I'm planning to attend graduate school (USA), which will cost around 200k over 3 years. I have about 200k in highly appreciated stock (basis average of 100k, long-term gain) in a personal investment account.

I'd have to liquidate a minimum of 66k per year, resulting in 33k of capital gains. That, plus other earned income, will put me in the capital gains bracket of 15% federal and 5% state.

Alternatively, I could keep all my money invested, and take out a student loan. I have good credit and could probably get a 5-6% APR given current low rates. Then at the end of school I have 200k invested +/- 3 years of market fluctuations (hopefully +), but I also have a bunch of historically relatively cheap debt.

Intuitively, I feel like losing 10% of my stock's value to taxes, not to mention a few years of time-value in my portfolio, seems worse than paying 5% APR amortized over 10 years.

My third alternative is to split it somehow--liquidate some stock, but not enough to trigger the 15% federal bracket. Pay the rest with student loans. This would be about 100k each. But I'm not sure how to figure out if that's a better idea.

So, should I liquidate enough stock each semester to pay for school or take out some portion in student loans?

  • I know that money.se tends to be pretty debt-averse, which is one reason I'm asking here. But if anyone wants to argue that leveraging oneself to a 100% D/E ratio is not as stupid as it sounds, I'm all ears.
    – jhch
    May 28, 2020 at 21:06
  • related, but I'm already sortof in the situation advised against here money.stackexchange.com/questions/46625/…
    – jhch
    May 28, 2020 at 21:16
  • What are your goals after graduation? For example, do you want to buy a home or rent? May 28, 2020 at 23:51
  • 1
    Have you done everything you can do to bring that cost down? Picked a in-state school that you don't have to move to? Can you go part time so you can work more hours? Have you submitted the FAFSA to see if there is any aid you can get besides a loan? How much of a guaranteed bump in pay will this program get you? May 29, 2020 at 12:42
  • I'd like to buy a home in the future. And, yes, I've done what I can to keep costs down. There is no guaranteed pay bump unfortunately, although it is likely to some extent. It's not unreasonable to see a six figure increase, but also could just be 10k increase.
    – jhch
    Jun 2, 2020 at 18:41


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