Saving left over financial aid for graduate school

[Bennyden]

From financial aid grants, I am receiving about $3000 leftover per year after my personal and textbook expenses.

I am thinking of opening a savings account and and depositing this $3000 every year in order to save up a bit for medical school. So by the end of my undergrad school, I would have $12000 + interest saved ready for medical school. I know it doesn't even fully cover a year of medical school, but a grand saved is a grand less to borrow from loans.

Here's is where my question comes in; would this accumulation of money in my savings account effect how much financial aid grant I receive each years?

For example, if having $3000 in my savings account after freshman year lower the financial aid I would receive for sophomore year to $2000 and therefore ruining the plan?

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[TobiasFunkeMDFACS]

There's no point in saving for grad school. I would say that you'd be better off spending this money. You will have to take out loans in grad school, but they're federal loans that qualify for Income Based Repayment (IBR). So, it limits your personal liability if you're not in a position to pay it back for some reason. That's the main reason that you don't see med students borrowing from family or using their own money to pay for medical school.

Also, you're right in that the money you save will be factored into a formula for your future financial aid and it will certainly reduce the grants you get in the future.

If you want to be productive with this money, spend it on test-prep material for the MCAT, study guides, etc.

 

[Bennyden]

There's no point in saving for grad school. I would say that you'd be better off spending this money. You will have to take out loans in grad school, but they're federal loans that qualify for Income Based Repayment (IBR). So, it limits your personal liability if you're not in a position to pay it back for some reason. That's the main reason that you don't see med students borrowing from family or using their own money to pay for medical school.

Also, you're right in that the money you save will be factored into a formula for your future financial aid and it will certainly reduce the grants you get in the future.

If you want to be productive with this money, spend it on test-prep material for the MCAT, study guides, etc.

Wouldn't 12000 out of my own pockets be 12000 I won't have to borrow from the government though?

 

[GraC_undr_PrsR]

Wouldn't 12000 out of my own pockets be 12000 I won't have to borrow from the government though?

Why don't you save some and invest some? You could be on to something... Saving is a good thing. Sounds like you're really savvy about finances and having an emergency fund is a good thing. There are many free accounts out there so do your homework about which one will give you the best interest rate.

However, you could probably save a lot more if you reduce the amount of loan you have accepted in your financial aid package. This way, you save about 6.8% on federal loans you didn't need.

 

[plauto]

However, you could probably save a lot more if you reduce the amount of loan you have accepted in your financial aid package. This way, you save about 6.8% on federal loans you didn't need.

this. A guaranteed 6.8% on your money is golden these days. Don't take the money out if you are or will be paying interest on it.

 

[Bennyden]

Thanks fornthe responses guys.

So it would be more beneficial to save?

Also, as an alternative so that my future financial aid grants would not be effected, would it be better to privately save my money (like in a private safe) so that the financial aid cannot check up on it and my future federal grants won't be effected.

Or should I just save in a savings bank?

Thank you.

 

[Bennyden]

If I understand correctly, the grant money you will save ($12,000) is yours to keep and you will not have to pay it back.

If you are worried that having $12,000 to your name will effect how much you can get in "grants" in medical school, I wouldn't worry about it all that much. It may exclude you from some grants, but in general there are a lot fewer grants available to medical students vs undergrad.

Save some and invest some as was mentioned above. Make sure to save in a higher yielding online bank (money market account type) like ING Direct where you can at least get 1% interest back vs 0.1% at a regular bank.

Good job with the savings. Most people don't have that kind of will power.

Yes, I do not have to pay the grants back.

No, I am worried that having $3000 in a savings account one year will reduce the federal financial aid grant I receive in the follow year to less than 3000, guessing that the government can check it or I have to report it when reapplying for financial aid.

 

[Igor4sugry]

Since you will be applying as an independent student the savings will not be an issue.

I think its a great idea to save this money. Use the $12k as a rainy day fund. There will be expenses along the way in med school that your loans won't be able to cover.