Pay Cash for Grad School?

Ressa wants to know whether she should start paying back her student loans before going to grad school.

QUESTION: Ressa is a senior at Middle Tennessee State University and will be going on to grad school.  She wants to know if she should start paying her student loans back before she graduates and borrow to go to grad school or leave the undergrad loans alone and pay cash for grad school. 

ANSWER: Do not pay on the undergrad loans until you have the money to pay cash for grad school.  If you pay off the student loans, but take out a loan for grad school, what’s the difference?

Pay cash for grad school and if you have any money left over, pay on your undergrad loans.  If you can’t afford to pay your undergrad loans while you’re in grad school, just start paying on those after grad school and pay as much as you can on your smallest debt right now. 

In your case, the best thing may be to build up a big emergency fund until you get out of school.