How Easy to Finance NYU?
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Date: December 24th, 2005 3:09 AM
Let's say I decide to go to NYU, and my parents can't pay for it...
How easy is it to get loans (federal or private or institutional) to pay for school + housing and stuff? I have no idea what my credit is, probably not bad but I wouldn't say excellent.
Date: December 24th, 2005 3:13 AM
Author: chancemeeting (ret. - except radiohead threads)
Incredibly easy to get loans. You automatically qualify for a certain amount of Federal money right off the bat (some subsidized, some not), and your university will often be the primary lender to cover the rest. (This is aside from any merit or need-based aid you may receive - that's free money.) For example, Chicago has the "Alternative Loan" and they're loaning me sickening amounts of money. The rates are decent too, though Federal loans are almost always going to be the best.
If you're ever going to have debt, you can't do much better than to have it be student loan debt. So long as you're not a derelict, a spendthrift, or a failure in school, it won't be particularly difficult to pay off your loans coming out of NYU in a matter of years if you're dead set on it. Honestly though, it's smarter to hold onto the debt and leverage it into profitable investment.
Date: January 2nd, 2006 4:44 PM
How does all of this borrowing work in terms of loan repayment programs? Say, for example, I'm attending NYU, and I am borrowing to cover all expenses. On top of the federal $18,500, say I borrow as much as $45,000 every year from a private loan company. Then, upon graduation, say I work for 10 years (or whatever the required period is) in the public interest. Will ALL of my loans be repayed? If so, what prevents me from borrowing a little extra, and, say, splurging on some jewelry, vacations, etc?
One answer, I suppose, is that many (if not most) people who anticipate being bailed out by loan repayment programs end up working in non-qualifying jobs, and so end up repaying their debt. (Oops!) But is this the only thing stopping someone from taking out unnecessarily large loans? Is there a limit?
Date: January 6th, 2006 12:40 AM
Welcome to the wonderful world of financial aid.
There's no way in hell you'll be able to get all of your loans repaid, simply by working in a public interest job, if you're borrowing that much. I don't know NYU's exact rates for the LRAP but there's no way they'll forgive $190,000+. Not gonna happen. Some federal jobs allow for loan forgiveness but the amount is paltry -- like a max of $6k-$8k per year. Please!
Only the very top schools have loan repayment assistance programs anyway....and even those do not forgive your entire loans. Some lesser schools have such programs but its pitiful what their budget is -- I know a top 20 school that has a program with a TOTAL BUDGET of $15,000. TOTAL. For ALL alumni who are working in public interest and need loan forgiveness.
For federal loans, I think the standard repayment term is 10 years, but you can change to longer if you wish, making your repayment per month smaller, but you pay more back overall in the end. For private loans it depends on the company. Most are in the 15-20 year max for pay off, but I think there are a couple that are 10 and maybe 1 or 2 that are 25 years.
You can borrow money and spend it on frivilous stuff, no one cares where you spend the money that's leftover for living expenses. But every law school (and college, university etc). has a set maximum student budget. You're allowed to borrow up to that amount, and no more. It accounts for tuition, books, health insurance, housing, money for living (including food, personal expenses, etc). But it's not a ton of money. And if you go to law school in a major city, you'll be living on a tight budget even if you borrow the max. Things just cost that much here in New York.
Your student budget can be increased at the discretion of the law school financial aid office -- but only for allowable expenses related to your education. I've been through this process and its tough. You cannot include things like consumer debt (credit card debt you're coming into law school with, car loans, etc), can't include expenses for car payments or car insurance, etc.
You also have to submit documentation to get your budget increased -- detailed receipts showing that you actually have incurred extra expenses than the ordinary law student. In my experience, I was only able to include medical expenses that were not covered by insurance and an increase to meet what my actual rent was -- because the school's budget was way below what I actually paid -- and I live in on campus housing.
Anyway, here's how it works. You sign up for loans for law school. You can borrow only up to the maximum student budget set by your law school. Then the loans are given to your law school FIRST. They take out tution and any other costs they are owed (like health insurance, misc. fees, etc). Also housing if you're living on campus.
Then you get a check for whatever is left (which isn't much). That's what you have to live on for the semester. You've got to buy books with that, food, utilities, clothes, whatever. You don't get any more of your loan money until spring semester (the loans are dispersed in 2 allotments, 1 for each semester). So if you spend it too quickly and are broke, you better have nice parents or rob a bank or have credit cards to get you by until next semester.
So there's not much wiggle room to use your living expenses money on a tropical vacation or designer watch. I knew a girl who lived at home during 1L and she borrowed the maximum amount of loans. So she had a surplus of money that she borrowed that would have gone towards rent, but her parents didn't charge her rent obviously. She went and bought a couple Louis Vuitton bags and some other junk she couldn't afford. I think she's a total idiot because she's going to be making loan payments for 20 years on her stupid purse and end up paying twice or three times what she bought it for. You could do the same and go on vacation or whatever but you still have the pay the money back and your $2,000 trip to Hawaii this year is going to actually cost you $10,000 when you're done paying it off in 10 years. See what I mean?
Anyway, if you go to a top 10 law school you most likely will not have a problem paying back your loans. Don't kid yourself, no one goes into public interest after they realize 2L year how much you can make at a big firm. So rack up the debt, then go to a big firm and work your butt of for a couple of years and you'll pay off your loans and have some fancy toys along with it.
Date: January 6th, 2006 10:26 AM
Thanks so much. This is all really helpful. But one question. You make it seem as though it is impossible, and not just highly unlikely, that a top 10 school would repay all, or at least a HUGE percentage of, your loans. On the NYU plan, for example, if you make in the low 40's, NYU pays everything. And, as I'm sure you know, as you make more (but still less than 60ish), you start paying a larger percentage from your earnings over the ceiling (like 40 something), but nonetheless NYU still picks up a large part of the tab. In other words, if someone were to work for 10 years after graduation in public interest, starting at around, say, 40k, and eventually getting to, say, 60k, will not a HUGE percentage of his debt be repayed by NYU (or, I guess, a school with a comparable LRAP)?
Date: January 8th, 2006 8:01 PM
Hey I'm not here to argue, I'm just here to give my thoughts based on my experiences.
A couple things. I went to a top 15 law school. Not NYU. I'm at NYU getting my LLM now. Not in public interest. Have no interest whatsoever in public interest. Not even to get some loan forgiveness. Also, my law school doesn't have such a large loan forgiveness program for alums so it isn't a realistic option.
I borrowed approx. $165,000 to pay for 3 years of law school. I had undergrad loans of about $30,000. When I started at NYU this fall, that total student loan debt amounted to about $237,000. Yes its crazy. But that's what it is with the different interests added, etc. And now this year I borrowed $60,000+.
If you really are planning on doing public interest, I would strongly advise you to do your best to apply for scholarships via all the law schools you apply to -- specifically the public interest ones. It is MUCH better to get a full ride for law school, or free tution or whatever, and then be able to do public interest after law school without worrying about paying back huge loans. I think its a better strategy to go to the school that will give you a full ride, or close to one, instead of going to a better school that doesn't give you any free financial aid. Now I'm saying this if you're 150% sure you want to do public interest only. Otherwise, if you're even a little unsure, you should go to the best law school you can to ensure the best employment opportunities after graduation.
I still think it is highly unlikely, if not impossible, that a law school is going to repay ALL of your loans. Maybe they'll pay a good percentage, I don't know, it really depends on the specfics of your situation.
But I DO know that it is highly unlikely that after graduation you will WANT to STAY in public interest for long enough to qualify for that much of loan forgiveness. Earning $40,000 or less for 10 years after law school graduation....unless you've got a spouse with a good paying job, or a wealthy family to fall back on, I just don't think its realistic that you're going to put up with earning that little for 8, 10+ years. I've had friends in law school who were 200% committed to public interest, only to sell their souls like everyone else 2L year when they got the juicy firm offers.
Date: January 8th, 2006 8:34 PM
It doesn't matter what tier law school you go to in terms of being eligible to borrow private loans. Private loan companies are more than happy to loan you hundreds of thousands of dollars for law school no matter if its for Harvard or some 3rd tier.
What does matter very much is your credit score. I don't know the exact range of what you need, but you can't have a terrible credit history. If your credit background is a bit blemished, some private loan companies will loan you money but ONLY IF you have a co-signer.
But if you're just outta college and have no credit history (which means no BAD credit history) they'll let you borrow the max of what your school allows no problem.
Date: January 7th, 2006 4:41 AM
first of all, this is a great thread. lots of helpful posts. let's keep it alive.
sounds like lots of pre-law posters here are concerned about not being able to lead a decent quality of life (i.e. do fun stuff) while living on the school's estimated budget. sounds also like it's quite difficult to borrow more than this amount without documentation for stuff like medical expenses/high rent (sounds strange that you can't even do this through private lenders when you've got a good credit score and go to a top school - do i have that right? why would the school want to stop you from borrowing that money from private lenders?).
what i am wondering is what impact working during the school has on your estimated budget. in my case i am already teaching lsat now and can make some decent money at it. i would prefer not to do it in law school because i'd like to spend my time studying/having fun, but if the estimated budget is so low, maybe i will do it so that i have some money to spend on fun. but my concern is that working during the school year will lower the amount of money that i will be permitted to borrow. will that happen? or will they let me keep my earnings to spend as i please? i'm not looking to have the school pay my debt via loan repayment, i'm willing to repay it myself via firm earnings.
also, what impact does summer employment have on the estimated budget? i've been accepted to a top 5 and i'd like to get a law firm job over 1L and 2L summers to make money. i'm not concerned so much about the impact on grants, as i don't think they'll grant me too much money regardless of my earnings, due to parental assets. i'd just like my combination of loans and earnings during law school to add up to an amount that will allow me to lead a decent standard of living.
lastly, i've saved up a decent amount of money (about 20k). will this affect the amount of money i'm allowed to borrow? i'd imagine they'll expect me to contribute this money when calculating grants, but i would hope they wouldn't use it to stop me from borrowing the full estimated budget.
thanks again for a great thread everyone!
Date: January 7th, 2006 6:07 AM
Author: marisa tomei
OK, I just skimmed the threat but it has NOT been my experience that it's hard to borrow more without justifying it. After a school assesses what you can pay and what your parents or spouse can (supposedly) pay, they might adjust a grant or give you no grant, but you can always assume that you or they can't actually pay that EFC and take it all, plus more, in private loans.
In grad school I went to ask for more money and they said "Sure. How much? OK, sign here."
As for loan repayment, YLS' at least is phenomenally generous and I think they do end up covering everything when you stay below a certain income level, whether you're doing public interest or something that isn't even a law job. I don't know much about NYU's, though.
Date: January 8th, 2006 8:14 PM
Here's how it works. You file the financial aid application and apply for admission. If you get accepted, then the school returns a "financial aid award" letter to you. It can include scholarships and grants from the school, federal loans (those are the first you'll get if you need to borrow money), and then any amount that isn't covered you can borrow from a private loan company.
You DO have to submit your financial info, your spouse's financial info (if you're married) as well as your parental info in most cases. The school tells you what your "estimated family contribution" is towards your school expenses. They can see that you earned $50,000 in the last year, for example, and say that your EFT is "$12,000" I don't know how they come up with that number but there it is.
That doesn't mean you actually HAVE to contribute that much towards school in the form of cash. It just means that the school thinks you SHOULD be able to contribute that much. And so they make your financial aid package less in relation to what your EFT is.
So they might say your EFT is $12,000, and your financial aid package will say you can borrow X amount from federal loans (taking into account you're going to contribute $12,000 of your own funds). If you can't do this, all you have to do is ask to borrow more.
It's not impossible to get a budget increase. But you can't just say "hey law financial aid office, I need more money. I want to borrow $10,000 more." They make you submit detailed documentation about what the additional money is for. This is if you have ALREADY borrowed the max student budget.
If you haven't already borrowed the max student budget, it's easy to borrow up to the max student budget, you don't have to submit any documentation at all. But you defnitely DO if you've already borrowed the max.
I had to increase my student budget in law school and also now for my LLM, so I'm intensely familiar with this sad process. At my law school, I had already borrowed the max student budget amount. I requested to borrow more money because my housing cost a lot more than the financial aid office estimated in the student budget. All I had to do what submit a copy of my lease, to show how much rent I was actually paying for.
At NYU for my LLM studies, I borrowed the max student budget. I asked to borrow more because my rent was more than the budget allowed for (again! Financial aid offices usually estimate a ridiculously low rent amount for what is reality in your location), and also for some medical expenses not covered by insurance. I again had to submit my housing papers, as well as all receipts to demonstrate the medical costs. It took over a month for them to process and approve, and in that time they initially rejected some of my requests and made me submit more detailed documentation.
So it's not impossible to do but your financial aid office can't just say "sure you can borrow $10,000 more, sign here" if you have ALREADY borrowed the max.
I bet the poster above who said he had no trouble borrowing more in law school HADN'T borrowed the max student budget when he asked to borrow more. In that case, the school will let you borrow more, no questions asked, UP TO the max student budget. After you're borrowed the max, then the process is much stricter.
The frustrating part of asking to borrow above the max budget is that it's not like they're giving me more money in the form of a grant or scholarship. I have none of those. It's all student loans that I have to repay -- no skin off their back at all. It's not like they're being generous or doing me a favor.
Date: January 8th, 2006 8:31 PM
Great questions, I'll answer what I can.
The schools aren't being jerks by limiting the amount we can borrow each year. I believe this whole process is set by the federal government, so that students don't borrow an obscene amount of money for things that aren't truly school related (or living related during school)...and then end up defaulting on their loans later on and not being able to pay them back. Each law school, med school, university, etc. has to set a max student budget. It's different for each school depending on the cost of living in that area, tution, fees for the specific program, etc.
And yes, students worry about not being able to have a great quality of life in law school, and they should realize they can't live like a young professional (unless they have family money or a spouse supporting them or a lot of savings). Student budgets do NOT allow for anything other than basic living expenses and school fees like tution. They tell you specifically to work on getting any credit card debt or other consumer debt down or eliminated before you start law school, because they WON'T increase the student budget for you so that you can afford to pay your credit cards while in school (and presumably not working). I know about this issue quite intimately, as I went into law school with about $10,000 credit card debt and had to cut back even more on living expenses to spend some of that money on my monthly credit card payments.
As far as working....I would definitely say DON'T work your first year. I didn't work my first semester but I did second semester of my 1L year, as well as 2L and 3L years. I worked a lot....like I mentioned, I had credit card payments and other expenses that necessitated me working. And my grades suffered 1L for sure for it. Your grades first year are SOOOO important, they really can determine whether you get a big firm job or not. You need to do the best you can 1L year so that you get a good summer job 2L year. So do whatever you can -- live in ramen noodles, borrow money from family if you can, use credit cards if you absolutely have to -- but most of all, buckle down and prepare to live pretty simply so that you can afford NOT to work 1L year. I can't emphasize this enough.
Looking back, I wish I hadn't worked during law school at all but I didn't have much of a choice. The only thing worth doing in law school like working is doing a great internship for free (or paid if you can get one) with a federal agency, or doing a part-time law clerk job/internship with a law firm to get real legal experience. Continuing to teach LSAT classes sounds like it may work -- if it doesn't take tons of time away from your studies and it pays pretty good, I don't think its a bad idea to continue. That's if you're working 5 or 10 hours a week.
But I would say definitely don't take a waitress/waiter job, bartending job, office job, etc. that requires you to really work a lot and detracts from your studies. I worked 20-40 hours a week at times during law school and it really took away from my studies and my focus on learning the law.
As far as how your earnings impacts your financial aid award.....
You said you've saved up a good amount of money. You'll have to report that on your financial aid application (don't even think about lying) and that will definitely decrease the amount of need-based aid you qualify for. That won't preclude you from getting merit based scholarships or grants though, if you qualify for those. It also won't effect the amount you can ultimately borrow.
As far as summer earnings at a firm. You will have to report those too, and your financial aid can definitely be decreased in light of that. But again, that's really just for need-based aid (i.e. you're poor so they're going to help you out)....and it shouldn't effect any merit-based scholarships or grants you've been given (i.e. for being the genuis you are and having a stellar LAST or being from a particular background or origin).
I think from the facts you've told me, you are a smart guy/girl who has good grades and a good/great LSAT score, so you'll probably get some merit-based scholarships or grants. And the rest you'll borrow from the federal loans first (best interest rates) and then if you need any more, you'll borrow a little private loans. You should definitely be able to have a decent standard of living with a combo like that.
I'm not saying that most law students eat ramen noodles and sit at home staring out their windows every night because they can't afford any better food or any entertainment. But unless you have family money or a spouse supporting you, etc., you won't be hitting the fancy restaurants and bars ever night spending $100+ on dinner and drinks. You'll find bars with good happy hours, take advantage of student discounts for gym memberships or plays/shows, etc. For law school and my LLM I lived in 2 of the most expensive cities in the US, so I just happen to know the realities of law student living in expensive locals very well. :)
Date: January 8th, 2006 9:01 PM
Just a couples of tips, and this applies to Fed aid only, not private.
1. You can borrow 18,500 no matter what, the FAFSA only determines if any of that will be subsidized. You can be a millionaire and still borrow 18,500 unsubsidized.
2. The FAFSA counts your wages but does not count assests if you can file a 1040EZ or 1040A for your taxes. All law students are considered independant. See simplified worksheet B http://www.fafsa.com/downloads/EFC/2004-05_final_FM_tables.pdf
3. Note, your assests will work against you for any need based grants from the school and they'll likely look at parental assests too.
4. You may be able to get a small Perkins loan in addition to Stafford if your FAFSA makes you look particularly poor (remember, they don't count assests for most students), but exactly how much is available depends on your school.