Author Topic: Max out Roth or Save up for Grad School?  (Read 816 times)

Mr. Nice FI

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Max out Roth or Save up for Grad School?
« on: December 10, 2017, 02:27:01 PM »
I am planning to start graduate school in the summer of 2018. I am wondering if I should continue maxing out my Roth IRA until I begin school, or if I should save up for tuition.

The total cost for the master's program will be around 100k, which will be financed mostly through student loans (probably around 6.5-7%), but I should start out making between 120-140k straight out of school and plan to pay the loans back in 2 years max. So the question essentially is, should I max out my Roth IRA until school starts, or save all of that money for tuition to lower my loan needs?

Thanks in advance for any insight.

Proud Foot

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Re: Max out Roth or Save up for Grad School?
« Reply #1 on: December 11, 2017, 02:12:57 PM »
I don't know how loans for grad school work but will any of them be subsidized loans? If so then I would max out the Roth before and if possible during grad school and take advantage of the tax free growth, particularly since you are expecting to have a higher income after completing school.

frugaliknowit

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Re: Max out Roth or Save up for Grad School?
« Reply #2 on: December 11, 2017, 02:44:35 PM »
I would seek out an employer to sponsor the masters or pay cash for it.  I would not borrow on the assumption that my potential new income will take care of everything.

Mr. Nice FI

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Re: Max out Roth or Save up for Grad School?
« Reply #3 on: December 12, 2017, 10:47:43 AM »
I don't know how loans for grad school work but will any of them be subsidized loans? If so then I would max out the Roth before and if possible during grad school and take advantage of the tax free growth, particularly since you are expecting to have a higher income after completing school.

The loans generally aren't subsidized for grad school. My thinking is that any money that I save now for tuition will have a guaranteed return of 6.5-7%, which seems attractive when compared to buying more stocks at these inflated prices. Thank you both for responding.

Gin1984

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Re: Max out Roth or Save up for Grad School?
« Reply #4 on: December 12, 2017, 11:17:39 AM »
I don't know how loans for grad school work but will any of them be subsidized loans? If so then I would max out the Roth before and if possible during grad school and take advantage of the tax free growth, particularly since you are expecting to have a higher income after completing school.
Subsiding student loans were taken away from graduate students a few years back.