I need to pay for the tuition for a 2-year graduate school program.

Since I don't have to, and can't, pay tuition of 2 years in advance, but need to pay interest, I want hold the value of my borrowed cash against the interest. I don't want to waste the interest. Is there any low risk assets with annual return that at least I can cover the loan interest?

The setting is like: Let's say I plan to borrow 150k USD to fund my tuition and other living expenses, and the tuition will be charged 4 times in September and January in 1st and 2nd year respectively. And let's say the annual interest rate is 1.7% with 3 years of grace period where I need to pay only the interest.

How should I do to hold value for my borrowed cash?

  • 2
    Why would you not borrow each lump as and when you need it?
    – Vicky
    Commented May 25, 2017 at 10:39
  • It's a special loan with a low interest rate. But it requires to borrow in bulk. Commented May 25, 2017 at 16:48
  • What program are you enrolled in that doesn't pay a stipend and prevents you from working at least part-time?
    – chepner
    Commented May 25, 2017 at 17:29
  • at 1.7% APR, your interest charges through the grace period will be $7,650, $212.50 per month for 36 months. Are you sure taking this lump at that rate is actually less expensive than just taking a loan at the prevailing rate when you actually need it?
    – quid
    Commented May 25, 2017 at 18:52
  • @chepner 2 years probably rules out a Ph.D so any professional program (law, medicine), MBAs, most non-STEM degrees, many master's programs even in STEM fields
    – mkennedy
    Commented May 25, 2017 at 19:26

1 Answer 1


What you want to do is basically borrow money to invest. This is generally a bad idea. It's called leveraging risk and it can work to your advantage, until it doesn't.

If this is a special loan with a low interest rate then I'm going to assume it's a family member? That's also generally a bad idea because it can affect your relationship with them.

As I understand it (and I could be wrong) a federally backed student loan doesn't accrue interest while you're in school. So you might be better off taking a federal student loan and then take this special loan for the lower interest and pay off the federal loans.

But lets take even another step back. $150,000 seems like a lot to me. If it's a private school, stop. You want to go to your local state university. Mine estimates around $80,000 for someone from out of state and $46,000 if your in state. http://admissions.utah.edu/cost/

What's your local state university cost? I would look at that before considering going into debt of $150,000. You can buy a house for that much money.

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