Originally Posted by
liz
DS has a 529 plan that will only cover a few years of college. DS will have to take a school loan at some point. Is it better to use up the 529 plan first or start with the loan? DH's thinking is that the 529 plan is making more money than the current interest rates on school loans. He's thinking letting the 529 money sit untouched for a bit and let it make more money. WWYD?
We went ahead and took the federal student loans. A few reasons. As you said, the 529s right now have more potential growth, they are also down and we are trying to avoid withdrawals in a down market. Also, there is a good possibility that the student loan pause will be extended again, making them 0% interest for the time being. Lastly, you cannot go back at the end and take out the federal loans as there is a max per year. If you end up in 3 years needing more than the federal loan, you are looking at private/parent loans.
For the most part, this is a cash flow issue for us with 3 starting college in the next 4 years. We have told DS1 we will pay the interest while he is in school, and if things work out, we plan to pay them off for him, but due to his program and other factors, we are not as sure as we would like.
Mama to three boys ('03, '05, '07)