Student Loan or Out of Pocket

[saf21a]

Hi
I am about to attend graduate school p/t for Computer Engineering ME and I can't figure out whether it's more beneficial to pay for graduate school out of my pocket or get student loan.

My job just had a new tuition assistance program but it's quite hard to get it and they only pay a maximum amount of $5000/year. I have money to pay out of pocket but I am not sure whether it's better to put the money I used to pay for school in a saving account to earn interest and get student loan instead.

Here's is my finance info.
I started my first f/t job out of college a year ago. I am making $59K. I have no debts. I put 10% into my 401K and I save about 60% of my income after taxes, FSA, 401K, insurance, etc.

With my salary, I am not sure if I can even get subsidized loan. I never had students loan before so I have no idea how it works.

[zetta]

Do you plan to take classes part-time while you continue to work? Definitely apply for the tuition assistance through your job -- $5k will cover a couple of classes a semester.

Interest rates for savings accounts are so low right now that you are probably better off paying out of pocket instead of taking a student loan.

[marvholly]

If you can get the student loan at a GOOD rate go for it. As I understand it, It does not rack up interest or require any payments until you get the degree or drop out of the program.

Then you can also bank the 5k tuition reimbursement (be SURE to go for it-apply & reapply as needed) and make a BIG payment immediatly after graduation; maybe even pay off the entire loan before more than a month/2 of interest hits.

[buildmybudget]

Typically, you won't be able to get a subsidized loan for grad school. I believe the federal rate is 6.8 percent, so you're much better off paying for it yourself unless you can find a higher rate(including inflation). Just make sure you have build a strong budget that shows you where you are headed(so you can make sure you will hit your tuition payments on time!)

[poundwise]

Definitely pay for it out-of-pocket if you are able.

[EEinNJ]

Congratulations on deciding to continue your education. I assume you are a fairly recent grad- the longer you wait the harder it is to go back and stick with it. Pay cash if you can without hardship. More education in a technical field may actually be a better investment than a few percentage points in a 401k contribution. By all mean get your employers tuition assistance. In my experience big companies offer it for advanced studies in your field of employment.