$16,000 Gift

[koercive]

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I received a $16k graduation gift from my grandparents. I am very thankful that I will not have to pay interest on at least this amount to pay off my grad loans.

How should I split this up paying off my tuition for the next 4 years? I have invested in stocks ($3k), and the rest is now sitting in a "high yield savings" (not so high anymore, ~1.5%)

 

[Igor4sugry]

Use all of your $16k to reduce your current dept now.

You will save on accrued interest from your total dept in the long run.

 

[PremedIowa]

Use all of your $16k to reduce your current dept now.

You will save on accrued interest from your total dept in the long run.

Agreed. If any of your loans are unsubsidized, you should use all of the money to pay for those.

 

[dragonfly99]

I agree.
Just use it to pay for your tuition and/or books and living expenses for this year. Stafford loans have, what, 6%+ interest right now? You're not going to make more than that via savings accounts or CD's of any kind, and the stock market is just gambling unless you are a total expert (and even then, it's still kind of gambling...).

 

[southerndoc]

Don't forget to claim the excess on your taxes. The government gets pretty strict about it. I think the current limit is $13,000/year, so you'll owe taxes on $3k.

 

[edmadison]

Don't forget to claim the excess on your taxes. The government gets pretty strict about it. I think the current limit is $13,000/year, so you'll owe taxes on $3k.

Sorry, this is incorrect. The donor is responsible for any gift tax (if any), not the recipient.

Ed