Author Topic: Paying for grad school+how much to keep in cash?  (Read 2530 times)

Maria

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Paying for grad school+how much to keep in cash?
« on: October 12, 2013, 04:28:45 PM »
Hello!

I've just found the Mustachian forum, and am so excited about it! Thank you for creating such an informative and awesome community.

Here's my question...

My husband is planning on going to grad school starting next June. Tuition for the entire program will be 45-70k depending on which program he chooses and gets accepted into (hoping for the 45k one...)

We have 60k saved for tuition, which is currently invested in a mix of domestic+foreign stocks and bonds. Otherwise, we have 20k cash in an emergency fund and another 30k in stocks a Roth IRA. My question is, seeing that the tuition bill will be coming up, should we have more in cash than this? With the unknown of the stock market and an imminent ((large)) bill to pay, I'm feeling a bit nervous. Two other things that are going into my consideration of this...I am self-employed and my income fluctuates quite a lot/is not ultra-secure. We are also expecting a baby next month, and I want to be prepared now that we have more than just ourselves to worry about.

Thanks so much for any input you have to offer!

(EDITED to add: My husband is going to physician assistant school, to be more specific. Thanks Argyle for asking.)
« Last Edit: October 12, 2013, 04:58:37 PM by Maria »

Argyle

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Re: Paying for grad school+how much to keep in cash?
« Reply #1 on: October 12, 2013, 04:53:39 PM »
What field is he in?  A professional school (law, medicine, etc.), or an academic field?

The rule for an academic field is never to go into any debt to go to grad school.  A good grad school will cover their students' costs, through tuition wavers, teaching appointments, etc.  Some grad schools (e.g. Harvard) will offer some places to people they don't cover.  This is only very rarely a good idea.  If the school is someplace less than Harvard, it's always a bad idea.  So if your husband is going to grad school for an academic field, he should not be paying.  Things have gotten even worse than usual in recent years, as academic jobs have dried up.  So some poor souls are emerging with $100K+ in debt and no job prospects.

If it's a professional school, it may be worth it, since debt is often the only way to get into certain professions.  I would be sure that he has good job prospects and that he loves his field, though.  There are a number of unemployed and/or miserable lawyers out there.

If any of those scenarios applies, then the answer to "How much to keep in cash" is "All of it."

Maria

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Re: Paying for grad school+how much to keep in cash?
« Reply #2 on: October 12, 2013, 04:57:29 PM »
Thanks so much for taking the time to reply Argyle! I should have specified...he's going to physician assistant school, which has really good job prospects following it. On the downside, there aren't a whole lot of funding options other than paying for it yourself.

With this bit of information, what do you think? Again, thanks for your time.

Mayan

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Re: Paying for grad school+how much to keep in cash?
« Reply #3 on: October 12, 2013, 09:28:54 PM »
I'd be inclined to have at least the first year's tuition in cash (assuming the most expensive scenario) until you know where he's going.  Then you can decide whether to keep the rest invested and liquidate as you go - keeping the possibility of gains in the next few years but risking not having the money in the event of a crash or dip - or to just set aside everything you'll need for tuition in cash.  In your position, I'd probably go for the latter route and forgo some potential stock market gains for the comfort of knowing that I have enough money to pay for the entire program (or most of it if he ends up at the 70K school). 

The few PAs I know like their jobs and are making good money.  Coming out with no or minimal student loans seems like a nice situation that your planning up to this point has enabled!

Maria

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Re: Paying for grad school+how much to keep in cash?
« Reply #4 on: October 13, 2013, 12:14:37 AM »
Thanks for your thoughts, Mayan. I think that's good advice. I'm definitely all about sleeping well at night and not worrying about the stock market. : ) Again, thank you!