<p>It’s rather doubtful then they would garnish only $2k a year: probably far more than that. Moreover, they would surely take most (perhaps all) of your assets. </p>
<p>Furthermore, as I said before, I don’t envision that the economy would remain so dismal as to require that a YLS grad would be working at Starbucks forever. Presumably, one day you will return to a lucrative law job at which point whatever they do garnish would be a significant burden. </p>
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<p>See above. I envision the LRAP as a stopgap to tide you over in a particularly bad year (like now). When the economy recovers, presumably you would want to buy a house, a car, and stop crashing on a couch. Presumably one would need a strong credit rating to do that. </p>
<p>I also envision the LRAP as a means to start your own small business, whether that be a law firm, an admissions consultancy, or something entirely different (i.e. if you learn some IT skills, earn the appropriate certifications, and then start your own IT contracting proprietorship). You would find a strong credit rating most helpful for those endeavors. </p>
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<p>Yet again, this is not a problem specific to lawyers, and certainly not to YLS/HLS graduates, but one that everybody must confront. Under practically any reasonable scenario, the YLS/HLS grad is better off than the average American in that regard, for even in the worst case scenario, he just earns the pay of an average American ($40-60k) while the LRAP umbrella shields him from debt payments, but in a strong economy, he can earn the pay of a high-flying lawyer (even if he has to consign a fraction of that pay to debt payback). In other words: heads, I win big, tails, I just live the lifestyle of a regular American. That’s a no-lose proposition. </p>
<p>Granted, the proposition can be modified to be a losing one if a high-paying job is available to somebody right out of undergrad, i.e. a position in investment banking, private equity, hedge funds, etc. I can perhaps agree that those offers may be better than enrolling in HLS/YLS. But let’s face it. Many college graduates, even those admitted to HLS/YLS, did not receive those types of job offers. For them, the choice on the table truly was to either matriculate at HLS/YLS or take a regular job. Let’s face it: most regular jobs aren’t that great. They don’t pay particularly well, they don’t really offer many opportunities for advancement, and they don’t really provide the financial security necessary to comfortably afford that 3-bedroom house in the suburbs while raising kids while still having all your hair. The choice between taking a regular job or attending HLS/YLS seems to be a no-brainer. Like I said, even in the worst case scenario, you merely end up making the same regular pay that you probably would have been making had you taken the regular job. </p>
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<p>And those other law schools are clearly far more overpriced, relatively speaking, than HLS/YLS, from a cost/benefit standpoint. </p>
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<p>I would submit that that’s because none of you actually graduated from a top law school (or, if you did, then, not to be blunt, but you’re not marketing yourself properly). If I was a YLS/HLS grad with a solo practice, I would be milking that brand name, just as the following attorneys do:</p>
<p>Don’t YOU deserve a Harvard Lawyer, asks Barry Oliver Chase</p>
<p>So string together several of them. Or combine it with some other part-time work. The point is not to be paid well - if you wanted that, you would have simply stayed in biglaw - but simply to have a law-related job to be LRAP eligible while still providing you with extensive free time. Keep in mind that you’re not trying to be promoted to tenure, so you don’t really need to invest much commitment in the process.</p>
<p>From what I understand, they are limited to 15% of your after-tax income. </p>
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<p>That might not be so easy if you have a year of Dunkin Donuts on your resume. Besides, my concern is not so much about temporary layoffs or respites from lucrative law jobs.</p>
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<p>Well that doesn’t really address my concerns. What if you decide you hate practicing law and decide you want to be a medical equipment salesman and marry your girlfriend who is a nurse? </p>
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<p>If I were starting my own firm and had a choice between (1) 200k debt and a Yale degree or (2) 0 debt and a TTT degree, I would definitely take number 2.</p>
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<p>It’s inaccurate to compare the YLS/HLS grad with the average American. You need to compare the YLS/HLS grad with the same person except that he or she did not go to law school. Or went to a lower ranked law school on a full scholarship.</p>
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<p>There are plenty of folks, not working in finance, making excellent money. I regularly meet salespeople and administrators who make well into 6 figures. Plumbers and electricians who make $40+ per hour plus overtime. The guy who runs the local sandwich shop is paying full tuition for his sons’ college right out of his pocket. </p>
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<p>That’s definitely true. But so what? </p>
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<p>FWIW I went to a top law school. Anyway, the fact that some attorneys market themselves in this way doesn’t mean that their brand name law school is having a big impact.</p>
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<p>And my point is that some folks need to be paid (reasonably) well.</p>
<p>That’s why you don’t put it on your resume. Nobody needs to know. </p>
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<p>YLS allows you to do just that while invoking the LRAP. HLS does not, but see below. </p>
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<p>And by that same notion, there are plenty of Americans who are mired in poverty - college graduates included. </p>
<p>Again, keep in mind that the average American doesn’t make that much money. The average American full-time annual pay is only around $35k a year, and many Americans don’t even work full-time. Furthermore, as I said, many jobs don’t really offer opportunities for advancement. You will never earn 6 figures at many such jobs, as promotions and pay are not really based on merit. Sad but true.</p>
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<p>I don’t know what sort of undergrad school you came from, but of all of the people I know, the number who were qualified to work as plumbers or electricians, or to run a sandwich shop, immediately after graduating from college, is probably zero. Let’s face it. You don’t learn those skills in college. </p>
<p>Now, to be fair, obviously a college graduate could learn those skills. Yet, frankly, you don’t need a college degree at all to work at those professions - so if that’s what you want to do, why even go to college? Heck, why even bother graduating from high school? If you want to open your own sandwich shop, why not just drop out of high school as soon as you are legally able? </p>
<p>Let’s face it: most college graduates actually want to pursue careers for which a degree is actually useful. Maybe working in Starbucks for a year during an economic recession is fine, but they’re not going to be satisfied with a long-term career for which they never really needed to go to college. {We can argue about whether that should be the appropriate psychological response, but I think there is little dispute that that is indeed the response that would be elicited - as anybody who graduates from college and then becomes a plumber will eventually begin to torment himself regarding why he ever went to college at all.}</p>
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<p>And that’s where we greatly differ, for I would not. Again, keep in mind that option (1) is not just $200k of debt, but rather $200k of debt with a key safety valve - that being the LRAP. As long as you’re making less than $60k, it is as if you’re not carrying any debt at all for you can simply shelter under the LRAP umbrella. </p>
<p>Moreover, let’s say that you truly do hate the law. You can indeed leverage a YLS or HLS degree to a very high-paying job in investment banking, private equity, hedge funds, or strategy consulting far more readily than can somebody with a low-tier law degree. For example, for many years (including possibly this year), the #1 single most prolific hirer out of HLS was not a law firm or a government agency, but was McKinsey, the world’s premier strategy consulting firm. </p>
<p>In fact, I strongly suspect that in a non-recessionary economy, practically any HLS or YLS graduate who wants an associate-level finance or consulting position can find one. Granted, it may not be at a top firm - in fact, it may be at a mediocre boutique. But that’s still probably going to pay you better than the job you would probably obtain coming from a mediocre law school, even after subtracting law debt payouts. Let’s face it: the average salaries for graduates from mediocre law schools ain’t that great. </p>
<p>But in any case, as long as you make less than $60k, the financial outcome from graduating from YLS or an average law school is exactly the same. YLS also obviously has a far larger upside, in that a YLS grad is far more likely to garner a biglaw position, which would clearly place you in a superior financial position even factoring in the debt payouts. The only region where the mediocre law school would win is a ‘middle ground’, say, if a Yale Law grad were to work at the same average law firm that the average law school grad worked at, and making the same average pay. Yet I believe the chances of that are slim and are clearly outweighed by the potential upside.</p>
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<p>The ‘so what’ is that you’re picking on HLS/YLS, when, if anything, you should be picking on those other schools.</p>
<p>What does it matter if you living the backpacker lifestyle?</p>
<p>Anyway, do you now concede that you were wrong about the amount you would be garnished?</p>
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<p>Except that you will be paying a hefty “tax” on all earnings above $60,000. So that if you make $90,000 a year as a medical equipment salesman and your wife earns $65,000 per year as a nurse, you will be taking a big hit in terms of loan payments.</p>
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<p>Irrelevant. As noted above, that’s simply not the proper comparison.</p>
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<p>I agree. I would caution youngsters today against taking out serious debt to go to college.</p>
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<p>Well what if your earnings are higher? Let’s take the case of a hypothetical solo practitioner who clears about $100k a year after expenses but before taxes. His wife has a government job which pays about $60k a year. In that case, the Yale program doesn’t help much, does it?</p>
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<p>It’s not a question of picking on anyone, it’s simply a question of responding to peoples’ arguments. You seem to be saying that Harvard and Yale are good deals for $250k because of their loan repayment programs. I’m skeptical of this.</p>
<p>Because you probably would like to keep the assets that you accumulated before. </p>
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<p>Actually, you were the one who was wrong. Even assuming that somebody was making $20k at Starbucks, the 15% garnishment would be $3k a year, not the $2k that you claimed previously. Do you concede that you were wrong? </p>
<p>But, like I said, that’s irrelevant. What is more relevant is that your bankruptcy which would need to be declared will damage your chances of launching your own law firm or the lifestyle you would enjoy if you were to ever return to higher-paid law work. 15% of $20k isn’t much, but 15% of, say, $100k a year becomes serious money. </p>
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<p>So don’t make more than $60k a year. Instead, take that ‘pay’ in the form of greater leisure time. I can think of many people who would happily trade lower pay in return for more time off and less stress. </p>
<p>Or, like I said, when the economy recovers, leverage that YLS degree to obtain a high-paying position in investment banking, management consulting, or private equity - a position clearly unavailable if you went to a lower-tier law school and that pays so well that your loan paybacks would hardly constitute a serious burden. As I said before, in any non-recessionary year, any YLS or HLS grad should be able to obtain a position in finance or consulting. Even during a recessionary year, as I said, you can simply invoke the LRAP for that year and then find a finance or consulting position when the economy recovers.</p>
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<p>I’m afraid I must disagree - it is entirely relevant, for the comparison is apt. Keep in mind that the average American doesn’t make much money, and has to work fairly hard to do it. You could make that some (low) amount of money but have far more leisure time on your hands, hence enjoying a heightened quality of life relative to the average American. </p>
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<p>And, like I said, don’t choose to make that type of money - at least, not until the LRAP has retired all of your debt.</p>
<p>Profit is particularly controllable if you run your own firm. As a small business owner, you can always choose to increase your expenses, i.e. spending more on advertising, renting a nicer office, purchasing more and better office equipment, and so forth. Or, even simpler, you can simply choose to take fewer clients or work fewer billable hours (again, in return for more leisure time). </p>
<p>As a case in point, I know an IT contractor who runs his own small business who, during a period of bumper revenue, bought a decked-out GMC Yukon as a perfectly legitimate ‘business expense’ (as he does often times have to haul servers and cabling around town). Strictly speaking, he didn’t really “need” it, as his old SUV was working just fine. But his business was expanding, and so he could afford to invest more into his ‘business’. But as a businessman, you have great power to manage your revenues and expenses to report the desired ‘profit’ level. For the same reason, large companies hire entire armies of accountants and tax attorneys in order to manage their profits (and taxes) in an entirely legal manner. </p>
<p>Also, keep in mind that the loan payback period is only 10-15 years long. A savvy businessman can effectively ‘defer’ revenue until after that time frame. For example, you could simply frontload most or all of your startup expenses to earlier years and similarly delay the realization of profit until later years. Hence, you could simply “report” earning only $60k of profit in every year until all of your loans have been retired, and then that very next year, report a blowout year in profit. </p>
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<p>While I don’t disagree that risks exist, I would argue that the risks are quite manageable. Under normal economic circumstances, a YLS/HLS grad would be able to obtain a job in biglaw, or (if he hates the law) something in Ibanking or consulting. Like I said before, the top employer at HLS for many years (and perhaps even in this year) has not been a law firm, but rather has been McKinsey. Even in the worst case scenario, the person can simply invoke the LRAP by taking a $40k laid-back law position, which you yourself agreed was not that hard to do.</p>
<p>Of course, but the 15% is done after taxes so it’s not necessarily 3k. I should have said “approximately 2k.” Nice nit-pick though.</p>
<p>Now please answer my question:</p>
<p>Do you admit you were wrong when you said the garnishment would be far more than 2k?</p>
<p>Simple yes or no question. </p>
<p>Or are you going to claim that when you said “far more than $2000” that included $3000? Because it’s impossible to live a starving student lifestyle on $17k but perfectly possible on $18k. Is that your position?</p>
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<p>And I would probably like to be the Sultain of Brunei. So what?</p>
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<p>If you and your wife voluntarily underemploy yourselves like that, you won’t be able to make your mortgage payments; pay for your childrens’ activities; and so on. Oh, but that’s right . . . you and your wife and children can live the lives of starving students and be perfectly happy. As long as you make at least 18k a year. Because you will be perfectly fine on 18k a year. But if you make 17k a year, forget about it. Or something like that.</p>
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<p>So let’s see if I understand your argument: It doesn’t matter if you personally would have been better off not attending Yale Law School. As long as the choice makes you better off than the “average american,” it’s the better choice. Is that your position?</p>
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<p>If a solo practitioner settles cases in Year 3 which settlements produce $150,000 in legal fees, please explain how that $150,000 in revenue can be deferred to Year 12.</p>
<p>No, your entire premise is wrong. My position is that a HLS or YLS grad would easily be able to earn $40k a year - a position that you yourself agreed to - in which case a 15% garnishment would be indeed significantly more than $2k a year. Hence, my answer is no because your questioning is flawed. </p>
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<p>The ‘so what’ is that you would lose (many) such assets if you were to declare bankruptcy. The LRAP, on the other hand, does not require you to forfeit any assets.</p>
<p>Consider the following time sequence. You graduate from HLS and take a job in biglaw for a few years, as the subject of the OP’s link did. Those few years clearly would have provided you with enough money to buy a nice car and an excellent wardrobe of fashionable suits. Then you either lose your job because of the recession, or you quit because the hours are too stressful. No problem - as we agreed before, you could easily find a laid-back $40k position: and you keep everything that you had previously purchased. You’re still driving that nice car. You still keep your wardrobe of fashionable suits. If you had purchased real estate on a mortgage, while you might have to sell it because you can’t maintain the payments, you still retain the equity. Everything you had before, you keep. </p>
<p>Now, true, you can’t buy more items. But you still retain everything that you had. It’s a far better lifestyle than you would have enjoyed under bankruptcy. Most durable goods last more than a few years. I can think of plenty of people who drive luxury cars built in the 90’s, and they all still run well with proper maintenance. </p>
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<p>Nothing like that at all. I think you can survive quite well on $60k a year. How many Americans make far less than that, yet still do just fine? Let’s face it: $60k a year is a lot of money for many Americans. Even $40k is pretty good. </p>
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<p>What I’m saying is that making $40-60k a year is really not that bad, if you have a job that requires relatively little work and stress. There is no need to feel depressed if that is indeed your fate. Most Americans would still love to trade places with you. </p>
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<p>Oh come on. You say that you’ve run your own law firm, so surely you could engage in a bit of entrepreurial creativity, can’t you? These are basic ideas that any reasonably savvy small businessman would know.</p>
<p>First of all, in your scenario, I assume that those fees collected in year 3 were for work you had performed for the preceding 3 years. Hence, one way to account for the $150k in revenue is to allocate them across all 3 years as accrued revenue (assuming that the payment was not ‘risky’ in the sense that there was a high probability that you would not be paid at all - where the definition of ‘risky’ is best handled by an accountant). Why not - after all, you were working for those fees during the previous 3 years, so it is entirely appropriate, under accrual accounting purposes, to allocate the revenue across the entire three year period. The fact that you were actually paid in year 3 is irrelevant, what is relevant for accounting purposes is when the actual work was performed and hence when the revenue was recognized. I don’t claim to be an accountant, but what I can tell you is that there is an entire discipline associated with multi-year revenue allocation. </p>
<p>Now, to your more interesting point that perhaps the $150k payment in year 3 truly is a windfall payment above and beyond whatever you had been billing in year 3, or, if that $150k payout had indeed been ‘risky’. I then have 2 responses: </p>
<p>A)That’s the year that you - or more specifically, ‘your company’ - goes shopping. For example, the year 3 blowout is also precisely the year that you decide to renovate your office, or even purchase your own office with cash (or a relatively small commercial real-estate mortgage). That’s the year that you decide to buy an office computer on steroids. That’s the year that you purchase an HDTV for your office (so that you can watch ‘training videos’). That’s the year that you buy a new car for your business. As I mentioned before, it was precisely during his blowout year that the IT business owner that I know decided to purchase a pimped-out SUV as a business expense.</p>
<p>Now, to be fair, you wouldn’t be able to deduct all of these expenses in the first year, as you would be restricted by depreciation guidelines. But you would be able to deduct quite a bit. Tax code changes under the Obama stimulus plan allowed all small businesses to deduct 50% of the cost to purchase new business equipment in 2009 as ‘bonus depreciation’, and I expect a similar - and possibly even more generous - deduction to be available in 2010 and every other year as long as the economy is weak, and indeed, some economists have floated the notion of providing 100% bonus depreciation for small businesses until the economy recovers. {And once the economy recovers, then you as a HLS or YLS should be able to find a high-paying job in consulting or investment banking anyway, rendering this entire discussion moot.} </p>
<p>That may also be the year that you invest heavily in intangible services to improve your business: most notably, as a law firm, in marketing. {The year that your law firm bills $120k is also the same year that your law firm engages in an advertising blitz, the benefits of which will (hopefully) accrue in terms of greater revenue in following years. We assume that advertising is actually effective in the sense that advertising does indeed generate future business, and hopefully by enough to cover the costs of the advertising, which should be a safe assumption for if that was not true, why would anybody ever advertise?} This is a direct method of ‘deferring’ revenue from one year to another. In the following years, when you don’t enjoy blowout revenue years, you simply reduce your advertising budget. </p>
<p>The point is, as a business proprietor, you have tremendous control over what your expenses are, and by extension, what profit you choose to profit, as nobody really knows what ‘proper’ expenses are. Nobody really knows how much you should spend on marketing, how much business equipment you should purchase, or what sort of office space you should obtain You have tremendous freedom to shift expenses forward and backward in time by investing or divesting as necessary in order to manage your books, all of which is perfectly legal. Companies engage in earnings management as a matter of course. </p>
<p>B) $150k of profit, above and beyond your expenses, means that you enjoyed a pretty decent year for a single-man law firm. I therefore would argue that it wouldn’t be such a terrible thing to have to pay your law school debt expenses for that year. In the following year, if your revenue drops under the LRAP bracket, you can once again invoke the LRAP umbrella. Heck, even after deducting the debt paybacks, you’re probably still making more than somebody who graduated from a 3rd tier law school with a full ride. </p>
<p>Let’s run some numbers. Take somebody running his own law firm that made $150k in profit, and to eliminate any tax shelter complexities, let’s assume this was done through either a sole proprietorship or a pass-through corporate structure such as an S-corp or LLC. Let’s assume a 40% combined Fed + state individual tax bracket. Let’s also assume that full yearly debt service payments to attend Harvard Law would total $25k a year (or over $2k a month) - which I think is too high,but let’s use it as a conservative estimate. Your takehome pay, after taxes and debt service, would be about $65k a year.</p>
<p>Contrast that with, say, the average graduate of Southwestern University Law School (a tier-3 law school) who, after 3 years of experience, might be making $100k if he chose a private sector position. Assuming that he had a full ride and therefore has no debt to service, then, with the same tax bracket, he would be making $60k in after-tax income.</p>
<p>Now, granted, you can play with the assumptions by modifying the tax brackets, the amount of yearly debt service, and every other number of that calculation. But at the end of the day, it is not clearcut that the Southwestern full-ride graduate would be clearly financially better off than the HLS grad who started his own law firm that made $150k of profit. </p>
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<p>But in any case, the bottom line is that while I don’t dispute that carrying $200k+ of debt is indeed a burden, the fact that you can leverage a HLS or YLS degree to either a biglaw job or, in under normal economic circumstances, a lucrative position in consulting or banking means that the risks, while still extant, are quite circumscribed and manageable. As I have stated, even in the absolute worst case scenario, you could simply shelter for the next 10-15 years under the LRAP umbrella, and while I’m not claiming that that’s an optimal strategy, you would still be living a far better lifestyle than most Americans, making a livable salary without having to work particularly hard. {As I said before, I suspect that plenty of low-level law firms wouldn’t mind hiring a HLS or YLS grad, even if he demands large blocs of time off, if he’s only being paid $40-60k a year). More realistic would be the scenario where you would invoke the LRAP only as necessary, for example, only when the economy sours and you can’t find a high-paying biglaw, consulting, or banking position. </p>
<p>Let’s compare that to the proposed alternative: to attend a low-tier law school on a full ride. Having less debt is clearly an advantage, but at the cost of a dramatically reduced upside, particularly as one would practically never be able to obtain a lucrative position in consulting, banking, and (probably) biglaw. I view that as the more serious problem, for there is such a thing as being too risk-averse. Let’s be perfectly honest - you can’t easily enter such high-paying professions with a low-tier law degree. </p>
<p>Now, to be sure, we can probably come up with exceptional cases. For example, surely there are some full-ride low-tier law school grads who nonetheless land a high-paying biglaw job, with no debt. On the other hand, there are HLS and YLS grads who immediately land extraordinarily lucrative positions in fund management or venture capital. That’s precisely what Jim Cramer did - immediately after graduating from Harvard Law, he was hired by the Private Wealth Management division at Goldman Sachs. You can’t really do that as a lawyer unless you go to schools such as Harvard or Yale. Goldman is probably not going to hire anybody directly out of a low-tier law school.</p>
<p>Hence, I can only agree with you that the alternative route would be better during recessionary years. But how often does that occur? Most years, thankfully, are not recessionary years.</p>
<p>This seems to be the crux of the argument. So let’s examine how much this extra ‘tax’ really is. </p>
<p>Let’s assume that yearly debt service would be ~$25k a year, or, at a 40% overall tax bracket, would require $42k of additional gross income to cover it. In other words, the question at hand is, can the HLS/YLS grad make an additional $42k a year above what he would have made by attending a low-level law school on a full ride?</p>
<p>I would submit that the answer is clearly yes. Let’s take Southwestern University Law School is a proxy for the typical low-tier law school. The average graduate in 2008 who went to the private sector (hence, no government, NGO, or clerkship work) made about $70-80k a year. I suspect that the average HLS grad in 2008 who entered the private sector easily earned over $120k a year, as most of them entered biglaw, yet right there, you’ve covered the extra ‘tax’ of the debt service. </p>
<p>Now, granted, perhaps the average Southwestern Law student is an unfair proxy, as somebody good enough to get into HLS should be an exceptional student at Southwestern. I certainly agree that if you take a SW full ride and nevertheless land a biglaw job, you’ve executed a brilliant strategy. But the real question then is, how likely are you to do that? On the other hand, in non-recessionary years, I suspect that most HLS students could land a job paying at least $120k a year.</p>
<p>How big is that? In this example, we’re talking about Yale, and according to the sliding LRAP benefits, that couple would be paying $11k in ‘extra tax’, or at a 40% tax bracket, about $18k in gross income. </p>
<p>Like I said, at a cost (in this scenario) of $20k a year, I’d take that chance. If a Yale Law School grad can truly find nothing better for the rest of his career but to be a medical equipment salesman making only $90k a year for the rest of his life, then that means he’s suffering from unfathomable career difficulties and/or the US economy has entered permanent stagnation. </p>
<p>As I said before, I’ve always viewed the value of the LRAP, apart from enabling NGO/government work, as a temporary stopout during temporary economic softness or if somebody is burnt out from biglaw. The LRAP then allows you to take low-paid but low-stress work for 1-2 years without having to worry about debt service. You would then later return to higher-paying law, consulting, or finance, work when the economy (or your mental state) recovers. </p>
<p>{Note, perhaps you might never invoke the LRAP, but the fact that you could at any time provides psychological solace during the darkest and most stressful stretches of biglaw work. Analogously, if I’m running an exhausting cross-country hike, then the fact that I am carrying extra water - even if I never actually do drink it - provides me with the assurance that I could drink it whenever I really need it. That’s far more comforting than not having any water.} </p>
<p>So the real question is, would you trade the ‘extra tax’ of debt payments should you indeed become a medical equipment salesman for the rest of your life, compared to chances for the highly lucrative jobs available to you? I’d make that trade. The extra tax isn’t that large, and the chances that you would be consigned to make only $90k a year is quite remote.</p>
<p>Please don’t weasel, i.e. pretend that you said something different from what you actually said.</p>
<p>Here’s the exchange:</p>
<p>sez I: If you have $250k in debt and you are earning $20,000.00 per year as a part-time Starbuck’s barrista, the $2k a year they garnish from your wages won’t even cover the interest you owe. </p>
<p>sez you: It’s rather doubtful then they would garnish only $2k a year: probably far more than that.</p>
<p>We were clearly discussing the amount which would be garnished from your wages if you had a 20,000 a year job. </p>
<p>And even assuming they garnish $2500, $2800, or even $3000 a year, that still will not cover the interest on 250k.</p>
<p>It depends on what you mean by “survive quite well.” You don’t deny that on 60k, my hypothetical family will default on its mortgage; will not be able to send its children to activities; and so on. </p>
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<p>Again, so what? We are talking about a hypothetical person who is living the starving student lifestyle. Such folks have very little assets.</p>
<p>Again, please do not weasel.</p>
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<p>There’s a difference between “entreprenurial creativity” and tax fraud. It may be possible to time settlements so that the revenue is realized in Year 2 and not Year 1. But I don’t know any legal way to do it so that revenue is realized 10 years after the fact.</p>
<p>What are you going to do? Pay your office rent 10 years in advance? I doubt the IRS would let you do that. Go on an advertising binge? Well then the money is gone.</p>
<p>And in any event you have your monthly home mortage pay; checks to write for summer camp; and so on. </p>
<p>Oh, but that’s right . . . you can default on your mortgage and forego all that other stuff. Because as long as you make more money than the “average american,” everything is ok.</p>
<p>Seem to me that my statement is entirely accurate: $3000 is 50% more than $2000. That’s a big difference, especially in after-tax income, for somebody making only $20k a year. </p>
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<p>So are you now contradicting your own point? You were the one who stated that they would only garnish 15% of your wages. If that doesn’t cover the interest, then what do you think happens? </p>
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<p>So now we’re talking about a family? I thought we were simply talking about an unattached couch-surfing bum. </p>
<p>With a family, you now have 2 (potential) incomes, hence you should be earning far more than $60k a year - right? </p>
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<p>What’s this? So now we’re back to the starving student lifestyle? Just a single paragraph ago, you were talking about paying for a mortgage, supporting a family and sending children to activities. So which is it? Please do not weasel.</p>
<p>The ‘so what’ is that all of the assets that you earned before, as a biglaw associate, before you decided to invoke the LRAP (as per the protagonist in the OP’s weblink) are yours to keep. I am certain that I explained this in my posts - perhaps you’d like to read it again. The point is: you’re living far better than the starving student lifestyle. The car you bought with cash, that’s yours. All of your business attire that you obviously must have bought to work as a biglaw attorney, again, that’s all yours. The nice computer and electronics that you purchased, again, all yours. </p>
<p>Look, lskinner, I’m happy to argue either way: either the single unattached guy crashing on a futon, or the married guy with children. Or, heck, I’ll even argue both, as long as we keep the narratives separate. But don’t mix the two. The first guy is obviously not going to have to worry about mortgage payments or supporting kids, and the second guy has a spouse who (presumably) should be able to provide a second income, and if she cannot, well, that’s a different problem. </p>
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<p>Uh, not once have I advocated tax fraud. Everything that I have proposed is entirely legitimate and is practiced by companies both small and large every day. </p>
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<p>Nor do you have to. You said it yourself - it is in fact relatively easy to shift revenue backwards and forwards for a year or two, and that’s all you’re really looking to do. To take your example, if you were paid $150k in year 3 of a case, then depending on the circumstances of the case, you could probably legitimately and legally recognize $50k of that revenue in each of years 1,2, and 3. After all, you did work for 3 years on that case, so what is the problem with realizing that revenue over a 3-year time span? </p>
<p>Even if that doesn’t work, you could, as you said, split the revenue across two years: perhaps even by ‘conveniently’ demarking the end of a fiscal year between two dates of payment. Again, this is indeed perfectly legal provided that you had never established your company’s fiscal year before. Granted, you would then have to pay a bit of law debt payment, but not a particularly large amount due to the sliding LRAP scale. </p>
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<p>No, but you could buy the office, or other commercial real estate, and the IRS will definitely allow you to do that. Perhaps even more conveniently, you could renovate your office by stocking it with expensive gear, such as a new computer, new furniture, electronics, and take advantage of the Obama 50% stimulus bonus depreciation.</p>
<p>Again, note, this is all perfectly legal. In fact, the government wants you to do this, because they want you to stimulate the economy by investing in new business infrastructure. That was the whole point of the bonus depreciation initiative. Similarly, they want you to spend on advertising because they want you to expand your business. </p>
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<p>No, as I explained, the money is not gone. It is supposed to come back, for that is the whole point of advertising. Advertising is supposed to generate more business in the future. {Nobody is advocating that you purchase ineffective advertising.} </p>
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<p>Wait, just a few paragraphs ago, the guy was a living the starving student lifestyle. Now he has a mortgage and sending kids to summer camp? Which is it?</p>
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<p>But everything is OK - that is, unless you want to argue that being an average American is not OK. You keep invoke the trope of mortgage defaults, yet the fact is, the US home ownership rate is nearly 70%, and lest you think this be a anomaly due to the housing bubble and crash, the rate was over 60% even as far back as 1960. The average American is able to marry and successfully raise kids. As I said, even in the absolute worst case scenario where you have to shelter under the LRAP for the entire 15 year period while taking low-paying (but low-stress) law jobs, you’re still doing better than the average American. Again, let’s keep in mind that the average American doesn’t make that much money, but still apparently lives a quite acceptable lifestyle. You’re making more than the average American - while working less. That’s not bad, relatively speaking.</p>
<p>Ah, but I think I understand. You constantly want to compare that lifestyle to what you might have enjoyed had you not gone to HLS or YLS at all. To that, I would first say that that’s a clear road to psychological torment. You can always torture yourself to madness with what you could have done. For example, maybe if I had practiced every day when I was a kid, I could be a multimillionaire professional baseball player right now. But there’s no mileage to be had by engaging in that sort of angst. </p>
<p>But secondly, and far more importantly, if that truly is the issue at hand, then, like I said, take your HLS or YLS degree, and leverage it to find a lucrative position in biglaw, consulting or investment banking. As I said before, any HLS or YLS grad in any non-recessionary year should be able to find such a job, and the recessionary years can be waited out simply by invoking the LRAP. </p>
<p>Look, lskinner, I am somewhat sympathetic to your arguments, and I probably could agree with you if we were talking about assuming $200k of debt to attend, say, Vanderbilt Law. But this is HLS and YLS - by far the two best established law school pathways to not only biglaw, but also to numerous other high-paying professions and to other more powerful professions besides, such as, well, the US Presidency.</p>
<p>Here’s another example: Year 3 is then the year that you decide to splurge on travel, for business reasons, say, by attending a business conference to network with potential clients…yet the business conference just happens to be held in an exotic locale.</p>
<p>Again, this is perfectly legal. Just think about how many large corporate shindigs are held in Hawaii, Florida, Las Vegas, California, or overseas - all of which are deductible as business expenses, as long as you are careful to obey the rules. </p>
<p>And to that, I would be highly sympathetic to lskinner’s argument.</p>
<p>But we’re talking about HLS and YLS - the two schools that not only have the most generous LRAP’s, but also open the door to a bevy of highly lucrative consulting and banking jobs, even if you don’t want to pursue biglaw. Coming out of those schools, if the best you can do is become a medical equipment salesman for $95k a year for the rest of your life, frankly, something is truly wrong with either you, or the economy at large. Like I said, I can understand being burnt out from biglaw and wanting to take a few years off to relax by taking a laid-back albeit low-paid law job while sheltering under the LRAP. But never being able to find a lucrative job? Come on.</p>
<p>You just fall deeper and deeper into debt until you die. How does this contradict my point?</p>
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<p>Then you need to read my posts more carefully. We were talking about both.</p>
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<p>Agreed, and thus you will start losing eligibility for loan repayment.</p>
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<p>Sheesh, we are talking about both.</p>
<p>Anyway, I don’t debate with people who misrepresent my position. Please either show me where I confused the situations (please QUOTE me) or admit that I never did so and apologize.</p>
<p>This probably isn’t a good alternative to taking on slightly more debt and going full time. For one thing, a lot of people in PT programs are actually full-time students (who didn’t have the numbers for the FT program), so they’re studying all day while you’re at work. This puts you at a disadvantage, which can hurt your grades, which hurts your future earning potential. You may also be unable to take a summer associate position, where you’d probably make as much in one summer as you could in a full year at a post-college job. And the biggest disadvantage may be that you spend a fourth year in school, when you could be earning much more as a lawyer.</p>
<p>Wait, how’s that? I thought you said that they could only garnish 15% of your wages, and that was it (or at least that was implied) Are you now saying that they would garnish your wages and your total debt would nevertheless increase???.</p>
<p>If so, then I think you’re now on my side -that declaring bankruptcy is indeed a serious burden. But you can’t have it both ways. Either bankruptcy is a serious burden, or it isn’t. </p>
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<p>Then I think you need to read my posts more carefully. A couch-surfer doesn’t need to support a family, agreed? </p>
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<p>Wrong. Please read the LRAP stipulations. Your spouse can indeed earn an income that does not violate LRAP stipulations. </p>
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<p>No, it’s your choice. Either we’re talking about the couch-surfer, or not. If not, again, the spouse can earn income that does not violate the LRAP. {Granted, it’s not a lot of income, but it is still indeed income.} If we’re still talking about the couch-surfer, then I would like to hear more about how such a person has to manage a family.</p>
<p>Uh, how’s that? Even if you were a “fake” FT student, you would still have more study time than somebody who actually is indeed studying part-time, and hence, should be earning higher law-school grades. {If you’re not, then that speaks to a level of talent or motivation.} </p>
<p>Secondly, exactly why couldn’t you take a summer associate job anyway? Let’s face it - most “full-time” jobs available to undergraduates aren’t that exacting. You probably could quit for the summer and then reclaim the job - or a similar position - when you return for the fall. Again, as somebody with just a bachelor’s degree, it’s not as if you have an actual career that requires that you must be available during the summer, or that you would lose much seniority if you weren’t. Most such jobs are fairly low-end. </p>
<p>Let me provide some examples. At my gym, most (I think all) of the personal trainers are college educated. But they wouldn’t exactly ‘lose’ their capability to be trainers if they simply took a summer off to work as a law firm associate. They would surely easily be able to reclaim their positions as personal trainers in the autumn. Come on, it’s not like you ‘lost’ your knowledge of being a personal trainer just because you took the summer to do something else. </p>
<p>Similarly, let’s say that you were an IT guy - i.e. configuring and maintaining Cisco routers all day long. If you took a summer off to be a law firm associate, you would surely still remember how to configure Cisco routers 3 months later. Hence, you would surely easily be able to resume that position when the summer ended. It’s not as if Cisco router configuration skills change dramatically in 3 months that would be completely obsolete. {Trust me, router technology doesn’t change that quickly} Maybe your old firm had replaced you, but you could surely find a position with another firm, even if it were lower-paying. It’s not that hard.</p>