Loan Payment Calculator - this almost gave me an aneurysm Forum

[jpSartre]

ITT: Neurosis overwhelms TLSers as they collectively speculate how much debt they will incur and what their salaries will be 3+ years from now while also managing to figure in the COL for cities which they cannot be certain to reside.

Edit: also incorporating future interest rates

play by play

[GeePee]

Why is it that everyone on TLS gets an offer to work at a biglaw firm after law school? Thus, why is this scenario the only one that is ever even contemplated?

Considering the people ITT are considering the prospect of paying off their loans WITH the 160k biglaw job, I'm pretty sure they're aware of the (im)possibility of paying them off without.

[reasonable_man]

Why is it that everyone on TLS gets an offer to work at a biglaw firm after law school? Thus, why is this scenario the only one that is ever even contemplated?

Considering the people ITT are considering the prospect of paying off their loans WITH the 160k biglaw job, I'm pretty sure they're aware of the (im)possibility of paying them off without.

Thats all fine and good. Just seems like most are assuming that option will be available.

[vanwinkle]

Why is it that everyone on TLS gets an offer to work at a biglaw firm after law school? Thus, why is this scenario the only one that is ever even contemplated?

It'll be really hilarious if I get an offer from a BigLaw firm when I graduate, considering I won't be applying to any.

[bceagles182]

The fact that people are seriously debating how someone with a $165k big law salary would be able to pay back their law school loans alone points to the absurdity of that debt.

[heathbar88]

I was just playing around with the calculator and for a $150k loan, with a 6.5% interest rate, paid back in 5 years it's a little under $3000/month. That doesn't really seem like that much to me, if you're making over $10,000/month after taxes and having loans paid off in 5 years is great; $7000/month is an absolutely livable salary (even in NYC, considering I make about 1/6 of $7000 and get along just fine living frugally), especially in places like TX. Of course, this is assuming you're making $165k out of law school and for me (and I assume other posters), full sticker at a T10 is worth the risk of not getting biglaw.

EDIT: But then again, maybe I'm missing something, because the calculator says one might experience difficulty trying to this pay this loan at a $250k+ salary. What am I not getting?

You're missing:
1) $160k in Manhattan is basically middle class
2) If you aren't in Manhattan or Chicago or LA where the COL completely ridiculus, then you probably aren't making $160k/year right out of LS
3) It seems only 1/3 of T10 classes are getting those salaries. The other 2/3, poor bastards, are going to have to pay those loans off on half that salary.
4) Even if your scenario pans out, you're still paying about a third of your money to student loan debt. Financial advisors typically advise that your total debts should be about 10-15% of your income.

I'm thinking about paying sticker at Michigan, but when I go through the numbers and consider my statistical chance of pulling one of those top jobs, it really scares me. Now, that's not saying I couldn't bust my ass and get lucky, but to wager such a large sum on money on my ability to outperform a group of people I have absolutely no idea about except that they scored in the 97-99%ile on the LSAT and had great grades... well, that has me thinking twice.

1) I live in Manhattan. I make ~1400/month and pay my rent, credit card bills, monthly payment for my 30k in undergrad loans & extra expenses with my parents paying only for my food & tuition.
2) I want to practice in TX..the specific firm I have some a connection with and other firms I've looked at start at $160k+ bonuses.
3) We don't know the figures for this year, but that seems about right from what I've read. I've also heard predictions of the market beginning to recover soon which would up that 1/3 -> 2/3. Even if that doesn't happen, I understand real life. I know law school is difficult and the majority of people won't be in the top, but it's a risk I'm willing to take going to a T10. I also have some connections which could help & I'm URM.
4) I've heard that before, but I don't see how paying down loans quickly, if I can, is going to hurt. I know I can live on $7000/month or less easily in NYC..and if I'm in TX even easier. I'd pay less interest paying the loans back in 5 yrs than in 10 as well.

I'm not trying to be a smartass, just explaining my logic because I still don't see what I'm missing. The one thing I may have not considered enough is the tax rate..but it's not 39% (I know someone else said this)..it's 28% for 2008, 2009 and 2010 for a 160k salary.

http://moneychimp.com/features/tax_brackets.htm

[UCInfo]

165000*(39% fed income tax+ 6.85% NY state income tax +3.6% NY City tax) = 49.45 * 165000 = $81592.5 take home/12 = $6800 a month take home (ignoring other misc taxes). So almost half your take home salary would be paying off student loans for 5 years

This math is wrong. First off, $165,000 is still in the 28 percent federal bracket for a single filer. Second, you don't pay that percentage on the entire salary. It's a graduated tax system, so you pay it only on a portion of your salary.

Using California as an example: Federal taxes would be about $34,000 on $165,000 salary for a single filer, based on a tax calculator and assuming standard deductions. On top of that, you'd pay $6,200 for Social Security taxes and $2,300 in Medicare taxes. Under California's income tax rates, you'd also pay about $15,000 for state income taxes and $1,100 for state disability insurance. Total taxes would be around $59,000.

So take-home would be more like $106,000 divided by 12 -- right around $8,800 per month.

[beesknees]

.

[bceagles182]

I was just playing around with the calculator and for a $150k loan, with a 6.5% interest rate, paid back in 5 years it's a little under $3000/month. That doesn't really seem like that much to me, if you're making over $10,000/month after taxes and having loans paid off in 5 years is great; $7000/month is an absolutely livable salary (even in NYC, considering I make about 1/6 of $7000 and get along just fine living frugally), especially in places like TX. Of course, this is assuming you're making $165k out of law school and for me (and I assume other posters), full sticker at a T10 is worth the risk of not getting biglaw.

EDIT: But then again, maybe I'm missing something, because the calculator says one might experience difficulty trying to this pay this loan at a $250k+ salary. What am I not getting?

You're missing:
1) $160k in Manhattan is basically middle class
2) If you aren't in Manhattan or Chicago or LA where the COL completely ridiculus, then you probably aren't making $160k/year right out of LS
3) It seems only 1/3 of T10 classes are getting those salaries. The other 2/3, poor bastards, are going to have to pay those loans off on half that salary.
4) Even if your scenario pans out, you're still paying about a third of your money to student loan debt. Financial advisors typically advise that your total debts should be about 10-15% of your income.

I'm thinking about paying sticker at Michigan, but when I go through the numbers and consider my statistical chance of pulling one of those top jobs, it really scares me. Now, that's not saying I couldn't bust my ass and get lucky, but to wager such a large sum on money on my ability to outperform a group of people I have absolutely no idea about except that they scored in the 97-99%ile on the LSAT and had great grades... well, that has me thinking twice.

1) I live in Manhattan. I make ~1400/month and pay my rent, credit card bills, monthly payment for my 30k in undergrad loans & extra expenses with my parents paying only for my food & tuition.
2) I want to practice in TX..the specific firm I have some a connection with and other firms I've looked at start at $160k+ bonuses.
3) We don't know the figures for this year, but that seems about right from what I've read. I've also heard predictions of the market beginning to recover soon which would up that 1/3 -> 2/3. Even if that doesn't happen, I understand real life. I know law school is difficult and the majority of people won't be in the top, but it's a risk I'm willing to take going to a T10. I also have some connections which could help & I'm URM.
4) I've heard that before, but I don't see how paying down loans quickly, if I can, is going to hurt. I know I can live on $7000/month or less easily in NYC..and if I'm in TX even easier. I'd pay less interest paying the loans back in 5 yrs than in 10 as well.

I'm not trying to be a smartass, just explaining my logic because I still don't see what I'm missing. The one thing I may have not considered enough is the tax rate..but it's not 39% (I know someone else said this)..it's 28% for 2008, 2009 and 2010 for a 160k salary.

http://moneychimp.com/features/tax_brackets.htm

You make $1,400/month and live in Manhattan and are current on all of your bills? Are you living in a water closet? My friend's small 1 bedroom runs him what you make in a month.

+1

It's pretty much impossible to pay much less than $1,000 even with a roommate

[heathbar88]

I actually live in a nice 3BR/1 bath doorman & elevator apt. in a nice part of the city. Most people I know pay more (both my roommates pay more than me because I don't have a window in my BR haha), but I got a good deal. It happens a lot.

[MC Southstar]

Going to /self

[ATOIsp07]

When a bunch of prestige-loving people congregate on a forum, it can lead to group-think prestige-drunkenness. QED.

Easy with the group-think. Just thinking back on that RC passage gives me the heebie jeebies. Same with the ever-so-ironic 'cakewalk' passage.

that "cakewalk" passage was something else. oh, the irony!

[YCrevolution]

..

[ughOSU]

http://www.finaid.org/calculators/loanpayments.phtml

I was thinking about the choices for schools that I have thus far and whether or not to withdraw from GULC's waitlist, and decided to see just how much of an impact paying sticker for law school would have financially.

This was DEFINITELY an eye-opener for me. It's funny that on the Acceptances Forum, people are just so excited to get in.....then you think about the $$, and it is quite sobering.

Enjoy.

Well I think we know where the bitterness comes from...

[Sky'stheLimit]

I was just playing around with the calculator and for a $150k loan, with a 6.5% interest rate, paid back in 5 years it's a little under $3000/month. That doesn't really seem like that much to me, if you're making over $10,000/month after taxes and having loans paid off in 5 years is great; $7000/month is an absolutely livable salary (even in NYC, considering I make about 1/6 of $7000 and get along just fine living frugally), especially in places like TX. Of course, this is assuming you're making $165k out of law school and for me (and I assume other posters), full sticker at a T10 is worth the risk of not getting biglaw.

EDIT: But then again, maybe I'm missing something, because the calculator says one might experience difficulty trying to this pay this loan at a $250k+ salary. What am I not getting?

I suspect what you are not getting is the improbability of taking home anything close to $10,000 monthly on a $165,000 annual salary. Can you explain how you've arrived at this figure?

I just ballparked it..$10,000/month=$120k/year which seems about right. Even ITE, the firms I'm interested in in TX are starting at 165k +bonuses.

State and city tax is deductible. After deductions your AGI is probably around 130k. On a 165k your marginal rate is 28%, but you dont multiply 28% by your AGI you have to progress through each bracket.

165000*(39% fed income tax+ 6.85% NY state income tax +3.6% NY City tax) = 49.45 * 165000 = $81592.5 take home/12 = $6800 a month take home (ignoring other misc taxes). So almost half your take home salary would be paying off student loans for 5 years

All state and local income taxes are deductible and so is interest on student loans. Your AGI for federal income taxes, if you have someone good preparing your tax return, will probably be around 130-140k on a 165k a year salary in NYC. Also for 2010 the marginal rate for a single filer (unmarried) making 165k a year is 28%, but you progress through each tax rate, so the percentage you're paying is much less.

Basically taxes are very complicated. There are all sort of deductions and credits that you may or may not qualify for. If you're making 150k a year you can basically kiss about 35% for taxes goodbye if you live in a city. Also, you have have to factor in savings for retirement (and it's retarded not too). After that, you will take home about 55-65% of your money.

[vanwinkle]

165000*(39% fed income tax+ 6.85% NY state income tax +3.6% NY City tax) = 49.45 * 165000 = $81592.5 take home/12 = $6800 a month take home (ignoring other misc taxes). So almost half your take home salary would be paying off student loans for 5 years

This math is wrong. First off, $165,000 is still in the 28 percent federal bracket for a single filer. Second, you don't pay that percentage on the entire salary. It's a graduated tax system, so you pay it only on a portion of your salary.

Using California as an example: Federal taxes would be about $34,000 on $165,000 salary for a single filer, based on a tax calculator and assuming standard deductions. On top of that, you'd pay $6,200 for Social Security taxes and $2,300 in Medicare taxes. Under California's income tax rates, you'd also pay about $15,000 for state income taxes and $1,100 for state disability insurance. Total taxes would be around $59,000.

So take-home would be more like $106,000 divided by 12 -- right around $8,800 per month.

+1

"39% fed income tax" made me lol.

[john titor]

reminder: 5% of lawyers work in biglaw

[ShibaDan]

This whole thread just made me give one hell of a *gulp*

[wocehtoom]

I was just playing around with the calculator and for a $150k loan, with a 6.5% interest rate, paid back in 5 years it's a little under $3000/month. That doesn't really seem like that much to me, if you're making over $10,000/month after taxes and having loans paid off in 5 years is great; $7000/month is an absolutely livable salary (even in NYC, considering I make about 1/6 of $7000 and get along just fine living frugally), especially in places like TX. Of course, this is assuming you're making $165k out of law school and for me (and I assume other posters), full sticker at a T10 is worth the risk of not getting biglaw.

EDIT: But then again, maybe I'm missing something, because the calculator says one might experience difficulty trying to this pay this loan at a $250k+ salary. What am I not getting?

Well it assumes you're only paying 10% of your income towards the loan. In addition, after a few years you would hopefully get a pay increase...

[2010law]

Well, for me, I'm in top 25 (depending upon the days ranking)-
I have no problem with sticker price for the following reasons:
1) I know the school I am going to attend has a reputation for turning out solid lawyers (hopefully that will help with the post law school income and job prospects)
2) I am perfectly fine with a comfortable lifestyle and don't really care if I get to live like the "TV Lawyers"
3) I currently make a decent living but don't enjoy going to work - and have always wanted to go to law school
4) we can all make all the projections about what we will earn after the bar but we're all full of it until we are actually employed.
- But, the same can be said for anyone in any job- and even if you get the job and the $$$ it can all go away in an instant (recessions, layoffs, financial scandals that bankrupt thousands----- ah, nah. that will never happen- i'm just being negative).
5) I'm ok with driving a Honda vs. a Mercedes or BMW (can probably find a cheap Toyota if i look--- low mileage and barely used brakes)
6) I'm going because life is short and I want to go--- I prefer to regret the things I did and not the things I didn't)
Besides, if I'm wrong, the state still has casinos and lottery tickets and I'll just win a boatload of money and sail off to my happy place.