[Stella]

Daughter is in dental school, she has to rely on loans for tuition (~$87k per year at 8%).

We help every month with paying 100% of her living expenses and about $1000 per month for the loans.

She has about $12k from gifts from grandparents, what is the best to do with that $ (put in her Roth, High yield interest or put towards loans).

She is 22 and has 3 more years of dental school before she can generate income.

I personally feel she should save that $ because they will come very handy in the future especially in her Roth (she worked during the summer so it’s justifiable).

She started investing about 3k per year in her Roth since she was 19.

My understanding is that all the FI gurus speak about investing in that Roth as early as possible, but what you do when you have these huge loans at young age?

What do you guys think?

[Christopher]

$87,000 * 4 years = $384,000. At 8%, that’s $27,840/year in interest, or $2,320/month (again, just in interest).

These are pretty serious numbers to be playing with. Some time is warranted doing the math for yourself (herself) to see if it’s worth it.

[Andrea]

The math answer depends how much the loans cost interest wise, and how much the Roth IRA could make interest-wise.

But personally, I would just try and get debt free as soon as humanly possible.

Putting it in the Roth feels like trying to save for the future with a noose tightening around your neck.

[Dan]

Unless she has earned income she can’t do a Roth for that given year, unless she is married and the partner works

[Author]

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