Take out loans or use 529?

Paying for College
1

<p>Hey everyone!</p>

<p>So, I have a few options in front of me for financial aid. All of them are equally affordable, per say. The biggest determining factor is that I will without a doubt go to grad or med school.</p>

<p>60k COA - 45k Free Money = 15k Gap</p>

<p>I was offered $3.5k sub, $2.0k unsub and $1.5k perkins. I also have a 529 account that has enough money to take care of the COA without loans (and then some).</p>

<p>Option 1:
Take out the sub loans ($5k) and use part of the 529 to pay the rest. Let the 529 gain interest every year. </p>

<p>Option 2:
Take out all federal loans ($7k) and use even smaller part of the 529 to pay the rest. Let the larger part of the 529 gain interest every year.</p>

<p>Option 3:
Take out zero federal loans ($0k) and use a very larger part of the 529 to pay the rest. There will be a tiny (to zero, depending on inflation/COA increase) bit left in the account for grad school.</p>

<p>Those are the three options I am faced with, and I am leaning towards Option 1, since the loans wont gain interest during undergrad or grad! This is good because I wont be able to get sub loans in college. Though, half of the money (two accounts, one is an UTMA 529) will become my possession when I turn 21, so that year (senior year), I will most likely get zero finaid.</p>

<p>For the second option, should I risk the 529 doing better than the interest accruing on the loans? It seems that if I couldn't, then that would be a bad idea.</p>

<p>Any suggestions or help would be great!</p>

2

<p>I think a 529 in your name is still assessed at a parental rate for FAFSA purposes even if you turn 21. Tend to agree with you that you should only use sub loans, if your plans change for grad school you can still use the 529 to pay it off then, if interest isn’t accruing. Of course, your 529 investments could crash again like my son’s did, I wouldn’t invest in a very high risk fund if you plan on using it in the next couple years. Consult a financial advisor?</p>

3

<p>The UTMA 529’s custodian is a NCP, so it was no assessed by FAFSA and the prepaid 529’s custodian is my grandfather, so same situation. The UTMA 529 will be turned over to me on my 21st birthday (all control, no NCP), so it will probably be seen as huge income… sadly.</p>

<p>Consulting a financial adviser is probably a good idea. Lucky the prepaid 529 is based on instate tuition so it actually grew during 2008, and the UTMA 529 regained most of its losses since 2008 (aggressive growth, which idk if thats a good idea). I’ll call the financial institution later this month.</p>

<p>Thanks!</p>