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# Keep cash or pay off debt before bschool?

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Intern
Joined: 31 Jan 2011
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Keep cash or pay off debt before bschool? [#permalink]

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27 Mar 2011, 18:32
I have a question about financial aid. I know that generally it's better to have a lower net worth when applying for aid, but at what point does it stop mattering?

For example, let's say I have cash and stocks worth \$50,000 and debt of \$25,000. Would my financial aid change significantly if I paid off the debt before applying? The interest on the debt is pretty cheap, so I'm not worried about that. All things considered, I'd prefer to have more cash on hand but not if it would significantly hurt my aid package.

Does anyone have any thoughts or input on this?

Thanks!

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Director
Joined: 04 Oct 2008
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Location: United States (CA)
Concentration: Entrepreneurship, Strategy
Schools: Michigan (Ross) - Class of 2013
GMAT 1: 770 Q50 V44
GPA: 3.3
WE: Project Management (Aerospace and Defense)
Re: Keep cash or pay off debt before bschool? [#permalink]

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03 Apr 2011, 15:39
You should review the FAFSA form, which shows how your EFC (Expected Family Contribution) is calculated. I believe schools use your EFC as one means of determining financial need.

Although the FAFSA uses your assets in the EFC cacluation, I think it may also allow you to deduct debt.
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Re: Keep cash or pay off debt before bschool? [#permalink]

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04 Apr 2011, 18:31
bump, im in a similar boat. i would like the extra cash to help cover cost of living, but i'd rather pay off some higher interest debt and take on a little extra student loan money if needed.

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Re: Keep cash or pay off debt before bschool? [#permalink]

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28 Feb 2016, 15:08
I think it really depends on how much you are currently paying in interest. Most education loans will come in at 6-9 percent. Therefore, if this is credit card debt we are talking about, it might make sense to pay it down. If it's a car or home loan at 3-5 percent, it might make sense to keep that debt around since it is relatively lower than other types of debt and it doesn't look as bad on your credit report as revolving debt.
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Re: Keep cash or pay off debt before bschool?   [#permalink] 28 Feb 2016, 15:08
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# Keep cash or pay off debt before bschool?

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