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Make sure you keep some savings for bschool if you have to hold CC debt it will be much higher than the loans for your undergrad. Just moving can cost a few thousand from actual moving to putting down a deposit on an apt. Button up on spending and try to he extra frugal leading up to MBA.
Compare interest rates, perform a hard calculation, make generous assumptions, boom, your answer.
My suggestion is pay off the current debt except hold back an emergency fund (like $2000). Also, try to find scholarships for B school since that will put you back in the same hole you’re in.
Option 1: Pay off all student debt before bschool starts knowing I would be entering my program with nearly $0 in savings but at least no debt. I’d have to take out loans (federal loans) to support living expenses on top of tuition.
Option 2: Pay my debt at the current rate and have savings for bschool. I’d have to take out loans for only tuition.
Option 3: A bit of both so I have some savings for school while still adding some extra payments to my debt each month. Likely need to take out loans for tuition and some living expenses
What are the current interest rates for your existing and future GRAD student loans? What are the protections on your current student loans?
1. You need an emergency fund no matter what. You should adjust it to your situation, but never deplete it unless it's emergency.
2. If your current student loans are much lower interest than future grad loans, you'll probably be better paying what you can out of pocket for B school before you tackle your undergrad loans. This is what I did. Ended up paying off my 6% grad loans before my 2% and 5% undergrad loans.
3. Another reason I didn't pay off my 5% undergrad loans was because it did not incur interest during deferment! So make sure you understand not just the interest rate, but the terms of the loans. Do they all have the same terms for deferral, forbarence, repayment plans, etc?