The other day a reader e-mailed and said he needed some help. I always tell you all that I welcome your e-mails all the time, so if you have a question that you would like me or my readers to answer, then go on and ask. If you don't know the answer or want more opinions, I'm sure that there are plenty of other people who are wondering the exact same thing.
This reader e-mailed me after (what I'm assuming) reading my numerous posts about how I want my student loans gone. I do talk about it in nearly every post as it CONSUMES my life it seems like. I graduated with approximately $38,000 in student loan debt… This does include two undergraduate degrees and my Finance MBA though.
Here is the e-mail that I received:
“Son wants to go to law school in about 6 months. Spouse and I have put him through undergrad debt-free (along with a number of perks – studying abroad, travelling abroad, car, insurance etc).
Law school is outrageously expensive and even with his scholarships he's going to be paying out of pocket $30-$40,000/ year. They max out your Stafford loans for law school at $20,500 so just exactly where do we makeup that additional $10-$20,000 a year?
We could (and may) tap our retirement funds – and take the hit on that tax wise and penalty-wise, but I am NOT under any circumstances taking out a parent plus loan.”
My Thoughts
Let me start out with saying that my student loans seem to be a big subject that many readers e-mail me about. Some people graduated with a lot of student loan debt, and some graduated with absolutely none. I didn't have anyone help me with tuition, having a place to live, food to eat or any other expenses while in college.
So, I think it's great that this reader and spouse were able to put him through undergraduate school debt-free. If you can truly afford it, then why not? However, I don't know how I feel about tapping into retirement funds to help with law school. And I think it's a great idea that they will not take out a parent plus loan.
Here is what I replied to them with:
“This is tough. Law school is definitely expensive. There are always private loans that you could look for. The interest rate isn't always horrible and sometimes they have lower interest rates than federal loans. I only know this because I took out 1 private student loan and its interest rate is below 5% (I think it's 4.7% to be exact). This rate is actually below almost all of my federal student loans. Most people are against private student loans, but if the interest rate is low and the person is adamant about attending a high priced school, then there aren't many options.
Has he looked around at several schools to see which one is the best value? He can also try asking the school if there are any additional scholarships and grants that he can qualify for.
He should also see if there are any work-study options at his school. I'm not sure if in law school you can do that, but you never know.”
Now before a ton of you start throwing sticks and stones at me, realize that I DO know a lot of you will hate me for suggesting private student loans. The interest rate is most likely variable with private student loans, but like I said, there are not many options. If his son is determined to attend law school, then it will be expensive.
He can get private student loans, save up before he attends law school, work while he attends law school (and possibly find a company that will pay for at least part of his schooling), ask for a larger financial aid and scholarship package and also look for work study options.
I'm sure there are more options, so let us know in the comments below! We are very interested in learning how to come up with this extra money in law school expenses each year.
I did find some articles that are about paying for your law school education:
- 5 Steps to Getting More Money From Your Graduate School
- 5 Ways to Reduce Law School Expenses
- Paying for Law School FAQs – This is from a university's website, but I thought the information was good and it looks like it can apply to numerous schools.
How did you pay for school? How much student loan debt do you have?
How do you think his son should come up with the $10,000 to $20,000 per year?
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First, law school is a 'go big or go home' game. If you don't get into one of the top schools, it isn't worth going. Do some research and you'll find out that law school applications are decreasing, that lots of new grads can't find jobs, and that the starting salaries are bimodal (one peak at a middling salary for low tier grads, and one peak at a nice high salary for the top grads). I entertained the thought of law school once and decided against it.
I went to grad school in the sciences where you got paid a stipend for teaching and research. For people not in the sciences, I would try to line up scholarships. I would also try to get a job in the field. More important than providing spending money, the job will help you gain valuable work experience and connections, which will help you land a job.
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I agree, a job in the field is needed. You can then decide if it's the right path for you and is also great for networking.
My recent post How To Pay for Graduate School
I disagree. I know a whole lot of attorneys who didn't go to HYS etc that love what they're doing and are making pretty good $ and actually really helping people along the way.
You're right also. I'm in a field where I deal with lawyers everyday, and they make plenty of money! 🙂
My recent post How To Pay for Graduate School
I disagree. Not everyone can/wants to work at the top law firms. The stress of the job and working 80 hour weeks isnt for everyone.
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I have a student loan, from which I borrow 100% a year, then if I pass all my exams, 40% of the loan will be made into a grant. I`m going to have about 50.000 $ in student loans, which might sound shocking, but I do live in another country (Norway), which is a very expensive country, so it´s difficult to compare the price levels.
That's awesome that 40% converts into a grant!
My recent post How To Pay for Graduate School
Good breakdown of "Frank's" situation Michelle. 🙂 Private loans aren't great, but there are very few options which should be left off the table in this situation. I see the main one being off the table as them taking away from their retirement saving as well as them taking a parent loan. Private loans could be an option depending on the overall award package he were to get. I think they're negotiating with the top two choices right now, so hopefully he'll be awarded more scholarship money.
Thanks John!
My recent post How To Pay for Graduate School
I would try to find a job at the university, a teaching assistant or admin position, there are often high tuition discounts for employees. I works outside or the university and managed to pay for college and living expenses in full as well and graduate with $25K in savings. Tuition is cheaper in Europe though.
This is what I recommended as well. The universities around where I live will pay for you and your immediate family to go to school for free.
My recent post How To Pay for Graduate School
Man, the cost of college is getting ridiculous. When is this bubble gonna burst!
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I agree!
My recent post How To Pay for Graduate School
My parents put me through college debt free. I cannot imagine them paying for graduate school too.
The idea behind graduate programs is that (unlike what we think about undergrad programs, at least in the business) they are job training. So I say this is the son's problem– he should do a cost/benefit analysis about whether the law school he's interested in can get him a job that pays enough to pay back the loans he will be taking out. The parents should definitely NOT compromise their retirement for this. And yes to myfijourney.
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ITA about grad school being job training. The end job has to be enough to pay for the education or it's not worth it no matter if it was paid for with loans or cash.
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I absolutely agree with Nicole and Maggie.
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I agree!
My recent post How To Pay for Graduate School
I don't see why the parents should tap into their retirement funds in order to pay for his kid's law school. They already paid for his undergraduate degrees. I think the kid should take responsibility and if he really wants to go to grad school, then he should pay for it.
I agree 100% with this. You can borrow to go to school but you can't borrow to retire…
My thoughts while reading this article is "why the heck would this kid assume his parents would pay for his law school?" I'm nervous this kid has a sense of entitlement about what their parents owe them. I would never consider cashing in retirement savings to pay for law school unless I had a contract that my kid would pay my cost of living in retirement 🙂 haha they'd probably pick a pretty crappy retirement home for me 🙂
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Wow! Where did this "kid assumes his parents would pay for his law school" and he has a "sense of entitlement" come from???????????????????????? WOW – NOTHING could be further than the truth. This kid hasn't asked for a dime, has always worked his ASS off and is one of the most decent human beings you'll ever have the privilege to meet. You TOTALLY missed the entire point of this discussion. It is NOT about what the kid wants – it's ALL about what the parents should do.
I completely agree with SavvyFinancialLatina. I think his parents more than fulfilled their responsibility by paying for his graduate school. he should have been working throughout college and saving for law school if that's what he wanted. At the age you go to law school, you should be responsible for your own debt.
I think ti would be a huge mistake for the parents to take out retirement loans now.
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I agree with you. I think he should pay for it himself. I can see why the parents don't want to leave him out in the cold though.
My recent post How To Pay for Graduate School
Wow that is really expensive. All I can say is that you need to be really dedicated to take on that kind of financial pressure.
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I agree!
My recent post How To Pay for Graduate School
You can get a Grad Plus loan on top of the Stafford loans. That is what I did although I wouldn't recommend it. The Grad Plus loans are better than private loans though. Unless the student is at a top 15 law school, I would recommend going to a lower ranking school where the student could get a full scholarship. That is what I should have done.
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Good to know. Thanks for stopping by and helping out.
My recent post How To Pay for Graduate School
As a lawyer I would say:
1) Do NOT go to a school that hasn't give you financial aid unless it's a top 4 school – and even then I'm not sure it's worth it.
2) Law school is expensive and a kid should have to accept that responsibility to be a member of the profession. I had several friends whose parents paid for their undergrad, but grad school was on them. I also had friends whose parents paid for all of it. Not surprisingly – the kids who weren't responsible for the cost lost their scholarships the first year because they spent a lot of time drinking (common in law school) and a lot less time outlining.
3) A terrible tier 3 school can be more expensive than a tier 1 school.
4) Full disclosure: I graduated with 82,000 in principal – after a 1/2 tuition merit scholarship and 2 years of federal work study instead of taking out cost of living loans. That balance hit 100,000 thanks to interest two months ago.
5) A school will set up your loans unless you're able to some how do it yourself (I'm first generation college. I was not). You do not have to cover that cost, they will suggest various private loans to take out.
6) A parent does NOT have to co-sign graduate school loans.
7) Loan interest rates for federal loans have gone up a ton in the last few years. I started in 2007 when they upped them to 6.8-7.5. I have accepted that barring a crazy salaried job or a huge settlement one day, I will pay my loans until they are forgiven thanks to the federal government consolidation plan. But I was willing to accept that because I wanted to be a lawyer.
8) Law school sucks. There will be at least one day this kid wants to drop out. For goodness sakes do NOT spend your retirement money on the worst three years of your kid's life.
9) off my soap box…
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Thank you SO much for commenting on this post. I was really hoping that a lawyer or law student would stop by and give us valuable insight.
My recent post How To Pay for Graduate School
Let your kid fend for himself with respect to finding the rest of the money – for goodness sakes don't tap your retirement funds!!!!! You already paid for college so you've done more than enough!
OK you didn't actually tell us if you have tons of excess cash sitting around that you've labeled for "retirement." If you have majorly over-saved, maybe you could spare some extra for this education or for a parent-to-child loan. But if you have to pay penalties for removing the money OR are not WAY ahead of schedule for saving, you should not consider this option at all! If you aren't sure whether you're on track, visit a fee-only financial planner for a couple hours.
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I agree. Since I had to pay for everything myself, I think I can honestly say that it's not the end of the world having to pay for everything yourself. If you're getting a good return on your education, then go for it.
My recent post How To Pay for Graduate School
my parents paid for my undergraduate – even after I got married. but they always said graduate school would be on my own. right now, my husband & I are working to pay off his undergrad loans & save up for our eventual graduate school tuition. we made the decision to put off grad school 2-3 years in order to make sure we weren't drowning in debt. and it's an added bonus that we're getting real-world experience.
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I'm all for real world experience. I took around 6 months off from school after undergrad before I went and got my MBA. I worked full time while getting my MBA (still have the same job) and real world experience is very valuable.
My recent post How To Pay for Graduate School
I have 55k left on an original 68k loan. It would have been 100k if I didn't hustle my butt off! Law school is crazy expensive, and just like anything else, there are no guarantees these days. Just google "law school scam" and hear all the horror stories. Some people never work in law after accruing triple digit debt and it can be soul sucking.
If he is able to hustle as a tutor, work study and live frugally, he can probably make 10k-20k. I made 16k working three jobs while going to graduate school. It helped me tremendously, although I was always very tired and didn't have much of a social life.
I'm all for working while getting a degree. The extra money can be a lifesaver!
My recent post How To Pay for Graduate School
Whoa ! This is crazy. You can borrow money for an education but you can't borrow money to live on when you retire ! Keep the retirement money where it is.
My ex is a lawyer. Very few lawyers start at 100k. Those who do, were at the very top schools and the top of their class. They work 80 or 90 hours a week. minimum. Lots of baby lawyers start at 30k – 40k. I would suggest a job in the legal field to get an idea what it is like.
I agree Christie, thanks for stopping by!
My recent post How To Pay for Graduate School
Although I don't know the ins and outs of this person's financial situation, as a financial advisor, I would strongly encourage him NOT to tap his retirement funds. While I know private loans may be his last and least favorite option, they are an option to fund his son's law school. There is no loan available to fund your retirement. You will have to keep working. As a parent, I understand their desire to help their son out, but they have to take care of themselves first.
This may sound harsh but I've seen firsthand parents who have ruined themselves financially to help out their kids. The worst part is now they're in trouble and their kids are in no position to help them. Assuming this is their son's dream and passion, they should figure out TOGETHER how to finance school. It shouldn't be the parent's burden alone. The son needs to be aware of the high cost so he can be as sure as possible this is what he wants. Secondly, he also needs to consider what type of lawyer is he planning to be. Different fields make very different salaries, so if his area of focus is not a high-paying career – he needs to take that into consideration. It doesn't mean he shouldn't do it, but needs to be aware that it will take a lot longer to pay off the loans.
They should put together a budget so he doesn't get himself deeper into debt during law school. Once he graduates, they need to figure out a plan to help him reduce debt as quickly as possible. The simple truth is that if law school is what he wants then fantastic but he needs to prepare himself for some significant debt and be prepared to pay it down. Okay, I'm done lecturing! 😀
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Thank you for stopping by! Having a financial advisor such as yourself offer your opinion is very valuable in this situation.
My recent post How To Pay for Graduate School
I would recommend joining the military and having them pay for it. That's what I did.
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I agree with a few that say get some on the job training and see if the field is for you. There are so many law school grads that have not come close to getting a good job and now have a lot of student loans. I work with one and we work in ecommerce.
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Michelle (and all you other chimer-in- ers),
Thanks so much for all your thoughts. I really appreciate it. Consider me seriously b-slapped. Thank you for that. Your guys' generation is restoring my faith in that American spirit. When I was your age I struggled with the same things that you are currently struggling with – and now that I think about it – I was actually having fun in the process. Flat ass broke, but still finding joy and fun in the world. It is, quite frankly, harder to watch your kids do it then it is for you to do it yourself. But, you've given me some great insight and you're right. It's time I threw that kid out into the real world and let him fend for himself (ouch!)
You're welcome Frank! I hope no one was a debbie-downer. I know everyone is just trying to help. Yes, throw him out in the real world! 🙂
My recent post How To Pay for Graduate School
Michelle,
Apparently there are only so many words one can send in a comment and I exceeded them, so let me be more concise. Thank you, to you and all of your readers. Really, really appreciate it. You’ve helped us more than you know.
Sincerely,
Frank
Sorry, I'm not sure why it does that lately, I wish everyone could just leave super long comments 🙂
I'm glad we were able to help. You'll have to update us all one day if you have the chance.
My recent post How To Pay for Graduate School
I should be able to update you sometime this summer. Spouse is taking him out to "tour" his top 2 picks. I'm not going ''cause I apparently am not the hard ass (financially speaking), but spouse is and will be. He's going to be making some tough decisions and living with the consequences. We'll see how the "bidding war" goes. Thanks much, again, for everything. Much appreciated.
Sounds great. Please update us all! 🙂
Personally I would shop around for different schools. I don't agree with the "Go Big or Go Home" statement. I know a number of lawyers that are making very good money that went to instate or private schools and saved a significant amount of money bu doing so.
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Definitely, don't tap retirement funds. I plan on helping my kids with college but not grad school. I knew someone who went to law school in the evenings while maintaining a full time job. Not sure how many schools out there are like that, but it is a consideration and might allow for less debt getting through.
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I really hope this couple doesn't dip into their retirement! If this person is fully prepared for everything (financially and mentally) that goes into law school, then it's probably best that he take the loans out in his name. He has the rest of his life to pay the loans back while it's likely that his parents are getting closer to retirement. It's wonderful that they're willing to help, but it doesn't make sense to put their own futures in jeopardy.
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This is something I am struggling with myself right now. I desperately want to go back to school to get an MBA, but I can't afford it without student loans right now. I am making the tough choice to not attend grad school until I can pay my way through on my own.
I don't think you're making a bad choice at all!
Michelle, Guys/Gals, (have to consolidate this)
Thank you all, once again, for all of your input. We forwarded all of your comments on to our son. He listened and heard. T He started getting really serious about the amount of debt he was potentially about to take on, got off his ass and got very serious it. He has recently been offered a full ride scholarship to a good school. He still needs to figure out how to cover his day to day living expenses – applying for other scholarships. It's all going to work out fine for him – not without a lot of hard work and sacrifice, but fine nonetheless.
Nick – I'll just say this. I never in my wildest imagination thought that my kid would get a full ride scholarship to law school – but he did. It happened because I asked questions of complete strangers and they responded with compassionate intelligence. Put your story out there and see what wisdom comes back – then ACT on it. It'll pay off like you can't imagine. Of course, once it does (and it will) it'll be your turn to pay back. Best of luck.
And thank you to all of you who have contributed to our little situation.
That's awesome that he got a full scholarship! I'm glad everything will work out and thanks for updating us all 🙂
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