You Too Can Be A JurisDebtor!

So today I was working on reviewing the institutional catalog for one of our* medical campuses.  This is the first time I’ve ever done this type of work and although it’s not too complicated, it can be somewhat painstaking.  Basically, I was looking at the campus’s student catalog and checking to be sure that it complied with all the requirements set out in our checklist to include legislative, statutory, and regental policy changes.  There’s a lot of cross-referencing between all these documents which makes it easy to get lost in the layers.

One part that I reviewed today pertained to tuition for attendance at the medical school.  Here’s the line that caught my attention:  “The designated tuition fee is $8660 per academic year.” My mind immediately started ticking:  Hmmm, so one could go to medical school for a year and spend roughly a third of what it costs to go to a private** law school for that same year!  Nice.

I have to admit I never really thought too much about the expense (Read: Debt) of law school before deciding to attend.  Why?  For me, there was no point.  I knew that I wanted to become a lawyer…that meant I had to go to law school…that meant that I’d go into debt.  So be it.  But seeing the stark difference between what it costs to become a doctor versus a lawyer, I have to cry: OBJECTION!!!!

You would think that with what it costs for a legal education (and the beat down one endures to get licensed) that lawyers would be held in higher esteem.  Maybe if we didn’t have 3x the debt of doctors, legal fees wouldn’t be so out of whack.  I don’t know, I’m just speculating.  Thankfully, I didn’t have any undergrad debt to carry forward into law school which wasn’t anything I planned; it just happened that way.

In discussing this whole issue of debt repayment with one of my recent law school grad friends (we’ll call her “Gina” just because I know no Ginas and it’s a lot easier than saying “one of my recent law school grad friends”)—I found out two important things:  1) There is a cap on the amount they can set for your monthly payment and 2) You only have to repay for 25 years.  These are both good things to know.

So in a nutshell (and according to Gina) these two rules are pretty clear.  I went on this website to further investigate and it’s not nearly this cut and dried. We are, after all, talking about government loans and so there are the requisite caveats and categories, all with different rules. What I did discover is that there are several options available and that in all probability I won’t have to be destitute to pay these loans off.

Gina was right about the 25 years, which if you’re paying off loans that long, let’s face it, you’ve long since paid off the actual money you borrowed and what they are “forgiving” is the interest*** they were still squeezing out of you.  That’s generous.  However, they do note that you might have to pay taxes on the amount discharged.  So don’t plan that trip to Tahiti just yet.  They’ll get it out of you one way or another. (I find this just hilarious:  So the federal government Dept. of Education “forgives” the remainder of your interest (Uh, I mean “loan”) and the federal government IRS collects taxes on what you were forgiven.  Sneaky!  Thankfully, the IRS does not run heaven since they clearly misunderstand the concept of forgiven!)

There are, of course, options to get portions of your loans forgiven if you work in public interest, which, it turns out, is something that I am seriously considering. 

Also, Gina’s information about a cap on the amount you can pay is, I think, generally correct under the section pertaining to Income Contingent Repayment plans which calculates your monthly payment based on your  adjusted gross income (AGI, plus your spouse’s income if you’re married), family size, and your total loan amount.  So each month you’ll pay the lesser of:

1.      The amount you would pay if you repaid your loan in 12 years multiplied by an income percentage factor that varies with your annual income, or

2.      20 percent of your monthly discretionary income.

They have a handy little calculator on the website so you can plug some numbers in and play around with various scenarios.  Here’s another link to a blog that has interesting information on Income-based Repayment, which may or may not be the same as Income Contingent Repayment from the Dept. of Ed. website.

Either way, it’s not pretty, by any means.  You could probably buy a fully loaded Hummer and pay less monthly, but I seriously doubt a Hummer will get you as far in life as a good legal education and a law license.  I could be wrong, but since I will have the latter before I can ever hope to have the former, we’re just gonna go with that.

Like I told another of my recent law school grad friends, whom we’ll call, Denny, he knows why…  There’s always a bright side and the bright side to law school student debt is indeed the 25-year rule.  I find comfort in knowing that my ENTIRE social security check will be mine.  Then, I might go to Tahiti.  🙂

Footnotes:

* I still say “our” even though I haven’t been a regular full-time employee here in four years!

** BTW, it’s not much cheaper to go to a public school.  I’d say the numbers I was looking at put it at about $6K/year less.

***I have to point out that by the time you’re “forgiven” you’ve probably already paid more than a few years worth of interest.  I’d not want you to think they let you fully off the hook.  No, they get interest out of you, it’s just a matter of how much.  So student loan forgiveness is more or less akin to the “mercy rule” in baseball–they’ve beaten you so long and so hard that it’s no longer fun, so they walk away.

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About LegalTrenches

I graduated law school in May 2012 and have been blogging about my experience as a non-traditional student since my 2L year. I live over 200 miles from my law school and so I commuted two round trips a week from the beginning. I put almost 1000 miles a week on my car. Law school is crazy. It's even crazier as a non-traditional commuter student, but I wouldn't have had it any other way! I blogged my way through bar prep and sat for the July 2012 Texas Bar exam. Hopefully some of my experiences will help out those taking the bar exam after me. On Nov. 1, 2012, I received my bar results and became an officially licensed Texas lawyer! Follow me as I transition into the legal world as a brand new baby lawyer. I'll try to keep it light and promise to keep it real.

Posted on December 23, 2011, in Uncategorized and tagged , , , . Bookmark the permalink. Leave a comment.

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