How much were you able to pay off? Forum

[Litt1tUp]

How much of your loans were you able to pay off from summer internships? Especially the 2L BigLaw summer internship?

[Thomas Hagan, ESQ.]

I've actually never heard someone refer to it as an internship before lol

[curry1]

I've actually never heard someone refer to it as an internship before lol

someone at an ASW referred to an SA as a "fellowship," lol

[Litt1tUp]

My bad ... lol please forgive my noobness

[PeanutsNJam]

Your 2L SA will net you 35k, maybe 38.5k if it's 11 weeks. Depending on where it is, you'll spend a chunk of that and pay taxes, so you'll probably walk away from your summer with 20-25k. That's probably enough to cover living expenses and maybe some tuition for your 3L year, but you're not going to be making a dent in any accumulated debt.

[stoopkid13]

I've actually never heard someone refer to it as an internship before lol

That's because generally interns are unpaid labor, whereas SAs are paid vacation.

[jbagelboy]

Zero. Smart play is to save as much as you can to borrow less as a 3L and avoid origination fees rather than pay back old loans and borrow more, unless interest rates are plummeting.

[antiworldly]

Although 2.5k of student loan interest is tax deductible, so if you can keep within budget it's worth it to get that sweet tax break before it phases out (phaseout range is 130k AGI to 160k AGI, so no good after Dec. 31 of your 1st year of biglaw)

[BmoreOrLess]

Zero. Smart play is to save as much as you can to borrow less as a 3L and avoid origination fees rather than pay back old loans and borrow more, unless interest rates are plummeting.

This, unless you can get no origination fee loans for 3L. New grad plus loans basically cost 10% in the first year.

But if you're biglaw secure, you can consider looking into private loans with no origination fees, at which point it could be smarter to take out more for 3L and pay down existing loans. I snagged 3.25% variable with no origination fees for 3L.

[IsThisForReal]

Zero. Smart play is to save as much as you can to borrow less as a 3L and avoid origination fees rather than pay back old loans and borrow more, unless interest rates are plummeting.

This, unless you can get no origination fee loans for 3L. New grad plus loans basically cost 10% in the first year.

But if you're biglaw secure, you can consider looking into private loans with no origination fees, at which point it could be smarter to take out more for 3L and pay down existing loans. I snagged 3.25% variable with no origination fees for 3L.

I feel like everything I've seennis closer to 7. I guess maybe variable makes the difference?

[BmoreOrLess]

Zero. Smart play is to save as much as you can to borrow less as a 3L and avoid origination fees rather than pay back old loans and borrow more, unless interest rates are plummeting.

This, unless you can get no origination fee loans for 3L. New grad plus loans basically cost 10% in the first year.

But if you're biglaw secure, you can consider looking into private loans with no origination fees, at which point it could be smarter to take out more for 3L and pay down existing loans. I snagged 3.25% variable with no origination fees for 3L.

I feel like everything I've seennis closer to 7. I guess maybe variable makes the difference?

Yea, variable is going to make a huge difference. I think my fixed quotes were around high 5's or low 6's, and this was also last July before rates went up.

[stoopkid13]

Although 2.5k of student loan interest is tax deductible, so if you can keep within budget it's worth it to get that sweet tax break before it phases out (phaseout range is 130k AGI to 160k AGI, so no good after Dec. 31 of your 1st year of biglaw)

I don't see how it's worth it, even if there is a tax deduction. You are still incurring an expense you have to pay for. So if you pay 2.5k in interest and deduct it, you save maybe 1k in tax liability if you are paying 40% marginal tax. But it's far better to pay the tax and not incur the expense, than to incur the expense and save on taxes.

[BmoreOrLess]

Although 2.5k of student loan interest is tax deductible, so if you can keep within budget it's worth it to get that sweet tax break before it phases out (phaseout range is 130k AGI to 160k AGI, so no good after Dec. 31 of your 1st year of biglaw)

I don't see how it's worth it, even if there is a tax deduction. You are still incurring an expense you have to pay for. So if you pay 2.5k in interest and deduct it, you save maybe 1k in tax liability if you are paying 40% marginal tax. But it's far better to pay the tax and not incur the expense, than to incur the expense and save on taxes.

I hope you're not planning on being a tax lawyer.

[stoopkid13]

Although 2.5k of student loan interest is tax deductible, so if you can keep within budget it's worth it to get that sweet tax break before it phases out (phaseout range is 130k AGI to 160k AGI, so no good after Dec. 31 of your 1st year of biglaw)

I don't see how it's worth it, even if there is a tax deduction. You are still incurring an expense you have to pay for. So if you pay 2.5k in interest and deduct it, you save maybe 1k in tax liability if you are paying 40% marginal tax. But it's far better to pay the tax and not incur the expense, than to incur the expense and save on taxes.

I hope you're not planning on being a tax lawyer.

I hope you're not taking out loans you don't need. Getting a tax deduction on interest is different from an interest-free loan.