So I am a 19yo sophomore in college and I have $40k in a CD (1.155% APY) that will mature in August 2018. I have two years left in my undergrad, and that will cost me about $40k. I was planning on just paying for school upfront with the money currently in the CD, but I spoke with a friend today and he made me consider a different route.
My friend is an insurance salesman and also works in financial planning for retirement (in the field for 50 years). He told me upfront that he is not an expert in student loans and short term investments. However, he is a pretty smart man when it comes to finances and I trust him. He told me to consider taking out loans for my last two years of college, and invest my $40k. When I get out of school, then pay of my loans in a large lump sum with my $40k plus interest. Of course, he told me that this route only makes sense if I gain more interest off of my investment compared to the interest on the student loan. He was not aware of the student loan rates and short-term investment rates at the time of our discussion, but he was going to call some of his colleagues in short-term investment tomorrow and get back to me. He made it clear that he was just throwing the idea out there for me to consider. I hadn't even thought of this option because I have been told to avoid student loans at all cost. However, I figured I might as well look into it.
After our conversation, I did some of my own research and it looks to me that the interest rates on student loans are too high to justify taking out loans. I was finding the majority of the loans to be around 5-10%, and I have not been able to find any short-term investment solution that makes that kind of interest.
However, I want to hear what you guys think. Should I just pay cash for my last two years and avoid loans? If not, what short-term investment routes would you recommend? Thanks!
Submitted January 11, 2018 at 07:45PM by milty4122 http://ift.tt/2Fu7Uvm
