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My son is in grad school, and for his final year I would encourage him to use student loans rather than tap his IRA, because:

- Once money's taken out of an IRA, it can't be put back. When he's at the point he can contribute again, better to add to an existing amount than start from scratch.

- Once the loan is paid back, he'll have no loan plus an IRA, whereas if he'd used the IRA, he'll have no loan and no IRA.

- A student loan might help his credit score, which at the moment is based entirely on his credit card usage (he has no other loans). (Which reminds me, he should check his credit report anyway, www.annualcreditreport.com )

- Regarding "rainy day" fund, after graduation, in the event of a true emergency, he could use his IRA then (it's a Roth he's had over 5 years, so no penalties).

YMMV.
Meanwhile, Phil, thanks for the Lifetime Learning Credit info, I'll have him look into that.
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