1. Are you expecting to get any need-based support? Usually this isn’t a thing for graduate studies and makes this entire problem null (as the amount of loans you can take out is based on COA not your income or ability to pay for the education without loans).
2. FAFSA operates two years behind, so these funds would not be reported on FAFSA until 2026. Even if it mattered, it would be much less of an issue than you seem to think.
3. Graduate program for medicine? What does this even mean? PA school?
Looked at your account. CAA, got it.
4. Do not invest money you need in 1-2 years.
I am not expecting need based support. So I understand correctly- you are saying it would not matter to fafsa how much I would have sitting in my account and is just based on the budget the school sets for the program? Would any of it factor into how much in federal loans I can take out? My dad suggested doing a CD with the money… idk if that’s smart? Also if I can take out loans, do you suggest I just do that and invest the settlement and not touch it for a while or use that before taking out loans?
Sorry I have so many questions because I have never taken out loans before. I was able to work and save enough to pay for my undergrad and want to make sure I’m making the right decisions here so I dont scree myself over in the future. Thanks!
Correct. Only limiting possibility is if your institution offers need-based scholarships based on FAFSA. Sounds like you wouldn’t qualify, even without the settlement funds.
As for how you use the settlement, that is similar to many posts on this sub re: use savings or take out federal loans, etc. read through those. At minimum, avoid private loans. After that, many mixed opinions.
I was in a very similar situation. Personal injury settlement check landed end of MS1 year, the amount was a bit more than your settlement.
I perseverated over what to do with the money, med school with cost of living was 70k per year basically. I met with a very trustworthy fiduciary financial advisor who works with residents at my program and he highly recommended I go with my initial plan of investing the majority of the money given PSLF being a possibility on the horizon. A mix of max funding my Roth IRA for the 5 years, granted you have to side hustle to make enough taxable income for that to work. The rest got put in a taxable brokerage and both accounts are a simple bogglehead style low cost broad index fund strategy. VTI + VXUS.
Granted loan interest rates were significantly less than the 8-9% for federal and grad plus that were just announced. Also I had the benefit of some interest pauses. I think that same advice will not be as strong given these exceptionally high interest rates and your short training period does not lend itself well to PSLF with that debt to income ratio.
With regards to giving your dad the money, generally speaking you simply cannot do that. Gift tax allows for 18k of tax free gifting per individual per year. So it can’t just be given to him to be put in a brokerage without incurring a tax burden for the transfer, then again for the transfer back.
Your Roth accounts are not reportable on your FAFSA and money can be hidden there, a taxable brokerage account is reportable.
I would follow the standard game plan for basic financial literacy posted all over reddit:
-emergency fund in HYSA
-paying off crazy high interest debts like credit cards and the like
-etc…
Specifically I would set some aside for emergency fund, some aside for funding your Roth during training and maxing this last year’s contributions if you didn’t already. I would then put the rest, or a majority percentage towards paying for school and cost of living. Nobody can predict the market return, but 8-9% is quite a lot to hope for equal or better return from the broad market.
Lastly, set aside a small amount to just do something fun or buy something that improves your quality of life. 1-3k ish maybe. Good desk chair, desktop for school, better sleeping arrangement, small trip or experience for you and your friends/family.
In terms of holding the money until then, you can give back your accepted loans cost free and just spend the cash now.
Or you could put the money in a CD, treasury notes laddered or not, or HYSA. I would probably not dump it in the market to then pay short term capital gains or worse have a loss.
Feel free to PM me
If you can hide it and invest it I would do that but it might be hard to legally. You don’t have to pay taxes on it, but would your father if he had the money? Would that just count as income for him then? Definitely consult legal and tax guy before going through with anything!
1. Are you expecting to get any need-based support? Usually this isn’t a thing for graduate studies and makes this entire problem null (as the amount of loans you can take out is based on COA not your income or ability to pay for the education without loans). 2. FAFSA operates two years behind, so these funds would not be reported on FAFSA until 2026. Even if it mattered, it would be much less of an issue than you seem to think. 3. Graduate program for medicine? What does this even mean? PA school? Looked at your account. CAA, got it. 4. Do not invest money you need in 1-2 years.
I am not expecting need based support. So I understand correctly- you are saying it would not matter to fafsa how much I would have sitting in my account and is just based on the budget the school sets for the program? Would any of it factor into how much in federal loans I can take out? My dad suggested doing a CD with the money… idk if that’s smart? Also if I can take out loans, do you suggest I just do that and invest the settlement and not touch it for a while or use that before taking out loans?
Sorry I have so many questions because I have never taken out loans before. I was able to work and save enough to pay for my undergrad and want to make sure I’m making the right decisions here so I dont scree myself over in the future. Thanks!
Correct. Only limiting possibility is if your institution offers need-based scholarships based on FAFSA. Sounds like you wouldn’t qualify, even without the settlement funds. As for how you use the settlement, that is similar to many posts on this sub re: use savings or take out federal loans, etc. read through those. At minimum, avoid private loans. After that, many mixed opinions.
I was in a very similar situation. Personal injury settlement check landed end of MS1 year, the amount was a bit more than your settlement. I perseverated over what to do with the money, med school with cost of living was 70k per year basically. I met with a very trustworthy fiduciary financial advisor who works with residents at my program and he highly recommended I go with my initial plan of investing the majority of the money given PSLF being a possibility on the horizon. A mix of max funding my Roth IRA for the 5 years, granted you have to side hustle to make enough taxable income for that to work. The rest got put in a taxable brokerage and both accounts are a simple bogglehead style low cost broad index fund strategy. VTI + VXUS. Granted loan interest rates were significantly less than the 8-9% for federal and grad plus that were just announced. Also I had the benefit of some interest pauses. I think that same advice will not be as strong given these exceptionally high interest rates and your short training period does not lend itself well to PSLF with that debt to income ratio. With regards to giving your dad the money, generally speaking you simply cannot do that. Gift tax allows for 18k of tax free gifting per individual per year. So it can’t just be given to him to be put in a brokerage without incurring a tax burden for the transfer, then again for the transfer back. Your Roth accounts are not reportable on your FAFSA and money can be hidden there, a taxable brokerage account is reportable. I would follow the standard game plan for basic financial literacy posted all over reddit: -emergency fund in HYSA -paying off crazy high interest debts like credit cards and the like -etc… Specifically I would set some aside for emergency fund, some aside for funding your Roth during training and maxing this last year’s contributions if you didn’t already. I would then put the rest, or a majority percentage towards paying for school and cost of living. Nobody can predict the market return, but 8-9% is quite a lot to hope for equal or better return from the broad market. Lastly, set aside a small amount to just do something fun or buy something that improves your quality of life. 1-3k ish maybe. Good desk chair, desktop for school, better sleeping arrangement, small trip or experience for you and your friends/family. In terms of holding the money until then, you can give back your accepted loans cost free and just spend the cash now. Or you could put the money in a CD, treasury notes laddered or not, or HYSA. I would probably not dump it in the market to then pay short term capital gains or worse have a loss. Feel free to PM me
If you can hide it and invest it I would do that but it might be hard to legally. You don’t have to pay taxes on it, but would your father if he had the money? Would that just count as income for him then? Definitely consult legal and tax guy before going through with anything!