Tuesday, May 19, 2009

Settling Up: The Cost of a Law Degree

I took out over $130,000 in student loans to pay for law school. Add in my undergraduate student loans and my total student loan bill is a little bit north of $180,000. That is a lot of educational debt.

Some finance books say educational debt is "good debt" because it is an investment. I call bullshit. Debt is debt and it does not matter whether it was incurred in pursuit of collecting every Betsy Johnson handbag or in pursuit of higher education. No, I cannot rationally justify $180,000 worth of student loans but bemoaning my financial situation does little good. I must get to the real task at hand: repaying this monstrous debt. Thankfully, I think I did a few things right.

First, I consolidated approximately $140,000 of my student loan debt at a low, fixed rate of 5.25%. The payment on my consolidated loans is $752. The payment for my other $40,000 in student loans is $633. I know it seems odd that the lesser loan amount has a payment nearly equal to the higher loan amount. However, one of my loans is amortized over three years instead of twenty-five years like my other loans. Thus, the payment on that one, short amortized loan is $375 per month.

Second, I did not take any private loans. I maxed out my federal loans, begged my school for more grant money, and paid the rest out of pocket. I have heard horror stories about private lenders and I knew I did not want to borrow from them if it could be helped. Luckily, I was able to meet (almost) all my expenses. I do have a small tuition balance right now but I can afford to pay it because all my loans are in deferment until at least January. By then, I should be well settled into my job.

Lastly, we have kept our household expenses very low. We own one car that will be completely paid for in two months. We own a modest house on which the mortgage is $1100 per month. We have no credit card debt. We buy secondhand whenever possible and generally try to spend very little on things we have identified as "needs" rather than "wants." It's dull. Date night is usually a rental from the local Redbox and some microwave popcorn. But the upside is that my student loan debt does not worry me as much as I thought it would.

I know we will be okay. I have run the numbers more than once. Yes, $1385 in student loan payments is mind boggling but I am fortunate. I have a degree and a job that allows me to comfortably repay my student loans and all my other household expenses even if my spouse were to lose his job. I know I am lucky. Now I need to work on being grateful - for law school, for the Juris Doctorate, and for all the financial hurdles it can help me overcome.


Ashley said...

I have been following your blog because I have three small children and have been thinking about going to law school. Thank you for your candid insights into your life. It's fascinating and helpful!

Catherine said...

We've been living like you since my husband is in school getting his MBA. How did law school come to $130? I figured 3 yrs of law school at a private U would be $104 and the U would be $65K. Am I missing something? ~ Cat

LawSchoolMom said...

Ashley: Thank you!

Catherine: it took me more than three years to complete law school.

Kenneth said...

My loan debt is going to be 135 or so. I'm only taking 3 years at a private law school, and that's with a small scholarship.

I should have joined the Peace Corps.

Nicole C. said...

I have been thinking about going to law school as well. I am 25 and married with three wonderful children...a 6 yo girl and 4 yo twin boys... But the cost scares me, as well as the time. I estimate if I went part-time, 6-10 years for completion and full-time, cost covering employment. They will be in early to mid teens, but I really in a rut in my current profession as a hair stylist. Your blog helped me to get closer to a decision...think harder...