Considering whether to consolidate your law school debt? This economics primer for law students and lawyers gives some key facts about federal consolidation loans and information sources you'll need to make that decision.
Vol. 75, No. 7, July
2002
Figure 1
Recent 10-year History
Average Repayment Rate = 7.55
| Year |
Repayment
Rate |
|
Year |
Repayment
Rate |
|
92-93
|
6.94 %
|
98-99
|
8.25 %
|
|
93-94
|
6.22 %
|
99-00 |
7.72 % |
|
94-95
|
7.43 %
|
00-01 |
8.19 % |
|
95-96
|
8.25 %
|
01-02
|
5.99 % |
|
96-97
|
8.25 %
|
02-03 |
4.06 % |
|
97-98
|
8.25 %
|
|
|
(effective July 1, 2002)
Figure 2
Cumulative Amount of Federal Student Loans Borrowed by Degree
Recipients in the 1990s
| |
1992-93
|
1995-26
|
1999-2000
|
Program &
Institution Type |
% who
Borrowed |
Median
Amt. Brrwd. |
Monthly
pymt. for
Median |
% who
Borrowed |
Median
Amt. Brrwd. |
Monthly
pymt. for
Median |
% who
Borrowed |
Median
Amt. Brrwd. |
Monthly
pymt. for
Median |
Bachelor's
Public College or U |
38.1 |
6,449 |
75 |
52.4 |
10,342 |
120 |
59.6 |
15,375 |
179 |
Bachelor's
Private College or U |
45.5 |
9,793 |
114 |
55.4 |
13,983 |
162 |
66.5 |
17,250 |
200 |
|
Master's
Public U
|
33.8 |
8,502 |
99 |
55.5 |
12,496 |
145 |
54.2 |
17,341 |
201 |
Master's
Private U |
39.0 |
9,343 |
108 |
54.4 |
19,213 |
223 |
59.1 |
24,409 |
28 |
| Doctoral |
45.0 |
11,191 |
130 |
34.0 |
14,084 |
164 |
50.0 |
24,078 |
280 |
|
Professional
Public U
|
72.2 |
20,884 |
242 |
80.2 |
47,183 |
548 |
87.0 |
61,417 |
713 |
Professional
Private U |
75.1 |
26,813 |
311 |
74.5 |
54,214 |
629 |
83.3 |
73,533 |
854 |
| Notes: Figures reflect cumulative student loan
borrowing as of the year indicated. For graduate students, this includes
debt incurred as an undergraduate. Monthly payment is calculated using
the median amount borrowed, assuming an annual interest rate of 7
percent under the standard 10-year repayment plan. Source: U.S.
Department of Education, National Center for Education Statistics.
National Postsecondary Student Aid Studies: 1992-93, 1995-96, and
1999-2000. |
Figure 3
Monthly Payment Table
|
Balance
|
5.00 %
|
6.00 %
|
7.00 %
|
8.25 %
|
Level
|
| $ 5,000 |
$53.03 |
$55.51 |
$58.05 |
$61.33 |
10 yrs |
| 6,000 |
63.64 |
66.61 |
69.67 |
73.59 |
10 yrs |
| 7,500 |
69.37 |
73.19 |
77.13 |
82.22 |
12 yrs |
| 8,000 |
73.99 |
78.07 |
82.27 |
87.70 |
12 yrs |
| 9,000 |
83.24 |
87.83 |
92.55 |
98.66 |
12 yrs |
| 10,000 |
79.08 |
84.39 |
89.88 |
97.01 |
15 yrs |
| 15,000 |
118.62 |
126.58 |
134.82 |
145.52 |
15 yrs |
| 20,000 |
131.99 |
143.29 |
155.06 |
170.41 |
20 yrs |
| 30,000 |
197.99 |
214.93 |
232.59 |
255.62 |
20 yrs |
| 40,000 |
233.84 |
257.72 |
282.72 |
315.38 |
25 yrs |
| 50,000 |
292.30 |
322.15 |
353.39 |
394.23 |
25 yrs |
| 60,000 |
322.09 |
359.73 |
399.18 |
450.76 |
30 yrs |
| 70,000 |
375.78 |
419.69 |
465.71 |
525.89 |
30 yrs |
| 80,000 |
429.46 |
479.64 |
532.24 |
601.01 |
30 yrs |
| 90,000 |
483.14 |
539.60 |
598.77 |
676.14 |
30 yrs |
| 100,000 |
536.82 |
599.55 |
665.30 |
751.27 |
30 yrs |
| 120,000 |
644.19 |
719.46 |
798.36 |
901.52 |
30 yrs |
| 130,000 |
697.87 |
779.42 |
864.89 |
976.65 |
30 yrs |
| 140,000 |
751.55 |
839.37 |
931.42 |
1,051.77 |
30 yrs |
| 150,000 |
805.23 |
899.33 |
997.95 |
1,126.90 |
30 yrs |
| 160,000 |
858.91 |
959.28 |
1,064.48 |
1,202.03 |
30 yrs |
| 170,000 |
912.60 |
1,019.24 |
1,131.01 |
1,227.15 |
30 yrs |
| 180,000 |
966.28 |
1,079.19 |
1,197.54 |
1,352.28 |
30 yrs |
| 190,000 |
1,019.96 |
1,139.15 |
1,264.07 |
1,108.33 |
30 yrs |
| 200,000 |
1,073.64 |
1,199.10 |
1,330.60 |
1,502.53 |
30 yrs |
| 220,000 |
1,181.01 |
1,391.01 |
1,463.67 |
1,652.79 |
30 yrs |
| 240,000 |
1,288.37 |
1,438.92 |
1,596.73 |
1,803.04 |
30 yrs |
| 260,000 |
1,395.74 |
1,558.83 |
1,729.79 |
1,953.29 |
30 yrs |
| 280,000 |
1,503.10 |
1,678.74 |
1,862.85 |
2,103.55 |
30 yrs |
| 300,000 |
1,610.46 |
1,798.65 |
1,995.91 |
2,253.80 |
30 yrs |
Figure 4
Recent Treasury Bill Auction Results
| Term |
Issue Date |
Maturity Date |
Discount Rate% |
| 91-day |
4-25-2002 |
7-25-2002 |
1.690 |
| 91-day |
4-18-2002 |
7-18-2002 |
1.680 |
| 91-day |
4-11-2002 |
7-11-2002 |
1.710 |
| 92-day |
4-04-2002 |
7-05-2002 |
1.790 |
| 91-day |
3-21-2002 |
6-20-2002 |
1.840 |
| 91-day |
3-14-2002 |
6-13-2002 |
1.825 |
| 91-day |
3-07-2002 |
6-06-2002 |
1.760 |
| 91-day |
2-28-2002 |
5-30-2002 |
1.735 |
| 91-day |
2-21-2002 |
5-23-2002 |
1.730 |
| 91-day |
2-14-2002 |
5-16-2002 |
1.715 |
| 91-day |
2-07-2002 |
5-09-2002 |
1.735 |
| 91-day |
1-31-2002 |
5-02-2002 |
1.715 |
(New reference rate, 1.76 %)
Figure 5
Impact of Rate and Term on Original Balance of
$79,000
| |
10 Years
@ 8.25% |
10 Years
@ 5.50%
|
30 Years
@ 5.50% |
Monthly
Payment |
$968.95 |
$857.35 |
$448.55 |
|
Total Cost
of Loan
|
$116,274.68 |
$102,882.91 |
$161,479.19 |
Figure 6
The 8 - 10 % Guideline of Loan to Income
Comparison
|
Annual Income
|
Monthly Income |
Maximum Student Loan
Repayment at |
|
| 8% |
10% |
15% |
| $30,000 |
$2,500 |
$200 |
$250 |
$375 |
| $50,000 |
$4,167 |
$333 |
$417 |
$625 |
| $75,000 |
$6,250 |
$500 |
$625 |
$938 |
| $100,000 |
$8,333 |
$667 |
$833 |
$1,250 |
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