take 10k gift now or later?

[tinkerbelle]

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Someone is considering giving me 10k to help pay for medical school, and I'm wondering if I should take it now to pay for my first year (cost of attendance: ~$38,000) or if I should take it my fourth year of medical school when interest rates will probably be a lot higher. What do you guys think?

 

[MadameLULU]

sorry tinkerbelle, I don't have an answer to your question but I'm wondering if the receiver of such a gift have to pay a tax? I'm assuming a gift of this amount counts as income...

 

[docjolly]

Someone is considering giving me 10k to help pay for medical school, and I'm wondering if I should take it now to pay for my first year (cost of attendance: ~$38,000) or if I should take it my fourth year of medical school when interest rates will probably be a lot higher. What do you guys think?

Hi Tink,

I definitely think it depends on the current state of finances. Would you manage well without the 10k right now (in terms of housing, food, transportation, etc)?

Generous gifts such as the one you will receive are hard to come by. Although it may be tempting to take the money and use it now, I personally would save it for the fourth year of medical school. I'm certain that the financial obligations for being a fourth year medical student are quite high. Having that additionally money would be a life-saving blessing.

I like to look ahead and not "place all of my eggs in one basket." 😀

 

[tinkerbelle]

sorry tinkerbelle, I don't have an answer to your question but I'm wondering if the receiver of such a gift have to pay a tax? I'm assuming a gift of this amount counts as income...

hmm. I never thought about taxes....

 

[tinkerbelle]

Yeah, docjolly, i think it would be best to take the money fourth year too. I'll be ok this year... I've been offered enough gov't loans to cover my expenses for my first year. I figure interest rates will be a lot higher in 4 years and 10k will really help me since I won't have to take out such a large high interest loan. Plus, I've heard that applying for residency programs can be expensive and I don't want to have to take out any private loans.

 

[MadameLULU]

Yeah, docjolly, i think it would be best to take the money fourth year too. I'll be ok this year... I've been offered enough gov't loans to cover my expenses for my first year. I figure interest rates will be a lot higher in 4 years and 10k will really help me since I won't have to take out such a large high interest loan. Plus, I've heard that applying for residency programs can be expensive and I don't want to have to take out any private loans.

tinkerbelle, I'm not sure I understand your argument about taking the money later as opposed to this year. The interest on gov't loans is not fixed, so even if you do take out money this year, the interest rate on that loan will be the same as the rate you take out during your fourth year

 

[edmadison]

tinkerbelle, I'm not sure I understand your argument about taking the money later as opposed to this year. The interest on gov't loans is not fixed, so even if you do take out money this year, the interest rate on that loan will be the same as the rate you take out during your fourth year

Don't worry about taxes -- there are none. 10K is below the yearly gift tax exemption and in any event the giver not the receiver pays the tax. It is not considered income. I also agree with the last poster, there is no reason not to take it now. Remember too, a bird in the hand....

Ed

 

[tinkerbelle]

Hmm. Ok, maybe thinking about the interest is a bad way to look at it. But don't we have a lot of extra expenses 3rd/4th year with residency applications? I was talking to a second year yesterday, and she was telling me how some of her classmates applied to like 20-50 programs. I assume these costs will push me over the $38,500 i get in stafford loans and force me to take private loans (which i don't want to do).

I was hoping y'all would have the same opinions 😛 Now I have to think about it some more since y'all disagree 😀 Thanks for the advice!

 

[EvilNewbie]

If I were you, I would max out my student loans because the interests rates on those things are peanuts compared to real loans. Take the 10k NOW and invest it into a Roth IRA account ($4000) and use the rest to put into a 5-year CD (non-risky) OR if you want to make the big $$$ put it into a money market account (risky). Make sure you don't do it through a bank cause they give you less in returns. Take the extra money from your student loans and continue to invest perhaps into annuities or something just to broaden your portfolio. By the way, where can I find a friend willing to give me that much of a gift? Keep in mind, I am a guy 😉