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Posted: 2/26/2024 5:43:01 PM EDT
Like the title says I could do both so I am wondering whats the best route to go... plus another option Heloc.
In need about 18K to get my last kiddo thru her final year of undergrad. The 529 has run out and I am able to do this and would like for her to start debt free. She's been a 4.0 student and gets some small grants as well. 1. 401K loan for 18K / at my rate of put into there from my pay check i would have it paid back in 14 months. I may incease my withholding to pay more and be done sooner. 2. Liquidate some stonks as in AMZN, GOOG etc. But that has the obvious tax implications, Or 3. Use my Heloc, its variable currently at 9 % and the thought of that makes my stomach upset interest wise. I'd appriciate some input or am I missing anything? |
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GA, USA
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Posted: 2/26/2024 5:48:25 PM EDT
[Last Edit: giantpune]
[#1]
This is just for undergrad? How much more school is required before a degree materializes and the investment in college starts paying for itself?
Based on the limited information and the math problem you posed, I probably do the 401k loan. Just because you are paying interest back to yourself. With the backup plan that if something bad happened, you would liquidate the stonks to fulfill the 401k loan. |
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Posted: 2/26/2024 6:08:36 PM EDT
[#2]
Before I did ANY of those options I would ask about tuition reimbursement at her workplace. A LOT of employers offer this as a benefit but don't advertise it. IF she isn't employed, have her find a job that has this as a benefit. I met a 20 year old with a bachelors degree and 0 debt because she did this. If I had to pick out of the options you gave, I would take a 401k loan.
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Posted: 2/26/2024 6:19:27 PM EDT
[#3]
I'm pretty sure you can only pay off a 401k loan in lump sum or weekly over 5 years. I don't think you can choose to pay it faster unless you pay it all at once. Your plan may be different.
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Posted: 2/26/2024 6:22:27 PM EDT
[#4]
Quote HistoryOriginally Posted By jte3470: Before I did ANY of those options I would ask about tuition reimbursement at her workplace. A LOT of employers offer this as a benefit but don't advertise it. IF she isn't employed, have her find a job that has this as a benefit. I met a 20 year old with a bachelors degree and 0 debt because she did this. If I had to pick out of the options you gave, I would take a 401k loan. She works in a Tanning salon. The dont offer anything of that nature. She makes enough to cover her fun stuff, beer and repay her car note to the bank of dad, which she's never been a day late for. |
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Posted: 2/26/2024 6:25:45 PM EDT
[#5]
Quote HistoryOriginally Posted By Jarcese: I'm pretty sure you can only pay off a 401k loan in lump sum or weekly over 5 years. I don't think you can choose to pay it faster unless you pay it all at once. Your plan may be different. was my understanding that all future monies contributed to my 401 K would go to repayment of the loan first. I do $500 per pay, plus my commission also goes that way too and above is just another pay to me. So $1500 month paid back. Caveat, i have not spoken to my plan people yet. I come to the firearms guys first, non GD 
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Posted: 2/26/2024 6:27:33 PM EDT
[Last Edit: Rival14]
[#6]
Quote HistoryOriginally Posted By giantpune: This is just for undergrad? How much more school is required before a degree materializes and the investment in college starts paying for itself? Based on the limited information and the math problem you posed, I probably do the 401k loan. Just because you are paying interest back to yourself. With the backup plan that if something bad happened, you would liquidate the stonks to fulfill the 401k loan. Yes undergrad. Law enforcement / crimminal justice studies. Wants to be on the investigative side, not another lawyer. |
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GA, USA
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Posted: 2/26/2024 6:30:07 PM EDT
[#7]
Quote HistoryOriginally Posted By Rival14: She works in a Tanning salon. The dont offer anything of that nature. It wouldnt be the tanning salon. It would be the place she intends to work in the future when she gets a big girl job. Hospitals and law offices do this fairly commonly. Free school for you, and you agree to work for them for X number of years after graduation. Which is also a win, because you already have a job lined up when you get out. Ideally, she would already be trying to get her foot in the door at these sort of businesses. Work the mail room, gift shop, janitor, housekeeping, etc. There is less friction getting HR to hire somebody and pay for their school if they already are on payroll. But its not required. |
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Posted: 2/26/2024 6:30:34 PM EDT
[#8]
Why not get a FAFSA loan for her final year?
Yeah, it'll be in her name, but you can pay it off. The thought of getting into my 401k turns my stomach as much as a HELOC (which I absolutely would not do). |
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Posted: 2/26/2024 6:37:52 PM EDT
[#9]
Quote HistoryOriginally Posted By Rival14: was my understanding that all future monies contributed to my 401 K would go to repayment of the loan first. I do $500 per pay, plus my commission also goes that way too and above is just another pay to me. So $1500 month paid back. Caveat, i have not spoken to my plan people yet. I come to the firearms guys first, non GD That's not how it works with my plan. You still contribute(or not) to your 401k. Your employer divides your loan by a selected number of weeks plus interest and takes it out of your check. Interest is paid to yourself. You might have different selections of payback length, but usually you cannot choose to pay faster unless in lump. So you would be paying into your retirement before taxes and paying your loan after taxes. That's my employer though. You should be able to figure it out quickly on your 401k provider's site. |
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Posted: 2/26/2024 8:37:05 PM EDT
[#10]
National guard! 100 paid tuition.
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Posted: 2/27/2024 12:13:18 AM EDT
[#11]
If you have excellent credit you can find private parent plus loans at 5%.
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Posted: 2/27/2024 12:56:36 AM EDT
[#12]
Quote HistoryOriginally Posted By Rival14: Yes undergrad. Law enforcement / crimminal justice studies. Wants to be on the investigative side, not another lawyer. Is she afraid of acorns? |
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Posted: 2/27/2024 12:56:41 AM EDT
[#13]
Check your state to see if there are state tax deductions for their 529. Then you can at least avoid state tax on that $18k by contributing it and immediately paying her tuition with it.
You need to do the math to see which option is better - your retirement timeline, age, and cost basis(ie profit) of investments you would sell are the big factors. |
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Posted: 2/27/2024 11:01:08 AM EDT
[#14]
Army National Guard or Air Guard will pay 100% of tuition.
also.. not to be too discouraging, what has she done to prepare herself for her career work wise to gain any level of experience? working at a tanning salon isn't going to help her any. I make all my University Student employee's go do internships. every single one of them ends up working for that company later on. I've been dealing with high drive college students for 20 years now with my company. 90% of college students have no idea that the world is about to bitch slap them. make her get some serious skin in the game other than working at a tanning salon. |
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Posted: 2/27/2024 11:02:17 AM EDT
[#15]
Quote HistoryOriginally Posted By Morgan321: Check your state to see if there are state tax deductions for their 529. Then you can at least avoid state tax on that $18k by contributing it and immediately paying her tuition with it. You need to do the math to see which option is better - your retirement timeline, age, and cost basis(ie profit) of investments you would sell are the big factors. this is what I was also going to recommend. pay into the 529 pay it off thru the year/semester. get that deduction. |
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Posted: 3/4/2024 2:08:02 PM EDT
[#16]
Have her borrow the money. That is not a lot of college loan debt.
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PA, USA
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Posted: 3/4/2024 2:48:44 PM EDT
[Last Edit: TSLtrek]
[#17]
Personally I would liquidate the stonks. Then you are free and clear. You're already in the market with the 401k.
IMHO. YMMV. |
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Posted: 3/11/2024 9:16:03 AM EDT
[#18]
Quote HistoryOriginally Posted By FALARAK: Have her borrow the money. That is not a lot of college loan debt. Probably this, unless you promised to cover it, then I would do the 401k loan. Sorry to hear that she is doing criminal justice “wanting to do the investigative side”. Too much CSI TV shows causes this, saw it all the time with college kids on ride alongs (required for a class). Nobody gets to do investigative work without starting at the bottom (street cop), unless they get one of the fairly rare crime scene tech jobs (which are also low pay/no upward movement possible). (Also those are not actually investigators, they are documenters). On the plus side, agencies are desperate for new hires at least. Criminal justice degrees are among the least useful ones out there. Nobody I know recommends them for people wanting to do criminal justice work…at some point it might be useful, if you make command staff level, maybe. And for the huge percentage that washes out or never gets a job offer, kind of as useful as an art history degree or similar… |
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Posted: 3/11/2024 10:14:50 AM EDT
[#19]
Make her take a student loan. Even if you pay it yourself, I bet the interest is much less. $18K isn't squat.
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Posted: 3/13/2024 7:27:36 AM EDT
[#20]
Originally Posted By Rival14: In need about 18K to get my last kiddo thru her final year of undergrad. The 529 has run out and I am able to do this and would like for her to start debt free. Although your heart is in the right place, you aren't using your retirement account properly. Spend more time finding low cost loans for her or finding other grants. |
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NV, USA
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Posted: 3/13/2024 11:55:17 AM EDT
[#21]
Student loan or sell enough stock to cover it. I'm in the never touching the retirement funds until well into retirement camp.
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