Why are people so scared of debt at top law schools?

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neeks8282

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Why are people so scared of debt at top law schools?

Postby neeks8282 » Mon Sep 10, 2018 12:08 am

Please don't flame me if I'm wrong, because I very well could be. I understand that. But, this is what I understand from what I've been reading about.

Let's say you pay sticker at a T14, you have about $200,000 in debt. If you find a biglaw job paying $180,000 before bonuses, great. You can make a substantial dent into your debt before being kicked out which everyone is convinced will happen, and I have no reason to doubt them. But, if you are frugal, you can make a substantial dent in your loans to make them manageable no matter what you do after biglaw (assuming around 3 years or more in biglaw).

If you don't find a biglaw job out of a t14, you can take advantage of the LRAP which are very good at many of these schools, keeping the cost per month of paying off debt at a manageable level until they are forgiven after whatever amount of years the LRAP requires (max 10? someone correct me if I'm wrong). Now I suppose the issue is, is it hard to find a public interest job? From what I'm thinking, it would seem very reasonable to assume a graduate of a T14 school could find a public interest job.

So, in the end, is the debt really that horrible?

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Calbears123

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Re: Why are people so scared of debt at top law schools?

Postby Calbears123 » Mon Sep 10, 2018 1:23 am

After tax, rent, student loans, state tax, social security, retirement, food, loan interest, work transportation...$180,000 gets pretty small.

nixy

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Re: Why are people so scared of debt at top law schools?

Postby nixy » Mon Sep 10, 2018 6:38 am

If you find out that you really really hate your big law job, which people notoriously do, yeah, the debt is pretty terrible.

Plus for many people (not all, but many), you can avoid the problem in the first place by taking a scholarship.

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Pneumonia

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Re: Why are people so scared of debt at top law schools?

Postby Pneumonia » Mon Sep 10, 2018 9:27 am

Sticker is much closer to 300k. At some schools it's more.

The economy is currently humming just fine, and you're right to assume that right now most T14 grads are able to graduate into jobs that are financially unobjectionable. But for current 1Ls graduation is three years away. For current applicants it's four. And for a lot of those currently considering the LSAT, five. Your debt stays the same even if the economy significantly contracts.

For biglaw, others are right that it is hard to be frugal. Assuming NYC, but to a certain extent elsewhere, you won't have enough time to to a lot of the things that frugal people do. But even if you're super disciplined, it can be tough. There is also the very real possibility that you will hate your job. Doing a 9-5 that you hate is one thing. But hating biglaw is miserable, in part, because it's pretty much the only thing you do all day. And you don't have any choice but to keep doing it.

For PI, LRAPs within the T14 actually vary pretty widely. It's easy to get hosed on technicalities in the federal debt-forgiveness programs, and there is no guarantee that they'll be around forever. For some programs there is also the tax-bomb issue. Lastly, PI jobs in major cities are fairly competitive to get. So yeah, you can get one if your financial debt depends on it. But these jobs tend to be just as competitive as any others in NY, SF, LA, Boston, etc.

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Re: Why are people so scared of debt at top law schools?

Postby Npret » Mon Sep 10, 2018 11:07 am

neeks8282 wrote:Please don't flame me if I'm wrong, because I very well could be. I understand that. But, this is what I understand from what I've been reading about.

Let's say you pay sticker at a T14, you have about $200,000 in debt. If you find a biglaw job paying $180,000 before bonuses, great. You can make a substantial dent into your debt before being kicked out which everyone is convinced will happen, and I have no reason to doubt them. But, if you are frugal, you can make a substantial dent in your loans to make them manageable no matter what you do after biglaw (assuming around 3 years or more in biglaw).

If you don't find a biglaw job out of a t14, you can take advantage of the LRAP which are very good at many of these schools, keeping the cost per month of paying off debt at a manageable level until they are forgiven after whatever amount of years the LRAP requires (max 10? someone correct me if I'm wrong). Now I suppose the issue is, is it hard to find a public interest job? From what I'm thinking, it would seem very reasonable to assume a graduate of a T14 school could find a public interest job.

So, in the end, is the debt really that horrible?

Yes. Are you really asking why people worry about taking on hundreds of thousands of non dischargable debt for an intangible resource?

You’re assuming the ability to repay that debt comes in tandem with an admission to a certain few law school. It doesn’t. Getting and keeping a job (biglaw, small law, IP, even government) isn’t guaranteed to anyone.

Also, your debt estimate seems low.

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totesTheGoat

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Re: Why are people so scared of debt at top law schools?

Postby totesTheGoat » Mon Sep 10, 2018 11:17 am

Because sometimes life doesn't go as planned, and being leveraged to the tune of a quarter million dollars when life goes sideways is a recipe for disaster. Take off your best-case scenario blinders and start looking at all the ways your life could end up somewhere except in your dream situation. Then ask yourself whether a $2500/month debt payment helps or hurts that situation. (No matter whether you can defer that payment for a few months or not, it's still looming over you).

albanach

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Re: Why are people so scared of debt at top law schools?

Postby albanach » Mon Sep 10, 2018 11:26 am

LRAP at other than the very top schools might be contingent on PSLF still being available. Or may be predicated on a very low household income which could be problematic if you want to marry/have a family.

It's also likely to require that you keep the loans as federal loans with a relatively high interest rate. Now imagine you do five qualifying years in public service but you're offered a decent private gig paying $140k. Your $300k in student loan debt is now $400k which will take a long time to repay, even with that larger salary.

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Re: Why are people so scared of debt at top law schools?

Postby QContinuum » Mon Sep 10, 2018 2:26 pm

neeks8282 wrote:If you don't find a biglaw job out of a t14, you can take advantage of the LRAP which are very good at many of these schools, keeping the cost per month of paying off debt at a manageable level until they are forgiven after whatever amount of years the LRAP requires (max 10? someone correct me if I'm wrong). Now I suppose the issue is, is it hard to find a public interest job? From what I'm thinking, it would seem very reasonable to assume a graduate of a T14 school could find a public interest job.

So, in the end, is the debt really that horrible?


LRAPs often come with strict qualifying conditions (locking you into not just PI in general but specific employers/jobs); lock you into PI for a decade (if you leave prior to your loans being forgiven, you may actually owe more than when you graduated!); effectively prevent you from getting married to a working partner (otherwise their income gets calculated in to how much you must repay); and, if not combined with PSLF, result in a huge tax liability when the loans are finally forgiven.

LRAPs are not fun by any stretch. They're an invaluable resource for PI-minded folks, but should not be thought of as a "get-out-of-jail-free" safety net, especially when folks considering top law schools generally have other options for making a good living without the downside risk of being locked in to a low-paying career for (at least) 10 years.

TrustMeImALawStudent

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Re: Why are people so scared of debt at top law schools?

Postby TrustMeImALawStudent » Mon Sep 10, 2018 7:09 pm

I'm at a T14 and my debt will be $200K by the time I pay it off (I have several scholarships, but the interest really adds up) and even though I have not yet graduated, I am thinking about this issue now, so I'll tell you that $200K in debt is scary in this day and age for most people. Middle class jobs are shrinking away, so if you opt out of big law (or out of law completely, which many people end up doing) after working in big law for several years, your next job options don't just pay less---they pay a lot less, which makes paying back those loans with growing interest very difficult.

I've met many attorneys who went to my school (and other T14s) who can't deal with big law's inhumane work hours, and jump ship after 2-3 years and take a PI job. In my city, the standard pay for PI for grads of my school is around $65K, which means these attorneys end up living with many other roommates and living on a tight budget, which doesn't feel right, as an adult, to live like a college student or someone in their early 20's, especially after you've had a substantial paycheck for several years. You can get on the loan forgiveness track if you jump ship from big law soon enough after graduation, but you're still tied to your legal job (even if you decide you hate being an attorney) because you need that loan forgiveness, and the debt hanging over your head feels suffocating.

Also: "it would seem very reasonable to assume a graduate of a T14 school could find a public interest job" -- this isn't necessarily true. The legal job market is tight and PI jobs are not plentiful. The PI students at my T14 have job hunts that are filled with uncertainty, even beyond graduation.



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