The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: mattydt20 on January 19, 2020, 06:26:48 PM
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I started graduate school last week. I have enough in savings to pay for the 100k tuition over the program. It will earn me a 170k+ salary and most employers offer student loan reimbursement.
I didn't initially plan to take loans, but I'm wondering if I'm being ridiculous. Some places will offer 50k over 4 years, other places as much as 20k per year with no limit.
Relying on employer repayment will take much longer than I would personally pay off the balance, meaning I'll accrue more in interest if I take out more than they will pay back.
Thoughts?
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As long as you put the 100K of your own money to work in case employer reimbursement does not go as planned. Nothing wrong with debt if you can retire it when you wish.
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If you're pretty sure you'll be able to get an employer to pay off the loans for you, I would jump on that opportunity and keep my own money invested. As long as you're not worried you might feel like you're stuck working for a company that you wouldn't otherwise be working for, i.e., just for the loan repayment, it seems like a no brainer to let your future employer pay off your loans for you. The sooner you can get that $100K working for you, the sooner you'll be able to FIRE.
When my brother was in graduate school he had the cash to pay his tuition, but he decided to take out interest free government guaranteed loans, and he used that money to pay his tuition, instead. For the two years he was in grad school, my brother put his own money into CDs, which he timed to be redeemable just before he graduated and would've normally had to start making payments. OP, you've got a way better deal, though. Good luck!
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There is a cost for the company that I am guessing they compute into their offer for new hires with student loan debt and the pay is at a lower rate.
I would research what they are willing to pay if you come in with no loans. A 20k higher starting rate could easily make a larger difference in your career earnings VS taking a lower starting wage.
Worth thinking about / looking into.
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Thank you for the various responses. No one I've asked has been able to leverage a higher pay in lieu of the loan forgiveness, but I doubt any have tried.
Sinking it all into the market at this time makes me a bit squeamish, but we have $75k in a 2.875% house mortgage that would lock in a gain, although only marginally better than a CD.
It would definitely lock me into a job, but I can't imagine leaving my first position before at least 2 years experience, and I'm sure the next position would offer reimbursement as well.
Thank you for your valuable thoughts.