, you should probably follow the new PSLF news/thread before you advise too many people in this regard, counselor ...

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Re: Experiences with paying sticker for lower-half of T14?

Post by instride91 » Fri Mar 07, 2014 3:40 am

I can't believe no one has brought up this point yet, but assuming a starting big law salary of $160k (and yes, that is quite an assumption), wouldn't you be able to increase your loan payments based on an increasing salary?

According to NALP, the trend for salary increases looks like this:

1st year Associate - 160k
2nd - 165k
3rd - 175k
4th - 190k
5th - 202k
6th - 210k
7th - 225k

http://www.nalp.org/associate_salaries_sept2013

This doesn't include bonuses, which start at around $10k as a first year associate, although back in 2007 this number was more like $40k...

Not to mention that the 160k hasn't risen since the recession in 2007. The bottom line is, our economy has gone through a complete shit storm since 2007 and hopefully by the time we graduate (I'm a 0L) there will be better prospects/higher salaries/bonuses. Either way I'd rather work my ass off to have a chance at a better future than settle for some $40k/year job that most undergrad students are looking at these days if they are lucky enough to find one.

Go big or go home.

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Re: Experiences with paying sticker for lower-half of T14?

Post by Tiago Splitter » Fri Mar 07, 2014 8:43 am

lgleye wrote:
NYC-WVU wrote:
Tiago Splitter wrote:Ignoring that those numbers are really conservative, I don't see how you can use them to conclude that one needs to be in the upper third to have a decent shot.
Yeah, that part of it is a little suspect. It seems that, even if ~50% get the jobs we're talking about, that would mean more like 2/3 have a shot, 1/3 has a very good shot.
Okay, seems like your minds already made up. Good luck to you good people.
Wait are you seriously doubling down?

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Re: Experiences with paying sticker for lower-half of T14?

Post by DebtMuch » Fri Mar 07, 2014 10:56 am

cron1834 wrote:
DebtMuch wrote:This worst case scenario tax bomb at 40K / year possibility is very pointless. Unless you want to be a manager of McDonald's with your T-14 law degree for 20 years on PAYE it will never happen. ANY, and I mean ANY public or tax exempt employment gets you a full forgiveness with no tax bomb after 120 payments. The job you have doesn't even matter. You can be a teacher, school janitor, create a 501C3, hire a few buddies, and run around saving the world, you can even join the Peace Corps.

What I'm trying to say, this worst case scenario of private employment for 20 years at 40K and a huge tax bomb is really a silly point to ever make.
Umm, you should probably follow the new PSLF news/thread before you advise too many people in this regard, counselor ...
Ummmmm. you should probably READ the PSLF webpage/charter before relying on TLS news/thread….

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Re: Experiences with paying sticker for lower-half of T14?

Post by DebtMuch » Fri Mar 07, 2014 10:59 am

Ummmm, here's a link that should help our TLS news/thread believer learn more about PSLF:
http://studentaid.ed.gov/sites/default/ ... stions.pdf

Seriously? What are you waiting for?

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