Author Topic: What to do with refunded financial aid!  (Read 1365 times)

bryanth

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What to do with refunded financial aid!
« on: September 21, 2014, 06:36:22 AM »
So I've begun the adventure of going back to graduate school to get an MBA and took out Stafford Loan. I received my first refund check from my school totaling ~$5k the other day and am looking to figure out the best way to utilize.

What is the general consensus on handling excess loan money? It's subsidized so I am not paying the interest while holding, so I receive no benefit of just giving it back to the lender. Do I just park it in a HYSA? I have no interest in putting this in stock due to liquidity and the other associated risks.

Thanks!

chasesfish

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Re: What to do with refunded financial aid!
« Reply #1 on: September 21, 2014, 06:59:51 AM »
Do you need the money in the next year?

Murse

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Re: What to do with refunded financial aid!
« Reply #2 on: September 21, 2014, 07:04:24 AM »
I was reading the terms for the loans I was offered, and mine said something about an "origination" fee of around 1%, I would imagine yours has this too. Just thought you would be interested to know.

bryanth

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Re: What to do with refunded financial aid!
« Reply #3 on: September 21, 2014, 08:39:04 AM »
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I don't really need it in the next year, but from a safe loan standpoint, I would prefer to not lock it into anything.

Hotstreak

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Re: What to do with refunded financial aid!
« Reply #4 on: September 21, 2014, 01:34:05 PM »
You have some money.  It doesn't matter where it came from, it's just a number in your checking account like any other amount.  The only question is what you want to use it for. 

Will it be used for any expenses over the next few years?  If so, use a short term account like a HYSA or CD.  Otherwise, allocate it based on your personal investment statement (if you're like many here, that will mean some mix of stocks and bonds).

It's tempting to save it to pay your loans back when they start to accrue interest, but only if it's going to end up being ~5%+.  Otherwise it's better to invest and make small payments on the debt.