The Next Bubble: Law School Tuition
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Elie Mystal wrote an interesting article about the similarities between the housing market bubble and the law school tuition bubble. Consumers, desperate to pursue the American Dream of home ownership at any cost, took out sub-prime mortgage debt that infinitely outweighed the values of the homes themselves.
Similarly, a law student will take on a six-figure debt in order to pay for a degree that holds questionable value in today's job market. Like American consumers who have been inundated with the message that home ownership is the ticket to financial prosperity, law students have grown to believe that a law degree is worth more than it is. And those of us who now recognize the emperor is not wearing any clothes are swimming in law school debt that will likely not be paid off in our lifetimes.
I am on the 30-year plan with my law school debt. I pay a little over $600 per month with private and government loans combined. My private loans will probably be paid off in about 20 years, but as for the bulk of the debt, my husband and I will have paid off our mortgage well before those loans are ever wiped clean.
The fact that my husband and I are purchasing a home would probably lead many to believe that we are financially secure. Sure, we pay our mortgage and other bills on time every month. But will we ever be able to afford children? Probably not. Vacations? No. Most likely, we will both need to work in order to keep up with our debt for the next 20+ years. It makes me sad. It makes me want to use the $392 that will be deposited into my checking account on Friday to buy a whole mess of lottery tickets...
Your pretty lucky in that you have support(husband), and you can afford $600 a month. Most of us have to go the IBR route.
ReplyDeleteUnder IBR(Income Based Repayment), the debtor pays 15% on the income, after taxes, for 25 years. At the end of 25, the debt will be forgiven. This forgiven debt will be a bubble for the debtor in that the forgiven amount will be taxable income. There still is 5 ways to discharge student loan debt in bankruptcy. Unfortunately, these requirements are severe and narrow.