Still Invest While in Grad School?

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Abciximab
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Still Invest While in Grad School?

Post by Abciximab » Fri Jun 13, 2008 1:38 pm

I'm headed back to school this fall to get my MBA. I'll be attending evening classes so I'll still be working full-time. I can't decide if I should take out student loans and continue to invest, or if I should put my investments on hold and pay for my tuition out-of-pocket.

The set interest rate on student loans is 6.8%. I'll take subsidized loans, but I'm not sure if I should get unsubsidized federal loans. I can't deduct student loan interest on my taxes.

Right now the market is beat up and (although it may go lower) I feel the need to invest regularly and dollar cost average like I have been for years. It seems that if I put a hold on things I'm missing out somehow. Any suggestions?
An investment in knowledge always pays the best interest - Benjamin Franklin

exeunt
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Post by exeunt » Fri Jun 13, 2008 2:32 pm

I'd take the loans and cut back on my saving a wee bit.

Alex Frakt
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Post by Alex Frakt » Fri Jun 13, 2008 3:02 pm

Boiled down, your real question is:

Should I borrow money at 6.8% to play the market?

I wouldn't do it.

mike_slc
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Re: Still Invest While in Grad School?

Post by mike_slc » Fri Jun 13, 2008 3:10 pm

Abciximab wrote:I'm headed back to school this fall to get my MBA. I'll be attending evening classes so I'll still be working full-time. I can't decide if I should take out student loans and continue to invest, or if I should put my investments on hold and pay for my tuition out-of-pocket.

The set interest rate on student loans is 6.8%. I'll take subsidized loans, but I'm not sure if I should get unsubsidized federal loans. I can't deduct student loan interest on my taxes.

Right now the market is beat up and (although it may go lower) I feel the need to invest regularly and dollar cost average like I have been for years. It seems that if I put a hold on things I'm missing out somehow. Any suggestions?


I would take the maximum allowed federally subsidized loans and no more. If that leaves money to invest, then invest. If not, don't take the unsubsidized loans to invest.

When you graduate you'll be able to consolidate, probably at a very low rate for the subsidized. Some enterprising members of my MBA class negotiated a block consolidation for the entire graduating class and were thus able to get great terms for the subsidized (1.875% for 15 or 30 years with graduated repayment.)

No such luck on the unsubsidized - the rate stays too high after graduation to be worthwhile.
Last edited by mike_slc on Fri Jun 13, 2008 3:12 pm, edited 1 time in total.

OptionAl
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Post by OptionAl » Fri Jun 13, 2008 3:11 pm

Don't do it. The market is indeed beat up and the beating is likely to continue, despite what all the optimists will tell you. Take the 6.8%. You have plenty of time, and your best investment is in yourself.

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