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Hi!

I'm a recent undergraduate college grad, and I want to go to medical school. I graduated in May 2019 with $65k debt and as of today it stands at ~$22k. I should be able to pay off the rest before April (Thankfully)

My complication with medical school is this: I have DACA, which exposes me to deportation, especially if the new supreme court reverses the decision made earlier this year to protect the program. If that happens then whoever cosigns my med school student loans (my family) will be left with a staggering debt with no means to pay it off.

For that reason, I want to save up the money to pay for med school myself. I'm aware it might take many years.

I provided my background because the advice i generally get is: JUST GET A LOAN, but now you can see that it is not that simple.

Now that that's out of the way, my question is: What is the best 529 plan that suits my situation, so that my contributions can grow by the time I go to med school? My time horizon is ~ 3-5 years

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Sorry to hear there is so much uncertainty for you! I hope everything works out. Things to look out for when selecting a 529 plan are the tax benefits, types of investments, and associated fees.

Every State in the US have their own 529 plans and the rules can vary with each State. One of the biggest benefits to the 529 plan is that the money can grow and be used tax-free on the federal level but of course there are some exceptions on the state level. Not all states offer a state income tax benefit if you choose to invest in a different state's plan. I would encourage you to do some research on the state you currently live in and see what benefits they offer. Some states offer their residents an income tax benefit no matter what state's plan you invest in, others only give their residents a tax benefit if they invest in their state's plan, and then there are states that don't have income tax and therefore their residents don't have to worry about qualifying for this benefit.

Second, with the 529 plans states will typically only allow certain investments inside the account. Usually there will be age based funds that you can select that will tailor the portfolio risk to how long before you need the money (The longer before you need the money, typically the more aggressive the investments will be). You should be able to find the average performance over the years of a state's plans by searching for them. (Of course that doesn't guarantee anything moving forward)

Lastly, another very important thing to watch out for is the fees associated with a certain account. Different states and different brokers will charge varying amounts of fees, from a yearly administrative fee to paper statement fees. Make sure you know what all the fees are before you invest with a broker. Also different types of investments have varying levels of fees. Typically investments like mutual funds will have higher fees, since these are actively managed, than say an index fund that is passively managed.

All this to say that I would personally check first to see what the income tax rules are of the state I am living in to see if I could invest in any state's plan, and if so, then research the best rated plans. Once I find some plans that look to be good options I would probably also run some calculations taking into consideration expected contributions, fees, tax benefits, and historical performance to make sure that the 529 will even be the best investment plan with such a short investment timeframe of 3-5 years. This is just my opinion though so please take it with a grain of salt.

P.S: sorry this is a long post but I would also start doing a lot of research into grants and scholarships. I am not sure what is out there for Med school but if you apply to a lot of them you might be able to get a lot of free money for school that you don't have to save up or count on investments for. I paid for a lot of my school that way but I was not a Med student (not smart enough for that!).

LM

Thank you Landon! I appreciate your advice, and I looked into the state income tax implications for my own state and found no benefits in sight hahahaha, yeah it might be better to just throw whatever I would've contributed into a savings account and collect the 1-2% interest.

Also you'd be surprised, from what i can see, and have heard, Med school is more about sustaining an uncommonly high work ethic over a period of decades than it is about being smart.

S

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