This guy is enrolling at the University of Miami’s law school this fall:
So I will be taking out student loans to finance my legal education. I believe I am setting myself up well to get a p[ublic] s[ervice] l[oan] f[orgiveness] eligible job as I have been interning at a government agency (that has already offered an internship after 1L) and I plan to structure the courses I take around that 2L and 3L while keeping the connections I’ve made and eventually doing my CLI there. If I take out the maximum amount possible in loans, I would seem to have $5k-$7k more than I need because I will be living with my gf which make COL a little lower and my parents will be helping out with living expenses. With my dedicated interest to public service and looking at a job that offers ibr/pslf, should I invest with the extra money on hand?
Miami’s current annual cost of attendance is nearly $70K, which means that if he’s paying sticker he’s going to owe, with interest, around $240K when he graduates. His plan to pay this money back is to not pay it back:
Unfortunately, my school doesn’t offer a l[oan]a[ssistance]r[epayment]p[rogram] program so I would have to pay the minimum $300 a month on my P[ublic]I[nterest] salary for ten years. Still not a bad deal. I really just don’t want to work in the private sector. Yes the pay is much better than working in PI but there’s so much more to being an attorney than just money contrary to typical Top Law Schools rationale. I really want to be able to make an impact in my community with the agency I’m working with now.
A few points:
(1) Getting an unpaid internship with a government/non-profit legal employer is relatively easy (although getting harder all the time). Getting an actual job that pays a salary is exponentially more difficult.
(2) (1) is a function of the fact that federal, state, and local governments are all struggling with budgetary constraints, while at the same time law schools are graduating about 15,000 people a year who are getting the same bright idea as this public-spirited fellow: rack up hundreds of thousands in loans, pay $300 per month on PSLF for ten years — which will only pay off a fraction of the interest and none of the principal — and let Uncle Sugar handle the rest.
(3) Graduate school loans now have floating interest rates, but will probably average between 6% and 9% while this guy is in law school. Good luck arbitraging that. Where do kids these days get these ideas? The Wolf of Wall Street? (Haven’t seen it but I gather it’s the new generation’s version of Gordon Gekko.)
(4) This is all going to end badly.