Paying for Grad School

A few days ago, I took some of my own advice and wrote a question in to be answered by my very own personal financial planner. I was quite impressed to receive, not 1, but 2 answers! Unfortunately, they didn't tell me really anything I didn't already know (namely that I am up the creek sans paddle), but since they were kind enough to reply, I don't mind giving them some free (abeit limited) press. See below for the exciting exchange!

I am 23 years old, with some undergraduate debt, a steady job,and a 401(k) and Roth IRA that I regularly contribute to. I am hoping to return to graduate school sometime in the next 2-3 years. What can you recommend as the best way to save for graduate school?

Continue using the Roth IRA and setup a high yielding money market account. Many fund companies like Vanguard or ING's Orange Savings account offer high yields. You could continue to fund the Roth IRA for educational needs because the Roth IRA offers an exception for educational needs. Just check with the IRA custodian for filing requirements to get the exception.

Good Luck. Robert Ratti, CFP
800.828.8957 (TOLL FREE - VOICE)
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Considering that grad school is only 2-3 years away, you don’t have that many options as far as savings vehicle is concerned. I recommend a safe investment such as a CD or money market fund. The time frame doesn’t allow you to take any risks. You might consider a 529 Plan, but unfortunately, the short time frame also complicates matters.

Hope this helps.
Jimmy S. Sarmiento, CFP®
Certified Financial Planner Practitioner