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Take student loans or use taxable investments?

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  • Take student loans or use taxable investments?

    I'm a first year medical student with a family of three (soon to be four) and roughly $50k in a taxable investment account.  I'm also a veteran and what is remaining of my GI Bill is paying the lion's share of my first two years of school.  I'm using savings (apart from investments) to cover the remainder.

    My dilemma going into 3rd year is what to do with the taxable account.  Should I take out federal student loans (current rate 5.84%) and migrate the $50k over the next ~five years into my Roth as well as my wife's?  Or should I use the taxable account to pay for tuition?  I'm at my state school so the $50k fully covers the cost of attendance for the 3rd year but I would still have to take out some loans for the 4th year.

    With the rise of companies like SoFi and DRB, I'm leaning towards taking out loans and refinancing to a lower interest rate in residency.  The loan size will be small enough that I could feasibly cut it in half during residency and finish it off during my first year as an attending.  Additionally, migrating the $50k into our Roths will give us a jumpstart on retirement as we wouldn't otherwise have the means to make Roth contributions during the next four years.

    This seems fairly straightforward but I want to make sure I'm not overlooking something.  Any advice?

  • #2
    Thank you for your service.

    I vote for the Roth contributions, assuming all of your other ducks are in a row (emergency fund, life and disability insurance, 80% or less on your mortgage, no credit card debt, etc.) You're doing a great job with your debt load so far.
    Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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