Beastykato Posted August 13, 2014 Share Posted August 13, 2014 Hi, I am 27, a single father, and interested in pursuing PA school. I have looked into it in the past and getting into school isn't something I'm particularly worried about. The financial aspects of it for me are very worrisome though. I have a mortgage of ~900/month. In addition to that I have a job where I make ~60-70k each year. My job isn't very satisfying and I am not using my Biology/Chemistry degree at all in my current position. In addition, my work shift sucks (3-11pm) and I barely see my family. Now my question is, to those of you who are in or were in similar situations, did you just jump in headfirst and go for it? I'm very concerned about paying my mortgage with school loans and the loss of income for 2 years, not to mention the tuition. I estimate I will be approximately 240,000 in the hole with the combination of loans (100,000) plus the loss of income (140,000). Despite my desire to get into the medical field, strapping myself down with too much debt to get there would leave me a miserable PA, I think. So, I would just like some input on it and how you have all gotten through the financial burdens, especially those of you with children/homes/etc. Are there aid programs to help people like myself? Special loans for PA's and medical professionals? Any information is appreciated. Link to comment Share on other sites More sharing options...
Administrator rev ronin Posted August 13, 2014 Administrator Share Posted August 13, 2014 Do you have a 401K at your current job? Roll it all into an IRA when you quit, and then spend out of that IRA without early withdrawal tax penalty (up to the amount of your financial need letter) in the tax year when you have no other income--since even without penalty it is still taxed as regular income--and with a family you will pretty much not have to pay tax on it. Yes, you won't have that money left for retirement, but I don't see a way you DON'T come out ahead if you were forced to take private loans for that money instead. Link to comment Share on other sites More sharing options...
Beastykato Posted August 13, 2014 Author Share Posted August 13, 2014 I do have a 401k. So, that is an option. I admit, I'm very leery of doing that just because I've always been taught to never touch my retirement unless absolutely necessary. I am glad you reminded me about that though, because I forgot all about being able to tap my 401k and Roth IRA for educational expenses. Link to comment Share on other sites More sharing options...
cinntsp Posted August 13, 2014 Share Posted August 13, 2014 I do have a 401k. So, that is an option. I admit, I'm very leery of doing that just because I've always been taught to never touch my retirement unless absolutely necessary. I am glad you reminded me about that though, because I forgot all about being able to tap my 401k and Roth IRA for educational expenses. Tapping your 401k to go to Tahiti = bad. Tapping your 401k to increase your earning power considerably without paying years of interest = good. You will likely earn less in your 401k than what you're paying in interest on 100k in student loans so it makes sense to avoid that if possible and then just increase your retirement investments after graduating. Link to comment Share on other sites More sharing options...
GetMeOuttaThisMess Posted August 13, 2014 Share Posted August 13, 2014 IRA early withdrawals come with hoops to jump through to avoid 10% early withdrawal penalty. Link to comment Share on other sites More sharing options...
winterallsummer Posted August 13, 2014 Share Posted August 13, 2014 Student loans ~26K/yr. Get credit cards with 0% or low APR and pay minimum payments on time. Live frugally. Link to comment Share on other sites More sharing options...
Administrator rev ronin Posted August 13, 2014 Administrator Share Posted August 13, 2014 IRA early withdrawals come with hoops to jump through to avoid 10% early withdrawal penalty. Been there, done that, and it's really not that hard at all. Just gotta know you're doing it and declare to your IRA custodian at the time of withdrawal that you're using it for approved educational purposes. Your 1098-T and financial aid letter will vouch for you if needed. You DO need to declare it as regular income in that tax year--there is no getting around that, but if you've got no other income, your tax burden will be minimal at most. Link to comment Share on other sites More sharing options...
primadonna22274 Posted August 14, 2014 Share Posted August 14, 2014 I tapped my IRA for education expenses for med school and it was tremendously helpful and almost no penalty. In my situation it was the right financial decision. YMMV. Link to comment Share on other sites More sharing options...
gbrothers98 Posted August 14, 2014 Share Posted August 14, 2014 Tapping your 401k to go to Tahiti = bad. Tapping your 401k to increase your earning power considerably without paying years of interest = good. You will likely earn less in your 401k than what you're paying in interest on 100k in student loans so it makes sense to avoid that if possible and then just increase your retirement investments after graduating. This person inquiring is 27, so likely only 6 or 7 years of compounding in that 401k. If you can get accepted soon, graduate in your early 30s, still have time to catch up, but if you have been contributing regulary since just before the recession, you are sitting on some potential capital gains that may be taxed differently than income. I would consult an accountant or tax expert to avoid any surprises. Other suggestion is to investigate National Health Service Corps scholar program or Active duty military health professional programs. The local PA program near me has had 2 students accepted to the Navy program over last 2 years. The NHSC program has a small window of opportunity every year and seems to be rather tight in accepting applicants. Both obviously involve a significant pound of flesh on your part you may not want to consider. A few other things: Have you thought about selling the house or renting it out and yourself renting a cheaper place? Is there a PA program near enough to you that you can commute or do you do above? If you are the single father then who is watching/raising the kids? I have seen students commute an hour plus each way, rent their houses out (one was in Alaska, program in NH) and juggle childcare with the help of spouses, grandparents, friends, unhelpful exes and daycare. Lots of stress added onto a very stressful couple of years but they did it. Good luck G Brothers PA-C Link to comment Share on other sites More sharing options...
Administrator rev ronin Posted August 15, 2014 Administrator Share Posted August 15, 2014 [...] if you have been contributing regularly since just before the recession, you are sitting on some potential capital gains that may be taxed differently than income. I would consult an accountant or tax expert to avoid any surprises. Growth is tax free, but withdrawals of pre-tax dollars are taxed in the year in which they are withdrawn. If you withdraw it in a year with no other income, you can carefully manage and minimize the tax burden on that income. Capital gains don't play into it. Link to comment Share on other sites More sharing options...
Nucs2PA Posted November 14, 2014 Share Posted November 14, 2014 I would like to know more about this as I am trying to firm up a plan to pay for school... I make a pretty decent salary and my husband makes a good salary. We have children. I will stop working and roll my 401-k into an IRA. Does it matter if it's traditional or Roth when you want to withdraw with minimal penalties to pay for qualified educational expenses? I'm assuming the best time to do this would be in 2016 since I will be a student summer 2015 thru summer 2017. When I withdraw in 2016, I'm thinking that will be used for 2016-2017 school year? Any thoughts or advice are definitely appreciated!! I know a lot of people on here have done this or are about to! Link to comment Share on other sites More sharing options...
Administrator rev ronin Posted November 14, 2014 Administrator Share Posted November 14, 2014 Everything you said sounds right, but our situations seem to differ in that your husband will be still making an income, while my wife had only some part-time work in the year we withdrew from my IRA--our total earned income was less than $4000 if I recall correctly. Consult a tax advisor. Really, you'll be better off. Link to comment Share on other sites More sharing options...
Nucs2PA Posted November 14, 2014 Share Posted November 14, 2014 Thanks rev ronin. I was planning on consulting a tax advisor or financial planner! Link to comment Share on other sites More sharing options...
arnosr190 Posted November 15, 2014 Share Posted November 15, 2014 I like G-Brothers approach and was thinking the same thing if IRA doesn't pan out. I'm looking into real estate as a side gig and think you may be able to use your home as leverage as well. Some options: 1) Home equity line of credit - although might not be enough 2) refinance your mortgage if its not already at the lowest rates to lower monthly payments then rent a room out to a PA student 3) If you're in a cool part of the country put your home up on airbnb.com and rent a room. Have a friend who does that, pays entire mortgage with it 4) Sell home, use proceeds to buy a duplex...smartly, rent one side out and use rent to pay mortgage, meaning you don't pay mortgage: bigger pockets.com - or just become a real estate investor before PA school - might change your life 5) If you have extra cash use it to flip a home or use HELOC to purchase a flip - use all proceeds to pay for PA school. This is the hardest most risky option so be weary. Link to comment Share on other sites More sharing options...
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