Student loan payments: get advice and actual numbers here Forum

[Bronx Bum]

Pretty amazing how many people itt are either $160k biglaw secure or on the 10 year plan. I think I'm the only one fucked itt. Lol. Can't be representative.

Yeah, I am surprised as well - if you look at the % of people in this thread who have 160k salary vs. the % of law grads total with 160k income, this thread would be flipped upside down. I think that, even though anonymous, people with a high debt to income ratio are still going to be more willing to post when they are pulling in biglaw salaries.

Debt: 200k+
Salary: 70s, 1st year
Payment: 450/month via PAYE

Just started, will be living at home for a bit to get my feet under me somewhat (as much as that will ever be possible).

I'm sorry if this is an inappropriate question, but what happens if your salary ticks up to mid-100s or even 200k+ and you're still on PAYE 10 years from now? Have you figured out at what salary point it is easier to just pay off loans?

You would no longer be eligible for PAYE at that kind of income level.

Once you're on u can't get kicked off.

[Void]

I'm sorry if this is an inappropriate question, but what happens if your salary ticks up to mid-100s or even 200k+ and you're still on PAYE 10 years from now? Have you figured out at what salary point it is easier to just pay off loans?

You would no longer be eligible for PAYE at that kind of income level.

Once you're on u can't get kicked off.

Oops- you're right.

[A. Nony Mouse]

Yeah, it's tied to your income, but the max payment is still capped (is it 10% of your income for PAYE? I forget). So the payment goes up, but you're still on PAYE.

[Total Litigator]

Debt: $190k

Income: $68k

Plan: Don't even know, just deferred another year.

Life: Ruined

Height: 5'9

...Why are you deferring instead of getting on IBR or PAYE?

Not eligible for PAYE. What's the point of IBR at this point? So I can get tax bombed in 25 years? Don't want to consolidate anyway.I'm just throwing money at it trying to keep it at $190k (jfc it increases like $80 a day lol) until my salary increase to $68k once I'm admitted then do all I can do to pay it down.

IBR is really the worst option you can have. It's 25 years at 15% and you are going to get MURDERED by the tax bomb at the end. In 25 years the total will be like $500k if I IBR. Also, once you get married it's 15% of both salaries. Might as well hit the bottle for a while, keep it at bay, then man up and pay it.

Meh, I had the same thought process as you... but IBR is really the way to go.

I have about as much debt as you do, and a similar salary. If I suddenly win a proverbial / actual lottery, sure I will pay off my loans. But intending to repay the $190k later, while $10K+ in interest stacks up per year is not really a constructive plan.

Also, your first year IBR payments should be based on your 3L earnings, so you will likely knock off 1 year off of the 25 years without having paid anything anyways.

Furthermore, at around $190K per year, under the 25 year straight payment plan, that is about $1,500 a year for 25 years anyways (thank interest for that).

Also, if you want to overpay, IBR allows you to focus your payments on the high interest loans after you make your IBR payment, so it will actually save you money as long as your basic plan is to pay back your loans one way or another.

Finally, with regards to the tax bomb, putting money saved via IBR in a 'tax bomb preparation' account is more effective than putting that money towards your loans if you are not able to reduce the principle. Also, remember than the principle does not capitalize on IBR. Your ultimate loan forgivement amount, assuming Congress doesn't void the tax bomb in the next 25 years, will be taxed at about 33%. Therefore (for example) if you put $100K in a 'tax bomb preparation account' for an ultimate loan forgiveness amount of $300K, you will still spent less money than you would have paying it back in full. (I haven't done the actual math here, but it'd be tough to beat having to pay back 'only' 33% of the final unpaid amount versus having paid it back on a 25 year payment plan with interest stacking but no capitalizing priniciple).

[Anonymous User]

Debt: ~$54k (~$60k + interest at graduation in 2012)
Payments: $589/mo.
Income: $74k
Plan: IBR
Important info: I went to school for free at a UC, so my debt is 100% cost of living. I took out the max my 3L year as a cushion, though I got my job toward the end of fall semester.
Bonus points: PSLF-eligible job, so my school is currently paying 70% of my loans (it was 90% until a few months ago but dropped due to funding). I am also required to be on IBR for my school to pay, and I'm not sure I would be otherwise.

[Amity]

I really need to read up on all of this. But for now I am making the following assumptions. Payments begin 6 months after graduation, so my first payment will be due in Nov or Dec ’14….giving me 2 or 3 months of firm income as a cushion. Right? When do I have to officially announce what payment plan I have selected?

[Dr. Review]

I really need to read up on all of this. But for now I am making the following assumptions. Payments begin 6 months after graduation, so my first payment will be due in Nov or Dec ’14….giving me 2 or 3 months of firm income as a cushion. Right? When do I have to officially announce what payment plan I have selected?

Grace/deferment periods end one month apart. I had a partial payment in Nov, and my first full payment will be in Dec., so yes you do get a few months of income prior to repayment. As for payment plan, you can change it online any time after they become due (I changed mine in mid/late October). Keep in mind that PAYE can be a bit slower to approve, so you will want to do that upwards of a month in advance. Otherwise, switching takes 1-2 weeks.

[philosoraptor]

I really need to read up on all of this. But for now I am making the following assumptions. Payments begin 6 months after graduation, so my first payment will be due in Nov or Dec ’14….giving me 2 or 3 months of firm income as a cushion. Right? When do I have to officially announce what payment plan I have selected?

For me it was only 2 or 3 biweekly paychecks before loans started coming due. That money immediately went toward rent and credit card payments. You don't get to pick a payment plan until after the first payment comes due, for us around Nov. 15 (actual due date early December).

[Anonymous User]

Debt: 100K, all federal loans
Salary: 80K as a clerk (4K per month post-tax)
Payments: $1200 a month under normal repayment.
Caveat: I pay effectively 70% of my income to various government entities through loans and taxes. Tack on $1K for expenses and $2K for MFH rent/utils/laundry per month for a shitty studio and I am still living paycheck to paycheck. The only saving grace is about $6000 from my school's LRAP program, which constitutes my emergency fund. I have no savings, retirement plan, or money to take a vacation, and I work very long hours.

Reminder for dumbass 0Ls reading this thread: As much as I complain, objectively, I make much more than the median starting salary for judicial clerks or entry-level lawyers and have much less debt thanks to schollys. I could not conceive of paying off 200K of debt on 55K without PAYE.

[Anonymous User]

Debt: 210k
Salary: $30,000 (expected to double next year)
Payments: On IBR, so payments would be $84 a month by my LRAP pays them. I am public interest so I should be debt free in 10 years, and will likely pay a fraction of my loans.

I honestly find it fairly easy to live on a low salary, but I was also used to it before law school.

[fenton]

My wife and I each graduated in 2009 and then I did a tax LLM. All figures below represent our combined debt and payments.

Debt: we borrowed about $390,000, which means we had about $435,000 outstanding by the time we started repayment (capitalized interest).
Payments: $5400/month required minimum for the 10 year plan. This year we've averaged $10k/month and have focused every extra payment on one of the 8.5% grad plus loans. When that is paid off (next month) our monthly minimum required payment will be $4300.
Income: Wife $210,000 plus bonus. Me: $110,000 plus bonus (4 figure).
Plan: 10 year.
0L's: The first year that we each had full time jobs after law school we paid $36,000 in interest alone. My wife went to HLS so her chances at biglaw were significantly better than most grads will have. My results, $110K small-law job as a 3rd year associate, are not typical and are a direct result of my having an LLM in tax. Most are much worse. That said, for us the debt is manageable and our goal is to have it either paid off by 2016 or paid way down so that our required monthly nut isn't so bad. I should also note that my wife hates her job and only does it because it pays well and allows us to pay down this debt as quickly as possible. She's billed an average of 2500 hours/year since 2010. Remember, she "won" at law school.

[rad lulz]

m

[fearESQ]

Pretty amazing how many people itt are either $160k biglaw secure or on the 10 year plan. I think I'm the only one fucked itt. Lol. Can't be representative.

apparently everyone on this board is biglaw

[fenton]

For the 0Ls you should explain what life is like a lil for one who bills 2500 hrs/yr

Sure. It means going in at 9am and working pretty much every minute of the day until 7pm. She eats at her desk while working. On the way home, on public trans, she reads briefs, answers emails, and occasionally takes phone calls. She does this until bedtime. She's a 5th year now so she has a bit more flexibility and can operate remotely more often. In the early years she was chained to her desk much more. She thinks about work constantly, even on vacation and in her sleep. Last Sunday she woke up and her first words were "don't talk...I had a dream about my
summary judgment brief and I want to write it down before I forget.".

Basically, for her it means somewhat long days at the office and lots of being on-call, checking her blackberry and calling partners well into the evening. For others, especially those in corporate, it can mean lots of all nighters and weekends.

[gk101]

For the 0Ls you should explain what life is like a lil for one who bills 2500 hrs/yr

I billed about 2450 last year. Got in at 8 every morning and usually left somewhere between 7 and 10 pm with an hour lunch during the normal months. There was a 3 month stretch where I billed 820 hours. didn't take a single day off and went out of the office only to sleep for 5-6 hours. I worked the day after thanksgiving and was working till 8 pm on Christmas Eve.

[Young Marino]

This is a great thread. Thanks to all who have contributed! I do have two questions as a naive 0L though. Is it relatively easy to qualify for IBR if working in the public sector? And outside of having "adverse credit history" is there any other reason not to have all your loans from the federal government? One more question, for those on IBR on PSLF do you find it quite difficult to save money to put towatds a house or car even though your payments are really low?

[mr. wednesday]

One more question, for those on IBR on PSLF do you find it quite difficult to save money to put towatds a house or car even though your payments are really low?

I had no trouble buying a car even though I have more than 100k in loans and am on IBR/PSLF. IBR is technically 15% of your discretionary income but there are obviously ways to lower your AGI, like having a low earning spouse, putting money in retirement, various tax deductions, etc.

I probably pay around 10% of my take home salary to loans (before LRAP--taking LRAP into account, I pay around 2% of my take home). I am saving for a house now so I'm still unsure about what kind of mortgage I'll qualify for, but the issue will be my total loan balance, not my monthly payments. If I had zero debt right now and just had my salary reduced by how much I make in loan payments, I would have absolutely no concerns about qualifying for a mortgage, paying for my living expenses, having a newer car, or anything like that.

Obviously some public interest jobs are very low paid but PSLF doesn't require you to take a vow of poverty.

[Void]

One more question, for those on IBR on PSLF do you find it quite difficult to save money to put towatds a house or car even though your payments are really low?

This depends entirely on your income and general finances. It's possible to earn a pretty decent salary and still be on IBR and PSLF. (remember, PSLF doesn't have any earnings requirements- as long as you're in a qualifying position and you make 120 payments, you're forgiven regardless of your income) For the rest of us, fuck yes it's hard to save money. But speaking for myself, I only work 40 hours a week, my work email only gets checked at work, and nobody from work calls me after 4:30. I'm also doing exactly the kind of work I've always wanted to do, I have my own cases and my own clients, and I am in court actually litigating almost every single day. To me, these things are legitimately valuable and I don't really mind that my yearly take-home is a little more than most biglaw associates earned during their 2L Summer Associateship.

EDIT: Got a little off topic there, so I'll add that without PAYE (or, alternatively, IBR) I would not be able to afford my current job. Pretty thankful for these repayment plans.

[Young Marino]

One more question, for those on IBR on PSLF do you find it quite difficult to save money to put towatds a house or car even though your payments are really low?

This depends entirely on your income and general finances. It's possible to earn a pretty decent salary and still be on IBR and PSLF. (remember, PSLF doesn't have any earnings requirements- as long as you're in a qualifying position and you make 120 payments, you're forgiven regardless of your income) For the rest of us, fuck yes it's hard to save money. But speaking for myself, I only work 40 hours a week, my work email only gets checked at work, and nobody from work calls me after 4:30. I'm also doing exactly the kind of work I've always wanted to do, I have my own cases and my own clients, and I am in court actually litigating almost every single day. To me, these things are legitimately valuable and I don't really mind that my yearly take-home is a little more than most biglaw associates earned during their 2L Summer Associateship.

EDIT: Got a little off topic there, so I'll add that without PAYE (or, alternatively, IBR) I would not be able to afford my current job. Pretty thankful for these repayment plans.

Good to know. Thanks!

Edited: at request of moderator

[A. Nony Mouse]

I don't think this is a great thread for giving personal advice. There's a little leeway on 0Ls asking questions because of the purpose of the thread, but we're still in the Legal Employment forum. Questions clarifying what someone has posted about debt/payments is one thing, but questions about your personal financial planning based on a lot of hypotheticals are getting off topic.

[Young Marino]

I don't think this is a great thread for giving personal advice. There's a little leeway on 0Ls asking questions because of the purpose of the thread, but we're still in the Legal Employment forum. Questions clarifying what someone has posted about debt/payments is one thing, but questions about your personal financial planning based on a lot of hypotheticals are getting off topic.

Understood and edited.

[Amity]

Your tuition debt reduce your taxes by how much? Going for the silver lining....

[rad lulz]

Your tuition debt reduce your taxes by how much? Going for the silver lining....

http://taxes.about.com/od/deductionscre ... oanint.htm

[Anonymous User]

Total debt load: 110k, including accrued interest
I worked for 2 years before law school and was able to save a decent amount of money. I had about 12k in grants in years 1 and 2. No parental assistance.
Income: 160k
Payment: 1100/month

On my grad plus loan, $70 of interest has accrued (and $35 of which was capitalized) since my last payment on 11/12/13.


I realized before even starting that biglaw was not sustainable for me, so I've been paying off as much as possible - I've paid about 14k into my loans since starting in September. I live in a crappy apartment with roommates in NYC, which runs me about 1500/month. I cook on Sunday evenings, so that I don't have to eat out during the week on the 1-2 nights I'm not seamless-ing. I work between 65-75 hours a week, and recently had a 6-week stretch where I did not take a day off. I briefly considered not going home for Christmas because my plane tickets would cost $500, but I decided that I'd rather spend the money than take the risk of going legit crazy.

I'm happy that I get to pay it off, but I'm under no illusion: I'm trading years of my life for the paycheck necessary to service my debt. My strategy is to trade the fewest years of my life, but it also means those years are extra unpleasant because I won't really enjoy my salary.

[dixiecupdrinking]

Your tuition debt reduce your taxes by how much? Going for the silver lining....

if you're in big law, by zero after your stub year.