Law school Expenses

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Incognito
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Law school Expenses

Post by Incognito »

Daughter will be attending law school in 2021 Fall. She's weighing her options with regards to school reputation vs scholarships. After her undergrad she has worked for about 3 years and saved enough to cover for 1 year of tuition and living expenses. She's planning to take out loan but we would like to help her out and reduce the burden. What's the best way to go about it? Gift her $15k each per year from parents towards loan repayment? The 529 account that I had opened is depleted in the final semester of her undergrad.

Thanks
Gill
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Re: Law school Expenses

Post by Gill »

You can give as much as you like if you pay the tuition direct. There is no $15,000 annual exclusion on such gifts.
Gill
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Topic Author
Incognito
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Re: Law school Expenses

Post by Incognito »

Thanks. Any tax benefits / consequences in doing so?
momvesting
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Re: Law school Expenses

Post by momvesting »

Depends on where you live and what the 529 situation is. I hope to keep my daughter's plan open after college for this reason. In my state, if the account was opened before the beneficiary was 19, you can continue to take the state tax deduction for contributions, so I would probably just flush the state deductible max through the 529.
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anon_investor
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Re: Law school Expenses

Post by anon_investor »

Incognito wrote: Tue Jan 12, 2021 4:19 pm Thanks. Any tax benefits / consequences in doing so?
Not sure what state you live in and wheter you get a state income tax deduction for 529 plan contributions. But you might want to look into running some of the money you plan to gift her through a 529 plan to capture the state income tax deduction. But a word of caution, some states (but not all) will reduce the deduction by any withdrawals made in the same calendar year. I believe the 529 plan contributions would be subject to the $15k/yr gift tax limit, but for some plans I think you can put 5x worth of the gift tax limit up front. YMMV, but definitely worth looking into at least since just about all 529 plans have an FDIC insured investment option so you would not be putting the money at risk.

Some advice for your daughter as it sounds like she has not decided on a school yet; although I went to law school over a decade ago, where you go to school still matters, and even more so depending on the particular region/area of law you go into. I would say, taking the cheapest option (most scholarship) may be penny wise but pound foolish as it may greatly impact career prospects upon graduation. Also be extra careful about the scholarship offers, some of them have minimum gpa requirements that are misleadingly difficult to acheive, which would result in the loss of the scholarship after only 1 semester. Usually the elite schools (Top 14) do not have GPA requirements, but the ones ranked lower will. And the confusing part is, for example a 3.0 gpa does not sound hard, until you realize the school may have a fixed mean curve of 2.3, which means a 3.0 is equivalent to top 20%, etc. Not to say your daughter is not brilliant and will do well in law school, but it is surprising how unpredictable law school grades are.

Happy to answer any other questions about law school either in this thread or via PM.
Last edited by anon_investor on Tue Jan 12, 2021 4:34 pm, edited 1 time in total.
DawgFan2001
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Re: Law school Expenses

Post by DawgFan2001 »

Years ago, my parents generously paid for my law school tuition. It was very nice to graduate at zero versus negative.

I'd suggest your daughter attend the cheapest, best (in that order) school closest to where she wants to live and work afterwards.

If your state allows for tax deductions for contributions to 529, couldn't you just pass funds through a 529 for a state tax break? We live in GA, and I did this for my husband's MBA recently.

Best of luck to your daughter.
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Incognito
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Re: Law school Expenses

Post by Incognito »

Thanks for the replies.

Anon_investor, that's very valuable advice.

I do have a 529 account in Virginia with daughter as the beneficiary. It was depleted in the final semester of her undergrad. I guess that can be used for channeling the funds through. Or does she need to open a separate account on her name?
inverter
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Re: Law school Expenses

Post by inverter »

Incognito wrote: Wed Jan 13, 2021 8:25 am I do have a 529 account in Virginia with daughter as the beneficiary. It was depleted in the final semester of her undergrad. I guess that can be used for channeling the funds through. Or does she need to open a separate account on her name?
This works great. I believe the account owner is the one who can claim the deduction in most states.
NJdad6
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Re: Law school Expenses

Post by NJdad6 »

I am not an Attorney however my niece is finishing her 3rd year of law school in the spring. From what she has said (and I heard repeatedly from others) is if you cannot go to a top tier law school don’t go. Reputation is the MOST important thing.

I’m sure others with more experience can provide additional insight. Good luck to your daughter.
tingles
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Re: Law school Expenses

Post by tingles »

I graduated law school 8 years ago from a top 14. My two cents, reputation of a school is key. You go either to a top 14 or the best school in your region (if you want to work in that region). Having a strong alum network is important and what law school you went to will continue to impact your career choices for a long time.
TSR
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Re: Law school Expenses

Post by TSR »

Your offer to help is generous. A lot of it will depend on the cost of living in the town where she goes. Perhaps direct tuition payments are best given that you don't know that yet, but I think there is a risk that such gifts will disappear into the big pile of money that is tuition, whereas a fixed-sum gift to be paid toward living expenses can offer valuable budgeting practice (sounds like she's pretty good at it already though).

You didn't ask for advice on choosing schools, and I think some of the generalizations often made about law school are unhelpful. For example, what is a "top tier" law school? Is it the top 14 schools? The top 50? The top 100? And the frustrating truth about law school is that it's hard to make generalizations about it because you cannot predict the future. For example, I'd say that it's much better to be in the top 10% of your class at the 50th ranked school in the country than in the bottom half of your class at the 20th ranked school in the country. But unfortunately your daughter absolutely cannot know how well she will do in law school no matter where she goes. That fact alone would argue for taking the cheapest route. Similarly, EVERY law student says they want to do environmental law or international law, and yet NO law-school graduates actually do that (some hyperbole on both ends here), so it's not very helpful to say "go to the best school that specializes in your preferred area of law." Most of these sorts of generalizations come from people like me who have already been through law school and have the benefit of hindsight. For me I'd offer this unsolicited generalization, which is still pretty unhelpful: unless her "reach" school is in the top 14 schools, she should go with whoever is offering the best money/rank ratio (unless she absolutely knows WHERE she wants to practice, in which case she should stay close to there); also, there are benefits to being a big fish in a small pond, so going to "the best school you get into" isn't always the best policy (unless that school is in the top 14 schools).

Good luck!
New Providence
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Re: Law school Expenses

Post by New Providence »

Too many graduates. For Law School and MBA, reputation of school is key to get interviews for top tier jobs.
Bobby206
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Re: Law school Expenses

Post by Bobby206 »

DawgFan2001 wrote: Tue Jan 12, 2021 4:33 pm Years ago, my parents generously paid for my law school tuition. It was very nice to graduate at zero versus negative.

I'd suggest your daughter attend the cheapest, best (in that order) school closest to where she wants to live and work afterwards.

If your state allows for tax deductions for contributions to 529, couldn't you just pass funds through a 529 for a state tax break? We live in GA, and I did this for my husband's MBA recently.

Best of luck to your daughter.
I agree with above except I might give more weight to picking a school where you want to live afterwards. Especially if not going to a top school. If going to a second tier school I'd pick one you think you want to live after law school as you can get internships during school that sometimes turn into jobs after. Plus, good group to network with after law school. Just this week I got two referrals from old law school classmates in the area... over 20 years after graduating.
TallBoy29er
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Re: Law school Expenses

Post by TallBoy29er »

NJdad6 wrote: Wed Jan 13, 2021 10:02 am I am not an Attorney however my niece is finishing her 3rd year of law school in the spring. From what she has said (and I heard repeatedly from others) is if you cannot go to a top tier law school don’t go. Reputation is the MOST important thing.

I’m sure others with more experience can provide additional insight. Good luck to your daughter.
Partly true perhaps, but certainly not entirely. There is a geographic aspect to it as well. For instance, Georgia State University has been ranked somewhere around #50+/- in law schools. Go there, and try to get a job in NY or CA, and probably good luck. But if you want to stay in Georgia, a number of Big Law firms hire from GSU.....Troutman, King & Spalding, Alston & Bird, etc. From there, you can pivot to many a job....

You don't have to go to a top 5 law school to land a good job. You do have to perform well in whichever law school you do go to, however.
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anon_investor
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Re: Law school Expenses

Post by anon_investor »

TallBoy29er wrote: Wed Jan 13, 2021 10:03 pm
NJdad6 wrote: Wed Jan 13, 2021 10:02 am I am not an Attorney however my niece is finishing her 3rd year of law school in the spring. From what she has said (and I heard repeatedly from others) is if you cannot go to a top tier law school don’t go. Reputation is the MOST important thing.

I’m sure others with more experience can provide additional insight. Good luck to your daughter.
Partly true perhaps, but certainly not entirely. There is a geographic aspect to it as well. For instance, Georgia State University has been ranked somewhere around #50+/- in law schools. Go there, and try to get a job in NY or CA, and probably good luck. But if you want to stay in Georgia, a number of Big Law firms hire from GSU.....Troutman, King & Spalding, Alston & Bird, etc. From there, you can pivot to many a job....

You don't have to go to a top 5 law school to land a good job. You do have to perform well in whichever law school you do go to, however.
If you go to a top 14 law school you do no need to be the top of your class to land a biglaw job and make lots of money from day one (if that is what you really want to do...). But if you go to a mediocre law school even if you finish #1 you may not get a biglaw job. Going to a top 14 law school is not the be all, end all, but it means you have more options even if you don't want to do biglaw (top Fed gov law jobs, etc.). Just like I don't think biglaw is a great end goal, but without biglaw on my resume, I would not have a well paying in-house attorney job at a megacorp with good work life balance.
TSR
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Re: Law school Expenses

Post by TSR »

anon_investor wrote: Wed Jan 13, 2021 10:18 pm
TallBoy29er wrote: Wed Jan 13, 2021 10:03 pm
NJdad6 wrote: Wed Jan 13, 2021 10:02 am I am not an Attorney however my niece is finishing her 3rd year of law school in the spring. From what she has said (and I heard repeatedly from others) is if you cannot go to a top tier law school don’t go. Reputation is the MOST important thing.

I’m sure others with more experience can provide additional insight. Good luck to your daughter.
Partly true perhaps, but certainly not entirely. There is a geographic aspect to it as well. For instance, Georgia State University has been ranked somewhere around #50+/- in law schools. Go there, and try to get a job in NY or CA, and probably good luck. But if you want to stay in Georgia, a number of Big Law firms hire from GSU.....Troutman, King & Spalding, Alston & Bird, etc. From there, you can pivot to many a job....

You don't have to go to a top 5 law school to land a good job. You do have to perform well in whichever law school you do go to, however.
If you go to a top 14 law school you do no need to be the top of your class to land a biglaw job and make lots of money from day one (if that is what you really want to do...). But if you go to a mediocre law school even if you finish #1 you may not get a biglaw job. Going to a top 14 law school is not the be all, end all, but it means you have more options even if you don't want to do biglaw (top Fed gov law jobs, etc.). Just like I don't think biglaw is a great end goal, but without biglaw on my resume, I would not have a well paying in-house attorney job at a megacorp with good work life balance.
I'd argue that the top student in any top-80 law school in the country could get a biglaw job without any difficulty, at least whatever "biglaw" looks like in the state or geographic region where that school is located. Students in the top 10% of those schools can expect to find what I will call "good" jobs. Once you push past 80 and beyond, you start to get a lot more regional in your focus, which can be fine. The top student in that school will still definitely be employed, but it may not be exactly what they wanted. For context, I have worked in biglaw, done plenty of hiring, and run an intern program in a law office. I agree with your main points that (1) higher ranked schools make it much easier to get these jobs, and (2) biglaw can be a foot in the door for other positions (it was for me).
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anon_investor
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Re: Law school Expenses

Post by anon_investor »

TSR wrote: Thu Jan 14, 2021 1:41 pm
anon_investor wrote: Wed Jan 13, 2021 10:18 pm
TallBoy29er wrote: Wed Jan 13, 2021 10:03 pm
NJdad6 wrote: Wed Jan 13, 2021 10:02 am I am not an Attorney however my niece is finishing her 3rd year of law school in the spring. From what she has said (and I heard repeatedly from others) is if you cannot go to a top tier law school don’t go. Reputation is the MOST important thing.

I’m sure others with more experience can provide additional insight. Good luck to your daughter.
Partly true perhaps, but certainly not entirely. There is a geographic aspect to it as well. For instance, Georgia State University has been ranked somewhere around #50+/- in law schools. Go there, and try to get a job in NY or CA, and probably good luck. But if you want to stay in Georgia, a number of Big Law firms hire from GSU.....Troutman, King & Spalding, Alston & Bird, etc. From there, you can pivot to many a job....

You don't have to go to a top 5 law school to land a good job. You do have to perform well in whichever law school you do go to, however.
If you go to a top 14 law school you do no need to be the top of your class to land a biglaw job and make lots of money from day one (if that is what you really want to do...). But if you go to a mediocre law school even if you finish #1 you may not get a biglaw job. Going to a top 14 law school is not the be all, end all, but it means you have more options even if you don't want to do biglaw (top Fed gov law jobs, etc.). Just like I don't think biglaw is a great end goal, but without biglaw on my resume, I would not have a well paying in-house attorney job at a megacorp with good work life balance.
I'd argue that the top student in any top-80 law school in the country could get a biglaw job without any difficulty, at least whatever "biglaw" looks like in the state or geographic region where that school is located. Students in the top 10% of those schools can expect to find what I will call "good" jobs. Once you push past 80 and beyond, you start to get a lot more regional in your focus, which can be fine. The top student in that school will still definitely be employed, but it may not be exactly what they wanted. For context, I have worked in biglaw, done plenty of hiring, and run an intern program in a law office. I agree with your main points that (1) higher ranked schools make it much easier to get these jobs, and (2) biglaw can be a foot in the door for other positions (it was for me).
I am in complete agreement with you. When I say mediocre school, that would be outside top 80. I was in biglaw too, and after starting a family, the non-existent work life balance became an issue; but biglaw was a necessary stepping stone to my current position as an in-house attorney at a megacorp with excellent work life balance and good pay.
quenchgum
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Re: Law school Expenses

Post by quenchgum »

Hopefully not derailing the thread too much, but just wanted to emphasize the above points and add my own two cents.

If your daughter is considering an offer from a T14 school, then I encourage you to connect with current or former biglaw attorneys that can give an industry-specific perspective. If you don't know any, then feel free to PM me - I'm a recent graduate of one of those schools and a current biglaw attorney and would be happy to share my thoughts. I chose between a T6 at a half ride and lower T14's at a full ride, which is probably a more interesting choice than you'd expect.

Law school is peculiar in that (1) there is a very sharp cliff in expected compensation/job prospects once you dip past the top 15 schools, and that (2) those top 15 schools -- and almost exclusively those schools -- are feeders for "biglaw", which is made up of about ~100/150 or so firms that pay basically exactly the same salary, which starts at $190,000, and that are a huge career accelerant. Average compensation decreases dramatically if you "strike out" of biglaw. Students that are between a strong scholarship offer at a regional school versus little to no scholarship at a T14 should at least be very aware of that unusual, extremely bimodal post-grad dynamic. If it's the case that your daughter is between a strong scholarship at a lower T14 versus a lower scholarship at a higher T14, it's also an interesting choice -- the vast majority of all of those students end up equally well-paid positions, though the very top schools do afford more unique job opportunities (especially if your daughter may be interested in litigation/prestigious clerkships) and do add some not-immaterial biglaw buffer (which could be especially important if you're a bit different and unlikely to do well in a high-intensity interview situation). The general wisdom in that situation is to take the money at the lower-ranked T14, so long as you're not tied to any particular city or niche practice group. For example: if she may want to do some kind of general corporate law in NYC, then she'd be in a better position to take the scholarship than someone that wanted to litigate environmental protection laws, or practice tax law in Chicago, or work with the ACLU (all of which are generally a bit more exclusive/harder to be recruited into straight out of school without a tippy top resume). Obviously, your mileage may vary depending on what the scholarship differences actually are - if it's only 10 or 20k a year to bump from a T14 to a T6 then it's almost certainly worth it. And, of course, biglaw is incredibly stressful and is nowhere near the be-all end-all end goal, and most people do leave biglaw within a few years of starting. But it does set you up very well for your career.
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Incognito
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Re: Law school Expenses

Post by Incognito »

Thanks for all your replies. I don't have a clue as to how the law schools admissions work and their prospects. Daughter is definitely not looking at top-14 based on her LSAT scores. She has applied for schools that are 40 - 80 range and naturally the safety ones got back to her early with scholarships offers (about 60% off the sticker price). She's waiting to hear back from others. After her undergrad she worked a couple of years for a law-firm that was specializing in IP law (her minor degree) and switched to another law firm to gain experience in corporate law.

Living expenses is also another factor.

Thanks
Not Law
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Re: Law school Expenses

Post by Not Law »

If she wants to be on the Supreme Court, then by all means a top school is pretty much required - just look at the law schools the current (and past) justices attended. On the other hand, if she wants to be a country lawyer (Atticus Finch?), then just about any school will do. Not all aspiring lawyers want or expect to be on the Supreme Court! The opportunity for big bucks in the legal profession are not all that great when you look at the average pay for all lawyers. Check those numbers with the bar association of the state where she wants to work.
shuchong
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Re: Law school Expenses

Post by shuchong »

I went to law school about a decade ago, and my parents helped pay my tuition through a combo of gifts (tuition paid directly to my school) and giving me a loan which I then repaid (YMMV on that -- worked out great for me and my parents, but loans between family members can be dicey). I'm incredibly grateful that they helped me out. As a result, I was able to be debt free after a short time working at a large firm. It was very helpful to not feel "stuck" in my stressful job, and is probably one of the reasons I'm still at that same large firm today.

Echo the above posters that say paying tuition directly (through a 529 or otherwise) sounds like the best bet. I believe most loans these days, even the federal ones for graduate students, start accruing interest right away. (There used to be subsidized Stafford loans for graduate students that did not accrue interest while the student was still in school, but those are now only for undergrads.) So by paying part of her tuition up front rather than giving her money to pay off the loans, you're helping her avoid interest.

Also echo the posters who are talking about the bimodal salary distribution and law school prestige. They're something she should be aware of as she thinks about law school. NALP, the National Association for Law Placement, has graphs here: (https://www.nalp.org/salarydistrib). I would say that if she's thinking about schools in the 40-80 range, she should give more weight to whether the school is close to where she wants to ultimately live and work, and to the tuition costs. She should not assume that she'll get one of the biglaw jobs that start at $190k. That might be available to her if she's in the top of her class, but there are no guarantees.
OldBallCoach
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Re: Law school Expenses

Post by OldBallCoach »

100% agree on go to the best you can...reputation is everything...like it or not...As someone that went 150 years ago and then went into coaching I cant give you much data...just what my friends tell me that in law...
toofache32
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Re: Law school Expenses

Post by toofache32 »

Where does one find this list of law schools ranked 1 to 14? and to 100??
Big Dog
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Re: Law school Expenses

Post by Big Dog »

sry about the dupe
Last edited by Big Dog on Sat Jan 16, 2021 12:24 am, edited 1 time in total.
Big Dog
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Re: Law school Expenses

Post by Big Dog »

toofache32 wrote: Fri Jan 15, 2021 12:01 am Where does one find this list of law schools ranked 1 to 14? and to 100??
USNews and World Report. (Note: the so-called 'T14' is the 14 law schools that have been ranked in the top 10 at least once.)


OP: when considering scholarships from lower ranked law schools, also inquire as to the stipulations for keeping that scholarship in years 2 & 3. Does she just have to remain in 'good standing' or does she have to maintain a certain GPA? Obviously, the former is better than the latter.


And to answer your question, the absolute best way to reduce debt burden it to take some time off and study hard for the LSAT. Merit money is tax-free, and law schools will pay top dollar for higher scores (as it improves their ranking). A few extra points can be huge.
FIREFIRE
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Re: Law school Expenses

Post by FIREFIRE »

Without offending or disclosing too much, would you be interested in sharing some details about her school? Many law schools are terrible investments of time and money and should be avoided at all costs.
Last edited by FIREFIRE on Fri Jan 15, 2021 1:17 am, edited 1 time in total.
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anon_investor
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Re: Law school Expenses

Post by anon_investor »

Big Dog wrote: Fri Jan 15, 2021 1:06 amAnd to answer your question, the absolute best way to reduce debt burden it to take some time off and study hard for the LSAT. Merit money is tax-free, and law schools will pay top dollar for higher scores (as it improves their ranking). A few extra points can be huge.
+1. This is a really good tip. I took the LSAT twice and upped my score significantly the 2nd time, it definitely resulted in me getting into better schools receiving lots of scholarship offers.
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