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URL:  http://boards.fool.com/i-second-the-opinion-that-you-should-not-take-19856641.aspx

Subject:  Re: Roth change Date:  11/14/2003  8:18 PM
Author:  yttire Number:  37840 of 75528


I second the opinion that you should not take from your retirement to pay for your kids educations. They can get loans. They should get loans. You will be unable to get loans to retire on.

If your finances do extremely well, help them pay down the loans in the future, but you don't have to commit to that out of the gate. Also, I would increase savings to your retirement, it sounds like you are uncomfortable with your savings at the moment. Head over to the budgeting board and come up with a budget, we'll help you trim it down to size ;)

Even if you were to want to pay for your kids education outright, you might be better off not paying for it immediately. Another way to think about it is the rate of return on the investment. If you are earning 8% on your investment, and the school gives a loan at 5%, you actually end up 3% ahead by TAKING the loan and not paying for the education in cash. Of course, this is assuming you get an 8% return, which may or may not be true. But if it were guaranteed, you would be better off making minimal payments on the loans and keeping the investments free to grow. Especially because last I checked, student loans interest was tax deductable, effectively reducing the interest rate.


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