1 Reader Mail: Going to Grad School and Being Responsible | The Billfold

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undinespragg (#867)

I don’t know about paying off the loan now–grad school means you can defer the loan without accruing interest (right? I assume a Stafford Loan will defer interest as well as payment), and inflation means that $4000 will be worth less in 5-6 years than it would now. I don’t see why you wouldn’t take the interest-free time to let your debt become less significant, even if just by a small percentage.

ETA: if deferring the loan doesn’t also defer interest, ignore the above.

Normally I advise people not to pay off student loans as a matter of priority, but a lot of factors about your situation have made me reconsider in this case.

I was going to point out that not paying the loan off is often actually the more conservative option, because if something catastrophic happens, you can’t get that $4,000 back. But since you will be in grad school, you *could* actually borrow (a significant amount) more money if you really needed to, at the same or lower interest rate. This, plus the extent of your existing savings, suggests that paying off to avoid the interest is the right thing to do.

I would follow the above suggestion if you can get an interest-free deferment, though.

@stuffisthings (Haha I’m talking like somebody who is not fucking terrible at managing his own money.)

Maven (#402)

Roth IRA for sure! If you’re 25 and you fully fund (i.e., contribute $5K) a Roth IRA this year and never contribute to it again, not that I’m advocating for THAT, it’ll still almost certainly be worth over $108K by the time you’re 65.

I would pay off the loans — and am infinitely jealous that I am not in a position to do so with my own. I salivate at the prospect of sending my final check to Sallie Mae and telling them where to stick it. To be clear, I don’t resent them for loaning me the money, but for incorrectly putting my loan into repayment status and thus improperly capitalizing my interest multiple times, as well as their reps steadfastly refusing to look at my clearinghouse enrollment status to verify that I am, in fact, still in school until after they have capitalized said interest.

Side note: I accepted my advisor’s invitation to a brunch party at her house, and offered to come over early to help set up. She assigned me the task of making a layered egg dish that I promptly rechristened “Erik Egg-strata” and with which I managed to start a fire in her oven. She still invited me to transfer with her when she took a job at another school, and it is indeed a hilarious story that I tell at every opportunity.

selenana (#673)

I’ve been wanting to open one since I started reading this site but – I don’t get W-2s. Though I’m a US citizen, I live in Japan, and some of my income is in yen. I earn a little in dollars from freelance assignments, but I don’t receive W-2s – at best I get some freelance/contractor forms, what are they called, 1092s? I have some money socked away in a savings account that is not doing much (BofA sux). So can I not transfer it into that Roth IRA?

Where are you going to grad school that your stipend is $30,000? That is like an actual middle-class wage! The stipends I know of (including my own) are two-thirds to half of that.

runningpig (#1,244)

@mirror_father_mirror Many engineering/science stipends for universities in cities are on the order of $30,000; some start lower, and end up that high once you’ve passed qualifying exams

phenylalanine (#717)

@mirror_father_mirror Hahaha that was my first thought. Mine is actually less than a third of that. (Granted, I live in the South, in a small city. So it’s livable. But still.)

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