Good morning everyone,
I was hoping I could get some thoughts/opinions from a group of people I respect regarding preparation for my DW's going back to school.
To give a little background we are 27 (me) and 25 (DW) and are currently making around $75k +~$10K annual bonus and $30-35k respectively pre-tax and investments. This results in us maxing a 401k ($19k), our IRA's ($12k) and an HSA ($7k). These currently total to around $125k in total investments in VTSAX or similar vehicles. We also have a 3-6 months EF ($15k), two paid-off cars and are renting in a L-MCOL area. I give these details not because I am looking for a full case study, but just because I want to set the stage for our situation. The DW is looking to go back to school and would be over doubling her salary. My initial estimate, just based on what I have read, is that it would increase her salary from between $30-35k/year up to $70k+/year. The schools we are looking at are around $90k for two years. For what it is worth, she is looking to become a Physician's Assistant so I am also curious about any particular scholarships or aid that is available. This leads me to the primary area where I am looking for thoughts:
We will become a single income household when she goes back to school so our savings will definitely have to take a dip. I do plan on us continuing to max the HSA and contribute up to 7% in the 401k (match) however, should we be prioritizing saving and attempting to pay for as much of school out of pocket as possible? Alternatively, should we continue to aim for maxing our tax-advantage investments to the extent possible? Federal loans seem to hover between 6.5 and 7% which would lead me to believe we are better off trying to take some of the bite off and paying as much as we can up front. That being said, I was lucky enough to have a full academic scholarship for undergrad and really have NO idea how this whole student loan thing works.
TLDR: Currently saving and investing at a reasonable pace (maxed 401k, IRAs, HSA), should we plan to redirect funds to pay for DW's graduate school out of pocket (to the extent possible)?
Thanks so much for your thoughts!!
MWM