Financing- Part II

I can see that most of my readers are most interested in my post about financing. So I thought that I can add to that post. Since I am American, the choices available to me may not apply to you, if you are not a US citizen or permanent resident.

To finance my MBA, I've decided to liquidate my Roth IRA savings over the years and use the cash to pay for my MBA. If you decide to pursue this option, bear in mind that you can only take out the principle portion of your contribution tax free and penalty free. If you accidentally take out any profits that were made off of the principle contribution, you may have to pay additional penalty fees.

To supplement this, I will also borrow from the US gov't. Luckily, as an INSEAD student, we can borrow from the US gov't. The terms of the federal student loan is ok. You can borrow up to USD20,500 at a fixed rate of 6.8% and origination fee of 0.5%. You can borrow additional amount under the Federal Direct Loans at a fixed rate of 7.9% and origination fee of 4%. I think the term of the loan is 10 years and repayment begins 6 months after graduation. I've actually gotten approved of enough money from the US gov't to fund my tuition and living expenses. So don't worry if you don't have any savings to fall back on. If you have good credit, you can finance the entire thing.

Now being a smart business woman that I am, I approached my family and asked them if they would like to invest in me. I offered them a very attractive interest rate (less than what the US gov't demands from me). So my family will also invest in me and we will keep the same repayment schedule. I think this is a great option for not only you but also your family members. You can save on origination fees and interest expenses and they can make more on interest income. (The current US interest rate is less than 1%).

I hope you like these additional information that I offered. If there are additional areas that you want me to cover, please send me a comment and let me know.