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Author Topic: Time off after undergrad and financial aid  (Read 1086 times)

yale08

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Time off after undergrad and financial aid
« on: April 16, 2008, 10:21:39 PM »
I am a college senior planning to take two years off before law school to do consulting.  I haven't yet researched law school financial aid extensively, but I know that for my undergraduate financial aid, there was in some sense a disincentive to save money before college.  The more that one had saved up, the more he would be expected to contribute. 

I have 12k in debt from undergrad that I will begin paying six months after graduation.  Almost all of that amount is subsidized, and I don't have to pay interest on it while I am in law school. 

What is the best way to handle finances between now in law school?  It seems that it would be smarter to invest what money I can save over the next two years and still take on a higher amount of law school debt.  Is this sensible?  Is money saved in 401(k) plans or in IRAs assessed in determining financial aid eligibility?  Or would it be smarter to pay what I can up front and have less debt (though this amount will not be very much relative to the cost of law school).

hbb

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Re: Time off after undergrad and financial aid
« Reply #1 on: April 17, 2008, 12:25:31 AM »
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It seems that it would be smarter to invest what money I can save over the next two years and still take on a higher amount of law school debt.  Is this sensible?

How much would you be saving and how do you plan to invest it?

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Is money saved in 401(k) plans or in IRAs assessed in determining financial aid eligibility?

Generally, no. The FAFSA does not request this information, although some institutional forms might. I can't recall if NeedAccess considers retirement funds assets.



If you decide to invest the money you are able to save while working (and paying off your existing debt), consider investing through a Roth IRA. The investment would not affect your eligibility for need-based federal aid, and the contributions can be withdrawn at any time, for any reason.